DoD awards $25.4M for ECU, EOM, CDT repairs and lay-in material, with limited competition

Contract Overview

Contract Amount: $25,437,300 ($25.4M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2019-08-29

End Date: 2024-11-29

Contract Duration: 1,919 days

Daily Burn Rate: $13.3K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TWO YEAR TASK ORDER TO PROCURE 2 YEARS OF LAYIN MATERIAL AND LRU REPAIRS OF ECU, EOMS AND CDTS

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $25.4 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: TWO YEAR TASK ORDER TO PROCURE 2 YEARS OF LAYIN MATERIAL AND LRU REPAIRS OF ECU, EOMS AND CDTS Key points: 1. Contract focuses on essential repair and material for critical electronic components. 2. Sole-source award raises concerns about price discovery and potential overpayment. 3. Long duration suggests a sustained need for these specialized repair services. 4. Lack of competition may limit opportunities for innovative solutions or cost savings. 5. Performance period extends significantly, indicating a long-term reliance on the contractor. 6. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized components. The Cost Plus Fixed Fee structure, while common for complex repairs, carries inherent risks of cost escalation. Without competitive bids, it's difficult to ascertain if the $25.4 million over five years represents a fair market price or if taxpayers are bearing a premium for the lack of competition. Further analysis would require comparing the specific repair rates and material markups to industry standards for similar electronic components and repair services.

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 standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they significantly reduce price competition and can lead to higher costs for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible pricing, potentially resulting in higher expenditures for taxpayers.

Public Impact

The Department of the Army benefits from the continued operational readiness of its electronic systems. Services include repairs and lay-in material for crucial components like ECUs, EOMs, and CDTs. The geographic impact is primarily within the Department of the Army's operational theaters. Workforce implications are likely concentrated within BAE Systems' specialized repair facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can incentivize higher costs.
Lack of transparency in pricing due to non-competitive nature.
Long contract duration may mask inefficiencies over time.
Potential for vendor lock-in due to specialized nature of repairs.

Positive Signals

Ensures continued availability of critical repair services for defense systems.
BAE Systems is a known entity with established capabilities in this area.
Contract provides a stable period for necessary maintenance and support.
Clear definition of components (ECU, EOM, CDT) suggests focused scope.

Sector Analysis

This contract falls within the broader defense electronics manufacturing and repair sector. The market for specialized repair of military electronic components is often characterized by high barriers to entry due to technical expertise, security clearances, and proprietary knowledge. While specific market size data for ECU, EOM, and CDT repairs is not readily available, the overall defense electronics market is substantial, driven by continuous modernization and maintenance needs of military equipment. Comparable spending benchmarks are difficult to establish without competitive data, but the sustained nature of this award suggests a significant ongoing requirement.

Small Business Impact

This contract was not competed and does not appear to include specific small business set-aside provisions. The prime contractor, BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC., is a large business. There is no explicit information provided regarding subcontracting plans to small businesses. Therefore, the direct impact on the small business ecosystem appears minimal for this specific award, though BAE Systems may engage small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a delivery order under a larger contract vehicle, specific oversight mechanisms would be detailed within that framework. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected. The Cost Plus Fixed Fee structure necessitates careful monitoring of costs to ensure they remain reasonable and allocable.

Related Government Programs

Department of Defense Maintenance and Repair Contracts
Electronic Component Manufacturing and Repair
Military Logistics and Sustainment Services
Army Aviation and Missile Command Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.4 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. TWO YEAR TASK ORDER TO PROCURE 2 YEARS OF LAYIN MATERIAL AND LRU REPAIRS OF ECU, EOMS AND CDTS

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 Army).

What is the total obligated amount?

The obligated amount is $25.4 million.

What is the period of performance?

Start: 2019-08-29. End: 2024-11-29.

What is the historical spending pattern for similar repair and lay-in material services for ECUs, EOMs, and CDTs within the Department of the Army?

Analyzing historical spending for these specific components requires deep dives into the Army's procurement databases. Without access to granular data on past contracts for ECU, EOM, and CDT repairs, it's difficult to establish a precise historical trend. However, the defense sector generally sees consistent spending on maintenance and repair of electronic systems due to the aging of equipment and the need for operational readiness. The $25.4 million awarded over five years suggests a significant, ongoing requirement. If previous contracts for similar services were competitively bid, a comparison could reveal if current pricing is elevated. The sole-source nature of this award prevents a direct historical cost comparison for this specific task order.

How does the Cost Plus Fixed Fee (CPFF) contract type typically impact final costs compared to other contract types for repair services?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined or involves significant uncertainty, such as complex repairs. Under CPFF, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While it allows flexibility, it shifts much of the cost risk to the government. If costs escalate beyond initial estimates, the government pays more. This can be less cost-effective than fixed-price contracts, where the contractor bears the risk of cost overruns. For taxpayers, CPFF contracts require robust government oversight to ensure costs are reasonable and necessary, as the contractor has less incentive to control expenses compared to fixed-price arrangements.

What are the specific risks associated with a sole-source award for critical electronic component repairs?

A sole-source award for critical electronic component repairs carries several significant risks. Primarily, the lack of competition means the government cannot leverage market forces to achieve the best possible price, potentially leading to inflated costs. It also reduces the incentive for the sole provider to innovate or improve efficiency, as there is no competitive pressure. Furthermore, it can create vendor lock-in, making it difficult and costly to switch providers in the future, especially if the components are proprietary or require specialized knowledge. This dependence can also make the government vulnerable to supply chain disruptions or price increases dictated by the single source.

What is BAE Systems' track record with similar sole-source contracts for defense electronics repair?

BAE Systems is a major defense contractor with extensive experience in electronic systems integration, manufacturing, and support. Information on their specific track record with sole-source contracts for similar repair services would require a detailed review of their past performance evaluations and contract awards. Generally, large defense contractors like BAE Systems are awarded sole-source contracts when they possess unique capabilities, proprietary technology, or are the incumbent provider for a system. While they have a broad history of performance, the specifics of their sole-source dealings, particularly regarding cost-effectiveness and competitive fairness, would need to be assessed on a contract-by-contract basis. Government contract databases and performance reports (if publicly available) would offer more insight.

Are there alternative contractors capable of providing these repair and lay-in material services, and why might they not have been considered?

Identifying alternative contractors requires a thorough market analysis, which appears to have been bypassed due to the sole-source determination. For specialized electronic components like ECUs, EOMs, and CDTs used in military systems, the pool of capable contractors might be limited due to technical expertise, security clearances, and existing relationships with the original equipment manufacturers. The justification for a sole-source award typically rests on factors such as the urgency of the need, the unique capabilities of the incumbent, or the unavailability of other sources. Without the specific justification document for this sole-source award, it's impossible to definitively state why alternatives were not considered, but it likely relates to perceived technical requirements or existing system integration.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

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: $35,909,620

Exercised Options: $35,909,620

Current Obligation: $25,437,300

Actual Outlays: $14,210,765

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRBL119D0075

IDV Type: IDC

Timeline