DoD's $43.8M BAE Systems contract for aircraft parts awarded via sole-source justification

Contract Overview

Contract Amount: $43,784,756 ($43.8M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2023-01-01

End Date: 2023-12-31

Contract Duration: 364 days

Daily Burn Rate: $120.3K/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 $43.8 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BIG SAFARI Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and limited market engagement. 2. The fixed-price contract structure aims to control costs, but the lack of competition may hinder optimal value. 3. Performance period of one year suggests a need for ongoing supply, but the long-term strategy is unclear. 4. The award to BAE Systems, a major defense contractor, indicates a reliance on established suppliers for critical components. 5. The specific nature of the 'Other Aircraft Parts' suggests specialized needs within the Air Force's operational requirements. 6. Lack of small business participation noted, with no indication of set-aside or subcontracting goals.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source nature and lack of publicly available comparable pricing. The firm fixed-price award suggests an attempt to cap costs, but without competitive bids, it's difficult to ascertain if the price reflects fair market value. The $43.8 million award for a one-year duration for 'Other Aircraft Parts' requires further scrutiny to ensure it aligns with industry standards and avoids potential overpayment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically reserved for situations where only one vendor can provide the required goods or services. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: Taxpayers may be paying a premium for these aircraft parts due to the absence of competitive bidding, which typically drives down costs.

Public Impact

The primary beneficiaries are the U.S. Air Force, receiving essential aircraft parts for operational readiness. The contract ensures the continued availability of critical components for maintaining aircraft in service. The geographic impact is primarily within New Hampshire, where BAE Systems' relevant facility is located. Workforce implications are likely concentrated at BAE Systems' facilities, supporting manufacturing and logistics roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially leads to higher costs for taxpayers.
Lack of competition raises concerns about whether the government secured the best possible value.
Absence of small business participation means missed opportunities to support smaller enterprises in the defense supply chain.
The specific nature of 'Other Aircraft Parts' is vague, making it difficult to assess the necessity and scope of the procurement.
Limited transparency due to sole-source justification hinders public understanding of the procurement process.

Positive Signals

Firm fixed-price contract provides cost certainty for the government, capping potential overruns.
Award to an established contractor like BAE Systems suggests a focus on reliability and proven performance.
The contract duration of one year allows for flexibility in adapting to evolving Air Force needs.
The contract supports a critical segment of the defense industrial base.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is a vital component of the aerospace and defense industry. This contract falls within a segment that supplies specialized components essential for the maintenance and operation of military aircraft. The market is characterized by high barriers to entry, specialized technical expertise, and significant reliance on established relationships with prime contractors and government agencies. Spending in this area is often driven by defense modernization programs and sustainment requirements for existing fleets.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there any indication of subcontracting requirements for small businesses. The award to a large prime contractor like BAE Systems suggests that opportunities for small businesses within this specific procurement are limited. This could represent a missed opportunity to foster growth and innovation within the small business defense industrial base.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which aims to hold the contractor responsible for delivering within the agreed-upon price. Transparency is limited due to the sole-source nature of the award, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Support
Aerospace Component Supply
Military Aircraft Sustainment

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.8 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 $43.8 million.

What is the period of performance?

Start: 2023-01-01. End: 2023-12-31.

What is the track record of BAE Systems Information and Electronic Systems Integration Inc. with the Department of Defense for similar aircraft parts?

BAE Systems Information and Electronic Systems Integration Inc. is a significant defense contractor with a long history of providing various systems and components to the Department of Defense. For aircraft parts specifically, the company has a substantial portfolio, often involving complex electronic systems, avionics, and structural components. Their track record generally indicates a capacity to meet stringent military specifications and delivery schedules. However, the specific history related to 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' for the Air Force would require a deeper dive into historical contract awards, performance reviews, and any past issues or commendations. Without specific contract numbers or detailed product descriptions, a precise comparison is difficult, but BAE Systems is a known entity in this space.

How does the $43.8 million value compare to similar sole-source contracts for aircraft parts?

Directly comparing the $43.8 million value of this sole-source contract to similar ones is challenging without more specific details on the 'Other Aircraft Parts' procured and the specific Air Force requirements. Sole-source awards inherently lack the price discovery mechanism of competition, making direct value benchmarking difficult. Generally, sole-source contracts can be more expensive than competitively awarded ones. To assess value, one would need to compare the unit costs, quantities, and complexity of the parts against industry benchmarks or historical pricing for comparable items, if such data were available. The one-year duration and firm fixed-price nature provide some cost control, but the absence of competition remains a key factor in assessing overall value for money.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with awarding a $43.8 million contract on a sole-source basis include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or offer cost-saving efficiencies, and a missed opportunity to engage with a broader range of suppliers, potentially including smaller, more specialized firms. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility. Furthermore, the justification for the sole-source award itself needs to be robust to ensure it is truly necessary and not a result of poor planning or market research.

How effective is the firm fixed-price contract type in managing costs for specialized aircraft parts?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs for specialized aircraft parts, especially when the scope of work and specifications are well-defined. Under an FFP contract, the contractor assumes the primary risk for cost overruns, providing the government with cost certainty. This structure incentivizes the contractor to control costs and improve efficiency to maximize profit. However, for highly complex or novel parts where technical uncertainties are significant, an FFP contract might lead the contractor to build in substantial contingencies, potentially inflating the initial price. In such cases, other contract types might be more appropriate. For established parts with clear specifications, FFP is a strong choice for cost control.

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 to maintain and modernize its vast fleet of aircraft. This category encompasses a wide array of components, from simple fasteners to complex sub-assemblies. Annual spending can fluctuate based on fleet readiness requirements, new aircraft procurements, and sustainment contracts for aging platforms. The total annual expenditure by the Air Force in this sector often runs into billions of dollars, distributed across numerous contracts and vendors, including both large prime contractors and specialized manufacturers. The $43.8 million awarded in this instance represents a portion of that broader spending.

What are the implications of this contract award for the New Hampshire economy and its defense industrial base?

This contract award has positive implications for the New Hampshire economy, particularly for the defense industrial base located there, as BAE Systems has significant operations in the state. The $43.8 million contract is likely to support jobs in manufacturing, engineering, supply chain management, and related administrative functions within BAE Systems' New Hampshire facilities. It contributes to the state's reputation as a hub for defense manufacturing and technology. Furthermore, it reinforces the existing supply chain relationships and ecosystem within the region, potentially leading to further investment and economic activity. The sustained business for BAE Systems helps maintain critical skill sets and infrastructure within the state's defense sector.

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: BAE Systems PLC

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

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

Financial Breakdown

Contract Ceiling: $43,784,756

Exercised Options: $43,784,756

Current Obligation: $43,784,756

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $24,868,274

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862021G4028

IDV Type: BOA

Timeline