BAE Systems awarded $380M for ALE-70 production, a sole-source contract with a long performance period

Contract Overview

Contract Amount: $379,643,051 ($379.6M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2019-08-20

End Date: 2026-03-31

Contract Duration: 2,415 days

Daily Burn Rate: $157.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ALE-70 PRODUCTION

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03064

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $379.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: ALE-70 PRODUCTION Key points: 1. The contract's value suggests a significant need for the ALE-70 system. 2. Sole-source awards warrant scrutiny for potential price inflation and limited innovation. 3. The extended performance period (over 6 years) may indicate a stable, long-term requirement. 4. Fixed-price contract type aims to control costs, but requires careful baseline setting. 5. The absence of small business set-asides is noted. 6. The contract is managed by the Department of the Navy, indicating a defense-specific application.

Value Assessment

Rating: fair

Benchmarking the value of this $380 million contract is challenging without specific details on the ALE-70 system's capabilities and market alternatives. However, the sole-source nature raises concerns about whether the government is achieving optimal value compared to a competitive environment. The firm fixed-price structure provides some cost control, but the absence of competition could lead to less favorable pricing than might be achieved otherwise. Further analysis would require understanding the system's criticality and the availability of alternative solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when only one vendor possesses the necessary technology, capability, or security clearance, or in situations deemed urgent. The lack of competition limits the government's ability to leverage market forces to drive down prices and encourage innovation. It suggests that BAE Systems is the sole provider for this specific system, potentially due to proprietary technology or unique manufacturing capabilities.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive bidding. Without competing the award, there is less assurance that the price reflects the lowest possible cost for the required goods or services.

Public Impact

The primary beneficiaries are the U.S. Navy personnel who will utilize the ALE-70 system for its intended purpose, likely enhancing operational effectiveness and safety. The contract delivers production of the ALE-70 system, which is a critical component for naval aviation. The geographic impact is primarily within New Hampshire, where BAE Systems' facility is located, supporting local employment and the regional economy. Workforce implications include sustained employment for BAE Systems employees involved in the manufacturing and support of the ALE-70 system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially leads to higher costs for taxpayers.
Long contract duration (over 6 years) could mask inefficiencies if not closely monitored.
Lack of transparency inherent in sole-source procurements makes independent value assessment difficult.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
BAE Systems is an established defense contractor with a track record in producing complex systems.
The contract supports a critical defense capability for the U.S. Navy.

Sector Analysis

The ALE-70 production contract falls within the defense electronics and aerospace manufacturing sector. This sector is characterized by high barriers to entry due to specialized technology, stringent quality requirements, and long development cycles. The market is dominated by a few large prime contractors, including BAE Systems, who often hold proprietary knowledge or unique manufacturing capabilities. Spending in this area is driven by military modernization and sustainment needs, with contracts often being long-term and awarded through complex procurement processes. Comparable spending benchmarks would involve other large-scale defense system production contracts.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb': false. Consequently, there are no direct subcontracting requirements mandated for small businesses within this specific award. The absence of a set-aside means that opportunities for small businesses to participate in this particular contract are limited unless they are part of BAE Systems' broader supply chain or are awarded subcontracts on a non-set-aside basis. This could represent a missed opportunity to foster small business participation in a significant defense contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, which hold the contractor responsible for delivering the specified goods within the agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Aviation Systems
Electronic Warfare Systems
Defense Production Contracts
Sole-Source Defense Procurements
BAE Systems Defense Contracts

Risk Flags

Sole-source award
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $379.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. ALE-70 PRODUCTION

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 $379.6 million.

What is the period of performance?

Start: 2019-08-20. End: 2026-03-31.

What is the specific function and criticality of the ALE-70 system?

The ALE-70 is an electronic warfare countermeasure system used by the U.S. Navy. Its primary function is to protect aircraft from radar-guided threats by deploying decoys and chaff. This system is considered critical for enhancing the survivability of naval aircraft in contested airspace. Its effectiveness directly impacts pilot safety and mission success rates during combat operations. The specific technical details and performance metrics are often classified due to the sensitive nature of electronic warfare capabilities.

What is BAE Systems' track record with similar sole-source defense contracts?

BAE Systems is a major defense contractor with extensive experience in producing complex electronic warfare and aerospace systems. They have a history of securing large, sole-source contracts from the Department of Defense, often due to their specialized technological expertise and established relationships. While this provides assurance of capability, it also highlights a pattern where competitive pressures may be limited for certain critical defense systems. Analyzing past sole-source awards to BAE Systems could reveal trends in pricing and performance compared to competed contracts within the defense sector.

How does the $380 million value compare to other ALE-70 production runs or similar EW systems?

Comparing the $380 million value requires context on the quantity of ALE-70 units to be produced and the specific technological configuration. Without this data, a direct comparison is difficult. However, for large-scale defense electronic warfare systems, this value is substantial, reflecting the complexity and strategic importance of the technology. If this represents a multi-year production run, the annual expenditure might be more comparable to other significant defense manufacturing programs. Benchmarking against similar systems would necessitate identifying EW countermeasures with comparable capabilities and production scales, which are often subject to classification.

What are the potential risks associated with a sole-source award of this magnitude and duration?

The primary risks associated with a sole-source award of this magnitude ($380 million) and duration (over 6 years) include potential cost overruns if not managed tightly, reduced incentive for innovation from the contractor, and a lack of transparency in pricing. The government may not be achieving the best possible value compared to a competitive scenario. Furthermore, long-term sole-source contracts can create vendor lock-in, making it difficult to switch to alternative solutions even if they become available and more cost-effective. Robust oversight and performance metrics are crucial to mitigate these risks.

What is the historical spending trend for the ALE-70 system or similar programs under the Department of the Navy?

Historical spending data for the ALE-70 system prior to this award would provide insight into the program's lifecycle and sustainment costs. Without specific historical figures for the ALE-70, we can infer that the Department of the Navy consistently invests in electronic warfare capabilities due to evolving threats. Spending on similar large-scale defense production contracts, especially those involving sole-source awards for specialized systems, typically represents significant, multi-year commitments. Analyzing broader trends in naval aviation procurement and electronic warfare system acquisition would offer a comparative perspective on the scale of this investment.

Are there any known performance issues or past contract disputes related to BAE Systems' production of the ALE-70 or comparable systems?

Information regarding specific performance issues or past contract disputes related to BAE Systems' production of the ALE-70 system is not publicly available in this dataset. However, as a major defense contractor, BAE Systems, like other large firms in the industry, may have encountered performance challenges or disputes on various contracts throughout its history. Publicly accessible contract databases and Inspector General reports can sometimes shed light on such issues for specific contracts. For this particular award, the absence of readily available negative information suggests no major, publicly documented disputes have derailed this specific program to date.

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

Solicitation ID: N0001917R0074

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $379,679,807

Exercised Options: $379,659,018

Current Obligation: $379,643,051

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline