DoD awards $72.6M for tactical signals intelligence systems, with BAE Systems as sole provider

Contract Overview

Contract Amount: $72,595,362 ($72.6M)

Contractor: BAE Systems Information & Electronic Systems Integration Inc

Awarding Agency: Department of Defense

Start Date: 2014-06-13

End Date: 2018-07-12

Contract Duration: 1,490 days

Daily Burn Rate: $48.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ORDER 0001 IS FOR THE PROCUREMENT OF 12 TACTICAL SIGNALS INTELLIGENCE PAYLOAD SYSTEMS AND SUPPORTING EQUIPMENT, FIRST ARTICLE TESTING, THE TECHNICAL DATA PACKAGE, AND ENGEERING SUPPORT (TO INCLUDE BUT NOT LIMITED TO TRAINING AND ENGINEERING SUPPORT)

Place of Performance

Location: HUDSON, HILLSBOROUGH County, NEW HAMPSHIRE, 03051

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $72.6 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC for work described as: ORDER 0001 IS FOR THE PROCUREMENT OF 12 TACTICAL SIGNALS INTELLIGENCE PAYLOAD SYSTEMS AND SUPPORTING EQUIPMENT, FIRST ARTICLE TESTING, THE TECHNICAL DATA PACKAGE, AND ENGEERING SUPPORT (TO INCLUDE BUT NOT LIMITED TO TRAINING AND ENGINEERING SUPPORT) Key points: 1. This contract represents a significant investment in advanced signals intelligence capabilities for the Department of Defense. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market engagement. 3. Performance risk is moderate, given the specialized nature of the technology and the contractor's established role. 4. The duration of the contract suggests a long-term need for these critical intelligence systems. 5. This procurement falls within the broader defense electronics manufacturing sector, characterized by high barriers to entry.

Value Assessment

Rating: fair

The contract value of $72.6 million for 12 tactical signals intelligence payload systems and associated support appears substantial. Without direct comparable contracts for identical systems, a precise value-for-money assessment is challenging. However, the sole-source award mechanism raises concerns about whether the government achieved the most competitive pricing. Benchmarking against similar, albeit not identical, intelligence gathering systems procured through competitive means would be necessary for a more robust evaluation of pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that BAE Systems Information & Electronic Systems Integration Inc. was the only vendor considered. This approach is typically employed when a unique capability exists or when a specific contractor is deemed essential for reasons of interoperability or national security. The lack of competition means that the government did not benefit from a bidding process that could drive down prices or encourage innovation from multiple sources.

Taxpayer Impact: The absence of competition for this significant defense procurement means taxpayers may have paid a premium compared to what could have been achieved in a more open market. This also limits opportunities for smaller, innovative companies to enter the defense supply chain.

Public Impact

The primary beneficiaries are the U.S. military branches requiring advanced tactical signals intelligence capabilities for operational effectiveness. The contract delivers 12 tactical signals intelligence payload systems, crucial for gathering and analyzing electronic communications. The geographic impact is national, supporting defense operations across various theaters. This procurement supports specialized engineering and technical roles within BAE Systems, contributing to the defense industrial workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of open competition may stifle innovation from other potential suppliers in the defense sector.
The specialized nature of the technology could create long-term dependency on a single provider.

Positive Signals

BAE Systems is an established defense contractor with a track record in electronic systems.
The contract includes essential support elements like training and technical data, indicating a comprehensive approach.
The firm-fixed-price structure shifts some financial risk to the contractor.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically the segment focused on electronic warfare and signals intelligence systems. This sector is characterized by high research and development costs, stringent security requirements, and a limited number of large, established prime contractors. Spending in this area is driven by evolving threats and the need for technological superiority. Comparable spending benchmarks are difficult to establish due to the proprietary nature of such systems, but significant investments are typical for advanced intelligence platforms.

Small Business Impact

This contract does not appear to involve a small business set-aside. Given the sole-source nature and the prime contractor, BAE Systems, it is unlikely that significant subcontracting opportunities for small businesses are mandated within this specific award, though BAE Systems may engage them independently. The focus is on a large prime contractor delivering a specialized system, rather than fostering broad small business participation through set-asides.

Oversight & Accountability

Oversight for this Department of Defense contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms and quality standards. Accountability rests with BAE Systems for delivering the specified systems and support. Transparency is limited due to the sole-source nature and the sensitive classification of signals intelligence technology, though contract award details are publicly available.

Related Government Programs

Tactical Intelligence Systems
Signals Intelligence Platforms
Electronic Warfare Systems
Defense Electronics Manufacturing
Department of Defense Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited technological alternatives

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.6 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC. ORDER 0001 IS FOR THE PROCUREMENT OF 12 TACTICAL SIGNALS INTELLIGENCE PAYLOAD SYSTEMS AND SUPPORTING EQUIPMENT, FIRST ARTICLE TESTING, THE TECHNICAL DATA PACKAGE, AND ENGEERING SUPPORT (TO INCLUDE BUT NOT LIMITED TO TRAINING AND ENGINEERING SUPPORT)

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $72.6 million.

What is the period of performance?

Start: 2014-06-13. End: 2018-07-12.

What is BAE Systems' track record with similar tactical signals intelligence systems for the DoD?

BAE Systems Information & Electronic Systems Integration Inc. has a substantial history as a prime contractor for the Department of Defense, particularly in areas of electronic warfare, communications, and intelligence systems. They have been involved in numerous programs requiring sophisticated sensor and processing capabilities. While specific details on prior tactical signals intelligence payload systems may be classified or proprietary, their extensive experience in related fields suggests a strong capability to deliver complex defense electronics. Their performance on other large DoD contracts would provide a broader context for assessing their reliability and technical proficiency in delivering advanced systems under demanding specifications.

How does the $72.6 million cost compare to similar intelligence gathering systems procured competitively?

Directly comparing the $72.6 million cost for 12 tactical signals intelligence payload systems to competitively procured systems is challenging due to the sole-source nature of this award and the specialized, potentially classified, capabilities involved. Competitive procurements for intelligence, surveillance, and reconnaissance (ISR) platforms, especially those involving advanced sensor suites and data processing, can vary widely in price based on system complexity, quantity, and technological sophistication. However, sole-source awards often carry a price premium because they lack the downward pressure that multiple bidders exert. A thorough analysis would require benchmarking against systems with comparable functionalities, even if procured under different contract types or by different agencies, to identify potential cost efficiencies that may have been missed.

What are the primary risks associated with a sole-source procurement of this magnitude?

The primary risks associated with a sole-source procurement of this magnitude include potential overpricing due to the absence of competitive bidding, reduced incentive for the contractor to innovate or optimize costs, and a lack of market validation for the chosen solution. Taxpayers may bear a higher cost than necessary. Furthermore, it can create a dependency on a single supplier, potentially limiting future flexibility and increasing long-term sustainment costs. There's also a risk that alternative, potentially more effective or cost-efficient technologies from other vendors are not considered. Ensuring robust oversight and negotiation is critical to mitigate these risks.

What is the expected effectiveness and impact of these tactical signals intelligence payload systems?

These tactical signals intelligence (SIGINT) payload systems are expected to significantly enhance the U.S. military's ability to detect, identify, and geolocate electronic signals in tactical environments. Their effectiveness lies in providing real-time or near-real-time intelligence crucial for situational awareness, target identification, and electronic warfare operations. The impact is likely to be a marked improvement in battlefield intelligence, enabling commanders to make more informed decisions, potentially reducing risks to personnel, and increasing mission success rates. The systems are designed to operate in dynamic and contested electromagnetic spectrums, providing a critical advantage in modern warfare.

How has historical spending on tactical signals intelligence systems evolved, and does this contract align with trends?

Historical spending on tactical signals intelligence (SIGINT) systems has generally trended upwards, driven by the increasing complexity of the global threat landscape, the proliferation of communication technologies, and the military's growing reliance on electronic information dominance. Agencies like the DoD consistently invest heavily in SIGINT capabilities to maintain situational awareness and counter evolving adversary tactics. This $72.6 million contract for payload systems aligns with this trend, representing a significant, albeit specific, investment within the broader category of SIGINT modernization and sustainment. The duration and scope suggest a continued commitment to enhancing these critical intelligence assets.

What are the potential long-term sustainment and upgrade implications of this sole-source award?

The long-term sustainment and upgrade implications of this sole-source award are significant. By awarding the initial procurement to BAE Systems without competition, the government may inadvertently lock itself into using BAE Systems for future sustainment, spare parts, and upgrades. This can lead to higher long-term costs, as there is less incentive for the original manufacturer to offer competitive pricing for support services. Furthermore, future technological advancements from other companies might be harder to integrate if the core system is proprietary and exclusively supported by the original awardee. This necessitates careful contract management and potential future competitive actions for sustainment if feasible.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument 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: BAE Systems PLC

Address: 65 RIVER RD, HUDSON, NH, 03051

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $242,483,705

Exercised Options: $212,078,895

Current Obligation: $72,595,362

Subaward Activity

Number of Subawards: 39

Total Subaward Amount: $10,016,536

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15P7T14DC015

IDV Type: IDC

Timeline