DoD's $722M APKWS guidance section contract awarded to BAE Systems, raising value-for-money questions

Contract Overview

Contract Amount: $72,257,834 ($72.3M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2012-07-31

End Date: 2014-09-30

Contract Duration: 791 days

Daily Burn Rate: $91.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: APKWS FRP WGU-59/B GUIDANCE SECTIONS

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $72.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: APKWS FRP WGU-59/B GUIDANCE SECTIONS Key points: 1. The contract's value of $722 million for guidance sections suggests a significant investment in missile technology. 2. BAE Systems, a major defense contractor, secured this award, indicating established relationships and capabilities in the sector. 3. The contract type (Firm Fixed Price) aims to control costs, but the overall value warrants scrutiny for efficiency. 4. Performance context is limited without specific delivery metrics or operational success rates for the APKWS system. 5. Sector positioning highlights the critical role of advanced missile components in modern defense capabilities. 6. The duration of the contract (791 days) indicates a substantial, long-term need for these components.

Value Assessment

Rating: questionable

Benchmarking the value-for-money for this specific contract is challenging without detailed cost breakdowns or comparisons to similar guidance section procurements. The $722 million award for what appears to be a component of a larger missile system suggests a high unit cost. While BAE Systems is a known entity, the absence of competitive bidding data makes it difficult to assess if this price represents a fair market value or if taxpayers received optimal value. Further analysis of the unit cost relative to industry standards for similar guidance systems is needed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while competition was sought, certain sources were excluded, potentially limiting the bidder pool. The specific reasons for excluding other sources are not detailed, making it difficult to ascertain the true level of competition. A limited competition can sometimes lead to higher prices as the number of potential suppliers decreases, impacting price discovery.

Taxpayer Impact: The limited competition may have resulted in a higher price for taxpayers than if a broader range of suppliers had been able to bid. This procurement structure warrants careful review to ensure the government secured the best possible pricing.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other branches of the Department of Defense, receiving advanced missile guidance components. The services delivered involve the manufacturing and supply of critical guidance sections for the Advanced Precision Kill Weapon System (APKWS). The geographic impact is primarily within the United States, supporting defense manufacturing and supply chains. Workforce implications include employment opportunities within BAE Systems and its subcontractors in the defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition raises concerns about potential price inflation and reduced innovation.
Lack of detailed performance metrics makes it difficult to assess the true value and effectiveness of the procured guidance sections.
The significant dollar amount necessitates robust oversight to ensure funds are used efficiently and effectively.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to an established defense contractor like BAE Systems suggests a level of reliability and existing expertise.
The procurement addresses a critical need for advanced missile components, enhancing military capabilities.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector (NAICS 33414) is a highly specialized and capital-intensive industry within the broader aerospace and defense market. This contract for APKWS guidance sections fits within this niche, focusing on precision-guided munitions. The market is characterized by high barriers to entry, significant R&D investment, and long-standing relationships between prime contractors and government agencies. Comparable spending benchmarks would involve analyzing other contracts for missile components and guidance systems, which are often awarded through competitive processes but can also involve sole-source or limited-source arrangements due to proprietary technology or specialized manufacturing capabilities.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract (ss: false, sb: false). This suggests that the primary award was not targeted towards small businesses. However, BAE Systems, as a large prime contractor, may engage small businesses as subcontractors. The extent of subcontracting to small businesses and its impact on the small business ecosystem would require further investigation into BAE Systems' subcontracting plans and performance.

Oversight & Accountability

Oversight for this Department of Defense contract would typically involve the Defense Contract Management Agency (DCMA) for contract administration and potentially the Department of Defense's Inspector General (IG) for audits and investigations. Transparency is facilitated through contract award databases, but detailed cost and performance data may be considered sensitive. Accountability measures are inherent in the Firm Fixed Price contract type, which places the cost risk on the contractor, and through performance reviews and potential penalties for non-compliance.

Related Government Programs

Advanced Precision Kill Weapon System (APKWS)
Missile Guidance Systems
Defense Manufacturing
Aerospace Components
Guided Missile Manufacturing

Risk Flags

Limited Competition
High Contract Value
Lack of Detailed Performance Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. APKWS FRP WGU-59/B GUIDANCE SECTIONS

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 Navy).

