Navy awards $126M for LRIP Units 8 & 9, a sole-source contract for search and navigation systems

Contract Overview

Contract Amount: $125,992,578 ($126.0M)

Contractor: Saab, Inc

Awarding Agency: Department of Defense

Start Date: 2023-08-29

End Date: 2027-03-31

Contract Duration: 1,310 days

Daily Burn Rate: $96.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LRIP UNITS 8 & 9

Place of Performance

Location: EAST SYRACUSE, ONONDAGA County, NEW YORK, 13057

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $126.0 million to SAAB, INC for work described as: LRIP UNITS 8 & 9 Key points: 1. The contract's value of $126 million for LRIP Units 8 & 9 suggests a significant investment in advanced navigation and search technology. 2. As a sole-source award, the absence of competitive bidding raises questions about potential price efficiencies and market responsiveness. 3. The firm-fixed-price structure aims to mitigate cost overruns, but the lack of competition could still lead to suboptimal pricing. 4. This award falls within the broader defense sector's ongoing need for sophisticated sensor and navigation equipment. 5. The contract duration of over three years indicates a long-term commitment to the specific system being procured. 6. Performance risk is likely moderate given the nature of advanced system manufacturing, but the sole-source aspect warrants close monitoring.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without comparable competitive bids. The $126 million award for LRIP Units 8 & 9 represents a substantial investment. While the firm-fixed-price type offers some cost control, the lack of competition means it's difficult to ascertain if this represents the best possible value for the government. Without competitive data, assessing the pricing against market rates or similar contracts is speculative.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, SAAB, Inc., was solicited. This approach is typically used when a unique capability is required or when only one source can fulfill the requirement. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from multiple vendors.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing offers, it's harder to ensure the price reflects the lowest reasonable cost for the required systems.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational forces, who will receive advanced search, detection, and navigation systems. The contract delivers critical components for naval platforms, enhancing situational awareness and operational effectiveness. The geographic impact is primarily within New York, where SAAB, Inc. is located, potentially supporting local jobs and the regional economy. This contract supports specialized manufacturing roles within the defense industrial base, requiring skilled labor in systems engineering and production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Lack of competition may reduce incentives for contractor innovation or efficiency improvements.
Long-term commitment without competitive re-evaluation could lock in potentially suboptimal terms.

Positive Signals

Firm-fixed-price contract type helps control costs and provides budget certainty.
Award to an established contractor (SAAB, Inc.) may indicate a reliance on proven technology and expertise.
Procurement of advanced navigation and search systems addresses critical defense needs.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NAICS 334511). This industry is characterized by high technological complexity, significant R&D investment, and close ties to government defense spending. The market is often dominated by a few large, specialized firms due to high barriers to entry. Comparable spending benchmarks are difficult to establish precisely without knowing the specific system, but defense spending on navigation and sensor technology is consistently substantial.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false) and does not appear to involve significant subcontracting opportunities for small businesses based on the provided information. As a sole-source award to a likely larger prime contractor, the direct impact on the small business ecosystem may be limited unless SAAB, Inc. has specific small business subcontracting plans not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified units within the agreed price. Transparency is limited by the sole-source nature, but contract award details are typically available through federal procurement databases. The Inspector General's office for the Department of Defense would have jurisdiction over any potential fraud, waste, or abuse.

Related Government Programs

Naval Combat Systems
Defense Navigation Technology
Search and Detection Systems
Aeronautical and Nautical Instruments
Military Logistics and Support

Risk Flags

Sole-source award
Lack of competition
Potential for non-competitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $126.0 million to SAAB, INC. LRIP UNITS 8 & 9

Who is the contractor on this award?

The obligated recipient is SAAB, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $126.0 million.

What is the period of performance?

Start: 2023-08-29. End: 2027-03-31.

What is the specific system or technology being procured under LRIP Units 8 & 9?

The provided data does not specify the exact system or technology being procured under LRIP Units 8 & 9. However, the NAICS code (334511) and the contract description ('Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing') indicate it pertains to advanced equipment for these functions. LRIP typically stands for Low-Rate Initial Production, suggesting this is a phase of manufacturing for a newly developed or significantly upgraded system, likely for naval platforms, given the awarding agency is the Department of the Navy.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For defense procurements, this often relates to unique technological capabilities, proprietary systems, or follow-on production where competition is not feasible or cost-effective. Without further documentation from the agency, the precise justification for SAAB, Inc. being the sole source remains unspecified in the provided data.

How does the $126 million contract value compare to previous or similar procurements for navigation systems by the Navy?

Direct comparison of the $126 million value is difficult without knowing the specific system and its configuration. However, the 'LRIP' designation suggests this is an early production phase. Subsequent production runs (e.g., LRIP Units 10, Full-Rate Production) could be significantly larger or smaller depending on program maturity and quantity needs. The firm-fixed-price nature implies a defined scope. To assess value, one would need to compare the unit cost and total value against similar systems procured competitively or against independent cost estimates for comparable technology.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risk with a sole-source contract of this magnitude ($126 million) is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the best possible price. Other risks include reduced incentive for the contractor to innovate or improve efficiency, and a potential lock-in to a specific technology or vendor, making future transitions more difficult or costly. There's also a risk that the government's negotiating position is weaker without alternative sources.

What is SAAB, Inc.'s track record with the Department of the Navy or similar defense contracts?

SAAB, Inc. is a known defense contractor with a history of providing advanced systems, including those related to defense electronics, sensors, and training. While the provided data doesn't detail their specific performance history with the Navy on this particular system, their established presence in the defense sector suggests a level of capability and experience. A deeper dive into contract databases (like FPDS or SAM.gov) would reveal their past performance ratings, award history, and any significant issues on prior contracts with the Department of Defense.

What is the expected impact of this contract on the defense industrial base, particularly in New York?

This $126 million contract for LRIP Units 8 & 9 is likely to have a positive economic impact on SAAB, Inc.'s operations and potentially its supply chain, particularly within New York where the company is located (ST: NY). It supports specialized manufacturing jobs in areas like systems engineering, production, and quality assurance. For the broader defense industrial base, it signifies continued investment in critical navigation and sensor technologies, potentially bolstering the capabilities of firms involved in advanced electronics and defense systems manufacturing.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001923R0151

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Saab Defense and Security USA LLC

Address: 5717 ENTERPRISE PKWY, EAST SYRACUSE, NY, 13057

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $125,992,578

Exercised Options: $125,992,578

Current Obligation: $125,992,578

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $4,856,149

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline