DoD awards BAE Systems $7.8M for IFF Transponder Production, raising questions on competition and value

Contract Overview

Contract Amount: $7,866,212 ($7.9M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2024-08-30

End Date: 2026-06-30

Contract Duration: 669 days

Daily Burn Rate: $11.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION ORDER FOR 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 $7.9 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: PRODUCTION ORDER FOR AN/APX-123A(V) IFF TRANSPONDER Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Delivery order for a critical defense system, highlighting reliance on established suppliers. 3. Fixed-price contract type aims to control costs, but sole-source nature may negate savings. 4. Limited competition raises concerns about market responsiveness and innovation. 5. Performance period spans over 2 years, indicating a long-term need for the equipment. 6. Geographic concentration in New York for the contractor warrants attention for supply chain resilience.

Value Assessment

Rating: questionable

The contract value of $7.8 million for an IFF transponder production order appears within a reasonable range for specialized defense electronics. However, without comparable sole-source awards or open-market benchmarks, a definitive value-for-money assessment is challenging. The firm fixed-price structure is a positive indicator for cost control, but the lack of competition prevents a thorough price comparison against potential alternatives or market rates. Further analysis would require access to historical pricing data for similar systems or a justification for the sole-source award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, BAE Systems Information and Electronic Systems Integration Inc., was solicited. This approach bypasses the competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they limit the government's ability to leverage market competition to secure the best possible price and terms. The absence of multiple bidders means there is no direct comparison of offers to ensure optimal value.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government cannot benefit from competitive pressures that drive down prices. This limits the potential for cost savings that could be realized through an open bidding process.

Public Impact

The Department of the Navy benefits from the acquisition of essential IFF transponders for its fleet. This contract ensures the continued availability of critical identification friend or foe systems for naval operations. The geographic impact is primarily concentrated in New York, where BAE Systems is located. Workforce implications are likely within BAE Systems' manufacturing and engineering divisions in New York.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of competition may reduce incentives for innovation and efficiency from the contractor.
Dependence on a single supplier for critical defense components can pose supply chain risks.
Limited transparency into the justification for sole-source procurement.

Positive Signals

Firm fixed-price contract type helps to establish cost certainty.
BAE Systems is an established defense contractor with a track record in electronic systems.
The contract addresses a clear operational need for the Department of the Navy.

Sector Analysis

The contract falls within the aerospace and defense manufacturing sector, specifically focusing on electronic systems for aircraft and naval vessels. The market for Identification Friend or Foe (IFF) transponders is specialized, often dominated by a few key defense contractors due to the stringent requirements and security protocols involved. Spending in this sub-sector is driven by military modernization programs and the need for interoperable identification systems across allied forces. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for similar avionic or naval electronic components.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the 'ss' and 'sb' fields being false. BAE Systems is a large defense contractor. There is no explicit information provided regarding subcontracting plans for small businesses. Without specific set-aside goals or subcontracting requirements detailed in the award, the direct impact on the small business ecosystem is likely minimal, unless BAE Systems voluntarily engages small businesses in its supply chain for this specific order.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a delivery order under a larger contract vehicle (though not specified here), existing oversight mechanisms for that vehicle would apply. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected. Accountability is managed through contract performance monitoring and adherence to the firm fixed-price terms.

Related Government Programs

Department of the Navy Procurement
Defense Electronics Manufacturing
Avionics Systems
Identification Friend or Foe (IFF) Systems
BAE Systems Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $7.9 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. PRODUCTION ORDER FOR 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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $7.9 million.

What is the period of performance?

Start: 2024-08-30. End: 2026-06-30.

What is the specific justification for awarding this contract on a sole-source basis to BAE Systems?

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification for this determination is not detailed in the provided data. Typically, sole-source awards are justified when only one responsible source is capable of providing the required supplies or services, or when there is a compelling urgency that precludes competition. For defense systems like IFF transponders, justifications often relate to proprietary technology, unique manufacturing capabilities, or the need for interoperability with existing platforms where only one vendor's system is compatible. Without further documentation from the Department of the Navy, the precise reason remains unstated.

How does the $7.8 million contract value compare to previous or similar IFF transponder procurements?

A direct comparison of the $7.8 million contract value for this specific production order of AN/APX-123A(V) IFF transponders is difficult without access to a broader dataset of historical procurements for this exact model or comparable systems. The value is influenced by factors such as the quantity ordered, specific configurations, and the cost structure of the sole-source provider, BAE Systems. Given that it is a sole-source award, the price may not reflect the lowest possible cost achievable through competition. Benchmarking against other sole-source awards for similar specialized defense electronics would be necessary for a more informed assessment, but such data is not readily available in the provided snippet.

What are the potential risks associated with relying on a sole-source supplier for critical defense components like IFF transponders?

Relying on a sole-source supplier for critical defense components like IFF transponders introduces several risks. Firstly, it eliminates competitive pressure, which can lead to higher prices and reduced incentives for the supplier to innovate or improve efficiency. Secondly, it creates a dependency on a single entity, making the supply chain vulnerable to disruptions caused by the supplier's operational issues, financial instability, or geopolitical factors affecting their operations. Thirdly, the government has limited leverage in negotiating terms and conditions, potentially impacting delivery schedules or quality control. Lastly, it can stifle the development of alternative technologies or competing suppliers in the long run.

What is the expected performance period and delivery timeline for this contract?

The contract has a specified start date of August 30, 2024, and an end date of June 30, 2026. This indicates a performance period of approximately 22 months. The total duration in days is listed as 669 days. This timeline suggests that the production order and delivery of the AN/APX-123A(V) IFF transponders are expected to be completed within this timeframe. The delivery order nature implies that specific delivery schedules within this period would be managed through subsequent taskings or milestones under this overarching contract.

Does BAE Systems have a history of performance issues with Department of Defense contracts, particularly for electronic systems?

The provided data does not include specific performance history or track record details for BAE Systems regarding this or other Department of Defense contracts. BAE Systems is a major defense contractor with a broad portfolio of products and services. While large contractors generally have extensive contract histories, assessing their performance on specific programs requires access to contract databases that track on-time delivery, quality metrics, cost overruns, and customer satisfaction. Without such detailed performance data, it is not possible to evaluate BAE Systems' specific track record for IFF transponder production or similar electronic systems based solely on the information given.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001917R0011

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: $7,866,212

Exercised Options: $7,866,212

Current Obligation: $7,866,212

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $3,994,036

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001921D0008

IDV Type: IDC

Timeline