DoD's $217M contract for navigational instruments awarded to BAE Systems, raising questions about competition and value

Contract Overview

Contract Amount: $30,329,699 ($30.3M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2000-09-29

End Date: 2006-12-31

Contract Duration: 2,284 days

Daily Burn Rate: $13.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200012!2100!004916!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0700CJ012 !A!*!* !20000929!20020430!194956751!217304393!210116406!N!0D0D0!BAE SYSTEMS AEROSPACE INC-CNI !164 TOTOWA RD !WAYNE !NJ!07470!77870!031!34!WAYNE !PASSAIC !NEW JERSEY!0001!+000005059540!N!N!000000000000!6605!NAVIGATIONAL INSTRUMENTS !A7 !ELECTRONICS AND COMMUNICATION !1000!NOT DISCERNABLE OR CLASSIFIED !9999!3!*!*!*!B!A!*!D !N!J!1!001!N!1G!Z!N!C!* !* !Y!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: WAYNE, PASSAIC County, NEW JERSEY, 07470

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $30.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: 200012!2100!004916!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0700CJ012 !A!*!* !20000929!20020430!194956751!217304393!210116406!N!0D0D0!BAE SYSTEMS AEROSPACE INC-CNI !164 TOTOWA RD !WAYNE !NJ!07470!77870!031!34!WAYNE !PAS… Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value for navigational instruments, indicating a critical need within the Army. 3. BAE Systems has a substantial presence in defense electronics, suggesting established capabilities. 4. Contract duration of over 6 years points to a long-term requirement for these systems. 5. The 'NOT COMPETED' status is a key risk indicator for potential overpricing. 6. Focus on navigational instruments highlights a specific technological niche within defense spending.

Value Assessment

Rating: questionable

The contract's value of $217 million for navigational instruments is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of competition raises concerns about whether the government secured the best possible value. Further analysis would be needed to compare the per-unit cost to industry standards for similar navigational systems, but the sole-source nature makes this challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, meaning it was not openly competed. This typically occurs when only one responsible source can provide the required goods or services. The lack of competition means that multiple bidders did not have the opportunity to offer their solutions, which can limit price negotiation and innovation.

Taxpayer Impact: For taxpayers, a sole-source award means there is a higher risk of paying a premium for goods or services, as the government does not benefit from the downward pressure that competition usually provides.

Public Impact

The primary beneficiaries are the U.S. Army, which receives critical navigational instruments for its operations. The contract supports the development, production, and delivery of advanced navigational systems. The geographic impact is primarily centered in Wayne, New Jersey, where BAE Systems is located, potentially supporting local jobs. The contract implies a need for specialized technical expertise in electronics and communication systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for money.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for cost overruns without market-based price validation.
Long contract duration could lead to price increases over time if not managed.

Positive Signals

BAE Systems is a known entity in defense contracting, suggesting a level of reliability.
The contract addresses a specific and likely critical need for navigational instruments.
Firm Fixed Price contract type provides some cost certainty for the government.

Sector Analysis

This contract falls within the Defense sector, specifically related to electronics and communication equipment. The market for defense electronics is characterized by high technological sophistication, long development cycles, and significant government investment. Navigational instruments are a critical component for military platforms, requiring specialized engineering and manufacturing capabilities. Comparable spending benchmarks would typically be found within other large sole-source or competitively awarded contracts for similar avionics or electronic warfare systems.

Small Business Impact

The provided data indicates that small business participation was not a primary consideration for this contract, as it was awarded to a large prime contractor, BAE Systems, and the 'sb' (small business) indicator is false. There is no explicit mention of small business set-asides or subcontracting plans. This suggests that opportunities for small businesses to directly participate in this specific contract may be limited, though they could potentially be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and auditing agencies, including the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA). Inspector General (IG) investigations could be initiated if concerns regarding fraud, waste, or abuse arise. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal DoD review.

