DoD's $68.8M BAE Systems contract for aircraft parts lacks competition, raising value concerns

Contract Overview

Contract Amount: $68,849,269 ($68.8M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2020-11-01

End Date: 2025-12-31

Contract Duration: 1,886 days

Daily Burn Rate: $36.5K/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 $68.8 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 fixed-price contract type shifts performance risk to the contractor, but the lack of competition hinders benchmarking. 3. The duration of the contract (over 5 years) suggests a long-term need for these aircraft parts. 4. The specific nature of 'Other Aircraft Parts' indicates a specialized requirement within the Air Force's operations. 5. The absence of small business involvement raises questions about broader economic impact and set-aside utilization.

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 pricing reflects fair market value. The fixed-price structure provides some cost certainty, but the lack of competition means the government cannot leverage market forces to secure the best possible price. Further analysis would require comparing the unit costs to similar parts procured competitively or through other means, which is not readily available from the provided data.

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. This indicates that only one vendor, BAE Systems Information and Electronic Systems Integration Inc., was solicited for this requirement. The lack of competition limits the government's ability to explore alternative solutions or pricing, and it prevents the discovery of a market-driven price. This approach is typically used when a unique capability or proprietary product is required, or in situations where only one source is available.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This reduces the overall value for money achieved by the government.

Public Impact

The primary beneficiaries are the U.S. Air Force operations that rely on these specific aircraft parts for mission readiness. The contract delivers essential components for aircraft maintenance and operational capability, ensuring the Air Force's fleet remains functional. The geographic impact is primarily within the operational theaters and maintenance depots of the U.S. Air Force. The contract supports specialized manufacturing jobs within BAE Systems, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source award limits transparency in pricing.
Long contract duration without competition increases long-term cost risk.
No indication of small business participation or subcontracting.

Positive Signals

Fixed-price contract shifts performance risk to the contractor.
BAE Systems is a known entity in defense contracting, suggesting potential for reliable delivery.
Contract supports critical Air Force operational needs.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often characterized by high barriers to entry due to technical expertise, certifications, and established relationships with prime contractors and government agencies. While the overall defense spending is substantial, contracts for specific, non-standard parts can be niche. Benchmarking would typically involve comparing pricing for similar components across different defense contracts or against commercial aviation part prices, if applicable.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the requirement was either too specialized or that the prime contractor, BAE Systems, was deemed the most capable source without considering small business participation. There is no information on subcontracting plans, which means the impact on the small business ecosystem is likely minimal unless BAE Systems voluntarily engages small businesses for parts of this work.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight structures. The Air Force contracting officers are responsible for monitoring performance and ensuring compliance with contract terms. Inspector General (IG) offices within the DoD may conduct audits or investigations into contract spending and performance if specific concerns arise. Transparency is limited by the sole-source nature, but contract awards are generally reported in federal procurement databases.

Related Government Programs

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

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Long contract duration
No small business participation indicated

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.8 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 $68.8 million.

What is the period of performance?

Start: 2020-11-01. End: 2025-12-31.

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

BAE Systems Information and Electronic Systems Integration Inc. is a major defense contractor with a significant history of performing work for the Department of Defense across various platforms and systems. While specific data on their track record for 'Other Aircraft Parts' is not detailed here, their extensive experience suggests a capacity to deliver complex components. However, the sole-source nature of this particular award means that direct comparisons of their performance against competitors on this specific contract type are not possible. Past performance reviews and contract awards databases would offer a broader view of their overall DoD engagement, but without specific contract identifiers for similar sole-source parts awards, a precise comparison remains elusive.

How does the $68.8 million contract value compare to other sole-source awards for aircraft parts?

Comparing the $68.8 million value of this sole-source contract for 'Other Aircraft Parts' to similar awards requires access to a comprehensive database of federal procurements, filtered by contract type (sole-source), product/service code (or equivalent), and agency. Generally, sole-source awards for specialized defense components can range significantly in value, from a few million to hundreds of millions of dollars, depending on the criticality, uniqueness, and volume of the parts required. Without specific comparable contract data, it's difficult to definitively state whether $68.8 million is high or low. However, the lack of competition inherently removes the downward price pressure that competitive bidding provides, making it more likely that the price may be at the higher end of what the market could bear.

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

The primary risks associated with a sole-source award of $68.8 million over 1886 days (approximately 5.17 years) include potential overpricing due to the absence of competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in cost justification. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, making it difficult to switch even if better alternatives emerge. Furthermore, if BAE Systems faces production issues or financial instability, the Air Force has limited recourse without significant disruption. The long duration amplifies these risks, as market conditions and technological needs can change substantially over five years.

What does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code imply about the services delivered?

The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicates that the contract is for the production or supply of components that are not elsewhere classified within the aircraft manufacturing industry. This could include a wide array of items such as specialized structural components, engine parts, avionics hardware, landing gear elements, or other auxiliary equipment essential for aircraft operation and maintenance. The 'other' designation suggests these parts may be unique, custom-made, or not part of a standard, high-volume production run, often requiring specific engineering, materials, and manufacturing processes, which can contribute to higher costs and necessitate sole-source procurement.

How does the contract's fixed-price type mitigate or exacerbate risks in a sole-source scenario?

In a sole-source scenario, a Firm Fixed Price (FFP) contract type primarily mitigates performance risk for the government by placing the responsibility for cost overruns on the contractor, BAE Systems. The government agrees to pay a set price, regardless of the contractor's actual costs. This provides budget certainty. However, FFP can exacerbate risks related to pricing if not properly negotiated. Without competition, the government has less leverage to ensure the fixed price is truly 'fair and reasonable.' The contractor bears the risk of cost increases, but if the initial price was set too high due to the lack of competitive pressure, the government ends up overpaying. Therefore, while FFP shifts cost risk, the absence of competition in a sole-source award means the initial price negotiation is critical and potentially more vulnerable to being unfavorable to the government.

What are the historical spending patterns for this specific type of aircraft part or for BAE Systems' contracts with the Air Force?

Analyzing historical spending patterns for this specific type of 'Other Aircraft Parts' is challenging without more granular data, such as specific part numbers or a more precise Product Service Code (PSC). The NAICS code 336413 covers a broad range of manufacturing. However, BAE Systems is a significant defense contractor, and the Department of the Air Force is one of its major customers. Historical spending data from sources like USAspending.gov would likely show substantial aggregate contract values awarded to BAE Systems by the Air Force over the years across various programs. To understand patterns for this specific contract, one would need to look for prior sole-source or competitively awarded contracts for similar parts, noting their values, durations, and the pricing structures used. The current $68.8M award over ~5 years suggests an average annual spend of roughly $13.4M, which could be compared to previous annual expenditures if similar requirements existed.

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: FIRM FIXED PRICE (J)

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: $69,039,808

Exercised Options: $69,039,808

Current Obligation: $68,849,269

Subaward Activity

Number of Subawards: 31

Total Subaward Amount: $28,818,094

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