Saab Inc. awarded $30.7M contract for radar sustainment, raising questions about competition and value

Contract Overview

Contract Amount: $30,665,982 ($30.7M)

Contractor: Saab, Inc

Awarding Agency: Department of Defense

Start Date: 2021-09-17

End Date: 2026-09-16

Contract Duration: 1,825 days

Daily Burn Rate: $16.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LIFE CYCLE SUSTAINMENT & FIELDING OF AN/SPS-77 (VARIANTS) RADARS, USMC AN/TPS-80 G/ATOR, CELSIUS TECH RADAR & CRYPTRONIC SITE 200 FIRE CONTROL RADAR AND OTHER SAAB SENSOR SYSTEMS

Place of Performance

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

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $30.7 million to SAAB, INC for work described as: LIFE CYCLE SUSTAINMENT & FIELDING OF AN/SPS-77 (VARIANTS) RADARS, USMC AN/TPS-80 G/ATOR, CELSIUS TECH RADAR & CRYPTRONIC SITE 200 FIRE CONTROL RADAR AND OTHER SAAB SENSOR SYSTEMS Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can incentivize cost overruns. 2. The contract was not competed, limiting potential cost savings through market forces. 3. The duration of the contract (5 years) suggests a long-term need for these services. 4. The North American Industry Classification System (NAICS) code 811219 indicates a focus on repair and maintenance of electronic equipment. 5. The contract's value is significant within the niche of radar sustainment. 6. The absence of small business set-asides suggests larger prime contractors are expected to perform the work.

Value Assessment

Rating: questionable

The contract's value of $30.7 million over five years for sustainment and fielding of radar systems requires careful benchmarking. Without competitive bidding, it is difficult to assess if this price represents fair market value. The cost-plus-fixed-fee structure also introduces risk, as contractor incentives may not align perfectly with cost efficiency. Further analysis comparing this to similar sustainment contracts for complex electronic systems is needed to determine true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, proprietary technology, or when urgency dictates a direct award. The lack of competition means potential cost savings that could arise from a bidding process were not realized, and it limits the government's ability to leverage market dynamics for better pricing.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without a bidding process, there is less assurance that the price reflects the lowest possible cost for the required services.

Public Impact

The U.S. Marine Corps benefits from the continued operational readiness of critical radar systems. Services include sustainment and fielding of AN/SPS-77, AN/TPS-80 G/ATOR, and other Saab sensor systems. The contract's geographic impact is likely global, supporting deployed Marine Corps units. Workforce implications include the need for specialized technical personnel for radar maintenance and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Cost-plus-fixed-fee contract type can lead to higher costs if not managed closely.
Long contract duration may not adapt well to rapidly evolving technology.
Lack of small business participation could limit innovation and broader economic impact.

Positive Signals

Ensures continued operational capability of essential military radar systems.
Saab, Inc. likely possesses unique expertise for these specific systems.
Contract provides stability for sustainment services over a defined period.

Sector Analysis

This contract falls within the defense electronics sector, specifically focusing on the sustainment and maintenance of advanced radar systems. The market for defense electronics is characterized by high barriers to entry due to specialized technology, stringent security requirements, and long development cycles. Spending in this area is driven by national security needs and technological advancements. Comparable spending benchmarks would involve analyzing other sustainment contracts for complex military hardware, particularly radar and sensor systems, across different branches of the armed forces.

Small Business Impact

This contract does not appear to include a small business set-aside. The nature of advanced radar sustainment often requires specialized expertise and facilities that may be more readily available from larger, established defense contractors. While there is no direct set-aside, there may be opportunities for small businesses to participate as subcontractors to Saab, Inc., depending on the specific technical requirements and Saab's subcontracting strategy. The absence of a set-aside means that the primary contract award did not prioritize small business participation.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures would be embedded within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature and the sensitive defense-related aspects of the systems involved. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

AN/SPS-77 Radar Systems
AN/TPS-80 G/ATOR Radar Systems
Saab Sensor Systems
Defense Electronics Maintenance
Military Radar Fielding

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.7 million to SAAB, INC. LIFE CYCLE SUSTAINMENT & FIELDING OF AN/SPS-77 (VARIANTS) RADARS, USMC AN/TPS-80 G/ATOR, CELSIUS TECH RADAR & CRYPTRONIC SITE 200 FIRE CONTROL RADAR AND OTHER SAAB SENSOR SYSTEMS

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 $30.7 million.

