DoD awards $73.4M contract for aircraft parts to BAE Systems, raising questions about competition

Contract Overview

Contract Amount: $73,409,481 ($73.4M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2024-06-14

End Date: 2028-04-30

Contract Duration: 1,416 days

Daily Burn Rate: $51.8K/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 $73.4 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BIG SAFARI Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery. 2. Significant contract value for specialized aircraft parts manufacturing. 3. Long performance period suggests a need for sustained support. 4. Cost-plus-fixed-fee structure may incentivize cost escalation. 5. Lack of small business participation noted. 6. Geographic concentration in New Hampshire for contract performance.

Value Assessment

Rating: questionable

The contract value of $73.4 million for aircraft parts is substantial. However, without competitive bidding, it is difficult to benchmark the value for money. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex or uncertain work, can lead to higher costs compared to fixed-price contracts if not managed diligently. The absence of a clear per-unit cost benchmark makes direct comparison challenging.

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. This approach bypasses the standard procurement process where multiple vendors submit bids, which typically drives down prices and fosters innovation. The lack of competition means taxpayers may not be receiving the best possible price or terms.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from competitive pressures that would normally lead to lower prices and better value.

Public Impact

The Department of the Air Force benefits from the acquisition of critical aircraft parts. This contract supports the maintenance and operational readiness of Air Force aircraft. The primary impact is on the defense industrial base, specifically in New Hampshire. Workforce in New Hampshire involved in specialized manufacturing will be supported.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits transparency and potential cost savings.
Cost-plus-fixed-fee contract type can lead to cost overruns.
No small business set-aside or participation noted, potentially excluding smaller firms.

Positive Signals

Award to an established contractor (BAE Systems) suggests potential for reliable delivery.
Long contract duration indicates a recognized need for sustained support.
Specific National Industrial Classification (NAICS) code points to specialized manufacturing capabilities.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a critical component of the broader aerospace and defense industry. The total addressable market for aircraft parts manufacturing is significant, driven by military and commercial aviation needs. Benchmarking this contract's value against similar sole-source awards for specialized components is challenging due to the unique nature of defense procurement and the lack of public data on comparable sole-source deals.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there an indication of subcontracting goals for small businesses. This suggests that the primary contractor, BAE Systems, will likely perform the majority of the work. The absence of small business involvement could limit opportunities for smaller firms within the defense supply chain for this specific procurement.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Air Force's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates close monitoring of costs and performance to ensure adherence to the contract's objectives and prevent unnecessary expenditures. Transparency may be limited due to the sole-source nature of the award, but internal DoD oversight mechanisms should be in place.

Related Government Programs

Aircraft Parts Procurement
Defense Logistics and Sustainment
BAE Systems Contracts
Sole-Source Defense Contracts
Air Force Maintenance and Repair

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.4 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 $73.4 million.

What is the period of performance?

Start: 2024-06-14. End: 2028-04-30.

What is BAE Systems' track record with similar sole-source contracts for aircraft parts?

BAE Systems is a major defense contractor with extensive experience in aerospace and electronic systems. While specific data on their sole-source contracts for aircraft parts is not publicly detailed, their history includes numerous large-scale awards across various defense platforms. Analyzing past performance on similar sole-source awards would require access to internal DoD contract performance reports and historical data, which are typically not publicly available. However, their status as a prime contractor suggests a generally accepted level of performance and capability within the defense industrial base. Further investigation into specific past performance reviews or any documented issues with previous sole-source awards would be necessary for a comprehensive assessment.

How does the $73.4 million contract value compare to other aircraft parts contracts awarded by the DoD?

The $73.4 million contract value is substantial for a single award, particularly for aircraft parts. However, the defense budget is vast, and the DoD awards thousands of contracts annually, many of which are in the hundreds of millions or even billions of dollars. When comparing, it's crucial to consider the specific type of parts, the complexity, the quantity, and the contract type. Sole-source awards, like this one, can sometimes be higher than competitively bid contracts due to the lack of price pressure. Without knowing the exact nature of the 'Other Aircraft Parts and Auxiliary Equipment,' a direct comparison is difficult. However, for specialized or long-lead-time components, this value is within the expected range for a major defense contractor.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for aircraft parts?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature means there was no competitive bidding process, which inherently limits the government's ability to secure the lowest possible price and potentially overlooks more innovative or cost-effective solutions from other vendors. Taxpayers may be overpaying. Secondly, the Cost Plus Fixed Fee (CPFF) contract type, while suitable for work with uncertain costs, carries the risk of cost escalation. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. If costs increase, the government pays more, and the contractor's profit margin (as a percentage of total cost) decreases, but their absolute profit (the fixed fee) remains the same. This can disincentivize cost control by the contractor if not rigorously overseen.

What is the expected effectiveness of this contract in ensuring the Air Force's aircraft readiness?

The effectiveness of this contract hinges on BAE Systems' ability to deliver the specified aircraft parts on time and to the required quality standards. Given that it's a sole-source award to a large, established contractor, the expectation is that they possess the necessary technical capabilities and manufacturing capacity. The long duration (ending April 2028) suggests a sustained need for these parts, critical for maintaining the operational readiness of specific Air Force aircraft. However, the effectiveness in terms of value for money is questionable due to the lack of competition. If the parts are critical and unique, the contract might be deemed effective in ensuring availability, but potentially at a higher cost than a competitive process would yield.

How does this contract's value compare to historical spending on aircraft parts by the Department of the Air Force?

The Department of the Air Force consistently spends billions of dollars annually on aircraft parts, maintenance, and related services. A single contract valued at $73.4 million, while significant, represents a fraction of the total annual expenditure in this category. Historical spending patterns show a heavy reliance on large, established defense contractors for complex systems and components. Sole-source awards are not uncommon, especially for proprietary technologies or when only one vendor can meet specific requirements. This contract aligns with historical trends of significant investment in aircraft sustainment, but its specific value relative to historical averages for similar parts would require detailed analysis of past procurement data, which is not readily available in the public domain.

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

Financial Breakdown

Contract Ceiling: $74,492,006

Exercised Options: $73,409,481

Current Obligation: $73,409,481

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $17,458,997

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA862021G4028

IDV Type: BOA

Timeline