DoD's $55M contract for guided missile manufacturing awarded to BAE Systems, spanning over 7 years

Contract Overview

Contract Amount: $54,995,592 ($55.0M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2006-04-25

End Date: 2013-10-16

Contract Duration: 2,731 days

Daily Burn Rate: $20.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03061

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $55.0 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: Key points: 1. Contract value represents significant investment in defense manufacturing capabilities. 2. Sole awardee suggests specialized nature of the requirement or strong incumbent performance. 3. Long duration indicates a stable, long-term need for these components. 4. Cost-plus incentive fee structure aims to balance contractor performance with cost control. 5. Manufacturing of guided missiles is a critical component of national security. 6. Awarded by the Department of the Navy, highlighting naval defense priorities.

Value Assessment

Rating: fair

The contract's total value of $55 million over seven years averages to approximately $7.8 million annually. Without specific benchmarks for guided missile manufacturing, it's challenging to definitively assess value for money. The cost-plus incentive fee (CPIF) structure, while common in complex defense procurements, can lead to costs exceeding initial estimates if not managed tightly. Further analysis would require comparing this contract's unit costs and performance metrics against similar procurements for comparable missile systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, with only three bids received, the level of competition was relatively limited. This suggests that the market for this specific type of guided missile manufacturing may be concentrated among a few specialized companies, or that the technical requirements were highly specific, deterring broader participation. Limited competition can sometimes lead to higher prices than in more robustly contested markets.

Taxpayer Impact: While full and open competition was utilized, the low number of bids suggests taxpayers may not have benefited from the most aggressive pricing possible. The government secured a supplier, but the potential for cost savings through broader competition appears limited.

Public Impact

The primary beneficiaries are the Department of the Navy and the broader U.S. defense apparatus, ensuring the availability of critical missile components. Services delivered include the manufacturing of guided missiles and potentially related components, crucial for naval operations and national defense. The geographic impact is primarily centered around the contractor's facilities in New Hampshire, contributing to the local and state economy. Workforce implications include skilled manufacturing jobs in specialized areas, supporting the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (3 bidders) may have resulted in less favorable pricing for taxpayers.
Cost-plus incentive fee contracts carry inherent risks of cost overruns if not rigorously managed.
The long contract duration could mask inefficiencies if performance is not continuously monitored.
Lack of detailed performance metrics in the provided data makes assessing efficiency difficult.

Positive Signals

Awarded under full and open competition, ensuring a fair process.
Long-term contract provides stability and predictability for a critical defense capability.
Cost-plus incentive fee structure incentivizes contractor performance and cost control.
Contractor is a known entity in defense systems integration, suggesting a degree of reliability.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of guided missile and space vehicles. This is a highly specialized and capital-intensive segment of the defense industrial base, characterized by stringent quality requirements, long development cycles, and significant government oversight. The market is dominated by a few large prime contractors and their specialized suppliers. Spending in this area is directly tied to national security priorities and defense budgets, often involving complex, high-value procurements.

Small Business Impact

The provided data indicates that small business participation was not a primary focus for this contract, as the 'ss' (small business set-aside) field is false. There is no explicit mention of subcontracting goals for small businesses. This suggests that the prime contractor, BAE Systems, likely handled the majority of the work internally or with large business partners. The impact on the small business ecosystem for this specific contract appears minimal, though BAE Systems may engage small businesses in other capacities.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Given the nature of defense procurement, it is likely subject to review by the Government Accountability Office (GAO) for bid protests and potentially audits by the Defense Contract Audit Agency (DCAA). Inspector General (IG) investigations could be initiated if fraud, waste, or abuse is suspected. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive.

Related Government Programs

Guided Missile Manufacturing
Naval Weapon Systems
Aerospace Manufacturing
Defense Contracting
Cost-Plus Contracts
Space Vehicle Manufacturing

Risk Flags

Limited Competition
Cost-Plus Contract Risk
Potential for Cost Overruns
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.0 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. See the official description on USAspending.

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 $55.0 million.

