DoD awards $15.77M for Digital Electronics Warfare System, raising value-for-money questions

Contract Overview

Contract Amount: $15,774,244 ($15.8M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2023-08-19

End Date: 2026-03-31

Contract Duration: 955 days

Daily Burn Rate: $16.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DIGITAL ELECTRONICS WARFARE SYSTEM

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $15.8 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: DIGITAL ELECTRONICS WARFARE SYSTEM Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns. 2. Limited competition raises concerns about price discovery and potential overpayment. 3. The contract duration of 955 days warrants scrutiny for efficient project execution. 4. Repair and maintenance services for electronic equipment are critical but require cost-effective delivery. 5. The absence of small business participation needs further investigation. 6. The contract's value, while significant, requires benchmarking against similar EW system procurements.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure presents a risk for cost control, as the contractor is reimbursed for all allowable costs plus a fixed fee. Without strong oversight, this can incentivize higher spending. Benchmarking this $15.77 million award against similar Digital Electronics Warfare System contracts is crucial to determine if the pricing is competitive. The duration of nearly three years also suggests a need to monitor progress closely to ensure timely and efficient delivery of services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating a lack of competition. While sole-source awards can be justified for specialized capabilities or urgent needs, they limit the government's ability to secure the best possible pricing through a competitive bidding process. The absence of multiple bidders means that the government did not benefit from the price discovery mechanisms inherent in open competition.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the government may not be leveraging competitive pressures to drive down prices.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which will receive enhanced digital electronics warfare capabilities. The services delivered are critical for maintaining and upgrading sophisticated electronic warfare systems, ensuring operational readiness. The contract is geographically focused on New Hampshire, potentially impacting the local economy and workforce in that region. The contract may support a specialized technical workforce skilled in electronic systems repair and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type increases risk of cost overruns.
Sole-source award limits competitive pricing and potential taxpayer savings.
Lack of small business involvement may miss opportunities for cost-effective solutions and economic inclusion.
Contract duration of over 2.5 years requires diligent performance monitoring.
The specific nature of 'Other Electronic and Precision Equipment Repair and Maintenance' can be prone to scope creep if not tightly managed.

Positive Signals

Award to a known entity (BAE SYSTEMS) may indicate a level of trust and established performance.
The contract addresses critical defense capabilities (Digital Electronics Warfare System).
Fixed fee component in the contract structure provides some predictability on contractor profit.
The contract is for delivery orders, suggesting a phased approach to service delivery.

Sector Analysis

The defense electronics sector is highly specialized, focusing on systems that detect, jam, or deceive enemy radar and other electronic signals. This contract for a Digital Electronics Warfare System falls within this critical niche. The market is characterized by high barriers to entry due to complex technology requirements and significant R&D investment. Spending in this area is driven by evolving threats and the need for technological superiority. Comparable spending benchmarks would likely involve other EW system development, integration, or sustainment contracts within the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). The absence of small business participation, either as prime contractors or through subcontracting plans, means that opportunities for innovative and potentially cost-effective solutions from smaller firms may have been missed. It also limits the direct economic impact on the small business ecosystem within this specialized defense sector.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. Given the sole-source nature and cost-plus-fixed-fee structure, robust oversight is essential to monitor costs, ensure performance, and prevent scope creep. Transparency will depend on the agency's reporting practices and the availability of contract performance data. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Electronic Warfare Systems
Defense Electronics Procurement
Air Force Systems Command Contracts
Digital Systems Maintenance
Precision Equipment Repair

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns
Lack of small business participation
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.8 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. DIGITAL ELECTRONICS WARFARE SYSTEM

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 $15.8 million.

What is the period of performance?

Start: 2023-08-19. End: 2026-03-31.

What is BAE Systems' track record with similar sole-source, cost-plus-fixed-fee contracts for electronic warfare systems?

BAE Systems is a major defense contractor with extensive experience in electronic warfare systems. Analyzing their past performance on similar sole-source, cost-plus-fixed-fee contracts would involve reviewing contract award histories, performance evaluations (e.g., CPARS reports), and any documented cost overruns or schedule delays. While specific details are often proprietary, a review of publicly available data and contract databases can reveal patterns. For instance, if BAE Systems has a history of delivering such systems on time and within projected costs under similar contract types, it would mitigate some of the inherent risks. Conversely, a history of significant cost growth or performance issues would heighten concerns about the current award's value and execution.

How does the $15.77 million value compare to similar Digital Electronics Warfare System procurements?

Benchmarking this $15.77 million award requires identifying comparable contracts for Digital Electronics Warfare Systems. Factors to consider include the scope of work (e.g., development, sustainment, upgrade), system complexity, contract duration, and the specific capabilities offered. Without access to a comprehensive database of EW system contracts, a precise comparison is difficult. However, if similar systems of comparable complexity and duration were procured competitively for significantly less, or if this contract represents a substantial increase over previous similar awards without clear justification (e.g., technological advancements, inflation), it would indicate potential value-for-money concerns. The sole-source nature further complicates direct comparison, as competitive bids often drive prices down.

What are the specific risks associated with a sole-source, cost-plus-fixed-fee contract for EW systems?

The primary risks of a sole-source, cost-plus-fixed-fee (CPFF) contract for Electronic Warfare (EW) systems are amplified due to the complexity and critical nature of the technology. Sole-sourcing eliminates competitive pressure, potentially leading to inflated prices and reduced incentive for the contractor to innovate or optimize costs. The CPFF structure reimburses the contractor for allowable costs plus a fixed fee, which can incentivize cost overruns if not rigorously managed; the contractor has less financial risk for exceeding initial cost estimates. For EW systems, which are often cutting-edge and subject to rapid technological change, scope creep is also a significant risk. Without strong government oversight, the contractor might expand the project's scope beyond the original intent, further increasing costs and potentially delaying delivery of essential capabilities.

What is the expected program effectiveness and impact of this Digital Electronics Warfare System contract?

The expected program effectiveness hinges on the successful delivery and integration of the Digital Electronics Warfare System. This system is likely intended to enhance the U.S. Air Force's ability to detect, analyze, and counter adversary electronic threats, thereby improving situational awareness and mission success rates. Its impact could include providing aircrews with a critical advantage in contested electromagnetic environments, protecting aircraft from electronic attack, and enabling more effective electronic support measures. The effectiveness will be measured by the system's performance against specified requirements, its reliability, and its contribution to overall force protection and mission accomplishment. Successful implementation of this contract should lead to modernized EW capabilities crucial for maintaining air superiority.

How has spending on electronic warfare systems by the Department of Defense trended in recent years?

Spending on electronic warfare (EW) systems by the Department of Defense has generally trended upwards in recent years, reflecting a growing recognition of the importance of the electromagnetic spectrum in modern warfare. As adversaries develop increasingly sophisticated EW capabilities, the U.S. military is investing heavily in maintaining its own technological edge. This includes funding for research, development, procurement, and sustainment of advanced EW platforms and technologies across all branches. Factors driving this trend include the proliferation of advanced radar, communication, and missile systems, as well as the increasing reliance on networked operations. Consequently, contracts for EW systems, like the one awarded to BAE Systems, are common and represent a significant portion of the defense budget allocated to modernization and readiness.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

Address: 65 SPIT BROOK RD, NASHUA, NH, 02

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: $15,774,244

Exercised Options: $15,774,244

Current Obligation: $15,774,244

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $1,127,325

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852319D0001

IDV Type: IDC

Timeline