DoD's $30M BAE Systems contract for aircraft parts saw no competition, raising value concerns

Contract Overview

Contract Amount: $30,194,746 ($30.2M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2017-05-26

End Date: 2022-01-31

Contract Duration: 1,711 days

Daily Burn Rate: $17.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACAT III BIG SAFARI

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $30.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: ACAT III BIG SAFARI Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. A significant duration of over 5 years suggests a long-term need for these specialized aircraft parts. 3. The lack of competition is a key risk indicator for potential overpayment and reduced value for money. 4. Performance context is limited due to the sole-source nature, making direct comparisons difficult. 5. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector. 6. The firm fixed-price contract type offers some cost certainty but doesn't mitigate the lack of competition.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the absence of competitive bids. Without comparison to other offers, it's difficult to ascertain if the $30.2 million price reflects fair market value. The firm fixed-price structure provides cost certainty for the government, but the lack of competition means taxpayers may not have received the best possible price. Further analysis would require access to internal cost data or comparable sole-source awards for similar specialized aircraft components.

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. The Department of the Air Force did not solicit bids from multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition means there was no opportunity for price negotiation or comparison among different suppliers, which can impact the final price paid.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can lead to higher prices and reduced overall value for government spending.

Public Impact

The Department of Defense, specifically the Air Force, is the primary beneficiary, receiving critical aircraft parts. This contract supports the maintenance and operational readiness of Air Force aircraft. The geographic impact is primarily within New Hampshire, where BAE Systems' facility is located. Workforce implications include continued employment for those involved in manufacturing and supplying these specialized parts at BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer dollars.
Sole-source awards can create vendor lock-in, limiting future flexibility and potentially increasing long-term costs.
Without competitive benchmarking, assessing the true cost-effectiveness of this contract is difficult.
The extended contract duration could mask inefficiencies if not closely monitored.
Transparency is limited due to the non-competitive nature of the award.

Positive Signals

Firm fixed-price contract type provides budget certainty for the government.
BAE Systems is a known entity within the defense sector, suggesting a degree of reliability.
The contract supports critical defense needs for the Air Force.

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry, a segment of the broader aerospace and defense sector. This sector is characterized by high technological requirements, stringent quality standards, and significant government procurement. The market size for aircraft parts manufacturing is substantial, driven by military and commercial aviation needs. This specific contract likely addresses a niche requirement for specialized components, where BAE Systems may hold unique manufacturing capabilities or intellectual property, justifying a sole-source award.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting plans for small businesses. This suggests that the primary awardee, BAE Systems, will likely fulfill the contract requirements directly. Consequently, the direct impact on the small business ecosystem through this specific contract is likely minimal, although BAE Systems may engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. As a sole-source award, scrutiny might be higher to ensure the necessity and fair pricing. Accountability measures would involve performance monitoring against contract terms and delivery schedules. Transparency is limited due to the non-competitive nature, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Component Procurement
Defense Logistics Agency Contracts
Air Force Materiel Command Spending
BAE Systems Defense Contracts
Sole-Source Defense Acquisitions

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited value-for-money assessment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. ACAT III BIG SAFARI

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 $30.2 million.

What is the period of performance?

Start: 2017-05-26. End: 2022-01-31.

What is BAE Systems' track record with the Department of Defense for similar aircraft parts?

BAE Systems Information and Electronic Systems Integration Inc. has a substantial history of contracting with the Department of Defense. While specific data on their track record for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' in sole-source contexts is not detailed here, the company is a major defense contractor across various platforms and systems. Their extensive involvement suggests a familiarity with DoD requirements and processes. However, the lack of competition on this particular $30.2 million contract means that direct comparisons of their performance and pricing against other potential suppliers for these specific parts are not publicly available, making a precise assessment of their track record on this specific item challenging without further internal DoD analysis.

How does the $30.2 million value compare to market rates for similar aircraft parts?

Directly comparing the $30.2 million value to market rates for similar aircraft parts is difficult because this contract was awarded on a sole-source basis. Without competitive bids, there is no benchmark price established through market forces. Typically, government agencies would conduct market research or request quotes to establish a fair and reasonable price, especially for sole-source procurements. However, the absence of competition means that the price paid might be higher than if multiple vendors had vied for the contract. To assess value, one would need to compare this contract's unit prices (if available) to historical sole-source awards for comparable items or to prices charged by BAE Systems on competitively awarded contracts, if any exist.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of $30.2 million include potential overpricing and reduced value for money. Without competition, the government loses the leverage to negotiate the best possible price, potentially leading to inflated costs. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, limiting future flexibility and potentially increasing long-term costs. Furthermore, the lack of competitive pressure might reduce incentives for the contractor to innovate or improve efficiency. Oversight becomes critical to ensure the necessity of the sole-source justification and the reasonableness of the price.

How effective is the firm fixed-price contract type in mitigating risks for this specific award?

The firm fixed-price (FFP) contract type is effective in providing cost certainty for the government, as the contractor assumes the risk of cost overruns. For this $30.2 million award, the FFP structure means the total price is fixed, regardless of the contractor's actual costs. This mitigates the risk of unexpected cost increases for the Air Force. However, the FFP structure does not address the fundamental risk associated with the sole-source nature of the award: the potential for an inflated initial price due to the lack of competition. While cost certainty is achieved, value-for-money is not inherently guaranteed without competitive pressure.

What are the historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of the Air Force?

Historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of the Air Force are substantial, reflecting the continuous need for maintenance, repair, and upgrade of its vast aircraft fleet. While the specific total for this category fluctuates annually based on operational tempo, modernization programs, and budget allocations, it represents a significant portion of the Air Force's procurement budget. Contracts in this category often involve specialized components, proprietary designs, or long lead times, which can sometimes lead to sole-source or limited-competition awards, as seen in this BAE Systems case. Analyzing historical data would reveal trends in contract values, durations, and competition levels within this sub-sector.

What oversight mechanisms are in place for sole-source defense contracts of this size?

Oversight mechanisms for sole-source defense contracts of this size are typically robust, though they vary depending on the specific agency and contract type. For a contract like this ($30.2 million), the Department of the Air Force would likely employ several layers of review. This includes justification and approval (J&A) processes for the sole-source determination, requiring detailed documentation of why competition is not feasible. Program managers and contracting officers are responsible for monitoring performance, ensuring compliance with contract terms, and verifying the reasonableness of the price through market research or cost analysis. Contract audit agencies may also be involved. Furthermore, the Inspector General's office provides an independent oversight function to detect and prevent fraud, waste, and abuse.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

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: Compagnie DE Developpement DE L'eau S.A.

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

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

Financial Breakdown

Contract Ceiling: $30,194,746

Exercised Options: $30,194,746

Current Obligation: $30,194,746

Subaward Activity

Number of Subawards: 49

Total Subaward Amount: $20,399,745

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862016G3028

IDV Type: BOA

Timeline