DoD awards $71.6M for Common Missile Warning System hardware to BAE Systems, raising value concerns

Contract Overview

Contract Amount: $71,588,789 ($71.6M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2023-08-24

End Date: 2026-07-24

Contract Duration: 1,065 days

Daily Burn Rate: $67.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: COMMON MISSILE WARNING SYSTEM PRODUCTION HARDWARE - AUSTRALIA FOREIGN MILITARY SALES DELIVERY ORDER

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $71.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: COMMON MISSILE WARNING SYSTEM PRODUCTION HARDWARE - AUSTRALIA FOREIGN MILITARY SALES DELIVERY ORDER Key points: 1. The contract's value of $71.6 million for production hardware raises questions about cost-effectiveness. 2. Sole-source procurement limits competitive pressure, potentially impacting price discovery and value for money. 3. The contract duration of nearly three years suggests a sustained need for these systems. 4. This award falls under Foreign Military Sales, indicating international cooperation and defense support. 5. The specific nature of the hardware suggests a critical component within a larger defense system. 6. The absence of small business involvement warrants further examination of subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the value of this $71.6 million contract is challenging without specific unit cost data or comparable FMS sales. However, the sole-source nature of the award, coupled with the lack of transparency in pricing for foreign military sales, raises concerns about whether the Department of Defense secured the best possible price for this critical hardware. Without competitive bidding, it is difficult to ascertain if the pricing reflects fair market value or includes significant markups.

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, was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances, such as when only one vendor possesses the necessary technology or capability, they inherently limit price competition and may lead to higher costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from a competitive bidding environment. This can result in a less efficient use of public funds.

Public Impact

This contract directly supports the defense capabilities of Australia through Foreign Military Sales. It ensures the production and delivery of critical hardware for the Common Missile Warning System. The geographic impact is primarily on Australia, enhancing its military readiness. Workforce implications are likely within BAE Systems' manufacturing and engineering divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can reduce transparency in pricing.
No indication of small business participation or set-asides.

Positive Signals

Supports a critical defense system for an allied nation.
Ensures continued availability of essential warning system hardware.
Awarded to a known defense contractor with established capabilities.

Sector Analysis

This contract falls within the broader defense electronics manufacturing sector, specifically focusing on electronic components and systems for military applications. The market for such specialized hardware is often characterized by high barriers to entry due to technological complexity and stringent security requirements. Comparable spending benchmarks are difficult to establish without more granular data on the specific components and their intended use within the missile warning system. However, the defense sector generally sees significant investment in advanced electronics.

Small Business Impact

The contract data indicates that small business participation was not a stated objective, as the 'sb' field is false and there is no mention of set-asides. This sole-source award to a large prime contractor suggests limited opportunities for small businesses to directly participate in this specific contract. Further investigation would be needed to determine if BAE Systems intends to subcontract any portion of this work to small businesses, which is crucial for fostering a diverse defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Given it's a Foreign Military Sales delivery order, there may be additional oversight from the Defense Security Cooperation Agency. Transparency is limited due to the sole-source nature and FMS classification. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Missile Warning Systems
Foreign Military Sales Program
Defense Electronics Manufacturing
Avionics and Electronic Warfare Systems

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. COMMON MISSILE WARNING SYSTEM PRODUCTION HARDWARE - AUSTRALIA FOREIGN MILITARY SALES DELIVERY ORDER

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 $71.6 million.

What is the period of performance?

Start: 2023-08-24. End: 2026-07-24.

What is the specific technical capability of the Common Missile Warning System hardware being procured?

The Common Missile Warning System (CMWS) is designed to detect and identify incoming missile threats, providing timely alerts to aircrews and initiating countermeasures. The production hardware procured under this contract likely includes critical electronic components such as sensors, processors, and communication modules that are essential for the system's functionality. While the exact specifications are proprietary, these components are vital for threat detection, classification, and the subsequent activation of defensive measures, playing a crucial role in aircraft survivability in hostile environments.

How does the $71.6 million contract value compare to historical spending on similar missile warning system components?

Direct comparison of the $71.6 million contract value to historical spending on similar components is challenging without access to detailed historical procurement data for the CMWS or comparable systems, especially considering the Foreign Military Sales (FMS) context. FMS pricing can differ from domestic procurements due to various factors, including specific customer requirements, support packages, and different contracting mechanisms. However, for large-scale production hardware for critical defense systems, a contract of this magnitude is not unusual, but the lack of competition makes a definitive value assessment difficult. Further analysis would require benchmarking against other FMS contracts for similar electronic warfare or warning systems.

What are the primary risks associated with a sole-source award for critical defense hardware?

The primary risks associated with a sole-source award for critical defense hardware like the Common Missile Warning System components include potential overpricing due to the absence of competitive pressure, reduced innovation as the sole contractor may have less incentive to improve efficiency or technology, and a lack of transparency in cost justification. Furthermore, reliance on a single supplier can create supply chain vulnerabilities if that supplier experiences production issues or financial instability. For taxpayers, the risk is a less efficient allocation of resources, potentially diverting funds that could be used for other defense priorities or programs.

What is BAE Systems' track record with the Common Missile Warning System or similar defense electronics contracts?

BAE Systems is a major defense contractor with extensive experience in electronic warfare, avionics, and integrated defense systems. They have a significant history of producing and supporting complex military hardware, including warning systems. While specific details on their involvement with the Common Missile Warning System prior to this award would require deeper research into program history, their established presence in the defense electronics sector suggests they possess the technical expertise and manufacturing capacity required for such a contract. Their track record generally involves large, complex programs, often awarded through various contracting methods, including competitive and sole-source.

What are the implications of this contract being part of a Foreign Military Sale (FMS) for the U.S. taxpayer?

For U.S. taxpayers, Foreign Military Sales (FMS) like this one can have mixed implications. On one hand, FMS programs are intended to enhance the security of allies and promote interoperability, which can indirectly benefit U.S. security interests. The U.S. government often recovers its administrative and program management costs associated with FMS. However, if the hardware is procured by the U.S. government and then sold to Australia, or if U.S. production lines are utilized, the sole-source nature of this specific award means U.S. taxpayers may not benefit from competitive pricing, potentially leading to higher overall costs for the defense articles and services provided. The revenue generated from FMS can contribute to the defense budget, but efficiency concerns remain.

Are there any performance metrics or key performance indicators (KPIs) associated with this contract that are publicly available?

Publicly available performance metrics or Key Performance Indicators (KPIs) for specific production hardware contracts, especially those under Foreign Military Sales and awarded on a sole-source basis, are typically limited. Contractual details often contain sensitive information related to production schedules, quality control standards, and delivery timelines. While the contract specifies a delivery period ending in July 2026, indicating a timeline for performance, specific quantitative KPIs related to system reliability, defect rates, or operational effectiveness are generally not disclosed in public contract award notices. Oversight agencies and the contracting command would monitor these internally.

Industry Classification

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

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: $71,588,789

Exercised Options: $71,588,789

Current Obligation: $71,588,789

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ21D0010

IDV Type: IDC

Timeline