Related Government Programs

Defense Electronics Procurement
Avionics Systems Contracts
Naval and Aviation Navigation Systems
BAE Systems Defense Contracts
Army Communication and Electronics Command Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Long contract duration
Technological obsolescence risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.3 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. 200012!2100!004916!AB07 !USA COMMUNICATIONS-ELECTRONICS !DAAB0700CJ012 !A!*!* !20000929!20020430!194956751!217304393!210116406!N!0D0D0!BAE SYSTEMS AEROSPACE INC-CNI !164 TOTOWA RD !WAYNE !NJ!07470!77870!031!34!WAYNE !PASSAIC !NEW JERSEY!0001!+000005059540!N!N!000000000000!6605!NAVIGATIONAL INSTRUMENTS !A7 !ELECTRONICS AND COMMUNICATION !1000!NOT DISCERNABLE OR CLASSIFIED !9999!3!*!*!*!B!A!*!D !N!J!

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 $30.3 million.

What is the period of performance?

Start: 2000-09-29. End: 2006-12-31.

What is the specific type of navigational instrument being procured under this contract?

The contract specifies 'NAVIGATIONAL INSTRUMENTS' under the Product Service Code (PSC) 6605. While the exact model or technical specifications are not detailed in this summary data, this PSC typically covers devices used for determining position, direction, or velocity. Given the context of a Department of the Army contract, these instruments are likely intended for use in vehicles, aircraft, or soldier-portable systems, potentially including GPS receivers, inertial navigation systems, or related electronic components critical for mission success and situational awareness.

What is the historical spending pattern for this type of navigational instrument by the Department of the Army?

Analyzing historical spending patterns for this specific type of navigational instrument requires access to broader contract databases and historical procurement data. However, the significant value ($217 million) and long duration (over 6 years) of this sole-source award suggest a sustained and substantial requirement for these systems within the Army. Without comparative data, it's difficult to determine if this represents an increase or decrease in spending compared to previous periods or similar systems. The 'NOT COMPETED' status might indicate a lack of viable alternatives or a strategic decision to maintain a relationship with a specific supplier for these critical components.

What are the key performance indicators (KPIs) used to measure the success of this contract?

Key performance indicators for this contract would likely focus on the reliability, accuracy, and timely delivery of the navigational instruments. Specific metrics could include Mean Time Between Failures (MTBF) for the devices, accuracy rates in various operational environments (e.g., GPS-denied areas), on-time delivery percentages, and adherence to technical specifications. Given the sole-source nature, performance reviews and acceptance testing by the Army would be crucial for ensuring the contractor meets its obligations and that the instruments function as intended for military operations.

What is BAE Systems' track record with similar sole-source contracts for navigational equipment?

BAE Systems has a long history of supplying complex electronic systems, including navigational equipment, to various branches of the U.S. military. While this specific data point highlights a sole-source award, BAE Systems also frequently competes for and wins large defense contracts. Their track record with sole-source awards would need to be assessed on a case-by-case basis, examining past performance reviews, any documented issues with delivery or quality, and the justification provided for non-competitive awards. Generally, as a major defense contractor, they are expected to meet stringent performance and quality standards.

How does the $217 million contract value compare to the total annual spending on defense electronics by the Army?

The $217 million contract value represents a significant portion of the Army's spending on navigational instruments. To contextualize this against total annual spending on defense electronics, one would need to consult the Army's overall budget allocations and specific procurement reports for electronics and avionics. Defense electronics spending is a multi-billion dollar category annually. This single contract, while large, is likely one of many such awards within the broader defense electronics portfolio, underscoring the importance of reliable navigation systems across various Army platforms and operations.

What are the potential risks associated with the long duration (over 6 years) of this contract?

The long duration of this contract (from September 2000 to December 2006, totaling over 6 years) presents several potential risks. Firstly, technological obsolescence is a significant concern; navigational technology can evolve rapidly, and a system procured today might be outdated before the contract ends. Secondly, long-term contracts can lead to price escalation, especially if the contract includes provisions for adjustments based on inflation or material costs. Lastly, a prolonged sole-source relationship can reduce the incentive for the contractor to innovate or maintain peak efficiency, potentially leading to complacency and less favorable terms over time.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 164 TOTOWA RD, WAYNE, NJ, 11

Business Categories: Category Business, Not Designated a Small Business

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