BAE Systems awarded $12.1M for RT Upgrade Kits, with contract performance extending over two years

Contract Overview

Contract Amount: $12,073,330 ($12.1M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2023-05-31

End Date: 2025-07-31

Contract Duration: 792 days

Daily Burn Rate: $15.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RT UPGRADE KIT

Place of Performance

Location: GREENLAWN, SUFFOLK County, NEW YORK, 11740

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $12.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: RT UPGRADE KIT Key points: 1. The contract's value of $12.1 million for upgrade kits suggests a significant investment in enhancing existing systems. 2. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies and market alternatives. 3. Performance is scheduled through July 2025, indicating a medium-term project with ongoing resource allocation. 4. The fixed-price contract type aims to provide cost certainty for the government, shifting performance risk to the contractor. 5. The award falls under the 'Electromedical and Electrotherapeutic Apparatus Manufacturing' NAICS code, suggesting a focus on specialized equipment.

Value Assessment

Rating: fair

Benchmarking the value of $12.1 million for 'RT Upgrade Kits' is challenging without specific details on the kit's components and intended upgrades. However, the absence of competitive bidding suggests that a thorough price reasonableness analysis was crucial. Comparing this to similar upgrade contracts within the Department of Defense, especially those involving BAE Systems, would be necessary to determine if the pricing reflects fair market value. The fixed-price nature provides some cost control, but the lack of competition could lead to less favorable pricing than a fully competed award.

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 approach is typically used when only one vendor possesses the necessary capabilities, technology, or proprietary rights to fulfill the requirement. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a bidding process, potentially leading to higher costs than if multiple firms had competed.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of a competitive bidding process. This award highlights the importance of ensuring sole-source justifications are robust and that alternatives are thoroughly explored before foregoing competition.

Public Impact

The primary beneficiaries are likely military personnel who will utilize the upgraded systems, leading to improved operational capabilities. The services delivered involve the provision of specialized upgrade kits, enhancing the functionality or lifespan of existing equipment. The geographic impact is centered in New York, where BAE Systems' relevant facility is located, potentially supporting local employment. Workforce implications may include specialized manufacturing and technical roles at BAE Systems to produce and integrate the upgrade kits.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns if not closely monitored due to limited competitive pressure.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Award to an established defense contractor like BAE Systems suggests a focus on reliability and proven capabilities.
Upgrade kits aim to enhance existing assets, potentially extending their useful life and avoiding full replacement costs.

Sector Analysis

The defense electronics sector is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. BAE Systems is a major player in this market, providing a wide range of defense systems and components. This contract for upgrade kits fits within the broader category of defense modernization and sustainment spending, which is a substantial portion of the defense budget. Comparable spending benchmarks would involve looking at other sustainment and upgrade contracts for similar platforms or electronic systems within the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the prime contractor being BAE Systems, a large defense corporation, the direct impact on small businesses is likely minimal unless BAE Systems engages in significant subcontracting with small businesses for specific components or services. Further investigation into BAE Systems' subcontracting plan would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA) for contract administration and performance monitoring. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected. Transparency is limited due to the sole-source award, but contract award data is publicly available.

Related Government Programs

Defense Logistics Agency (DLA) Sustainment Programs
Department of Defense (DoD) Research, Development, Test, and Evaluation (RDT&E)
Naval Sea Systems Command (NAVSEA) Contracts
Air Force Materiel Command (AFMC) Procurement

Risk Flags

Sole-source award may indicate limited competition.
Lack of detailed justification for sole-source procurement.
Potential for price escalation without competitive bidding.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. RT UPGRADE KIT

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 $12.1 million.

What is the period of performance?

Start: 2023-05-31. End: 2025-07-31.

What specific systems or platforms are these RT Upgrade Kits intended for, and what are the key improvements they provide?

The provided data does not specify the exact systems or platforms that the 'RT UPGRADE KIT' is intended for, nor does it detail the specific improvements. The NAICS code '334510 - Electromedical and Electrotherapeutic Apparatus Manufacturing' suggests the kits might relate to electronic or medical equipment used by the military. Without further details, it's impossible to quantify the precise benefits or the technological advancements these kits represent. Understanding the intended application is crucial for assessing the strategic value and necessity of this $12.1 million investment. Further analysis would require access to the contract's statement of work or technical specifications.

What was the justification for awarding this contract on a sole-source basis, and were alternatives considered?

The data indicates the contract was awarded 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification for this sole-source determination is not provided in the abbreviated data. Typically, sole-source awards are justified under circumstances such as unique capabilities, proprietary technology, urgent and compelling needs where only one source can reasonably fulfill the requirement, or when a follow-on contract is awarded to the original source under specific conditions. The government is required to document this justification thoroughly. Without access to the Justification and Approval (J&A) document, it's impossible to verify the validity of the sole-source claim or confirm if reasonable alternatives were explored.

How does the $12.1 million contract value compare to historical spending on similar upgrade kits or BAE Systems' contracts in this category?

The provided data offers a single contract award of $12.1 million for 'RT UPGRADE KIT' to BAE Systems. To benchmark this value, one would need to analyze historical spending patterns for similar upgrade kits, particularly those manufactured under NAICS code 334510 or for comparable defense systems. Additionally, examining BAE Systems' portfolio of contracts for sustainment and upgrade services within the Department of Defense would provide context. Without access to a broader dataset of past contracts, it is difficult to definitively state whether $12.1 million represents a high, low, or average expenditure for such procurements. A comparative analysis of unit costs, if available, would also be informative.

What are the potential risks associated with a sole-source award of this magnitude, and what mitigation strategies are in place?

The primary risk associated with a sole-source award of $12.1 million is the potential for inflated pricing due to the lack of competitive pressure. This can lead to reduced value for taxpayer money. Other risks include a potential decrease in contractor urgency to perform if they perceive less market risk, and a lack of innovation that might arise from competition. Mitigation strategies typically involve rigorous price negotiation, detailed cost analysis by the government, robust contract surveillance and performance management, and clear performance metrics. The fixed-price contract type itself is a risk mitigation tool, shifting some financial risk to the contractor. However, the effectiveness of these mitigations depends heavily on the government's oversight capabilities and the thoroughness of the initial price reasonableness determination.

What is BAE Systems' track record with the Department of Defense, particularly concerning contracts of similar size and scope?

BAE Systems is a major global defense contractor with a substantial and long-standing relationship with the Department of Defense (DoD). They consistently rank among the top defense contractors, receiving billions of dollars annually across a wide array of programs, including electronics, naval systems, and aerospace. Their track record with the DoD is extensive, encompassing numerous large-scale contracts for development, production, and sustainment. While specific performance metrics for this particular 'RT UPGRADE KIT' contract are not yet available due to its recent award, BAE Systems generally has a proven capability to deliver complex defense systems. However, like any large contractor, they may have faced past performance issues or contract disputes on specific projects, which would be detailed in DoD's contractor performance databases.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Electromedical and Electrotherapeutic Apparatus Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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: $12,073,330

Exercised Options: $12,073,330

Current Obligation: $12,073,330

Subaward Activity

Number of Subawards: 31

Total Subaward Amount: $4,622,234

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001920D0002

IDV Type: IDC

Timeline