DoD's $493M Missile Warning System Contract Awarded to BAE Systems Amidst Limited Competition

Contract Overview

Contract Amount: $493,283,903 ($493.3M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2017-12-15

End Date: 2024-06-30

Contract Duration: 2,389 days

Daily Burn Rate: $206.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LIMITED INTERIM MISSILE WARNING SYSTEM (LIMWS) A-KITS AND B-KITS

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $493.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: LIMITED INTERIM MISSILE WARNING SYSTEM (LIMWS) A-KITS AND B-KITS Key points: 1. The contract's value of $493.3 million over its duration suggests a significant investment in critical defense capabilities. 2. BAE Systems, a major defense contractor, secured this award, indicating a concentration of large contracts within established players. 3. The 'DEFINITIVE CONTRACT' award type implies a long-term commitment and potential for follow-on work. 4. The contract's duration of approximately 2389 days (over 6.5 years) points to a sustained need for these missile warning system components. 5. The 'COST PLUS FIXED FEE' pricing structure can incentivize cost control by the contractor while ensuring a defined profit margin. 6. The absence of small business set-aside flags suggests this contract was not specifically targeted to boost small business participation. 7. The 'Other Electronic Component Manufacturing' NAICS code indicates a focus on specialized hardware rather than broad IT services.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the 'A-KITS' and 'B-KITS' components. However, the substantial dollar amount over a multi-year period indicates a significant investment. The 'COST PLUS FIXED FEE' structure, while common in defense, can sometimes lead to higher costs compared to fixed-price contracts if not managed diligently. Further analysis would require understanding the specific technological requirements and comparing pricing for similar, albeit potentially less complex, electronic component manufacturing contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'FULL AND OPEN COMPETITION,' suggesting that multiple bidders were likely solicited. However, the fact that BAE Systems was the sole awardee indicates that they were the most competitive offeror based on the evaluation criteria. The number of bidders is not explicitly stated, but a full and open competition generally aims to maximize price discovery and ensure the government receives the best value.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it encourages a wider range of offers, potentially leading to lower prices and better terms for the government.

Public Impact

The primary beneficiaries are the U.S. Army and Department of Defense, receiving enhanced missile warning capabilities. The contract delivers critical 'A-KITS' and 'B-KITS' for the LIMITED INTERIM MISSILE WARNING SYSTEM (LIMWS). The geographic impact is likely national, supporting defense infrastructure across various locations. Workforce implications may include specialized manufacturing and engineering roles within BAE Systems and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can sometimes lead to cost overruns if not closely monitored.
The long duration of the contract could present risks if technology evolves rapidly during its term.
Reliance on a single prime contractor for critical components may pose supply chain risks.

Positive Signals

Awarded under full and open competition, suggesting a robust selection process.
BAE Systems is a well-established defense contractor with a track record in complex systems.
The contract addresses a critical national security need for missile warning systems.

Sector Analysis

This contract falls within the 'Other Electronic Component Manufacturing' sector, a specialized area within the broader defense industrial base. The market for such components is driven by government procurement, particularly for defense applications requiring advanced technology and high reliability. The value of this single contract, nearly half a billion dollars, represents a significant portion of spending within this niche, highlighting the substantial investment the DoD makes in maintaining and upgrading its early warning systems.

Small Business Impact

The data indicates that this contract was not set aside for small businesses ('ss': false, 'sb': false). This suggests that the primary focus was on securing the best technical and price offering from the broader market, rather than specifically promoting small business participation. There is no explicit information on subcontracting plans, but large prime contractors like BAE Systems often engage small businesses for specialized components or services, though the extent of this contract's impact on the small business ecosystem remains unclear without further data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight is expected to monitor expenditures and ensure adherence to the fixed fee. Transparency is facilitated through contract award databases, but detailed operational oversight and Inspector General jurisdiction would depend on specific program requirements and any identified performance or financial irregularities.

Related Government Programs

Missile Defense Systems
Early Warning Systems
Electronic Warfare Systems
Defense Electronics Manufacturing
Department of the Army Procurement

Risk Flags

Long contract duration may lead to technological obsolescence.
Cost-plus-fixed-fee structure requires diligent cost oversight.
Limited competition information available beyond 'full and open'.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $493.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. LIMITED INTERIM MISSILE WARNING SYSTEM (LIMWS) A-KITS AND B-KITS

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 $493.3 million.

What is the period of performance?

Start: 2017-12-15. End: 2024-06-30.

What is the specific nature of the 'A-KITS' and 'B-KITS' for the LIMITED INTERIM MISSILE WARNING SYSTEM (LIMWS)?

The specific technical details of the 'A-KITS' and 'B-KITS' for the LIMITED INTERIM MISSILE WARNING SYSTEM (LIMWS) are not publicly disclosed in this contract award notice. However, based on the context of missile warning systems, these kits likely represent distinct sets of hardware components, sub-assemblies, or modules required for the system's functionality. 'A-KITS' might refer to primary operational components, while 'B-KITS' could denote ancillary, support, or upgrade modules. The 'Other Electronic Component Manufacturing' NAICS code suggests these are physical electronic parts rather than software or integrated systems. Their exact function would be tied to the overall LIMWS architecture, contributing to threat detection, tracking, and reporting capabilities.

How does the 'COST PLUS FIXED FEE' (CPFF) pricing structure compare to other contract types in defense procurement?

The Cost Plus Fixed Fee (CPFF) structure is common in defense contracts, particularly for research, development, and complex systems where the final cost is difficult to estimate precisely at the outset. Under CPFF, the contractor is reimbursed for allowable costs incurred, plus a predetermined fixed fee representing profit. This differs from fixed-price contracts, where the contractor agrees to a set price regardless of actual costs, offering greater cost certainty to the government but potentially higher risk for the contractor. It also differs from Cost Plus Incentive Fee (CPIF), which includes provisions for adjusting the fee based on performance against targets. CPFF provides the contractor with a guaranteed profit margin, incentivizing them to complete the work, but requires robust government oversight to manage costs effectively and prevent overruns.

What is BAE Systems' track record with similar missile warning or defense electronic systems?

BAE Systems is a major global defense contractor with extensive experience in electronic systems, including those related to sensing, communication, and command and control. They have a significant portfolio in areas such as radar, electronic warfare, and C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance). While specific details on their involvement with the 'LIMITED INTERIM MISSILE WARNING SYSTEM (LIMWS)' prior to this award are not provided here, their broad capabilities in advanced electronics and defense systems suggest they possess the technical expertise and manufacturing capacity required for such a contract. Their history includes numerous large-scale defense contracts across various domains, indicating a capacity to manage complex, high-value programs.

What are the potential risks associated with the long contract duration of over 6.5 years?

The long duration of this contract (2389 days) presents several potential risks. Technological obsolescence is a primary concern; the electronic components and system requirements defined today might be outdated by the time the contract concludes, potentially requiring costly modifications or leading to a system that is less effective against emerging threats. Programmatic risks also exist, including potential shifts in defense priorities, budget fluctuations, or changes in military strategy that could impact the need for or scope of the LIMWS. Furthermore, maintaining consistent performance and quality from the contractor over such an extended period requires sustained oversight and effective contract management to prevent degradation or complacency. Supply chain stability for specialized components over multiple years can also be a challenge.

How does this contract fit into the broader landscape of U.S. missile defense spending?

This $493 million contract for the LIMITED INTERIM MISSILE WARNING SYSTEM (LIMWS) represents a component of the larger U.S. missile defense architecture. While not as large as programs focused on strategic missile defense (e.g., Ground-based Midcourse Defense) or major interceptor development, it addresses a critical capability for detecting and providing warning of shorter-range or tactical missile threats. Spending in this area is crucial for force protection and situational awareness. The 'interim' nature of the system suggests it may be a placeholder or complementary capability to more advanced, long-term solutions. Overall U.S. missile defense spending encompasses a wide range of systems, from space-based sensors to ground-based interceptors, and contracts like this fill specific, albeit vital, niches within that comprehensive strategy.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W58RGZ17R0211

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

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: $539,170,601

Exercised Options: $493,283,903

Current Obligation: $493,283,903

Subaward Activity

Number of Subawards: 91

Total Subaward Amount: $32,793,991

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline