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The Naval Sea Systems Command (NAVSEA) is planning to award three sole source contracts to American Telephone & Telegraph (AT & T) for full-scale development of the Enhanced Modular Signal Processor (standard signal processor). NAVSEA planned to award the first contract in January 1991. We found that signal processors are available that may meet the Navy's requirements and result in cost savings through reduced procurement and life cycle costs. Therefore, the Assistant Secretary of the Navy (Research, Development and Acquisition) should direct NAVSEA to defer award of further contracts until alternate signal processors are evaluated for capability and cost-effectiveness. We are issuing this quick-reaction report as part of the overall audit of Foreign Weapons Evaluation. The audit's purpose is to evaluate the effectiveness of DoD's evaluation of foreign weapon systems, subsystems, and related equipment in reducing duplication of weapons research and development efforts, expediting schedules to field systems, improving performance, reducing unit cost of systems, and enhancing the commonality and interoperability of military equipment among NATO allies and other friendly nations.