Air Force awards $26.8M for U-2 electronic warfare suite upgrades, BAE Systems secures sole-source contract

Contract Overview

Contract Amount: $26,810,731 ($26.8M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2019-11-06

End Date: 2023-06-30

Contract Duration: 1,332 days

Daily Burn Rate: $20.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LOW BAND PROCESSOR UPGRADE PRODUCTION FOR THE U-2 AN/ALQ-221 ELECTRONIC WARFARE SUITE.

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $26.8 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: LOW BAND PROCESSOR UPGRADE PRODUCTION FOR THE U-2 AN/ALQ-221 ELECTRONIC WARFARE SUITE. Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Focus on upgrading the U-2's electronic warfare suite suggests a need for enhanced threat detection and response capabilities. 3. The contract's duration of over three years indicates a significant, long-term modernization effort. 4. Cost-plus-fixed-fee pricing structure may incentivize cost overruns if not closely monitored. 5. The absence of small business set-asides raises questions about broader economic participation. 6. This award falls under engineering services for defense, a critical but often high-cost sector.

Value Assessment

Rating: fair

Benchmarking the value of this specific U-2 electronic warfare suite upgrade is challenging without detailed cost breakdowns and comparisons to similar EW system modernization efforts. The cost-plus-fixed-fee (CPFF) contract type, while common for complex R&D or specialized services, carries inherent risks of cost escalation if not managed rigorously. The total award of $26.8 million over approximately three years suggests a substantial investment, but its true value-for-money depends heavily on the effectiveness of the upgrades and the pricing of labor and materials.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, BAE Systems Information and Electronic Systems Integration Inc., was solicited. This approach is typically justified when a unique capability or proprietary technology is required, or when there is insufficient time to conduct a full and open competition. The lack of competition means that the government did not benefit from the price discovery and potential cost savings that multiple bidders could have offered.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, there is less assurance that the price reflects the lowest reasonable cost for the required services and technology.

Public Impact

The primary beneficiary is the U.S. Air Force, which will receive upgraded electronic warfare capabilities for its U-2 reconnaissance aircraft. This upgrade aims to enhance the survivability and effectiveness of the U-2 fleet in contested environments. The services delivered include production and integration of a low band processor upgrade for the AN/ALQ-221 EW suite. The geographic impact is primarily within the defense industrial base, with BAE Systems' operations likely centered in New Hampshire. Workforce implications include specialized engineering and technical roles within BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if cost controls are not robust.
Lack of small business participation may limit opportunities for smaller innovative firms in the defense supply chain.

Positive Signals

Addresses critical modernization needs for a long-standing intelligence, surveillance, and reconnaissance (ISR) platform (U-2).
BAE Systems is a major defense contractor with established expertise in electronic warfare systems.
The contract specifies a clear deliverable: the AN/ALQ-221 EW suite upgrade.

Sector Analysis

This contract falls within the broader defense electronics sector, specifically focusing on electronic warfare (EW) systems. The EW market is highly specialized, involving technologies designed to detect, jam, and deceive enemy radar and communication systems. The U-2, while an older platform, remains a valuable ISR asset, and its modernization, particularly in EW capabilities, is crucial for maintaining operational relevance against evolving threats. Spending in this niche often involves significant R&D and integration costs, with major defense contractors like BAE Systems dominating the landscape.

Small Business Impact

This contract was not competed with a small business set-aside, nor does it appear to have specific subcontracting goals for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct opportunities for small businesses are likely limited to those that BAE Systems may choose to engage as subcontractors. This approach may not maximize the participation of the small business defense industrial base in this specific upgrade effort.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, scrutiny on pricing and performance is critical. The Cost Plus Fixed Fee (CPFF) structure necessitates close monitoring of expenditures to ensure costs remain reasonable and within the fixed fee parameters. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations into potential fraud, waste, or abuse.

Related Government Programs

U-2 Aircraft Modernization Programs
AN/ALQ-221 Electronic Warfare System
Defense Electronic Warfare Systems Procurement
Air Force ISR Platform Upgrades
BAE Systems Defense Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.8 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. LOW BAND PROCESSOR UPGRADE PRODUCTION FOR THE U-2 AN/ALQ-221 ELECTRONIC WARFARE SUITE.

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 $26.8 million.

What is the period of performance?

Start: 2019-11-06. End: 2023-06-30.

What is BAE Systems' track record with the AN/ALQ-221 EW suite or similar electronic warfare systems for the U-2 or other platforms?

BAE Systems has a long history and significant expertise in developing and integrating electronic warfare systems. They are a primary contractor for various EW suites, including the AN/ALQ-221, which has been deployed on multiple platforms. Their experience with the U-2 specifically, and with EW upgrades in general, suggests a strong technical capability. However, the specific performance metrics and successful integration history for this particular 'low band processor upgrade' would require deeper analysis of past performance reports and technical documentation. Without access to those details, we rely on their general reputation and established role as a key supplier in this domain.

How does the $26.8 million cost compare to similar EW suite upgrade contracts for reconnaissance aircraft?

Directly comparing the $26.8 million cost is difficult without knowing the exact scope, technological advancements, and duration of comparable contracts. EW suite upgrades can vary significantly in complexity and price. Contracts for similar modernization efforts on platforms like the RC-135 or P-8 Poseidon, which also involve advanced sensor and EW systems, could range from tens to hundreds of millions of dollars depending on the specific capabilities being added or upgraded. The U-2's unique operational niche and the specific nature of the 'low band processor upgrade' mean that this figure should be assessed against other specialized EW enhancements rather than broad platform overhauls. The sole-source nature also complicates direct cost benchmarking.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for EW system upgrades?

The primary risks with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved through bidding. The government lacks the benefit of comparing multiple proposals to ensure the best value. Secondly, the Cost-Plus-Fixed-Fee (CPFF) pricing model, while providing flexibility for evolving requirements, can incentivize the contractor to incur higher costs, as their profit is a fixed amount regardless of the final cost. This necessitates robust government oversight to manage scope creep, control expenditures, and ensure efficient execution to prevent cost overruns beyond the anticipated total.

How effective is the AN/ALQ-221 EW suite, and what improvements does this 'low band processor upgrade' aim to achieve?

The AN/ALQ-221 is designed to provide threat warning and situational awareness by detecting and identifying radar signals. It is a key component of the U-2's survivability measures. The 'low band processor upgrade' specifically targets improvements in detecting and processing signals within lower frequency bands, which are increasingly used for modern radar and communication systems. This upgrade likely aims to enhance the system's ability to detect a wider range of threats, improve the accuracy of threat identification, and provide more timely and actionable intelligence to the U-2 crew, thereby increasing the platform's effectiveness and survivability in sophisticated threat environments.

What has been the historical spending trend for EW system upgrades on the U-2 program?

Analyzing historical spending trends for EW system upgrades on the U-2 requires access to detailed contract databases and program history. However, it is generally understood that maintaining and upgrading aging platforms like the U-2 involves continuous investment in various subsystems, including avionics, sensors, and electronic warfare capabilities. Spending on EW upgrades would likely fluctuate based on threat evolution, technological advancements, and specific program priorities. Given the U-2's long service life and its critical role, consistent, albeit potentially variable, investment in its EW capabilities would be expected over the decades. This $26.8 million award represents a specific, recent investment in that ongoing modernization effort.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA852819R0021

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

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

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: $26,810,731

Exercised Options: $26,810,731

Current Obligation: $26,810,731

Subaward Activity

Number of Subawards: 35

Total Subaward Amount: $5,675,489

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852816D0009

IDV Type: IDC

Timeline