DoD awards $43.6M for receiver transmitter warranty and ancillary support, a sole-source contract

Contract Overview

Contract Amount: $43,573,636 ($43.6M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2023-09-20

End Date: 2027-05-26

Contract Duration: 1,344 days

Daily Burn Rate: $32.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE PURPOSE OF THIS DELIVER ORDER (DO), ANNUAL BUY, W56JSR-23-F-0103 TO CONTRACT W56JSR-19-D-0014 IS FOR OPTION YEAR 5 MARS ANCILLARY AND WARRANTY BUY FOR THE RT-1987 RECEIVER TRANSMITTER.

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46818

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $43.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: THE PURPOSE OF THIS DELIVER ORDER (DO), ANNUAL BUY, W56JSR-23-F-0103 TO CONTRACT W56JSR-19-D-0014 IS FOR OPTION YEAR 5 MARS ANCILLARY AND WARRANTY BUY FOR THE RT-1987 RECEIVER TRANSMITTER. Key points: 1. This contract represents a sole-source award for ongoing support of critical communication equipment. 2. The duration of the contract, spanning over three years, indicates a long-term need for these services. 3. The firm-fixed-price structure aims to provide cost certainty for the government. 4. The award is for ancillary and warranty services, suggesting a focus on maintenance and operational readiness. 5. The contractor, BAE Systems, has a significant presence in defense electronics manufacturing. 6. The absence of competition raises questions about potential cost efficiencies and market alternatives.

Value Assessment

Rating: fair

The contract value of $43.6 million for Option Year 5 of the RT-1987 Receiver Transmitter support appears to be within a reasonable range for specialized defense equipment maintenance and warranty services. However, without direct comparable contract data for this specific system or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm-fixed-price nature provides budget predictability, but the lack of competition limits the ability to benchmark against market rates or identify potential cost savings through competitive bidding.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's requirements, often due to prior development or integration. The lack of competition means that the government did not benefit from a bidding process that could have potentially driven down prices or spurred innovation from multiple vendors.

Taxpayer Impact: For taxpayers, a sole-source award means that the government may not be achieving the best possible price. Without competitive pressure, there is a risk of paying a premium for the goods or services, as the contractor faces less incentive to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Army personnel who rely on the RT-1987 Receiver Transmitter for critical communication operations. The contract ensures the continued operational readiness and reliability of essential communication equipment. The services provided include warranty support and ancillary maintenance, crucial for sustaining the equipment throughout its lifecycle. The geographic impact is primarily within the operational theaters where the U.S. Army deploys this communication technology. The contract supports the workforce at BAE Systems involved in the maintenance, repair, and technical support of this specialized equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for vendor lock-in due to specialized nature of the equipment.
Long-term reliance on a single contractor for critical system support.

Positive Signals

Ensures continued operational readiness of vital communication systems.
Firm-fixed-price contract provides cost predictability.
Contractor has established expertise in this specific equipment.
Addresses essential warranty and ancillary support needs.

Sector Analysis

This contract falls within the broader defense electronics manufacturing sector, specifically focusing on communication equipment. The market for such specialized components is often characterized by high barriers to entry due to technological complexity and stringent military specifications. Companies like BAE Systems are key players in this niche, providing essential systems for national security. Benchmarking this contract's value is difficult without access to proprietary cost data or detailed specifications of the RT-1987 system, but it represents a significant investment in maintaining fielded communication capabilities.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large defense contractor like BAE Systems suggests that the primary focus is on specialized capabilities rather than broad small business participation. This contract is unlikely to have a direct positive impact on the small business ecosystem unless BAE Systems voluntarily engages small businesses for specific support roles not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, requiring the contractor to deliver specified services within agreed-upon terms. Transparency is limited due to the sole-source nature and the proprietary aspects of defense technology. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of the Army Communications Systems
Defense Electronics Manufacturing
Radio and Wireless Communications Equipment
Military Logistics and Sustainment
BAE Systems Defense Contracts

Risk Flags

Sole-source award may indicate limited market competition.
Lack of detailed cost breakdown hinders value assessment.
Contract duration suggests long-term reliance on specific technology.
Absence of small business set-aside implications.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. THE PURPOSE OF THIS DELIVER ORDER (DO), ANNUAL BUY, W56JSR-23-F-0103 TO CONTRACT W56JSR-19-D-0014 IS FOR OPTION YEAR 5 MARS ANCILLARY AND WARRANTY BUY FOR THE RT-1987 RECEIVER TRANSMITTER.

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 $43.6 million.

What is the period of performance?

Start: 2023-09-20. End: 2027-05-26.

What is the historical spending trend for the RT-1987 Receiver Transmitter support, and how does this award compare?

The provided data indicates this is an 'Option Year 5' award, suggesting a continuation of support for the RT-1987 Receiver Transmitter. While the specific annual spending for previous years is not detailed, the current award of $43.6 million for Option Year 5 implies a substantial and consistent investment in maintaining this equipment. To assess trends, one would need to examine the contract values for Option Years 1 through 4, as well as any base year awards. A comparison would involve analyzing if the cost per year has remained stable, increased, or decreased, and whether the scope of services has changed significantly over time. Without historical data, it's difficult to determine if this $43.6 million represents an escalation or a steady state of expenditure for this particular system's sustainment.

What specific ancillary services are included in this contract, and what is their criticality?

The contract specifies 'ancillary and warranty buy' for the RT-1987 Receiver Transmitter. Ancillary services typically encompass a range of support functions beyond the core warranty, which may include logistical support, technical data, training, spare parts provisioning, repair services, and system upgrades or modifications necessary for continued operation. The criticality of these services is high, as they directly impact the operational readiness and effectiveness of the U.S. Army's communication capabilities. Without these ancillary and warranty provisions, the RT-1987 Receiver Transmitter could suffer from reduced reliability, extended downtime, and an inability to perform its intended mission, potentially compromising tactical operations and information flow in critical situations.

What is the justification for awarding this contract as sole-source, and were alternatives considered?

The provided data states the contract was 'NOT COMPETED,' indicating a sole-source award. The typical justifications for sole-source procurements in defense contracting include situations where only one responsible source can provide the required supplies or services, such as when the item is unique, proprietary, or requires specialized knowledge possessed by only one entity. For the RT-1987 Receiver Transmitter, this could stem from BAE Systems holding the original design rights, possessing unique repair capabilities, or the system being deeply integrated with other platforms where only BAE Systems can provide compatible support. Without the official justification documentation (e.g., a Justification and Approval document), it's impossible to definitively state the reasons or confirm if limited alternatives were explored and deemed unsuitable. The absence of competition suggests that the government determined no other vendor could meet the requirement effectively.

How does the firm-fixed-price (FFP) contract type mitigate risk for the government in this sole-source scenario?

The Firm-Fixed-Price (FFP) contract type is beneficial for the government, especially in a sole-source situation, as it shifts the majority of the cost risk to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides the government with significant budget certainty and predictability. While the initial price might be higher than in a competitive environment, the FFP structure prevents cost overruns from impacting the government's budget. It incentivizes the contractor to manage their own costs efficiently to maximize profit. In this sole-source context, the FFP structure is a key mechanism for controlling financial exposure, even without the benefit of competitive pricing.

What is the expected performance period and duration of this delivery order, and how does it align with the system's lifecycle?

This delivery order has a stated start date of September 20, 2023, and an end date of May 26, 2027, resulting in a duration of approximately 1344 days (or roughly 3.7 years). This duration covers 'Option Year 5' for the RT-1987 Receiver Transmitter. The length of this option year suggests that the RT-1987 system is expected to remain in service and require ongoing support for a considerable period. The alignment with the system's lifecycle depends on the overall expected service life of the RT-1987. If the system is nearing the end of its operational life, this contract might represent final sustainment efforts. Conversely, if it's a mid-life system, this contract is part of its ongoing operational support phase, indicating a longer-term need for maintenance and potential upgrades.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5001 US HIGHWAY 30 W, FORT WAYNE, IN, 46818

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: $43,573,636

Exercised Options: $43,573,636

Current Obligation: $43,573,636

Actual Outlays: $260,711

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56JSR19D0014

IDV Type: IDC

Timeline