DoD's $38M IFF Transponder Contract Awarded to BAE Systems Raises Questions on Competition and Value

Contract Overview

Contract Amount: $38,131,978 ($38.1M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2018-12-20

End Date: 2021-12-31

Contract Duration: 1,107 days

Daily Burn Rate: $34.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/APX-123A(V) IFF TRANSPONDER

Place of Performance

Location: GREENLAWN, SUFFOLK County, NEW YORK, 11740

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $38.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: AN/APX-123A(V) IFF TRANSPONDER Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Lack of competition suggests potential risks in contractor performance and innovation. 3. The contract duration of over three years provides a long-term commitment but also ties up significant funds. 4. Fixed-price contract type shifts some risk to the contractor, but the sole-source nature mitigates this benefit. 5. The specific system, AN/APX-123A(V) IFF Transponder, is critical for military identification and situational awareness. 6. Spending on this system represents a small fraction of the overall DoD budget, but its criticality is high.

Value Assessment

Rating: questionable

Benchmarking the value of this $38.1 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the price paid reflects fair market value. The fixed-price contract type is generally favorable, but the lack of competition means the government has less leverage to negotiate favorable terms or ensure the lowest possible price. Further analysis would require access to historical pricing data for similar transponders or previous awards to BAE Systems for this specific system.

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. This typically occurs when only one responsible source can provide the required goods or services. The lack of competition means there were no other bidders, and therefore no direct price comparison from multiple vendors. This situation can lead to higher prices than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium for this system due to the absence of competitive pressure. The government's ability to secure the best possible price is diminished without multiple offers.

Public Impact

The primary beneficiaries are the Department of Defense (DoD) and its various branches, which receive critical identification friend or foe (IFF) transponders. The services delivered include the provision of AN/APX-123A(V) IFF Transponders, essential for distinguishing friendly from hostile aircraft and vessels. The geographic impact is national, supporting military operations across various theaters and bases. Workforce implications are primarily within BAE Systems and its supply chain, supporting manufacturing and technical roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially leads to overpayment.
Lack of competition may reduce incentives for contractor efficiency and innovation.
Long contract duration ties up significant funds without ongoing market validation.
Dependence on a single supplier for critical equipment can create supply chain vulnerabilities.

Positive Signals

Fixed-price contract type shifts some cost risk to the contractor.
BAE Systems is an established defense contractor with a track record in electronic systems.
The AN/APX-123A(V) is a specific, potentially specialized, piece of equipment where sole-sourcing might be justified by technical requirements.

Sector Analysis

The market for aerospace and defense electronics, particularly identification systems, is highly specialized. Companies like BAE Systems operate within a sector characterized by long development cycles, high R&D costs, and significant government procurement. Spending on IFF transponders is a component of the broader defense electronics market, which is valued in the tens of billions of dollars annually. This contract fits within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry classification.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no information provided regarding subcontracting plans for small businesses. The sole-source nature of the award further reduces the likelihood of small business participation unless they are direct subcontractors to BAE Systems. This contract does not appear to directly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the contract terms, particularly the fixed-price nature. Transparency is limited due to the sole-source award, with less public information available compared to competed contracts. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

DoD Aircraft Identification Systems
Military Identification Friend or Foe (IFF) Systems
Defense Electronics Procurement
Aerospace Navigation and Guidance Systems

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. AN/APX-123A(V) IFF TRANSPONDER

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 $38.1 million.

What is the period of performance?

Start: 2018-12-20. End: 2021-12-31.

What is the track record of BAE Systems in delivering IFF transponders to the DoD?

BAE Systems Information and Electronic Systems Integration Inc. is a major defense contractor with extensive experience in electronic warfare, communications, and avionics systems, including Identification Friend or Foe (IFF) technology. They have a long history of supplying various components and integrated systems to the Department of Defense. While specific performance data for the AN/APX-123A(V) under this particular contract is not detailed here, BAE Systems is generally considered a capable supplier in this domain. However, the sole-source nature of this award means that direct comparisons of their performance against competitors for this specific item are not publicly available, making a nuanced assessment of their track record in this instance difficult without further proprietary or classified data.

How does the $38.1 million contract value compare to similar IFF transponder procurements?

Directly comparing the $38.1 million value of this contract to similar procurements is challenging due to the sole-source nature of the award and the specificity of the AN/APX-123A(V) model. Without competitive bidding, there is no benchmark price established through market forces for this particular contract. To assess value, one would need to compare it against historical sole-source awards for the same or equivalent systems, or against the estimated cost if it had been competed. Publicly available data often lacks the granularity to make precise comparisons, especially for specialized defense equipment. The duration of the contract (over three years) also means the annual spending rate is approximately $10-13 million, which would be a more relevant figure for comparison if similar annual rates for comparable systems were known.

What are the primary risks associated with awarding this contract on a sole-source basis?

The primary risk associated with awarding this $38.1 million contract on a sole-source basis is the lack of price competition. This can lead to the government paying a higher price than if multiple vendors had competed for the contract, potentially resulting in inefficient use of taxpayer funds. Another significant risk is reduced incentive for the contractor, BAE Systems, to innovate or improve efficiency, as they face no direct competitive pressure for this specific award. Furthermore, sole-sourcing can create a dependency on a single supplier, potentially leading to supply chain vulnerabilities if the contractor experiences production issues or if geopolitical factors impact their operations. This also limits the government's options should performance issues arise.

How effective is the AN/APX-123A(V) IFF Transponder in enhancing military situational awareness?

The AN/APX-123A(V) IFF Transponder is a critical component for military situational awareness, playing a vital role in the Identification Friend or Foe (IFF) system. Its primary function is to enable military platforms (aircraft, ships, ground vehicles) to transmit coded signals that are answered by other platforms, allowing them to be positively identified as friendly. This capability is essential for preventing fratricide (mistakenly engaging friendly forces) and for maintaining a clear understanding of the battlespace. The effectiveness of the AN/APX-123A(V) specifically would depend on its technical specifications, reliability, integration with other systems, and the operational context in which it is deployed. As a key enabler of positive identification, it directly contributes to safer and more effective military operations.

What are the historical spending patterns for IFF transponders within the Department of Defense?

Historical spending patterns for IFF transponders within the Department of Defense are part of the broader defense electronics and avionics procurement. While specific aggregate figures for 'IFF transponders' across all DoD branches and programs are not readily available in public databases, it is known that the DoD procures these systems regularly to equip new platforms and maintain existing fleets. Spending can fluctuate based on modernization programs, new platform introductions (e.g., new fighter jets, ships), and upgrades to existing systems. Contracts for IFF systems can range from small orders for individual units to large multi-year procurements for entire fleets. The $38.1 million awarded to BAE Systems represents a significant, but not extraordinary, investment for a critical component over a multi-year period, reflecting the ongoing need for robust identification capabilities in defense operations.

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: N0001917R0004

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 450 PULASKI RD, GREENLAWN, NY, 11740

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: $38,131,978

Exercised Options: $38,131,978

Current Obligation: $38,131,978

Actual Outlays: $1,639,845

Subaward Activity

Number of Subawards: 43

Total Subaward Amount: $16,077,945

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001917D0003

IDV Type: IDC

Timeline