DoD's $1.7B BAE Systems contract for aircraft parts saw no competition, raising value concerns

Contract Overview

Contract Amount: $17,017,515 ($17.0M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2019-10-01

End Date: 2022-02-28

Contract Duration: 881 days

Daily Burn Rate: $19.3K/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 $17.0 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BIG SAFARI Key points: 1. The contract's value of $1.7 billion over 881 days warrants scrutiny due to the lack of competitive bidding. 2. Sole-source awards can lead to higher prices and reduced innovation compared to open competition. 3. The 'Other Aircraft Parts' NAICS code suggests a broad scope, making direct cost comparisons difficult without further detail. 4. Performance period of nearly 2.5 years provides a substantial timeframe for delivery and potential cost overruns. 5. The Cost Plus Fixed Fee (CPFF) contract type shifts some risk to the government, requiring careful oversight. 6. The absence of small business set-asides or participation is noted, potentially limiting broader economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this $1.7 billion contract is challenging due to its sole-source nature and broad classification. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The CPFF structure means the government bears the risk of cost overruns beyond the fixed fee, which can inflate the total expenditure. Comparing this to similar sole-source awards for specialized aircraft components would be necessary for a more precise value assessment, but such data is not readily available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning BAE Systems was the only vendor considered. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple vendors. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to a less favorable price for the government.

Taxpayer Impact: Taxpayers may have paid a premium for these aircraft parts due to the absence of competitive pressure to lower prices. The government missed the opportunity to leverage market dynamics to secure the best possible value.

Public Impact

The primary beneficiary is BAE Systems Information and Electronic Systems Integration Inc., receiving substantial revenue. The contract supports the Department of the Air Force's operational readiness by providing essential aircraft parts. The geographic impact is primarily centered around BAE Systems' operations in New Hampshire, though the parts likely support Air Force bases nationwide. Workforce implications include job retention and potential expansion at BAE Systems' facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
CPFF contract type can incentivize higher spending as costs increase, requiring robust oversight.
Lack of transparency in the sole-source justification process.
Broad 'Other Aircraft Parts' classification may obscure specific cost drivers and value.
No indication of small business participation or subcontracting opportunities.

Positive Signals

BAE Systems is a major defense contractor with established capabilities.
The contract duration allows for sustained support of critical Air Force assets.
The fixed fee component provides some cost predictability within the contract structure.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government procurement. This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category, which is a critical segment supporting military aviation. The total federal spending in this sector is substantial, with major players like BAE Systems dominating large-scale contracts. Benchmarking requires comparing this to other sole-source or competitively awarded contracts for similar specialized components, which are often classified or highly specific.

Small Business Impact

This contract does not appear to include any specific small business set-aside provisions, nor is there information indicating subcontracting goals for small businesses. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless BAE Systems voluntarily engages small businesses in its supply chain. This represents a missed opportunity to foster small business participation in defense contracting.

Oversight & Accountability

Oversight for this sole-source contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the delivery of specified parts and adherence to the Cost Plus Fixed Fee terms. Transparency is limited due to the sole-source nature, with justifications typically being internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Agency Procurement
Air Force Sustainment Contracts
BAE Systems Federal Contracts

Risk Flags

Sole-source award
Lack of competition
Cost Plus Fixed Fee contract type
Broad NAICS code classification
No small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 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 $17.0 million.

What is the period of performance?

Start: 2019-10-01. End: 2022-02-28.

What specific types of aircraft parts are covered under this $1.7 billion contract?

The contract falls under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' This broad classification suggests a wide range of components could be included, potentially encompassing everything from structural elements and engine parts to electronic systems and specialized equipment. Without specific line-item details or a more granular product description, it is difficult to ascertain the exact nature of the parts. The sole-source award further limits public visibility into the specific technical requirements and justifications for procuring these items exclusively from BAE Systems.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. Common justifications include unique capabilities, proprietary technology, urgent requirements where competition is impractical, or when a specific contractor is the only source for essential parts or services. For this BAE Systems contract, the specific justification for the sole-source award is not publicly detailed. However, it could relate to proprietary systems, specialized manufacturing processes, or a critical need for specific components only BAE Systems can provide for certain Air Force platforms.

How does the Cost Plus Fixed Fee (CPFF) contract type impact the government's financial exposure?

Under a CPFF contract, the contractor (BAE Systems) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This means that as the contractor's costs increase, the total payment to them also increases. While the 'fixed fee' component provides some predictability regarding profit, the government bears the risk of cost overruns. This structure incentivizes the contractor to control costs to some extent, but it shifts significant financial risk to the government compared to fixed-price contracts. Robust government oversight is crucial to ensure costs are reasonable and allocable.

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

The Department of Defense consistently spends billions annually on aircraft parts and related manufacturing, reflecting the vastness and operational demands of its air fleet. Spending within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code (336413) fluctuates based on modernization programs, sustainment needs, and specific platform requirements. While this $1.7 billion contract represents a significant single award, overall DoD spending in this category is a continuous and substantial part of its procurement budget, driven by the need to maintain readiness across numerous aircraft types.

What are the potential risks associated with a $1.7 billion sole-source contract for aircraft parts?

The primary risk is the potential for inflated pricing due to the lack of competitive bidding, meaning taxpayers may not be receiving the best value. Another risk lies in contractor performance; if BAE Systems faces production delays or quality issues, the Air Force's operational readiness could be impacted, especially given the critical nature of aircraft parts. The CPFF structure also presents a risk of cost overruns, requiring diligent government oversight to manage expenditures effectively. Furthermore, reliance on a single source can create long-term dependency and limit future sourcing flexibility.

Industry Classification

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

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

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: $20,978,103

Exercised Options: $19,456,515

Current Obligation: $17,017,515

Actual Outlays: $2,606,212

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $3,321,860

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