DoD's $2.7M contract for U-2 EW suite support awarded to BAE Systems, raising value-for-money questions

Contract Overview

Contract Amount: $27,371,100 ($27.4M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2023-06-29

End Date: 2025-08-15

Contract Duration: 778 days

Daily Burn Rate: $35.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUPPORT AND SUSTAINMENT OF 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 $27.4 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: SUPPORT AND SUSTAINMENT OF THE U-2 AN/ALQ-221 ELECTRONIC WARFARE SUITE. Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract duration of over two years suggests a need for sustained support for critical EW systems. 3. Focus on electronic warfare indicates a high-priority defense capability requiring specialized expertise. 4. The 'Cost Plus Fixed Fee' pricing structure can incentivize cost overruns if not closely monitored. 5. Lack of competition raises concerns about whether the government is achieving optimal value. 6. The specific EW suite supported is crucial for U-2 reconnaissance missions.

Value Assessment

Rating: questionable

The contract's value-for-money is difficult to assess without competitive benchmarks. Awarded on a sole-source basis, it's challenging to determine if the fixed fee adequately reflects market rates for similar electronic warfare support services. The Cost Plus Fixed Fee (CPFF) structure, while common for complex R&D or services where costs are uncertain, carries inherent risks of cost escalation if not rigorously managed. Comparing this to other EW support contracts for similar platforms would be necessary for a more definitive value assessment.

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 bypasses the standard competitive bidding process, which typically involves multiple vendors vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they significantly reduce price discovery and can lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not be benefiting from the most cost-effective solution available in the market. Without competing bids, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

The U.S. Air Force benefits from the continued operational readiness of its U-2 reconnaissance aircraft. Essential electronic warfare capabilities are maintained, enhancing the survivability and effectiveness of the U-2 fleet. The contract supports specialized engineering and sustainment services critical for advanced defense systems. Personnel in New Hampshire are likely engaged in the technical support and integration of these complex systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not closely monitored.
Lack of transparency in pricing due to sole-source nature makes value assessment difficult.
Dependence on a single contractor for critical EW suite support poses a long-term risk.

Positive Signals

Contract supports a critical national defense asset (U-2 aircraft).
BAE Systems is a known entity in defense electronics, suggesting potential for reliable service.
The contract ensures continued operational capability for vital intelligence, surveillance, and reconnaissance (ISR) missions.

Sector Analysis

The defense electronics sector is characterized by high barriers to entry due to specialized knowledge, R&D investment, and stringent security requirements. Contracts for electronic warfare (EW) systems are particularly critical, as EW capabilities are vital for modern military operations, including threat detection, jamming, and electronic countermeasures. The market for EW support is often dominated by a few large defense contractors like BAE Systems, which possess the necessary expertise and security clearances. Spending in this area is driven by evolving threat landscapes and the need to maintain technological superiority.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the 'ss' and 'sb' fields being false. The prime contractor, BAE Systems, is a large defense corporation. There is no explicit information provided regarding subcontracting plans to small businesses. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem for this particular contract is likely minimal, though BAE Systems may engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force and the Department of Defense. The 'Cost Plus Fixed Fee' structure necessitates robust financial oversight to ensure costs remain within reasonable bounds and that the fixed fee is justified. Accountability measures would include performance reviews, adherence to delivery schedules, and quality control of the support provided. Transparency is limited due to the sole-source nature, but contract performance data and financial expenditures are typically subject to internal DoD review and potentially Inspector General audits.

Related Government Programs

U-2 Aircraft Sustainment
Electronic Warfare Systems
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Programs
Aerospace Engineering Services
Department of Defense Procurement

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Potential for cost overruns
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.4 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. SUPPORT AND SUSTAINMENT OF 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 $27.4 million.

What is the period of performance?

Start: 2023-06-29. End: 2025-08-15.

What is the track record of BAE Systems in supporting U-2 electronic warfare systems?

BAE Systems Information and Electronic Systems Integration Inc. has a significant presence in the defense electronics sector, including electronic warfare capabilities. While specific details on their historical support for the U-2 AN/ALQ-221 suite are not provided in this data snippet, the company is a major defense contractor known for developing and integrating complex electronic systems for various military platforms. Their extensive experience in EW suggests a capacity to provide the required support. However, a deeper dive into their performance on similar contracts, including any past issues or commendations related to EW system sustainment, would be necessary for a comprehensive assessment of their track record for this specific contract.

How does the pricing of this contract compare to similar EW support contracts?

Direct comparison of pricing is challenging due to the sole-source nature of this contract and the absence of specific cost breakdowns. The 'Cost Plus Fixed Fee' (CPFF) structure means the final cost is not predetermined but is based on allowable costs plus a negotiated fixed fee. Without competitive bids, it's difficult to benchmark the 'fixed fee' against market rates for similar EW support services. To assess value, one would need to compare the total contract value and duration against contracts for EW suite support on comparable aircraft platforms, considering factors like system complexity, required labor hours, and the level of technical expertise involved. The $2.74 million total value over approximately 26 months (from June 2023 to August 2025) provides a rough annual figure, but its reasonableness hinges on the scope of work.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to inflated prices and reduced incentive for cost efficiency. Taxpayers may be overpaying for the services rendered. Another significant risk is vendor lock-in; the government becomes dependent on BAE Systems for the sustainment of this specific EW suite, potentially limiting future flexibility or the ability to switch to more cost-effective solutions. Furthermore, the CPFF contract type carries the risk of cost overruns if the contractor's expenses exceed initial estimates, although the fixed fee component aims to cap the profit. Robust oversight is crucial to mitigate these risks.

How effective is the U-2 AN/ALQ-221 Electronic Warfare Suite, and what is its role?

The U-2 AN/ALQ-221 Electronic Warfare (EW) Suite is a critical component for the U-2 Dragon Lady reconnaissance aircraft, enhancing its survivability and operational effectiveness. EW systems are designed to detect, analyze, and counter enemy radar and electronic threats. The AN/ALQ-221 likely provides capabilities such as radar warning, electronic support measures (ESM), and potentially electronic countermeasures (ECM). In the context of the U-2, which operates at high altitudes for intelligence, surveillance, and reconnaissance (ISR) missions, maintaining the integrity and functionality of its EW suite is paramount. This suite helps the aircraft navigate through contested airspace by identifying threats and enabling evasive maneuvers or electronic deception, thereby ensuring the successful completion of its ISR missions and the safety of its pilot.

What is the historical spending trend for supporting the U-2's electronic warfare systems?

Historical spending data for the U-2's electronic warfare systems, specifically the AN/ALQ-221 suite, is not detailed in the provided information. However, the U-2 program itself has been in service for decades, undergoing continuous upgrades and sustainment. Spending on EW systems typically increases as technology evolves and threats become more sophisticated. Given the U-2's role in high-risk ISR missions, consistent investment in its EW capabilities is expected. To understand historical trends, one would need to analyze past contracts awarded for EW support, upgrades, and maintenance for the U-2 fleet over its operational lifespan, looking at both sole-source and potentially competed efforts.

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

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

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: $32,260,946

Exercised Options: $32,260,946

Current Obligation: $27,371,100

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $607,175

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852820D0009

IDV Type: IDC

Timeline