DoD's $162M BAE Systems contract for aircraft parts awarded via sole-source justification

Contract Overview

Contract Amount: $16,207,941 ($16.2M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2024-08-22

End Date: 2026-02-26

Contract Duration: 553 days

Daily Burn Rate: $29.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY 24-26 PMEIT

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $16.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: FY 24-26 PMEIT Key points: 1. Contract awarded to a single vendor, raising questions about competitive pricing. 2. Significant contract value for aircraft parts manufacturing, indicating critical supply chain role. 3. Sole-source award suggests potential lack of market competition or specialized capabilities. 4. Contract duration of over 1.5 years points to ongoing support needs. 5. Awarded by the Department of the Air Force, highlighting defense sector focus. 6. The 'Other Aircraft Parts' NAICS code suggests a broad range of potential components.

Value Assessment

Rating: questionable

Without competitive bids, it is difficult to assess if the $162 million price represents fair market value. The Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to higher costs if the fixed fee is not carefully calibrated against efficient performance. Benchmarking against similar sole-source awards for comparable aircraft parts would be necessary to determine value for money. The lack of competition inherently limits the government's ability to negotiate the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Air Force did not solicit bids from multiple vendors. This approach is typically justified when only one vendor possesses the necessary capabilities, technology, or security clearances, or in cases of urgent need. The absence of competition means that price discovery through market forces was bypassed, potentially impacting the final cost to the government.

Taxpayer Impact: Sole-source awards limit taxpayer benefit by preventing the government from leveraging competitive pressures to secure lower prices. This can result in higher overall spending for essential defense components.

Public Impact

The Department of the Air Force is the primary beneficiary, receiving critical aircraft parts. This contract supports the maintenance and operational readiness of Air Force aircraft. The geographic impact is primarily centered around BAE Systems' facilities in New Hampshire. Workforce implications include employment at BAE Systems and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
CPFF contract type may incentivize higher costs if not managed rigorously.
Lack of transparency in the justification for sole-source award.
Potential for vendor lock-in due to specialized nature of parts.
Limited visibility into the specific types of aircraft parts being procured.

Positive Signals

Award to established defense contractor BAE Systems suggests reliability.
Contract duration indicates a long-term need, potentially for critical platforms.
Focus on aircraft parts supports national defense readiness.
Fixed fee component of CPFF provides some cost predictability.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, stringent quality requirements, and significant government investment. Contracts for aircraft parts are crucial for maintaining fleet readiness and operational capabilities. This $162 million award to BAE Systems falls within the broader 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' category, suggesting a focus on components that are not necessarily engines or airframes but are vital for aircraft functionality. The market for such parts is often specialized, with a limited number of qualified suppliers, which can influence procurement strategies.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate specific subcontracting requirements for small businesses in the provided data. 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. Further investigation into BAE Systems' subcontracting plans would be needed to assess any indirect benefits to small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Inspector General of the Department of Defense may also conduct audits or investigations into the contract's execution, particularly concerning cost management and adherence to terms. Transparency is limited by the sole-source nature of the award, with public justification for the procurement method being the primary avenue for accountability.

Related Government Programs

Department of Defense Aircraft Procurement
Air Force Logistics and Sustainment Programs
Aerospace Component Manufacturing
Defense Industrial Base Support

Risk Flags

Sole-source award may limit cost savings.
CPFF contract type can lead to cost overruns.
Lack of specific part details limits risk assessment.
Potential for supply chain disruption if BAE Systems faces issues.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. FY 24-26 PMEIT

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 $16.2 million.

What is the period of performance?

Start: 2024-08-22. End: 2026-02-26.

What specific aircraft parts are being procured under this contract, and for which Air Force platforms?

The provided data indicates the contract falls under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' However, it does not specify the exact types of parts or the particular Air Force aircraft platforms they are intended for. This level of detail is typically found in the contract's statement of work or technical exhibits, which are not publicly available in this data snippet. Understanding the specific components and their application is crucial for assessing the contract's criticality and potential risks associated with supply chain dependencies.

What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?

The justification for a sole-source award typically stems from circumstances where only one responsible source can provide the required supplies or services. Common reasons include unique technical capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or when the government has already made substantial investments in a particular system that necessitates continued support from the original manufacturer. Without access to the specific Justification and Approval (J&A) document for this contract, the precise rationale remains undisclosed. However, the 'NOT COMPETED' designation strongly implies that a formal justification was submitted and approved.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar aircraft parts procurements?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not precisely defined, or when there is uncertainty about the costs involved. The government agrees to pay the contractor's allowable costs plus a predetermined fixed fee representing profit. While this structure can accommodate evolving requirements, it carries a risk of cost overruns if the contractor's costs are higher than anticipated, as the fee remains fixed. Compared to fixed-price contracts, CPFF generally offers less incentive for the contractor to control costs. For standardized aircraft parts with well-defined specifications, fixed-price contracts are often preferred for better cost certainty and value for taxpayers. The choice of CPFF here suggests a degree of uncertainty or complexity in the procurement.

What is BAE Systems' track record with the Department of the Air Force for similar types of contracts?

BAE Systems is a major defense contractor with a long history of performing work for the Department of the Air Force and other military branches. Their track record typically includes a wide range of services and products, from electronic systems and avionics to aircraft components and support services. While specific performance metrics for this particular contract are not yet available due to its recent award date, BAE Systems generally possesses significant experience in delivering complex defense systems. However, like any large contractor, past performance can vary, and a detailed review of their specific contract history with the Air Force, including any past performance evaluations or disputes, would be necessary for a comprehensive assessment.

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

Historical spending data for NAICS code 336413 by the Department of the Air Force would reveal trends in the procurement of aircraft parts and auxiliary equipment. Analyzing this data over several fiscal years would indicate whether spending in this category has been increasing, decreasing, or remaining relatively stable. Such trends can be influenced by factors like fleet modernization programs, aging aircraft requiring more maintenance, changes in defense budgets, and the introduction of new aircraft types. A significant increase in spending might signal a heightened need for parts, while a decrease could suggest a shift in procurement priorities or greater efficiency.

Are there any known risks associated with the supply chain for the specific aircraft parts covered by this contract?

The risk associated with the supply chain for aircraft parts can be substantial, especially for specialized components. Risks can include single-source dependencies for critical materials, geopolitical instability affecting raw material availability, manufacturing quality issues, and long lead times. Given that this contract is sole-sourced to BAE Systems, there's an inherent risk if BAE Systems itself faces supply chain disruptions. The 'Other Aircraft Parts' designation is broad, so specific risks would depend on the exact nature of the components. The Department of Defense often conducts supply chain risk management assessments for critical procurements to identify and mitigate potential vulnerabilities.

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

Financial Breakdown

Contract Ceiling: $17,203,851

Exercised Options: $16,207,941

Current Obligation: $16,207,941

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