What is the total obligated amount?

The obligated amount is $72.3 million.

What is the period of performance?

Start: 2012-07-31. End: 2014-09-30.

What is the specific role and technical contribution of the APKWS guidance sections procured under this contract?

The APKWS (Advanced Precision Kill Weapon System) guidance section is a critical component that transforms unguided rockets into precision-guided munitions. It typically includes a seeker (like a laser seeker), a guidance control system, and a warhead. This section allows the weapon to autonomously track a designated target, usually a laser-marked spot, and adjust its trajectory mid-flight to ensure a high-probability hit. The guidance sections procured under this $722 million contract are essential for the Navy's and potentially other DoD branches' ability to engage targets with precision, minimizing collateral damage and increasing warfighter effectiveness. The specific technical specifications and advancements within these guidance sections would dictate their performance characteristics, such as range, accuracy, and target discrimination capabilities.

How does the $722 million contract value compare to historical spending on similar guidance systems or the APKWS program overall?

Direct historical spending comparisons for this specific $722 million contract are difficult without access to detailed procurement histories for the APKWS program or comparable guidance systems. However, the magnitude of the award suggests a significant, multi-year procurement of a substantial quantity of guidance sections. To assess value, one would need to compare this figure against the total program cost, the number of units procured, and the unit price. If this represents a substantial portion of the total APKWS program cost, it indicates a high unit cost for the guidance sections. Benchmarking against other precision-guided munition guidance systems, considering their complexity and technological sophistication, would also provide context. A firm fixed-price contract of this size implies a negotiated price based on anticipated costs and profit, making a direct comparison to other contracts with different pricing structures (e.g., cost-plus) less straightforward.

What are the key performance indicators (KPIs) used to evaluate the success of this contract and the delivered guidance sections?

Key performance indicators (KPIs) for a contract involving the manufacturing of missile guidance sections typically focus on product quality, delivery timeliness, and adherence to technical specifications. For the guidance sections themselves, critical performance metrics would include accuracy (e.g., circular error probable - CEP), seeker sensitivity and lock-on range, environmental resistance (e.g., temperature, vibration), reliability (mean time between failures), and shelf life. Contractual KPIs would likely involve on-time delivery rates, defect rates (e.g., parts per million defective), and successful completion of government acceptance testing. The 'success' of this $722 million contract would be measured by BAE Systems' ability to consistently deliver guidance sections that meet all stringent military specifications and perform reliably in operational environments, contributing to the overall effectiveness of the APKWS.

What is BAE Systems' track record with the APKWS program or similar missile component contracts?

BAE Systems has a well-established track record in the defense industry, including significant involvement with guided missile systems. They are known to be a key contractor for the APKWS program, responsible for producing critical components. Their experience likely encompasses the design, development, and manufacturing of guidance systems, seekers, and other related technologies. Historically, BAE Systems has secured numerous large contracts with the Department of Defense and other allied nations for various defense platforms and components. Assessing their specific track record for APKWS guidance sections would involve reviewing past performance evaluations, delivery history, and any quality or reliability issues reported on previous contracts. Given their position as a major defense prime, they generally possess the infrastructure, expertise, and security clearances necessary for such complex procurements.

Are there any identified risks associated with the technology or manufacturing process for these APKWS guidance sections?

Risks associated with advanced missile guidance sections can stem from several areas. Technologically, there's a risk of obsolescence if newer, more capable systems emerge, or if the seeker technology faces countermeasures. Manufacturing risks include supply chain disruptions for specialized components, potential quality control issues in complex assembly processes, and the need for highly skilled labor. Given the 'Limited Competition' award type, there might be risks related to a lack of alternative suppliers, potentially leading to sole-source dependency and price vulnerabilities. Furthermore, integration risks with the broader missile airframe and the platform launching the missile are always present. The firm fixed-price nature of the contract shifts some financial risk to the contractor, but performance failures could still impact program timelines and operational readiness.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 65 SPIT BROOK RD, NASHUA, NH, 02

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

Financial Breakdown

Contract Ceiling: $72,257,834

Exercised Options: $72,257,834

Current Obligation: $72,257,834

Contract Characteristics

Cost or Pricing Data: YES

Timeline