SCHAUMBURG, Ill.--(BUSINESS WIRE)--Jul. 9, 2018--
Sparton Corporation (NYSE: SPA) today announced the filing of a bid
protest by ERAPSCO with the United States Government Accountability
Office (GAO) challenging the recent competitive range exclusion of
ERAPSCO under United States Navy (Navy) Solicitation No.
N00019-19-R-0002 for the GFY19-23 AN/SSQ-125A Production Sonobuoy.
ERAPSCO is a joint venture between Sparton DeLeon Springs, LLC, a
wholly-owned subsidiary of Sparton Corporation (Sparton), and Undersea
Sensor Systems, Inc. (USSI), a wholly-owned subsidiary of Ultra
Electronics Holdings plc (Ultra). The protest challenges on a number of
bases the Navy's decision to exclude ERAPSCO from the solicitation
process and requests that GAO restore ERAPSCO’s ability to participate
in the process. A decision by GAO is expected no later than October 17,
2018. Under applicable law, if GAO denies ERAPSCO’s bid protest, ERAPSCO
could seek further relief through a new bid protest filing at the U.S.
Court of Federal Claims.
The competitive range exclusion of ERAPSCO does not affect the Navy's
award of Solicitation No. N00019-19-R-0001 for the GFY19-23 AN/SSQ-36B,
AN/SSQ-53G, AN/SSQ-62F and AN/SSQ-101B Production Sonobuoys as a sole
source to ERAPSCO. ERAPSCO currently expects that the Navy will award
the contract for this solicitation in late 2018 or early 2019.
The AN/SSQ-125A production sonobuoy is a successor to the AN/SSQ-125
sonobuoy, which ERAPSCO is currently shipping under contract no.
N00421-14-D-0025. ERAPSCO has been supplying the AN/SSQ-125 sonobuoy to
the Navy since 2012. Shipments to the Navy of the AN/SSQ-125A are
expected to begin around October 2019, and shipments by ERAPSCO to the
Navy of the AN/SSQ-125 are expected to cease around August 2019. Sparton
recorded revenues for the AN/SSQ-125 sonobuoy of $20.7 million and $23.9
million for fiscal years ended July 1, 2018 and July 2, 2017,
respectively. ERAPSCO has sold and will continue to sell the AN/SSQ-125
to a growing list of select foreign countries that are interested in
this technology and approved by the United States Department of State.
If ERAPSCO is unsuccessful with its bid protest action or if an award
for the AN/SSQ-125A sonobuoy is made to ERAPSCO in an amount less than
the value of the current AN/SSQ-125 shipments to the Navy, Sparton would
expect to see a reduction in sonobuoy revenue beginning in Sparton’s
fiscal year ending June 28, 2020, when AN/SSQ-125A shipments are
scheduled to begin replacing AN/SSQ-125 shipments. However, Sparton
would not be prevented from bidding future AN/SSQ-125A production
contracts starting in GFY24 should it qualify a design in accordance
with the Production Sonobuoy Specification.
Potential Sale Transaction
On March 5, 2018, Sparton announced the termination by Sparton and Ultra
of their July 7, 2017 merger agreement as a result of the staff of the
United States Department of Justice (DOJ) informing the parties that it
intended to recommend that the DOJ block the merger. At that time,
Sparton announced that it would seek to re-engage with parties that
previously expressed an interest in acquiring all or a part of Sparton
and that are in a position to expeditiously proceed to effect such a
transaction. That process continues. However, there can be no assurance
these discussions will result in the execution of a definitive agreement
or the completion of a transaction.
ERAPSCO Joint Venture
On March 5, 2018, Sparton announced that, during the DOJ’s review of
Sparton’s proposed merger with Ultra, the Navy expressed the view that
instead of the parties proceeding with the merger, each of Sparton and
Ultra should enhance its ability to independently develop, produce and
sell sonobuoys and over time work toward the elimination of their use of
Sparton’s and Ultra’s joint venture for such activities. Since that
time, Sparton has been in communication with the Navy to better
understand its expectations with respect to the timing, funding and
terms of current and future sonobuoy IDIQ production contracts.
Discussions with the Navy on this topic are ongoing.
About Sparton Corporation
Sparton Corporation (NYSE:SPA), now in its 118th year, is a provider of
complex and sophisticated electromechanical devices with capabilities
that include concept development, industrial design, design and
manufacturing engineering, production, distribution, field service and
refurbishment. The primary markets served are Medical & Biotechnology,
Military & Aerospace and Industrial & Commercial. Headquartered in
Schaumburg, Illinois, Sparton currently has thirteen manufacturing
locations and engineering design centers worldwide. Sparton’s Web site
may be accessed at www.sparton.com.
Safe Harbor and Fair Disclosure Statement
Safe Harbor statement under the Private Securities Litigation Reform Act
of 1995: To the extent any statements made in this release contain
information that is not historical, these statements are essentially
forward-looking and are subject to risks and uncertainties, including
the difficulty of predicting future results, the regulatory environment,
fluctuations in operating results and other risks detailed from time to
time in Sparton’s filings with the Securities and Exchange Commission
(SEC). The matters discussed in this press release may also involve
risks and uncertainties concerning Sparton’s services described in
Sparton’s filings with the SEC. In particular, see the risk factors
described in Sparton’s most recent Form 10K and Form 10Q. Sparton
assumes no obligation to update the forward-looking information
contained in this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180709005831/en/
Source: Sparton Corporation
Institutional Marketing Services (IMS)
Nesbett/Jennifer Belodeau, 203-972-9200
Joseph McCormack, 847-762-5812