DoD awards $13M contract for aircraft parts, raising questions about competition and value

Contract Overview

Contract Amount: $12,981,098 ($13.0M)

Contractor: BAE Systems Aerospace Services Inc.

Awarding Agency: Department of Defense

Start Date: 2004-06-30

End Date: 2010-12-31

Contract Duration: 2,375 days

Daily Burn Rate: $5.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $13.0 million to BAE SYSTEMS AEROSPACE SERVICES INC. for work described as: Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Long contract duration of over 6 years suggests a need for sustained support. 3. The contract's value is substantial, requiring careful oversight to ensure taxpayer funds are used efficiently. 4. Focus on aircraft parts indicates a critical need within the defense supply chain. 5. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

The contract value of $12.98 million for aircraft parts over approximately six years appears significant. Without comparable sole-source contracts or detailed cost breakdowns, it is difficult to definitively benchmark the value for money. The lack of competition inherently reduces the pressure on the contractor to offer the most competitive pricing. Further analysis of the specific parts and services procured would be necessary to provide a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services due to unique capabilities, proprietary technology, or urgent needs. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. This necessitates robust negotiation and oversight by the contracting agency to mitigate potential overspending.

Public Impact

The Department of Defense benefits from the procurement of essential aircraft parts, ensuring operational readiness. The contract supports the maintenance and sustainment of military aircraft fleets. The geographic impact is primarily centered in Maryland, where the contractor is located. The contract supports jobs within the aerospace manufacturing and support sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Long contract duration may indicate a lack of market alternatives or potential for cost overruns if not managed effectively.
Absence of small business participation raises concerns about equitable distribution of contract value and potential subcontracting opportunities.

Positive Signals

Contract supports critical defense needs for aircraft parts, ensuring operational capabilities.
BAE SYSTEMS AEROSPACE SERVICES INC. is an established entity in the aerospace sector, suggesting potential for reliable service delivery.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such specialized components is often characterized by high barriers to entry, proprietary technology, and significant regulatory requirements. Comparable spending in this sector involves numerous contracts for aircraft maintenance, repair, and overhaul (MRO) services, as well as the production of specialized components for various military platforms.

Small Business Impact

The contract data indicates that this was not a small business set-aside, nor does it explicitly mention subcontracting goals for small businesses. This suggests that the prime contract was awarded to a large business. Further investigation would be needed to determine if any subcontracting opportunities were made available to small businesses within the aerospace supply chain, which could impact the broader small business ecosystem in this sector.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the relevant Department of Defense contracting officers. Accountability measures would include performance reviews, adherence to contract terms, and financial audits. Transparency is generally maintained through contract databases, though specific details of sole-source justifications and pricing negotiations may be less publicly accessible.

Related Government Programs

Aircraft Maintenance and Repair Contracts
Defense Supply Chain Management
Aerospace Component Manufacturing
Military Aircraft Sustainment Programs

Risk Flags

Sole-source award raises concerns about fair pricing and competition.
Long contract duration requires diligent oversight to prevent cost creep.
Lack of explicit small business subcontracting information warrants further review.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.0 million to BAE SYSTEMS AEROSPACE SERVICES INC.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS AEROSPACE SERVICES INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $13.0 million.

What is the period of performance?

Start: 2004-06-30. End: 2010-12-31.

What is the track record of BAE SYSTEMS AEROSPACE SERVICES INC. with the Department of Defense for similar contracts?

BAE SYSTEMS AEROSPACE SERVICES INC. has a significant history of contracting with the Department of Defense. While specific details for this particular contract are limited, the company is a major defense contractor known for providing a wide range of services and products, including aerospace components, support, and integration. Their track record generally involves large-scale, complex projects. A deeper dive into their past performance on similar firm-fixed-price contracts for aircraft parts, including any past performance issues or commendations, would provide a more comprehensive understanding of their reliability and capability in fulfilling this specific requirement.

How does the $13 million contract value compare to similar aircraft parts procurements by the DoD?

Benchmarking the $12.98 million contract value for aircraft parts is challenging without specific details on the types of parts and services procured. However, given the duration of over six years, the per-year cost is approximately $2.16 million. This figure needs to be compared against the market rates for the specific components and the complexity of their manufacturing or sourcing. Sole-source awards, by their nature, lack direct competitive benchmarks. Analysis of historical DoD procurements for comparable aircraft systems or components, especially those awarded through competitive processes, would be necessary to assess if this contract represents fair and reasonable pricing.

What are the primary risks associated with a sole-source award for critical aircraft parts?

The primary risks associated with a sole-source award for critical aircraft parts include a lack of price competition, which can lead to inflated costs for the government and taxpayers. There's also a potential for reduced innovation and quality if the contractor faces no competitive pressure. Furthermore, reliance on a single supplier can create supply chain vulnerabilities, especially if the contractor experiences production issues, financial instability, or geopolitical disruptions. The government's negotiating power is also diminished in a sole-source scenario, making robust oversight and detailed cost analysis crucial.

What is the expected program effectiveness given the contract's focus and duration?

The program's effectiveness hinges on the reliable and timely delivery of the specified aircraft parts. The contract's long duration (over six years) suggests a sustained need for these components, likely tied to the operational life or maintenance schedule of specific military aircraft. If BAE SYSTEMS AEROSPACE SERVICES INC. delivers high-quality parts consistently and on schedule, the program will be effective in supporting the DoD's aviation readiness. However, potential risks like supply chain disruptions or quality control issues could impact effectiveness. The firm-fixed-price nature of the contract aims to provide cost certainty, contributing to predictable program budgeting.

How has historical spending on aircraft parts by the DoD evolved, and does this contract align with trends?

The Department of Defense consistently allocates significant portions of its budget to aircraft parts, maintenance, and sustainment, reflecting the critical role of air power. Historical spending trends show a continuous demand for these components, driven by fleet size, operational tempo, and aging aircraft requiring upgrades or replacements. This $13 million contract, while substantial for a single award, is likely a component within the broader, multi-billion dollar annual spending on aviation sustainment. Its alignment with trends depends on whether it addresses a specific, ongoing need for parts that are either unique, difficult to source competitively, or part of a long-term support strategy for particular aircraft platforms.

What are the implications of the contract's fixed firm-price structure on cost control and contractor performance?

A firm-fixed-price (FFP) contract structure is designed to provide cost certainty for the government. Under an FFP agreement, the contractor assumes the primary risk for cost overruns, and the government pays a set price regardless of the contractor's actual costs. This incentivizes the contractor to manage costs efficiently and perform the work within the agreed-upon budget. For this contract, it means BAE SYSTEMS AEROSPACE SERVICES INC. is obligated to deliver the aircraft parts for the $12.98 million total amount. This structure can enhance cost control for the DoD, but it also means that any cost savings realized by the contractor are retained by them, rather than shared with the government.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

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: 5555 JOHN GIVENS ROAD, CRESTVIEW, FL, 01

Business Categories: Category Business, Hispanic American Owned Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline