DoD awards $207M contract for F-16 support equipment and spares to BAE Systems

Contract Overview

Contract Amount: $20,710,365 ($20.7M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2012-10-22

End Date: 2015-06-30

Contract Duration: 981 days

Daily Burn Rate: $21.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: F-16 FMS SUPPORT EQUIPMENT AND SUPPORT EQUIPMENT SPARES FOR OMAN.

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $20.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: F-16 FMS SUPPORT EQUIPMENT AND SUPPORT EQUIPMENT SPARES FOR OMAN. Key points: 1. Contract awarded to a single, established supplier, raising questions about competitive pricing. 2. Long-term support contract indicates a need for specialized, proprietary equipment. 3. Fixed-price contract structure aims to control costs, but initial pricing needs scrutiny. 4. Performance period spans nearly three years, suggesting ongoing operational requirements. 5. This award falls within the broader category of aircraft parts manufacturing. 6. No small business set-aside was noted, potentially limiting broader industry participation.

Value Assessment

Rating: fair

The contract value of $207 million for F-16 support equipment and spares appears substantial. Benchmarking this against similar Foreign Military Sales (FMS) support contracts for advanced aircraft is challenging without more specific data on the exact components and services included. The firm fixed-price nature suggests an attempt to cap costs, but the absence of competitive bidding means a direct comparison to market rates for equivalent services is not feasible. Further analysis would require understanding the specific nature of the 'support equipment' and 'spares' to assess 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. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's requirements. In this case, BAE Systems likely holds the necessary expertise or intellectual property related to the F-16 support equipment and spares. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: For taxpayers, a sole-source award means the potential for higher costs compared to a competitive procurement. Without competing bids, there is less pressure on the contractor to offer the lowest possible price, and the government must rely on its negotiation skills and cost analysis to ensure a fair price.

Public Impact

The primary beneficiary is the government of Oman, which will receive essential support equipment and spare parts for its F-16 fighter jets. This contract ensures the operational readiness and sustainment of Oman's air force capabilities. The services delivered include the provision of specialized equipment and replacement parts crucial for aircraft maintenance. The geographic impact is primarily on the Royal Air Force of Oman's operational bases.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Contract duration and value may indicate potential for cost overruns if not closely managed.
Absence of small business participation could limit economic opportunities for smaller firms.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established contractor like BAE Systems suggests a level of confidence in their ability to deliver specialized support.
Contract ensures critical support for a key U.S. ally's military assets.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft parts and support equipment manufacturing. The market for F-16 sustainment is specialized, often dominated by original equipment manufacturers (OEMs) or their authorized partners due to the proprietary nature of the technology and the need for specific expertise. Global spending on military aircraft sustainment is significant, with contracts often involving long-term support, upgrades, and spare parts, reflecting the high cost of maintaining advanced military platforms.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there information indicating subcontracting opportunities for small businesses. As a sole-source award to a large defense contractor, the direct impact on the small business ecosystem is likely minimal. Without specific subcontracting plans mandated, opportunities for small businesses to participate in supplying parts or services for this contract are not evident from the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA) for performance monitoring. Inspector General (IG) jurisdiction would apply in cases of fraud, waste, or abuse. Transparency is limited due to the sole-source nature, but reporting requirements for contract performance and financial expenditures would still be in place.

Related Government Programs

Foreign Military Sales (FMS) Program
F-16 Aircraft Sustainment
Aerospace Parts Manufacturing
Defense Logistics Support

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for higher costs
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. F-16 FMS SUPPORT EQUIPMENT AND SUPPORT EQUIPMENT SPARES FOR OMAN.

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 Air Force).

What is the total obligated amount?

The obligated amount is $20.7 million.

What is the period of performance?

Start: 2012-10-22. End: 2015-06-30.

What is the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis to BAE Systems?

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' which is a common designation for sole-source awards. Typically, such justifications stem from reasons like the existence of only one responsible source, urgent and compelling needs where competition is not feasible, or when the contract is a follow-on to a previous competitive award where only the original contractor can provide the necessary services or parts. For BAE Systems to be the sole provider of F-16 support equipment and spares, it likely possesses proprietary knowledge, specific manufacturing capabilities, or holds the necessary licenses and intellectual property rights essential for maintaining these particular aircraft components. A detailed justification document, usually available through official channels like SAM.gov or agency-specific portals, would elaborate on these specific technical or proprietary requirements that preclude competitive bidding.

How does the pricing of this contract compare to similar F-16 support equipment contracts awarded competitively?

Direct comparison of pricing is difficult without access to detailed cost breakdowns and market intelligence for similar competitive contracts. As this award was sole-source, it bypassed the price discovery mechanism inherent in competitive bidding. While the contract is firm fixed-price, which aims to provide cost certainty, the initial price was negotiated without the pressure of competing offers. To assess value, one would need to analyze the unit prices of specific spares and the overall cost of support services against industry benchmarks or historical data for comparable F-16 sustainment efforts. Without this comparative data, it's challenging to definitively state whether the pricing represents good value for money, though sole-source awards inherently carry a higher risk of being less cost-effective than competitive ones.

What are the key performance indicators (KPIs) or metrics used to evaluate BAE Systems' performance under this contract?

The provided data does not specify the key performance indicators (KPIs) or metrics for this contract. However, for defense contracts involving support equipment and spares, typical performance metrics often include on-time delivery rates for spare parts, quality of delivered goods (e.g., defect rates), responsiveness to support requests, and adherence to technical specifications. For Foreign Military Sales (FMS) contracts, meeting the operational readiness requirements of the partner nation's air force is a paramount, albeit broad, objective. The contract's terms and conditions would usually outline specific deliverables and acceptance criteria, against which performance would be measured. The Air Force contracting office and potentially DCMA would be responsible for monitoring these aspects.

What is the historical spending trend for F-16 support equipment and spares, both for Oman and overall by the Department of Defense?

The provided data only details this specific $207 million contract awarded in 2012. To understand historical spending trends, one would need to examine broader datasets. For the Department of Defense, spending on F-16 sustainment, including support equipment and spares, is a continuous and significant expenditure, often running into billions of dollars annually across the entire fleet. This includes maintenance, upgrades, and parts procurement. For Oman specifically, spending patterns would depend on the size and operational tempo of their F-16 fleet, as well as their specific sustainment agreements with the U.S. under the FMS program. Analyzing past FMS cases and sustainment contracts for Oman's F-16s would reveal trends in their investment in aircraft readiness.

What is the potential risk associated with relying on a single contractor for critical F-16 support equipment and spares?

Relying on a single contractor, as in this sole-source award, presents several risks. Firstly, there's the risk of price escalation over time, as the contractor faces no direct competition. Secondly, there's a dependency risk; if the contractor experiences financial difficulties, production issues, or decides to discontinue support for certain components, it could severely impact the operational readiness of the F-16 fleet. Thirdly, innovation might be stifled, as the lack of competition reduces the incentive for the contractor to develop more cost-effective or technologically advanced solutions. Finally, there's a geopolitical risk if the contractor's home country imposes restrictions on exports or support, potentially affecting the partner nation's defense capabilities.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: MAINT/REPAIR SHOP EQPT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 65 SPIT BROOK RD, NASHUA, NH, 03060

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

Financial Breakdown

Contract Ceiling: $20,710,365

Exercised Options: $20,710,365

Current Obligation: $20,710,365

Subaward Activity

Number of Subawards: 79

Total Subaward Amount: $12,523,321

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline