BAE Systems awarded $38.25M for tactical SIGINT payload logistics support, raising questions about competition and value

Contract Overview

Contract Amount: $38,250,141 ($38.3M)

Contractor: BAE Systems Information & Electronic Systems Integration Inc

Awarding Agency: Department of Defense

Start Date: 2016-08-11

End Date: 2020-01-31

Contract Duration: 1,268 days

Daily Burn Rate: $30.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF AWARD OF TASK ORDER 0001 TO PROCURE INTERIM CONTRACTOR LOGISTICS SUPPORT SERVICES FOR THE TACTICAL SIGINT PAYLOAD SYSTEM.

Place of Performance

Location: HUDSON, HILLSBOROUGH County, NEW HAMPSHIRE, 03051

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $38.3 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC for work described as: IGF::OT::IGF AWARD OF TASK ORDER 0001 TO PROCURE INTERIM CONTRACTOR LOGISTICS SUPPORT SERVICES FOR THE TACTICAL SIGINT PAYLOAD SYSTEM. Key points: 1. Contract awarded via non-competitive procedures, limiting price discovery and potentially increasing costs. 2. Long contract duration (1268 days) suggests a need for sustained support, but also risks cost overruns. 3. Cost-plus-fixed-fee structure incentivizes contractor to incur costs, requiring robust oversight. 4. Limited competition may hinder innovation and prevent the government from accessing best-value solutions. 5. The contract's value is significant, necessitating careful benchmarking against similar services. 6. Focus on logistics support for a specific system indicates a specialized, potentially high-risk area.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee (CPFF) structure, while common for complex services, can lead to higher costs if not managed tightly. Without competitive bids, it's difficult to benchmark the pricing against market rates or other similar contracts. The total award amount of $38.25 million over approximately 3.5 years suggests a substantial investment. Further analysis would be needed to compare the labor rates and overhead applied by BAE Systems to industry standards for similar logistics support services in the defense sector.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under 'NOT AVAILABLE FOR COMPETITION' procedures, indicating a sole-source or limited competition scenario. This means that the Department of the Army did not solicit offers from multiple potential contractors. While sole-source awards can be justified for unique capabilities or urgent needs, they typically result in higher prices and less favorable terms for the government due to the absence of competitive pressure.

Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for these services, as the contractor faces no pressure to offer the lowest possible price. This also limits opportunities for other businesses to compete for and win government contracts.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Department of the Army, ensuring continued operational readiness of the Tactical SIGINT Payload System. Services delivered include crucial logistics support, maintenance, and potentially sustainment activities for a critical intelligence system. The geographic impact is likely concentrated around military installations where the Tactical SIGINT Payload System is deployed or supported. Workforce implications include employment for BAE Systems personnel specializing in logistics, technical support, and potentially engineering related to the SIGINT system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Cost-plus-fixed-fee contract type requires stringent oversight to prevent cost overruns.
Long contract duration increases the risk of scope creep and unmanaged cost increases.
Sole-source award limits opportunities for small businesses and other potential vendors.

Positive Signals

BAE Systems is a large, established defense contractor with significant experience in electronic systems.
The contract addresses a critical need for logistics support for a specialized intelligence system.
The fixed fee component of the contract provides some level of cost predictability for the government.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense intelligence systems. The market for specialized logistics and sustainment services for advanced defense platforms is dominated by large, established contractors like BAE Systems. Comparable spending benchmarks are difficult to establish without more detailed service descriptions and competitive data, but significant investments are typical for maintaining complex intelligence, surveillance, and reconnaissance (ISR) payloads.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement or outcome (ss: false, sb: false). As a sole-source award to a large prime contractor, there is a reduced likelihood of significant subcontracting opportunities flowing down to small businesses unless explicitly mandated or pursued by the prime. This contract does not appear to be designed to benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the CPFF structure, rigorous financial oversight, performance monitoring, and regular audits would be essential to ensure cost control and adherence to the contract scope. The Inspector General's office for the Department of Defense would have jurisdiction for investigating any potential fraud, waste, or abuse related to this award.

Related Government Programs

Tactical SIGINT Payload System Sustainment
Defense Logistics Support Services
Intelligence, Surveillance, and Reconnaissance (ISR) Systems Support
BAE Systems Defense Contracts
Department of the Army Service Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.3 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC. IGF::OT::IGF AWARD OF TASK ORDER 0001 TO PROCURE INTERIM CONTRACTOR LOGISTICS SUPPORT SERVICES FOR THE TACTICAL SIGINT PAYLOAD SYSTEM.

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 (Department of the Army).

What is the total obligated amount?

The obligated amount is $38.3 million.

What is the period of performance?

Start: 2016-08-11. End: 2020-01-31.

What is the specific nature of the 'interim contractor logistics support services' provided under this task order?

The task order description indicates 'interim contractor logistics support services for the Tactical SIGINT Payload System.' While the exact nature of these services is not detailed in the provided data, 'logistics support' typically encompasses a range of activities including maintenance, repair, supply chain management, inventory control, transportation, and technical assistance for the system. 'Interim' suggests this support might be a temporary measure, possibly bridging a gap until a permanent solution or organic military capability is established. The SIGINT (Signals Intelligence) payload implies these services are critical for maintaining the operational readiness of electronic intelligence gathering equipment, which often requires specialized technical expertise and secure handling procedures.

How does the Cost Plus Fixed Fee (CPFF) contract structure compare to other contract types for similar defense logistics services?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not precisely defined or involves significant uncertainties, common in complex defense systems. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure incentivizes the contractor to control costs to maximize their profit margin on the fixed fee. However, it can also lead to higher overall costs compared to fixed-price contracts if cost estimation is inaccurate or if the government lacks robust oversight. Other contract types like Firm-Fixed-Price (FFP) offer more cost certainty for the government but are suitable only when requirements are well-defined. Performance-Based Logistics (PBL) contracts focus on outcomes and readiness, potentially offering better value for sustainment services.

What are the potential risks associated with a sole-source award for critical defense system logistics?

Sole-source awards for critical defense system logistics carry several risks. Firstly, the absence of competition typically leads to higher prices than would be achieved in a competitive bidding process, meaning taxpayers may overpay. Secondly, it can reduce the incentive for the contractor to innovate or improve efficiency, as they face no direct competitive pressure. Thirdly, it limits the government's ability to leverage the market for best-value solutions or explore alternative technologies. Finally, it can create vendor lock-in, making it difficult and costly to switch providers in the future, especially for highly specialized systems like SIGINT payloads where expertise is scarce.

What is BAE Systems' track record with similar defense logistics or SIGINT system contracts?

BAE Systems is a major global defense contractor with extensive experience in electronic systems, including intelligence, surveillance, and reconnaissance (ISR) platforms, and associated logistics support. They have a long history of performing complex service contracts for various branches of the U.S. military and allied nations. While specific details on their track record for the Tactical SIGINT Payload System are not provided here, their overall profile suggests they possess the technical capabilities and infrastructure to manage such contracts. However, like any large contractor, their performance history would need to be reviewed on a contract-by-contract basis, examining past performance evaluations, any disputes, or contract modifications to fully assess their reliability and value delivery.

How does the $38.25 million award compare to historical spending on the Tactical SIGINT Payload System or similar systems?

Without specific historical spending data for the Tactical SIGINT Payload System or comparable systems, it is challenging to benchmark this $38.25 million award. However, the amount suggests a significant investment in the sustainment of a critical intelligence asset. The duration of the contract (over 3 years) indicates a need for ongoing, substantial support. To provide a meaningful comparison, one would need to analyze historical contract data for the same or similar SIGINT payloads, looking at total lifecycle costs, annual sustainment expenditures, and the types of services procured. This would help determine if the current award represents an increase, decrease, or stable level of spending for this capability.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $38,250,141

Exercised Options: $38,250,141

Current Obligation: $38,250,141

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $2,174,894

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56KGY16D0013

IDV Type: IDC

Timeline