DoD's $56M Shipset contract awarded to BAE Systems, a sole-source procurement

Contract Overview

Contract Amount: $46,482,312 ($46.5M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2009-05-05

End Date: 2011-12-30

Contract Duration: 969 days

Daily Burn Rate: $48.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 56M SHIPSET

Place of Performance

Location: TOTOWA, PASSAIC County, NEW JERSEY, 07512

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $46.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: 56M SHIPSET Key points: 1. This contract represents a significant investment in specialized defense systems. 2. The sole-source nature of the award warrants scrutiny regarding potential price inflation. 3. Long contract duration suggests a need for ongoing support and maintenance. 4. The absence of competition may limit opportunities for innovation from other vendors. 5. Performance context is crucial to understand the value delivered for the investment. 6. Sector positioning highlights the critical role of navigation and guidance systems in defense.

Value Assessment

Rating: questionable

Benchmarking the value of this $56 million contract is challenging without detailed performance metrics and comparable sole-source procurements. The firm fixed-price contract type offers some cost certainty, but the lack of competition raises concerns about whether the government achieved the best possible price. Without competitive bids, it's difficult to assess if BAE Systems' pricing aligns with market rates or if it reflects a premium due to the sole-source award. Further analysis would require understanding the specific components of the 'shipset' and their market value.

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 considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. The lack of competition means there was no direct price comparison or incentive for vendors to offer their most competitive rates. This can sometimes lead to higher costs for the government compared to fully competed contracts.

Taxpayer Impact: Taxpayers may have paid a premium for this system due to the absence of competitive pressure. Without multiple bids, the government had less leverage to negotiate the lowest possible price, potentially resulting in less value for the allocated funds.

Public Impact

The primary beneficiaries are the U.S. Navy vessels equipped with the advanced search, detection, navigation, guidance, and nautical systems provided by BAE Systems. This contract delivers critical components essential for the safe and effective operation of naval platforms. The geographic impact is primarily within the United States, with potential implications for naval bases and shipyards where these systems are integrated. Workforce implications may include specialized engineering, manufacturing, and technical support roles within BAE Systems and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs.
Lack of transparency in the sole-source justification requires further review.
Long contract duration without clear performance benchmarks raises value-for-money concerns.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
BAE Systems is a known entity in defense electronics, suggesting established capabilities.
Contract supports critical national defense infrastructure.

Sector Analysis

The contract falls within the defense electronics sector, specifically focusing on navigation and guidance systems. This is a highly specialized area within the broader defense industry, characterized by high barriers to entry due to technological complexity and stringent quality requirements. The market for such systems is largely driven by government procurement, with a limited number of large, established defense contractors like BAE Systems dominating. Comparable spending benchmarks would involve analyzing other large sole-source or competitively awarded contracts for similar integrated electronic systems for naval platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. The prime contractor, BAE Systems, is a large defense corporation. There is no explicit information provided regarding subcontracting plans or goals for small businesses. Without specific subcontracting requirements or reporting, the direct impact on the small business ecosystem is likely minimal, though BAE Systems may engage small businesses as part of its broader supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver the specified goods or services at the agreed-upon price. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the procurement process and pricing more challenging. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Ship Systems
Defense Electronics Procurement
Navigation and Guidance Systems
Sole-Source Defense Contracts
BAE Systems Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. 56M SHIPSET

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $46.5 million.

What is the period of performance?

Start: 2009-05-05. End: 2011-12-30.

What specific systems are included in the 'shipset' and what is their individual market value?

The provided data does not detail the specific components of the 'shipset' beyond the general category of 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' To assess individual market value, a breakdown of each system (e.g., radar units, GPS receivers, inertial navigation systems, control consoles) would be required. This information is typically found in the contract's statement of work or technical specifications. Without this granular detail, it is impossible to benchmark the value of individual components against market rates or other government procurements.

What was the justification for awarding this contract on a sole-source basis?

Sole-source procurements are typically justified when only one responsible source is available or capable of meeting the government's needs. Common justifications include unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or when a previous contract was awarded competitively and follow-on work is required from the same vendor due to interoperability or standardization requirements. The specific justification for this $56 million BAE Systems contract would be documented in the contract award file, likely accessible through Freedom of Information Act (FOIA) requests or agency procurement databases, and would detail why competitive bidding was deemed impractical or impossible.

How does the $56 million total award compare to similar defense electronics procurements for naval systems?

Comparing this $56 million award requires identifying comparable contracts based on system type, scope, and platform. For instance, contracts for integrated combat systems, sonar suites, or advanced radar installations on naval vessels can range from tens to hundreds of millions of dollars. Sole-source awards, like this one, often appear higher on a per-unit or total-value basis than competitively bid contracts for similar capabilities due to the lack of price pressure. To provide a precise comparison, one would need to analyze recent procurements for analogous navigation, detection, and guidance systems awarded to different contractors or through competitive processes.

What is BAE Systems' track record with the Department of Defense, particularly on similar sole-source contracts?

BAE Systems Information and Electronic Systems Integration Inc. is a major defense contractor with a substantial history of awards from the Department of Defense across various platforms and systems. Their track record includes numerous contracts for electronic warfare systems, communication equipment, radar, and navigation systems. While specific data on their sole-source contract performance isn't detailed here, their consistent receipt of large DoD contracts suggests a generally accepted capability. However, the performance and pricing of sole-source awards are always subject to greater scrutiny than competitively won contracts due to the inherent lack of market validation.

What are the potential risks associated with a sole-source award of this magnitude and duration?

The primary risks associated with a sole-source award of this magnitude ($56 million) and duration (969 days) include potential cost overruns if pricing was not adequately negotiated, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market intelligence regarding alternative solutions or better pricing. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, making future transitions difficult or costly. Furthermore, without competitive pressure, the quality or timeliness of delivery could be compromised if not rigorously overseen.

How has spending on 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' evolved over the past decade?

Spending on the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code (334511) by the federal government, particularly the Department of Defense, has likely remained substantial over the past decade, driven by ongoing modernization efforts and the need for advanced capabilities in naval, air, and ground platforms. While specific aggregate spending figures for this NAICS code are not provided, trends generally show consistent investment in these critical technologies. Factors influencing spending include geopolitical threats, technological advancements, and budget allocations for defense modernization programs. This $56 million contract represents a portion of that broader investment.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

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

Financial Breakdown

Contract Ceiling: $46,482,312

Exercised Options: $46,482,312

Current Obligation: $46,482,312

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F0960303D0001

IDV Type: IDC

Timeline