DoD awards $33.7M contract for military communication equipment to BAE Systems, with no competition

Contract Overview

Contract Amount: $33,696,937 ($33.7M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2025-07-28

End Date: 2028-02-01

Contract Duration: 918 days

Daily Burn Rate: $36.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TO PURCHASE THE RT-1987, AM-7565, AM-7566, MT-7166, AND MT-7168 FOR FOREIGN MILITARY SALES CASES KU-B-UXF (KUWAIT), BR-B-UAJ (BRAZIL), AND PL-B-UEH (POLAND).

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46818

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $33.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: TO PURCHASE THE RT-1987, AM-7565, AM-7566, MT-7166, AND MT-7168 FOR FOREIGN MILITARY SALES CASES KU-B-UXF (KUWAIT), BR-B-UAJ (BRAZIL), AND PL-B-UEH (POLAND). Key points: 1. Contract awarded to a single, established defense contractor, raising questions about price competitiveness. 2. The award is for foreign military sales, indicating international cooperation and equipment transfer. 3. A firm fixed-price contract type suggests the government has accepted the contractor's pricing upfront. 4. The duration of over 3 years implies a sustained need for the specified communication equipment. 5. The contract's value is significant, but requires benchmarking against similar procurements for true value assessment. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller firms in this segment.

Value Assessment

Rating: fair

The contract value of $33.7 million for communication equipment appears substantial. Without specific details on the exact quantities and specifications of the RT-1987, AM-7565, AM-7566, MT-7166, and MT-7168 units, a direct comparison to similar contracts is challenging. However, given the sole-source nature of the award, there is a risk that the pricing may not reflect the most competitive market rates. Further analysis would be needed to benchmark the per-unit cost against industry standards or previous government purchases of comparable equipment.

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 generally lead to less price discovery and potentially higher costs for the government compared to fully competed contracts.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that can arise from competitive bidding, potentially leading to a higher overall expenditure for this equipment.

Public Impact

The primary beneficiaries are the foreign military forces of Kuwait, Brazil, and Poland, who will receive advanced communication equipment. The services delivered involve the procurement and provision of specific radio and wireless communication equipment. The geographic impact is international, supporting the defense capabilities of allied nations. Workforce implications are likely within BAE Systems, potentially involving manufacturing, integration, and logistics personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition increases the risk of paying a premium for the equipment.
Sole-source awards can limit opportunities for innovation from a broader range of suppliers.
Dependence on a single contractor for critical military communication systems could pose supply chain risks.

Positive Signals

Award to an established contractor like BAE Systems suggests a high likelihood of meeting technical specifications and delivery timelines.
The contract supports Foreign Military Sales, fostering international partnerships and interoperability.
Firm fixed-price contract provides cost certainty for the government once awarded.

Sector Analysis

This contract falls within the broader defense electronics and communications sector. The market for military-grade communication equipment is characterized by high barriers to entry due to specialized technology, stringent quality requirements, and long development cycles. Major defense contractors like BAE Systems dominate this space. Spending in this sector is driven by national security needs, technological advancements, and international defense cooperation, with significant government investment globally.

Small Business Impact

The contract was not competed and did not include a small business set-aside. This means that opportunities for small businesses to participate in this specific procurement, either as prime contractors or through subcontracting, were not explicitly prioritized or mandated. While BAE Systems may engage small businesses as subcontractors, the absence of a set-aside suggests a missed opportunity to foster small business growth within this particular defense contract.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency regarding the justification for the sole-source award and the pricing structure would be key areas for oversight. The Inspector General's office could investigate if any improprieties are suspected.

Related Government Programs

Foreign Military Sales Program
Department of Defense Communication Systems
Radio and Wireless Equipment Procurement
BAE Systems Defense Contracts

Risk Flags

Sole-source award bypasses competitive process.
Potential for inflated pricing due to lack of competition.
Limited transparency on specific equipment capabilities and justification for sole-source.
No small business participation explicitly mandated.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. TO PURCHASE THE RT-1987, AM-7565, AM-7566, MT-7166, AND MT-7168 FOR FOREIGN MILITARY SALES CASES KU-B-UXF (KUWAIT), BR-B-UAJ (BRAZIL), AND PL-B-UEH (POLAND).

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 $33.7 million.

What is the period of performance?

Start: 2025-07-28. End: 2028-02-01.

What is the specific technical capability and intended use of the RT-1987, AM-7565, AM-7566, MT-7166, and MT-7168 equipment being procured?

The provided data indicates the procurement is for 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing' (NAICS code 334220). The specific designations (RT-1987, AM-7565, etc.) likely refer to distinct models or components within BAE Systems' portfolio of tactical communication systems. These are typically designed for secure, reliable voice and data transmission in challenging battlefield environments. Their intended use would be to equip military personnel in Kuwait, Brazil, and Poland with modern communication tools to enhance command and control, situational awareness, and interoperability between allied forces. Without access to the detailed contract line item descriptions or technical specifications, the precise capabilities remain generalized, but they are understood to be critical for military operations.

How does the $33.7 million contract value compare to BAE Systems' historical sales of similar communication equipment?

Benchmarking the $33.7 million contract value against BAE Systems' historical sales requires access to detailed sales data, which is not publicly available. However, BAE Systems is a major global defense contractor with a significant presence in electronic systems and communications. Large-scale procurements for military communication suites often run into tens or hundreds of millions of dollars, especially when involving international sales and multiple equipment types. Given the sole-source nature and the duration of the contract (over three years), this value is plausible for equipping multiple foreign military units. A more precise comparison would necessitate examining past Foreign Military Sales cases for similar equipment or analyzing BAE Systems' annual reports for segment-specific revenue trends, though direct per-unit cost comparisons are difficult without detailed specifications.

What are the risks associated with awarding a contract of this magnitude on a sole-source basis?

Awarding a $33.7 million contract on a sole-source basis carries several risks. Primarily, it eliminates the potential for cost savings that competition typically drives. Without competing bids, the government may pay a higher price than if multiple vendors had vied for the contract. There's also a risk of reduced innovation, as the incentive for the contractor to offer cutting-edge solutions or cost-effective alternatives is diminished. Furthermore, sole-source awards can create a perception of favoritism or a lack of due diligence in ensuring the best value for taxpayer money. For critical systems like military communications, over-reliance on a single supplier can also introduce supply chain vulnerabilities and reduce leverage in future negotiations or sustainment efforts.

What is the significance of this contract being for Foreign Military Sales (FMS) cases?

This contract's significance lies in its role in supporting U.S. foreign policy objectives through the Foreign Military Sales program. By providing essential communication equipment to allied nations like Kuwait, Brazil, and Poland, the U.S. aims to enhance their defense capabilities, promote regional stability, and foster interoperability with U.S. forces. FMS contracts also contribute to the U.S. defense industrial base by generating revenue for contractors like BAE Systems. The sales generate funds that can offset U.S. defense research and development costs and maintain production lines. Ultimately, these sales strengthen security partnerships and advance U.S. strategic interests abroad.

How does the 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing' NAICS code relate to the specific military communication equipment being purchased?

The NAICS code 334220, 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing,' broadly covers establishments primarily engaged in manufacturing radio and television broadcast and wireless communication equipment. While this code encompasses commercial applications, it also includes equipment used for military communication systems. Military communication devices, such as tactical radios, encrypted transmitters, and secure wireless networking gear, fall under the umbrella of wireless communications equipment. Therefore, this NAICS code is appropriate for a contract involving the production of specialized communication hardware, even if its end-use is for defense purposes rather than civilian broadcasting. It signifies the manufacturing nature of the procurement.

What is the expected impact on the duration of the contract, given the start and end dates provided?

The contract has a stated start date of July 28, 2025, and an end date of February 1, 2028. This provides a contract duration of approximately 2 years and 6 months, or 918 days as indicated by the 'dur' field. This timeframe suggests a phased delivery or a sustained period of production and support for the communication equipment being procured for the FMS cases. A duration of this length is typical for equipping multiple international partners, allowing for manufacturing, testing, integration, and delivery schedules. It implies that the equipment is not intended for immediate, one-time deployment but rather as a foundational communication capability for the recipient nations over a defined period.

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: $33,696,937

Exercised Options: $33,696,937

Current Obligation: $33,696,937

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56JSR24D0002

IDV Type: IDC

Timeline