DoD's $28.3M BAE Systems contract for aircraft parts shows limited competition and raises value questions

Contract Overview

Contract Amount: $28,310,324 ($28.3M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2019-08-20

End Date: 2024-06-28

Contract Duration: 1,774 days

Daily Burn Rate: $16.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BIG SAFARI

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $28.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BIG SAFARI Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The duration of the contract (1774 days) suggests a long-term need for these aircraft parts. 3. The fixed-price contract type shifts some risk to the contractor, but the lack of competition is a concern. 4. The specific parts manufactured fall under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing'. 5. The contract is a delivery order under a larger agreement, indicating a phased approach to procurement. 6. The award to BAE Systems, a major defense contractor, places this within the context of established industry players.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source award and lack of publicly available comparable pricing. The firm fixed-price nature provides some cost certainty, but the absence of competitive bidding means there's no market validation of the pricing. Without more data on the specific parts and their market rates, it's difficult to definitively assess if the government received optimal value for its investment. The total value of $28.3 million over nearly five years warrants scrutiny regarding cost-effectiveness.

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 among 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 that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium for these aircraft parts due to the absence of competitive pressure. The government's ability to negotiate the best possible price was limited in this sole-source scenario.

Public Impact

The U.S. Air Force benefits from the continued supply of critical aircraft parts, ensuring operational readiness. This contract supports the maintenance and sustainment of specific aircraft platforms within the Department of Defense. The geographic impact is primarily within New Hampshire, where BAE Systems' relevant facility is located. The contract supports jobs within the aerospace manufacturing sector, specifically in the production of aircraft components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for cost overruns if pricing is not rigorously managed without market benchmarks.
Dependence on a single supplier could create supply chain risks if not managed proactively.

Positive Signals

Firm fixed-price contract shifts some performance risk to the contractor.
BAE Systems is an established defense contractor with a track record in aerospace manufacturing.
The contract duration suggests a stable, long-term requirement, allowing for production planning.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for these components is characterized by high technical requirements, stringent quality control, and often long production lead times. Major defense contractors like BAE Systems dominate this space, often holding specialized knowledge or existing production lines for specific military platforms. Spending in this category is substantial, driven by the need to maintain and modernize aging fleets and develop new aerial capabilities.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the 'sb': false flag. Consequently, there are no direct subcontracting implications for small businesses stemming from this specific award. The focus is on a large, established defense contractor, suggesting that the primary manufacturing and supply chain activities will likely be managed internally or through BAE Systems' existing network of large suppliers, rather than through dedicated small business subcontracting programs.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. As a delivery order under a larger contract, its execution is monitored through established reporting mechanisms and performance reviews. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse, but day-to-day oversight focuses on delivery schedules, quality, and adherence to contract terms.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Agency (DLA) Procurement
Air Force Sustainment Programs
BAE Systems Defense Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for non-competitive pricing
Long contract duration without re-competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. 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 $28.3 million.

What is the period of performance?

Start: 2019-08-20. End: 2024-06-28.

What is the specific nature of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' being procured under this contract?

The data provided indicates the contract falls under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' This broad category encompasses the production of various components for aircraft, excluding engines, propellers, and landing gear. Examples could include structural components, avionics housings, interior fittings, or specialized hardware. Without more granular detail from the contract itself, the precise nature of the parts remains unspecified, but they are essential for the operation and maintenance of Air Force aircraft. The value of $28.3 million suggests a significant quantity or complexity of these parts over the contract's nearly five-year duration.

How does the sole-source nature of this award impact the potential cost-effectiveness for the government?

A sole-source award inherently limits cost-effectiveness by removing the competitive pressure that typically drives down prices. When multiple bidders vie for a contract, they are incentivized to offer their most competitive pricing to win the award. In a sole-source scenario, the government negotiates directly with a single provider, and the absence of alternatives means the provider has greater leverage. While the contract is firm fixed-price, which caps the government's exposure to cost increases, the initial price negotiated may be higher than what could have been achieved through competition. This necessitates robust negotiation and potentially extensive market research by the contracting agency to ensure a fair and reasonable price.

What are the potential risks associated with a sole-source contract of this duration and value?

The primary risks associated with a sole-source contract of this magnitude ($28.3 million over 1774 days) include potential overpricing due to lack of competition, and vendor lock-in. If the sole provider experiences production issues, supply chain disruptions, or decides to increase prices significantly (within the fixed-price limits), the government has limited recourse. There's also a risk that the contractor may not prioritize this contract as highly as they would a competitively won one. Furthermore, over a nearly five-year period, market conditions, technological needs, or alternative solutions might emerge, but the government is committed to this single provider, potentially missing out on more advantageous options.

Can the performance history of BAE Systems be considered a mitigating factor for the sole-source award?

BAE Systems is a large, established defense contractor with extensive experience in manufacturing aerospace components. Their track record includes delivering complex systems and parts to various military branches. This established performance history can be seen as a mitigating factor, suggesting a lower risk of non-performance or significant quality issues compared to an unknown or less experienced vendor. However, even reputable contractors can face challenges, and their past performance does not entirely negate the inherent disadvantages of a sole-source procurement, particularly concerning price competitiveness and the lack of alternative sourcing options.

What is the historical spending context for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' within the Department of Defense?

Spending on 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' within the Department of Defense is substantial and ongoing, reflecting the vast size and operational tempo of the U.S. Air Force, Navy, and Army aviation assets. This category represents a critical segment of the defense industrial base, ensuring the sustainment and readiness of aircraft fleets. Historical spending patterns show consistent demand for these parts, driven by maintenance schedules, upgrades, and the operational life cycles of various aircraft platforms. While specific figures fluctuate based on modernization programs and budget allocations, the overall need for these components remains a significant and predictable expenditure for the DoD.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT 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: 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: $28,310,324

Exercised Options: $28,310,324

Current Obligation: $28,310,324

Actual Outlays: $1,448,177

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $501,086

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