DoD's $42.5M contract for EWTS Model Design awarded to BAE Systems, with no competition

Contract Overview

Contract Amount: $42,487,624 ($42.5M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2017-12-21

End Date: 2022-11-30

Contract Duration: 1,805 days

Daily Burn Rate: $23.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: DTIP EWTS MODEL DESIGN

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $42.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: DTIP EWTS MODEL DESIGN Key points: 1. Contract awarded on a sole-source basis, raising questions about potential overpayment and lack of competitive pressure. 2. The contract's cost-plus-incentive-fee structure may incentivize higher spending without guaranteed performance improvements. 3. Long contract duration of 1805 days suggests a significant, ongoing need for the EWTS Model Design services. 4. The specific product service code is missing, hindering direct comparison with similar industry contracts. 5. Awarded by the Department of the Navy, indicating a focus on naval electronic warfare systems. 6. The contractor, BAE Systems, is a major defense contractor, suggesting established capabilities but also potential market concentration.

Value Assessment

Rating: questionable

Without a competitive bidding process, it is difficult to benchmark the value for money. The cost-plus-incentive-fee (CPIF) contract type can lead to costs exceeding initial estimates, especially without a fixed price. Comparing this to similar sole-source contracts for advanced system design would be necessary to assess if the pricing is reasonable, but such data is not readily available. The lack of competition inherently limits the government's ability to secure 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 only one bidder, BAE Systems Information and Electronic Systems Integration Inc., was considered. This typically occurs when a unique capability is required or when only one source can fulfill the requirement. The absence of competition means there was no opportunity for price discovery through multiple bids, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure. Without competing offers, the government could not leverage market forces to drive down the price for the EWTS Model Design services.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive the EWTS Model Design services to enhance its capabilities. The services delivered are critical for the design and development of advanced electronic warfare systems, crucial for national defense. The geographic impact is primarily within the United States, where BAE Systems operates and where the Navy's defense infrastructure is located. This contract supports highly skilled jobs in systems engineering, design, and defense technology within BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus-incentive-fee contract type can lead to cost overruns if not managed carefully.
Lack of detailed product service code makes it difficult to assess the specific nature of the work and benchmark effectively.
Long contract duration may indicate potential for scope creep or evolving requirements that could increase overall cost.

Positive Signals

Award to a major defense contractor like BAE Systems suggests access to specialized expertise and technology.
The incentive fee structure, if well-defined, can align contractor and government goals towards specific performance targets.
The contract addresses a critical need for advanced electronic warfare system design within the Department of Defense.

Sector Analysis

The contract falls within the Information Technology and Defense sectors, specifically focusing on the manufacturing of search, detection, navigation, guidance, aeronautical, and nautical systems. The market for electronic warfare systems is highly specialized and dominated by a few large defense contractors. Spending in this area is driven by evolving threats and the need for technological superiority. Comparable spending benchmarks are difficult to establish without a specific product service code, but the overall defense electronics market is substantial.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false) or involve significant subcontracting to small businesses explicitly mentioned in the provided data (sb: false). The award to a large prime contractor like BAE Systems suggests that the primary focus is on leveraging established large-scale capabilities rather than fostering small business participation through this specific contract vehicle. Further analysis of subcontracting plans would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The cost-plus-incentive-fee structure necessitates close monitoring of costs and performance against defined metrics. Transparency is often limited in sole-source defense contracts, but reporting requirements are usually mandated. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Electronic Warfare Systems
Naval Systems Development Contracts
BAE Systems Defense Contracts
Advanced Technology Development Contracts
Search and Detection Systems Manufacturing

Risk Flags

Sole Source Award
Cost-Plus Contract Type
Lack of Competition
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. DTIP EWTS MODEL DESIGN

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 $42.5 million.

What is the period of performance?

Start: 2017-12-21. End: 2022-11-30.

What is the specific nature of the 'EWTS Model Design' and why was it deemed a sole-source requirement?

The 'EWTS Model Design' likely refers to the design and development of an Electronic Warfare Threat Simulation (EWTS) model. This could involve creating sophisticated software or hardware models used for testing, training, or analyzing the performance of electronic warfare systems against various threats. The sole-source justification would typically stem from a determination that BAE Systems possesses unique intellectual property, specialized expertise, or proprietary technology essential for this specific design, making competition impractical or detrimental to national security interests. Without further documentation, the precise technical requirements and the specific rationale for sole-sourcing remain speculative but point towards a highly specialized capability.

How does the Cost Plus Incentive Fee (CPIF) structure typically function, and what are the risks associated with it for this contract?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and also receives a fee that is adjusted based on performance against pre-determined targets. For this contract, the fee would likely be tied to achieving specific technical milestones, delivery schedules, or performance metrics related to the EWTS Model Design. The primary risk for the government is that the final cost can exceed the target cost if the contractor incurs higher-than-expected expenses, even if performance targets are met. Conversely, the contractor is incentivized to control costs to earn a higher fee. Effective oversight is crucial to ensure the targets are challenging and that costs are reasonable.

What is BAE Systems' track record with similar sole-source, cost-plus contracts within the Department of Defense?

BAE Systems is a major defense contractor with extensive experience in sole-source and cost-plus contracts across various defense agencies, including the Department of Defense. Their track record often involves complex systems integration, development, and manufacturing. While specific performance data for past sole-source CPIF contracts is not publicly detailed, BAE Systems generally has a history of delivering advanced technological solutions. However, like many large defense contractors, they have faced scrutiny in the past regarding cost overruns and contract modifications on complex, long-term projects. A thorough review would require examining specific contract performance reports and audit findings related to their previous sole-source engagements.

How does the $42.5 million contract value compare to historical spending on similar EWTS model design or electronic warfare system development by the Navy?

Comparing the $42.5 million contract value for EWTS Model Design to historical spending requires identifying comparable contracts, which is challenging due to the sole-source nature and potentially unique scope. However, the Department of the Navy consistently invests billions annually in electronic warfare capabilities, encompassing research, development, procurement, and sustainment. Contracts for advanced system design and simulation tools can range from tens to hundreds of millions of dollars, depending on complexity and duration. Without a specific Product Service Code (PSC) or detailed scope of work, a precise historical comparison is difficult. However, $42.5 million for a multi-year design effort by a prime contractor is within the expected range for specialized defense technology development.

What are the potential risks and benefits of awarding a contract of this magnitude and duration on a sole-source basis?

The primary risk of a sole-source award for a $42.5 million contract over approximately five years (1805 days) is the potential for inflated costs due to the absence of competitive pricing. The government loses the opportunity to explore alternative solutions or negotiate better terms. Additionally, sole-source awards can sometimes indicate a lack of robust market research or a reliance on a single vendor, which can create dependency. The potential benefits, however, include access to unique or highly specialized capabilities that only one contractor possesses, potentially accelerating development timelines if that contractor is the only viable option. It can also ensure continuity of critical systems if the contractor has deep institutional knowledge.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001917R0067

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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

Financial Breakdown

Contract Ceiling: $44,320,014

Exercised Options: $43,926,027

Current Obligation: $42,487,624

Actual Outlays: $2,798,770

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $4,475,078

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline