DoD Awards BAE Systems $328M for Microcircuits, Raising Concerns Over Competition
Contract Overview
Contract Amount: $327,899,881 ($327.9M)
Contractor: BAE Systems Information and Electronic Systems Integration Inc.
Awarding Agency: Department of Defense
Start Date: 2021-05-06
End Date: 2028-12-31
Contract Duration: 2,796 days
Daily Burn Rate: $117.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: 8508157598!MICROCIRCUIT,DIGITA
Place of Performance
Location: COLUMBUS, FRANKLIN County, OHIO, 43218
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $327.9 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: 8508157598!MICROCIRCUIT,DIGITA Key points: 1. Significant award value of $328 million for digital microcircuits. 2. Sole-source award to BAE Systems limits competitive pricing. 3. Potential risk associated with single-source procurement for critical components. 4. Spending falls within the Defense sector, specifically semiconductor manufacturing.
Value Assessment
Rating: questionable
The $328 million award for microcircuits appears high without competitive benchmarking. The lack of competition makes it difficult to assess if this price is fair market value compared to similar contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The lack of competition may result in inflated prices, impacting taxpayer value for this significant procurement.
Public Impact
Taxpayers may be overpaying for essential microcircuits due to the absence of competitive bidding. Reliance on a single supplier for critical defense components could pose a supply chain risk. The Defense Logistics Agency's procurement process for this item warrants further scrutiny.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of price competition
- Potential for overpayment
Positive Signals
- Award to established contractor
- Definitive contract provides long-term supply
Sector Analysis
This procurement falls under the semiconductor manufacturing sector, crucial for defense electronics. Spending benchmarks for sole-source microcircuit contracts are difficult to establish without competitive data, but large awards warrant scrutiny.
Small Business Impact
The data indicates this contract was not awarded to small businesses. Further analysis would be needed to determine if small businesses were considered or excluded from this sole-source opportunity.
Oversight & Accountability
The sole-source nature of this contract raises questions about the oversight applied to ensure fair pricing and explore competitive alternatives. The Defense Logistics Agency should provide justification for the lack of competition.
Related Government Programs
- Semiconductor and Related Device Manufacturing
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Sole-source award lacks competition
- Potential for inflated pricing
- Supply chain vulnerability
- Limited transparency in price discovery
Tags
semiconductor-and-related-device-manufac, department-of-defense, oh, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $327.9 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. 8508157598!MICROCIRCUIT,DIGITA
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 Logistics Agency).
What is the total obligated amount?
The obligated amount is $327.9 million.
What is the period of performance?
Start: 2021-05-06. End: 2028-12-31.
What is the justification for awarding this contract on a sole-source basis, and were any competitive alternatives explored?
The provided data indicates the contract was 'NOT COMPETED.' A thorough review would require access to the agency's justification for this sole-source determination. Typically, this involves demonstrating that only one responsible source can provide the required supplies or services, or that exceptional circumstances preclude competition. Without this justification, it's difficult to assess the validity of the procurement approach.
How does the unit cost of these microcircuits compare to commercially available or previously competed similar items?
Direct comparison is challenging without specific unit cost data and detailed specifications for the microcircuits. However, given the sole-source nature, it is highly probable that the unit cost is higher than what might be achieved through a competitive bidding process. Benchmarking against similar DoD contracts or commercial equivalents, if available, would be necessary for a precise assessment.
What are the potential risks to national security or operational readiness if this sole-source supplier faces disruptions?
A sole-source award for critical components like digital microcircuits presents a significant supply chain risk. Disruptions to BAE Systems' production or delivery could directly impact defense readiness and national security. The DoD should have contingency plans, such as identifying alternative suppliers or maintaining strategic stockpiles, to mitigate such risks.
Industry Classification
NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Semiconductor and Related Device Manufacturing
Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: SPE7MX20R0147
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 7825 6TH ST SW, CEDAR RAPIDS, IA, 52404
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: $955,471,909
Exercised Options: $327,899,881
Current Obligation: $327,899,881
Actual Outlays: $145,774,831
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2021-05-06
Current End Date: 2028-12-31
Potential End Date: 2030-05-05 00:00:00
Last Modified: 2026-01-09
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