DoD's $36.8M BAE Systems contract for aircraft parts lacked competition, raising cost concerns

Contract Overview

Contract Amount: $36,834,158 ($36.8M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2019-04-23

End Date: 2021-09-30

Contract Duration: 891 days

Daily Burn Rate: $41.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

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 $36.8 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BIG SAFARI Key points: 1. The contract's value of $36.8 million represents a significant investment in aircraft parts. 2. Sole-source procurement limits opportunities for competitive pricing and potentially increases costs. 3. The cost-plus-fixed-fee structure may incentivize higher spending by the contractor. 4. Performance duration of 891 days suggests a substantial, ongoing need for these parts. 5. The contract falls under the 'Other Aircraft Parts' manufacturing category. 6. Lack of competition is a key risk indicator for potential overspending.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the $36.8 million represents a fair market price. The cost-plus-fixed-fee (CPFF) contract type, while sometimes necessary for complex or undefined scopes, can lead to higher overall costs compared to fixed-price contracts if not managed rigorously. The absence of comparable competitive contracts makes a direct value-for-money assessment difficult, but the lack of competition inherently raises concerns about optimal pricing.

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 possesses the necessary capabilities, technology, or when urgency dictates a rapid award. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than if multiple offers had been solicited.

Taxpayer Impact: Taxpayers may have paid a premium for this contract due to the absence of competitive pressure. Without competing offers, there is less assurance that the price reflects the lowest possible cost for the required parts.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially military personnel relying on operational aircraft. The contract delivers essential aircraft parts and auxiliary equipment, crucial for maintaining fleet readiness. The geographic impact is primarily within the United States, supporting Air Force operations. Workforce implications include supporting jobs at BAE Systems and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee contract type can lead to cost overruns if not managed closely.
Lack of transparency in pricing due to non-competitive award.

Positive Signals

BAE Systems is a known defense contractor with established capabilities.
The contract addresses a specific need for aircraft parts, indicating a clear requirement.
The duration suggests a sustained need, potentially leading to economies of scale if managed well.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and often long procurement cycles. Contracts for aircraft parts are critical for maintaining military readiness and operational capabilities. Spending in this sub-sector can fluctuate based on modernization programs, fleet age, and geopolitical demands. Comparable spending benchmarks are difficult to establish precisely without knowing the specific parts, but the overall defense procurement budget runs into hundreds of billions annually, with a substantial portion allocated to aircraft and related components.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like BAE Systems suggests that the primary focus was on capability and existing relationships rather than fostering small business participation through set-asides. This could limit opportunities for small businesses to contribute directly to this specific procurement, although they may be part of BAE's 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. The cost-plus-fixed-fee structure necessitates robust financial oversight to ensure costs are reasonable and allocable. Inspector General (IG) investigations could be initiated if allegations of fraud, waste, or abuse arise. Transparency is limited by the sole-source nature, but contract modifications, performance reports, and payment data would likely be subject to internal review and potentially Freedom of Information Act (FOIA) requests.

Related Government Programs

Aircraft Maintenance and Repair
Defense Procurement
Aerospace Manufacturing
Military Logistics

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.8 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 $36.8 million.

What is the period of performance?

Start: 2019-04-23. End: 2021-09-30.

What is BAE Systems' track record with similar sole-source contracts for aircraft parts within the Department of Defense?

BAE Systems Information and Electronic Systems Integration Inc. has a significant history of contracting with the Department of Defense across various platforms and systems. While specific data on their sole-source contracts for 'Other Aircraft Parts' is not detailed here, their extensive experience suggests a capacity to fulfill complex requirements. However, sole-source awards, by definition, lack direct performance comparisons against competitors for that specific contract. Analysis of their broader contract portfolio would be needed to assess overall performance trends, on-time delivery rates, and cost control effectiveness across different contract types and scopes. Past performance reviews and contract award histories available through federal procurement databases would provide a more comprehensive picture of their reliability and efficiency in delivering defense-related goods and services.

How does the cost-plus-fixed-fee (CPFF) structure typically impact the final cost compared to other contract types for aircraft parts?

The Cost-Plus-Fixed-Fee (CPFF) contract type is designed to cover the contractor's actual costs plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves significant uncertainty, such as in research and development or complex system integration. For aircraft parts, if the requirements are well-defined, a fixed-price contract (like Firm-Fixed-Price or Fixed-Price Incentive) generally offers better value for the government, as it places the cost risk on the contractor and incentivizes efficiency. With CPFF, the contractor has less financial incentive to control costs beyond what is necessary to complete the work, as their costs are reimbursed. While the fixed fee provides some predictability, the total cost can escalate if actual costs are higher than anticipated. Rigorous government oversight is crucial in CPFF contracts to ensure costs are reasonable and allocable.

What are the potential risks associated with awarding a $36.8 million contract on a sole-source basis for aircraft parts?

The primary risk of a sole-source award for a contract valued at $36.8 million is the potential for inflated pricing due to the lack of competitive pressure. Without multiple bidders vying for the contract, the government may not achieve the most favorable pricing. This can lead to inefficient use of taxpayer funds. Additionally, sole-source awards can stifle innovation and limit the government's access to a broader range of solutions or potentially more cost-effective technologies that might be offered by other capable vendors. There's also a risk that the contractor may have less incentive to be highly efficient or to proactively seek cost-saving measures, as the government bears the cost of performance. Finally, it raises questions about the thoroughness of market research conducted to ensure no other viable sources existed.

What is the typical duration for contracts of this nature (aircraft parts) within the Department of Defense, and how does this contract's duration compare?

Contracts for aircraft parts within the Department of Defense can vary significantly in duration, depending on whether they are for immediate needs, long-term sustainment, or specific modernization programs. Contracts for spare parts can range from a few months for urgent requirements to several years for comprehensive sustainment packages. A duration of 891 days (approximately 2.5 years) for a $36.8 million contract for 'Other Aircraft Parts' suggests a substantial, ongoing requirement for sustainment or a significant upgrade/modification program. This duration is not unusually long for defense sustainment contracts, which often span multiple years to ensure continuous operational readiness. However, the length underscores the importance of ensuring cost-effectiveness and performance throughout the contract's life.

How does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' classification influence the analysis of this contract's value and competition?

The classification 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' is broad and indicates that the contract covers a range of components not specifically categorized elsewhere. This broadness can contribute to the difficulty in assessing value and competition. It suggests the parts might be specialized or custom-made, potentially limiting the number of qualified manufacturers. If the parts are highly specialized, it could justify a sole-source award if only one entity possesses the unique design, tooling, or certification. However, it also means that a thorough market analysis is critical to ensure that the scope isn't so broad that it unnecessarily excludes potential competitors who could supply subsets of these parts or comparable alternatives. The value analysis is impacted because 'parts' can range from simple fasteners to complex avionics, each with different market dynamics and pricing structures.

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: 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, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $37,384,158

Exercised Options: $37,384,158

Current Obligation: $36,834,158

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $3,238,218

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