Navy awards $24.2M for communications security equipment, with BAE Systems as sole source

Contract Overview

Contract Amount: $24,195,773 ($24.2M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2004-10-01

End Date: 2011-12-31

Contract Duration: 2,647 days

Daily Burn Rate: $9.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200503!073562!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002404C4210 !A!N! !N! ! !20041001!20060930!005149120!876861790!217304393!N!BAE SYSTEMS INFORMATION AND EL!65 SPIT BROOK RD !NASHUA !NH!03060!50260!011!33!NASHUA !HILLSBOROUGH !N.H. !+000006100000!Y!N!000000000000!5810!COMMUNICATIONS SECURITY EQUIP AND COMPS !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334511!E! !3! ! ! ! ! !20200930!B! ! !N!Z!D!N!J!1!001!N!1A!A!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!B!Y! ! ! !Y!1700!N00024!0001! !

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03061

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $24.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: 200503!073562!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002404C4210 !A!N! !N! ! !20041001!20060930!005149120!876861790!217304393!N!BAE SYSTEMS INFORMATION AND EL!65 SPIT BROOK RD !NASHUA !NH!03060!50260!011!33!NASHUA !HILL… Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Significant duration of over 7 years suggests a long-term need for these systems. 3. The contract value is substantial, indicating a critical role for the equipment. 4. Focus on communications security highlights the importance of secure data transmission. 5. The award to a single vendor may limit opportunities for smaller, innovative firms. 6. The North American Industry Classification System (NAICS) code points to a specialized manufacturing sector.

Value Assessment

Rating: fair

The contract value of $24.2 million over approximately 7 years (from Oct 2004 to Dec 2011) averages to roughly $3.46 million per year. Without specific benchmarks for similar communications security equipment, it's difficult to definitively assess value for money. However, the sole-source nature of the award means that competitive pricing pressures were absent, potentially leading to a higher cost than if multiple vendors had bid.

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, was solicited. This approach is typically used when only one source is capable of meeting the agency's needs, often due to proprietary technology, unique capabilities, or urgent requirements. The lack of competition means that the government did not benefit from a range of proposals or price negotiations that could have driven down costs.

Taxpayer Impact: Taxpayers may have paid a premium for this equipment due to the absence of competitive bidding. The government missed an opportunity to leverage market forces to secure the best possible price and terms.

Public Impact

The primary beneficiary is the Department of the Navy, which receives critical communications security equipment. The services delivered involve the provision of communications security equipment and components. The geographic impact is primarily within the operational areas of the U.S. Navy. Workforce implications may include specialized manufacturing and technical support roles at BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive opportunities and potentially increases costs.
Long contract duration could indicate a lack of readily available alternatives or a need for sustained support.
Lack of transparency in the sole-source justification could obscure potential inefficiencies.

Positive Signals

Award to a known entity (BAE Systems) suggests a level of trust in their capabilities for this specific need.
The contract addresses a critical need for communications security, vital for national defense.
The fixed-price contract type (FIRM FIXED PRICE) provides cost certainty for the government.

Sector Analysis

This contract falls within the defense electronics and communications sector, specifically related to communications security equipment. The market for such specialized equipment is often characterized by high barriers to entry due to technological complexity and security requirements. Spending in this area is driven by the need for secure information exchange in military operations. Comparable spending benchmarks would typically be found within other defense contracts for similar systems, but are not readily available in this dataset.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting implications for small businesses based on the provided data. The award to a large defense contractor like BAE Systems suggests that the primary contract is likely to be fulfilled by the prime contractor's internal resources or through their established supply chains, which may or may not involve small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification and terms would be subject to review. Inspector General offices within the Department of Defense may conduct audits or investigations into contract performance and pricing. Transparency is limited by the sole-source nature, but contract award data is generally made public.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Department of Defense Communications Security Contracts
BAE Systems Defense Contracts
Communications Security Equipment Procurement
Sole-Source Defense Awards

Risk Flags

Sole-source award
Long contract duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. 200503!073562!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002404C4210 !A!N! !N! ! !20041001!20060930!005149120!876861790!217304393!N!BAE SYSTEMS INFORMATION AND EL!65 SPIT BROOK RD !NASHUA !NH!03060!50260!011!33!NASHUA !HILLSBOROUGH !N.H. !+000006100000!Y!N!000000000000!5810!COMMUNICATIONS SECURITY EQUIP AND COMPS !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334511!E! !3! ! ! ! ! !202

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 $24.2 million.

What is the period of performance?

Start: 2004-10-01. End: 2011-12-31.

What is the specific type of communications security equipment procured under this contract?

The contract specifies procurement under NAICS code 334511, which covers 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' The Product Service Code (PSC) is 5810, 'COMMUNICATIONS SECURITY EQUIP AND COMPS.' This indicates the contract is for equipment and components related to securing communications, likely involving encryption devices, secure communication systems, or related hardware and software essential for maintaining the confidentiality and integrity of sensitive military information.

Can the value of this contract be benchmarked against similar procurements?

Benchmarking this $24.2 million contract is challenging without access to a broader dataset of similar sole-source procurements for specialized communications security equipment. However, the duration of over 7 years (Oct 2004 to Dec 2011) suggests a significant, long-term requirement. The absence of competition inherently limits the ability to establish a market-driven price. A fair comparison would require identifying contracts with identical or highly similar specifications, awarded competitively, which is not the case here. The value is thus assessed in the context of a non-competitive award for a critical defense need.

What are the risks associated with a sole-source award for critical defense equipment?

Sole-source awards carry inherent risks, primarily the potential for inflated pricing due to the lack of competitive pressure. This can lead to reduced value for taxpayer money. Another risk is the potential for vendor lock-in, where the government becomes overly reliant on a single supplier, limiting future flexibility and potentially hindering innovation. Furthermore, without competitive proposals, there's a reduced opportunity to explore alternative solutions or technologies that might be more cost-effective or advanced. Oversight and justification for sole-source awards are crucial to mitigate these risks.

How does the contract's fixed-price nature impact cost certainty?

The contract is designated as 'FIRM FIXED PRICE' (FFP). This contract type is generally favorable for the government as it shifts the risk of cost overruns to the contractor. The contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides a high degree of cost certainty for the procuring agency, making budgeting more predictable. However, for complex or long-term projects, an FFP contract can sometimes lead to higher initial pricing as the contractor may build in a contingency to cover unforeseen risks.

What is BAE Systems' track record with the Department of the Navy for similar procurements?

BAE Systems is a major defense contractor with a substantial history of providing a wide range of products and services to the Department of the Navy and other military branches. While this specific contract is for communications security equipment, BAE Systems' broader portfolio includes electronic systems, naval platforms, and information technology solutions. Their long-standing presence and numerous awards suggest a proven capability to meet complex defense requirements. However, a detailed assessment of their track record specifically for communications security equipment would require analyzing past performance reviews and other relevant contract data.

What are the historical spending patterns for communications security equipment by the Department of the Navy?

Historical spending patterns for communications security equipment by the Department of the Navy are substantial, reflecting the critical need for secure communication in naval operations. This specific $24.2 million award from 2004-2011 is one data point within a larger, ongoing investment. The Navy, like other branches of the military, consistently allocates significant resources to cybersecurity and secure communication technologies due to evolving threats and the sensitive nature of military information. Trends likely show increasing investment over time, driven by technological advancements and the growing importance of digital security.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 65 SPIT BROOK RD, NASHUA, NH, 02

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline