DoD's $25.3M Doppler GPS Upgrade Lacks Competition, Raises Cost Concerns

Contract Overview

Contract Amount: $25,312,668 ($25.3M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2014-07-01

End Date: 2018-09-07

Contract Duration: 1,529 days

Daily Burn Rate: $16.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: CHANGE ORDER TO UPGRADE THE COMPUTER DISPLAY UNIT FOR THE DOPPLER GLOBAL POSITIONING SYSTEM NAVIGATION SYSTEM (DGNS) TO MEET FAA REGULATIONS.IGF::OT::IGF

Place of Performance

Location: WAYNE, PASSAIC County, NEW JERSEY, 07470

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $25.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: CHANGE ORDER TO UPGRADE THE COMPUTER DISPLAY UNIT FOR THE DOPPLER GLOBAL POSITIONING SYSTEM NAVIGATION SYSTEM (DGNS) TO MEET FAA REGULATIONS.IGF::OT::IGF Key points: 1. Significant cost increase for a critical navigation system upgrade. 2. Sole-source award limits price discovery and potential savings. 3. FAA regulatory compliance drives the need, but contract structure warrants scrutiny. 4. IT hardware manufacturing sector involved, with potential for higher margins.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure for a sole-source award raises concerns about cost control. Without competitive bidding, it's difficult to benchmark pricing against similar upgrades or market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and may lead to inflated costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The lack of competition on this $25.3 million contract likely resulted in higher costs than a competitively awarded contract, impacting taxpayer value.

Public Impact

Ensures critical military navigation systems meet aviation safety standards. Potential for increased costs due to lack of competitive bidding. Impacts readiness and operational capability of DoD assets relying on DGNS. Highlights reliance on specific vendors for essential system upgrades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

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

Positive Signals

Meets FAA regulatory requirements
Essential for navigation system functionality
Supports military operational readiness

Sector Analysis

This contract falls within the IT hardware manufacturing sector, specifically for navigation systems. Spending benchmarks for similar sole-source upgrades are difficult to establish, but competitive procurements in this area typically aim for cost efficiencies.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. The award to BAE Systems suggests a focus on large, established defense contractors.

Oversight & Accountability

The sole-source nature of this award warrants further oversight to ensure the fixed fee is reasonable and that costs are managed effectively throughout the contract period. Accountability for cost justification is crucial.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award lacks competition
Cost-plus-fixed-fee structure may inflate costs
Limited transparency on pricing justification
Potential for contractor cost inefficiency
No small business participation evident

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. CHANGE ORDER TO UPGRADE THE COMPUTER DISPLAY UNIT FOR THE DOPPLER GLOBAL POSITIONING SYSTEM NAVIGATION SYSTEM (DGNS) TO MEET FAA REGULATIONS.IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.3 million.

What is the period of performance?

Start: 2014-07-01. End: 2018-09-07.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. For this DGNS upgrade, the specific reason needs to be documented by the agency. Without competition, the government misses the opportunity to leverage market forces for better pricing and innovation, potentially leading to higher overall costs for taxpayers.

How does the cost-plus-fixed-fee structure impact the government's ability to control costs on this sole-source contract?

A cost-plus-fixed-fee (CPFF) contract allows the contractor to recover all allowable costs plus a predetermined fixed fee. While the fee is fixed, the total cost is variable. In a sole-source scenario, this structure can incentivize the contractor to incur higher costs, as their fee is a percentage of those costs (or a fixed amount regardless of cost). This necessitates robust government oversight to scrutinize costs and ensure efficiency.

What is the long-term strategy for DGNS upgrades to ensure competitive sourcing and cost-effectiveness in the future?

To ensure future cost-effectiveness and competitive sourcing, the DoD should explore strategies like breaking down future upgrades into smaller, more competitive packages, encouraging industry innovation through market research, and developing clearer requirements to attract a wider range of bidders. Proactive planning and early engagement with the market can mitigate the need for sole-source awards and drive better value.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 164 TOTOWA RD, WAYNE, NJ, 07470

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

Financial Breakdown

Contract Ceiling: $25,312,668

Exercised Options: $25,312,668

Current Obligation: $25,312,668

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $6,292,695

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15P7T13DE013

IDV Type: IDC

Timeline