What is the period of performance?

Start: 2021-09-17. End: 2026-09-16.

What is Saab, Inc.'s track record with the Department of Defense for similar radar sustainment contracts?

Saab, Inc. has a history of providing defense systems and services to various military branches, including the Department of Defense. For radar systems specifically, their involvement often spans development, production, and sustainment. Analyzing past performance on contracts for systems like the AN/SPS-77 or similar radar platforms would reveal their reliability, technical proficiency, and adherence to schedule and budget. Publicly available contract data and performance reports (if not classified) can offer insights into their past success rates, any significant issues encountered, and their overall relationship with the DoD in delivering complex electronic warfare and surveillance capabilities. This historical context is crucial for understanding the rationale behind awarding a sole-source contract for the AN/SPS-77 and other Saab systems.

How does the $30.7 million contract value compare to industry benchmarks for radar sustainment?

Benchmarking the $30.7 million contract value requires comparing it against similar sustainment contracts for advanced military radar systems. Factors influencing this value include the specific radar models (AN/SPS-77, AN/TPS-80 G/ATOR), the scope of services (sustainment, fielding, repair), the contract duration (5 years), and the level of technical support required. Industry benchmarks are often derived from analyzing historical contract awards for comparable systems, considering factors like system complexity, age, and technological sophistication. Given the sole-source nature and cost-plus-fixed-fee structure, a direct comparison is challenging without access to detailed cost breakdowns and market research conducted by the agency. However, the value appears substantial, reflecting the critical nature and complexity of maintaining advanced defense sensor systems.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for radar sustainment?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source award eliminates competitive pressure, potentially leading to higher prices than might be achieved in a competed scenario. The government relies heavily on the contractor's pricing proposals and negotiation skills without market validation. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing the contractor with a guaranteed profit margin (the fixed fee), can incentivize cost escalation. If costs increase, the contractor's fee remains the same percentage of those costs, but the absolute fee amount increases. This can reduce the contractor's motivation to control costs rigorously, as a portion of increased expenses is borne by the government. Effective oversight and robust cost-tracking mechanisms are essential to mitigate these risks.

What is the expected program effectiveness and impact on Marine Corps readiness?

The expected program effectiveness hinges on Saab, Inc.'s ability to deliver timely and high-quality sustainment and fielding services for the AN/SPS-77, AN/TPS-80 G/ATOR, and other Saab sensor systems. Successful execution of this contract is critical for maintaining the operational readiness of the U.S. Marine Corps' air defense and surveillance capabilities. These radar systems are vital for threat detection, situational awareness, and command and control in various operational environments. Any degradation in their performance or availability due to inadequate sustainment could significantly impact mission effectiveness and troop safety. Therefore, the program's success is directly linked to ensuring these complex electronic systems remain functional, accurate, and deployable when and where needed.

How has federal spending on radar system sustainment evolved, and does this contract align with historical patterns?

Federal spending on radar system sustainment has generally trended upwards, driven by the increasing complexity and critical role of radar technology in modern defense strategies. As legacy systems age, the need for ongoing maintenance, upgrades, and operational support grows. This $30.7 million contract for Saab systems aligns with this pattern, reflecting a continued investment in maintaining advanced sensor capabilities. Historical spending data for similar sustainment contracts, particularly those awarded to major defense contractors for complex electronic systems, would provide context. Analyzing trends in contract values, durations, and award types (competed vs. sole-source) can reveal whether this specific award is typical or an outlier. The shift towards longer-term sustainment contracts is also a notable trend, aiming for greater efficiency and predictability.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6339421R0001

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $90,877,690

Exercised Options: $90,877,690

Current Obligation: $30,665,982

Actual Outlays: $65,258

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $1,225,443

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline