DoD Awards BAE Systems $32.7M for KUWAIT NRE Systems, Lacking Competition

Contract Overview

Contract Amount: $32,764,657 ($32.8M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2018-07-23

End Date: 2024-01-25

Contract Duration: 2,012 days

Daily Burn Rate: $16.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: KUWAIT NRE

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $32.8 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: KUWAIT NRE Key points: 1. Significant contract value of $32.7 million awarded to a single large business. 2. Lack of competition raises concerns about potential overpricing and reduced value. 3. The contract spans over six years, indicating a long-term need for these systems. 4. Sector is Defense, specifically focusing on navigation and guidance systems.

Value Assessment

Rating: questionable

The contract type is Cost Plus Fixed Fee, which can lead to higher costs if not managed carefully. Without competitive bidding, it's difficult to benchmark pricing against similar contracts to ensure fair value for taxpayers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and may result in higher costs than if multiple vendors had competed for the work.

Taxpayer Impact: The lack of competition for this $32.7 million contract means taxpayers may be paying a premium, as there was no market pressure to drive down costs.

Public Impact

Taxpayers may be overpaying for critical defense navigation and guidance systems due to the absence of competitive bidding. The long duration of the contract (over six years) suggests a sustained need, making the lack of competition a recurring issue. Reliance on a single vendor for specialized systems could pose a long-term risk if that vendor faces financial or operational challenges.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration
No small business participation indicated

Positive Signals

Awarded to a known defense contractor
Addresses critical defense system needs

Sector Analysis

This contract falls within the Defense sector, specifically manufacturing instruments for search, detection, navigation, guidance, aeronautical, and nautical systems. Spending in this area is critical for military operations, but competitive procurement is essential to ensure cost-effectiveness.

Small Business Impact

There is no indication of small business participation in this contract. The award went to a large business (BAE SYSTEMS), suggesting missed opportunities to engage smaller, innovative firms in the defense supply chain.

Oversight & Accountability

The sole-source nature of this award warrants closer oversight to ensure costs are reasonable and performance meets expectations. Accountability for the lack of competition should be reviewed.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition
Potential for cost overruns (CPFF)
No small business participation
Long contract duration without competitive review
Limited transparency on justification for sole-source award

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.8 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. KUWAIT NRE

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $32.8 million.

What is the period of performance?

Start: 2018-07-23. End: 2024-01-25.

What justification was provided for not competing this significant contract, and were alternative solutions explored?

The data indicates the contract was 'NOT COMPETED'. A thorough review of the justification for this sole-source award is necessary. Agencies must demonstrate that competition was not feasible or would not be in the government's best interest. Exploring alternative solutions or phased approaches that could introduce competition later is crucial for long-term value.

How are costs being monitored and controlled under this Cost Plus Fixed Fee contract to mitigate potential overruns?

With a Cost Plus Fixed Fee structure and no competition, rigorous cost monitoring and control are paramount. The Defense Contract Management Agency (DCMA) should be actively scrutinizing all incurred costs against the fixed fee. Regular audits and performance reviews are essential to ensure the contractor is operating efficiently and that the final cost remains justifiable.

What is the long-term strategy for ensuring competitive pricing for these navigation and guidance systems beyond the current contract?

Given the six-year duration and sole-source nature of this award, a proactive strategy is needed to foster future competition. This could involve market research to identify potential new vendors, breaking down future requirements into smaller, more competitive lots, or incentivizing incumbent innovation through performance-based metrics. Planning for future competition should begin now.

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: COMM/DETECT/COHERENT RADIATION

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: $32,764,657

Exercised Options: $32,764,657

Current Obligation: $32,764,657

Actual Outlays: $1,311,424

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $7,443,660

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001917G0013

IDV Type: BOA

Timeline