What is the period of performance?

Start: 2006-04-25. End: 2013-10-16.

What is the track record of BAE Systems Information and Electronic Systems Integration Inc. in fulfilling similar defense manufacturing contracts?

BAE Systems Information and Electronic Systems Integration Inc. is a major defense contractor with a long history of producing complex electronic systems, including those for naval platforms and missile systems. They have a substantial portfolio of government contracts, often involving advanced technology and large dollar values. While specific performance metrics for this particular $55 million contract are not detailed here, the company's overall track record suggests significant experience in defense manufacturing. However, like any large contractor, they may have faced past performance issues or contract disputes on other programs, which would typically be documented in contractor performance databases used by agencies during source selection.

How does the average annual value of this contract compare to other DoD procurements for guided missile manufacturing?

The average annual value of this contract is approximately $7.8 million ($55 million / 7 years). This figure needs to be contextualized within the broader landscape of DoD guided missile manufacturing procurements. Some missile programs, particularly those involving advanced technology development or large-scale production runs of complex systems (like strategic missiles or advanced fighter jet munitions), can involve annual spending significantly higher than this. Conversely, contracts for specific components, upgrades, or smaller production lots might be in a similar or lower range. Without access to a comparative database of similar contracts, it's difficult to definitively benchmark this $7.8 million annual average against the wider DoD spending in this category.

What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for missile manufacturing?

Cost Plus Incentive Fee (CPIF) contracts aim to incentivize the contractor to control costs while achieving performance targets. The primary risks include potential cost overruns if the target cost is set too high or if unforeseen technical challenges arise, increasing the actual costs. The incentive fee structure requires careful negotiation of target costs, target profits, and sharing ratios for cost savings or overruns. If the incentive targets are not well-defined or achievable, the contract may not yield the desired cost efficiencies. Furthermore, the government bears a significant portion of the cost risk, and effective oversight is crucial to ensure the contractor is managing resources efficiently and not simply increasing costs to maximize profit.

How effective is the 'full and open competition' approach when only three bids are received for a specialized defense contract?

While 'full and open competition' is the preferred method for maximizing market participation, its effectiveness is diminished when only a few bids are received, as in this case with three bidders. This suggests that the market for this specific requirement may be limited to a few specialized firms, or that the technical specifications were highly restrictive. In such scenarios, the government may not achieve the full benefits of robust competition, such as aggressive pricing and a wide range of innovative solutions. The effectiveness hinges on whether those three bidders represented the majority of capable sources and whether their proposals were thoroughly evaluated to ensure the best value was obtained, despite the limited pool.

What are the historical spending patterns for guided missile and space vehicle manufacturing within the Department of the Navy?

Historical spending patterns for guided missile and space vehicle manufacturing within the Department of the Navy (DoN) typically reflect evolving threats, technological advancements, and strategic priorities. The DoN consistently invests billions annually in missile systems, encompassing development, procurement, and sustainment across various platforms (ships, submarines, aircraft). Spending fluctuates based on major program milestones, such as the introduction of new missile types (e.g., hypersonic, advanced anti-air), modernization of existing fleets, and the overall defense budget allocation. Contracts like this one, for specific manufacturing capabilities, represent a portion of that larger investment, supporting the readiness and capability of naval forces.

What is the significance of the contract type 'COST PLUS INCENTIVE' (PT: COST PLUS INCENTIVE) in the context of defense procurement?

The 'Cost Plus Incentive' (CPI) contract type is utilized when the government and contractor can agree on a target cost, but the final cost is uncertain due to the nature of the work, such as research and development or complex manufacturing. The contractor is reimbursed for allowable costs incurred, plus a fee that is adjusted based on whether the final cost is below or above the target cost. This structure incentivizes the contractor to control costs and meet performance objectives. It's often used in situations where performance outcomes are critical and can be objectively measured, and where cost savings are desirable but difficult to predict precisely at the outset. It balances the government's need for cost control with the contractor's need for fair compensation on uncertain projects.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE (V)

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: YES

Timeline