BAE Systems awarded $33.5M contract for chemical product manufacturing, raising questions about competition and value

Contract Overview

Contract Amount: $33,546,720 ($33.5M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2016-04-04

End Date: 2018-07-01

Contract Duration: 818 days

Daily Burn Rate: $41.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MJU-68 FLARE

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $33.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: MJU-68 FLARE Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The contract's duration of 818 days suggests a significant, ongoing need for these chemical products. 3. Lack of competition raises concerns about whether the government secured the best possible price. 4. The firm-fixed-price structure shifts some risk to the contractor, but the sole-source nature mitigates this. 5. The specific chemical products manufactured are not detailed, making direct performance benchmarking difficult. 6. The contract's value is moderate within the context of large federal defense procurements.

Value Assessment

Rating: fair

The contract value of $33.5 million over approximately 2.7 years represents a significant investment. Without competitive bidding, it is challenging to definitively benchmark the value for money. However, the firm-fixed-price contract type suggests that the contractor bears the risk of cost overruns, which can be a positive indicator. The absence of comparable sole-source contracts for this specific product makes a precise price assessment difficult, but the overall value appears reasonable for a specialized manufacturing requirement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'not competed' (sole-source) justification. This means that only one source, BAE Systems Information and Electronic Systems Integration Inc., was solicited for this requirement. The reasons for this sole-source award are not detailed in the provided data, but typically such awards are made when only one responsible source can provide the required supplies or services. The lack of competition means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to negotiate the best possible price, potentially leading to higher costs for taxpayers. It also bypasses opportunities to foster a broader base of suppliers.

Public Impact

The primary beneficiary is the Department of Defense, which receives specialized chemical products essential for its operations. The contract supports the manufacturing sector by providing work for BAE Systems' facilities and potentially its supply chain. The geographic impact is concentrated in New Hampshire, where BAE Systems has operations, supporting local employment and economic activity. The services delivered are the production of specific chemical products, though the exact nature of these products is not specified.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency regarding the justification for sole-source procurement.
Potential for higher costs due to absence of competitive bidding.
Limited insight into the specific chemical products being manufactured.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
BAE Systems is a large, established defense contractor with significant experience.
Contract supports a critical defense need, ensuring supply chain continuity.

Sector Analysis

This contract falls within the 'All Other Miscellaneous Chemical Product and Preparation Manufacturing' sector. This is a broad category encompassing the production of various chemical preparations not elsewhere classified. The federal government, particularly the Department of Defense, is a significant consumer of specialized chemical products for a wide range of applications, from maintenance and cleaning to operational readiness. Benchmarking this specific contract's value is difficult without knowing the precise nature of the chemical products, but federal spending in chemical manufacturing can range from millions to billions annually, depending on the scope and criticality of the items procured.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (sb: false) and there is no indication of small business subcontracting requirements (ss: false). Therefore, this contract does not appear to directly benefit the small business ecosystem. The prime contractor, BAE Systems, is a large corporation, and the award does not suggest any specific provisions to engage small businesses as subcontractors.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration services to ensure compliance with terms and conditions. Oversight would typically involve monitoring performance, delivery schedules, and payment milestones. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's lifecycle.

Related Government Programs

Defense Industrial Base
Chemical Manufacturing
Department of Defense Procurement
Sole-Source Contracts
BAE Systems Contracts

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. MJU-68 FLARE

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 $33.5 million.

What is the period of performance?

Start: 2016-04-04. End: 2018-07-01.

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

The provided data indicates the contract was 'NOT COMPETED' (CT: NOT COMPETED), signifying a sole-source award. Federal Acquisition Regulation (FAR) Part 6 outlines conditions under which full and open competition is not required, such as when only one responsible source can provide the supplies or services, or in cases of urgent and compelling need. Without further documentation from the awarding agency (Department of Defense), the precise justification remains unknown. Typically, sole-source awards are made when a unique capability, proprietary technology, or critical need exists that only one contractor can fulfill. This lack of competition, however, necessitates careful review by the agency to ensure it is truly the only viable option and that the price is fair and reasonable.

How does the $33.5 million contract value compare to similar chemical product procurements by the DoD?

Comparing the $33.5 million contract value requires understanding the specific nature of the 'All Other Miscellaneous Chemical Product and Preparation Manufacturing' procured. If these are highly specialized, low-volume chemicals critical for specific defense systems, the value might be appropriate. However, if they are more common industrial chemicals, this value could be high, especially given the sole-source nature. Federal procurement data shows a wide range for chemical products, from smaller, competitively bid contracts for standard supplies to multi-million dollar sole-source awards for unique formulations or components. Without knowing the exact product and its criticality, a direct comparison is difficult, but the value is substantial enough to warrant scrutiny regarding price reasonableness.

What are the primary risks associated with this sole-source contract for the government?

The primary risk for the government in this sole-source contract is the potential for paying a non-competitive price. Without competing the requirement, the government loses the leverage that multiple bids provide to drive down costs and ensure the best value. Another risk is contractor performance; while BAE Systems is a reputable firm, the lack of competitive pressure might reduce incentives for exceptional performance or cost efficiency. Furthermore, the government may become dependent on this single source for these specific chemical products, creating a long-term strategic risk if the contractor's capabilities or pricing change unfavorably in the future.

What is the track record of BAE Systems Information and Electronic Systems Integration Inc. in fulfilling federal contracts, particularly for chemical products?

BAE Systems Information and Electronic Systems Integration Inc. is a major defense contractor with a long history of fulfilling numerous federal contracts across various domains, including electronics, information technology, and defense systems. While their expertise is well-established in these areas, their specific track record in 'All Other Miscellaneous Chemical Product and Preparation Manufacturing' is less prominent in general public data. Their overall performance on federal contracts is typically monitored by agencies like the DoD and DCMA. Past performance information, often available through government databases like the Contractor Performance Assessment Reporting System (CPARS), would provide a more detailed view of their reliability, quality, and adherence to contract terms on previous awards.

What are the historical spending patterns for this specific type of chemical product manufacturing within the Department of Defense?

Historical spending patterns for 'All Other Miscellaneous Chemical Product and Preparation Manufacturing' within the Department of Defense can be quite varied. The DoD procures a vast array of chemical products, ranging from bulk industrial chemicals for maintenance and operations to highly specialized compounds for advanced systems, munitions, and research. Spending can fluctuate significantly based on geopolitical events, technological advancements, and specific program requirements. Analyzing historical data would require identifying specific product codes (PSCs) or detailed descriptions related to this contract. Without such specifics, it's challenging to pinpoint precise historical trends for this particular niche, but the DoD consistently represents a significant portion of federal spending in this broad manufacturing category.

Industry Classification

NAICS: Manufacturing › Other Chemical Product and Preparation Manufacturing › All Other Miscellaneous Chemical Product and Preparation Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

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, 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: $39,999,960

Exercised Options: $39,999,960

Current Obligation: $33,546,720

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $19,380,766

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline