DoD's $56M contract for navigation systems awarded to BAE Systems, a follow-on to a prior award

Contract Overview

Contract Amount: $55,928,635 ($55.9M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2014-10-01

End Date: 2020-12-31

Contract Duration: 2,283 days

Daily Burn Rate: $24.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST NO FEE

Sector: Defense

Official Description: FY15, THIS IS A FOLLOW-ON OF FA2521-07-C-0009.

Place of Performance

Location: FORT WALTON BEACH, OKALOOSA County, FLORIDA, 32548

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $55.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: FY15, THIS IS A FOLLOW-ON OF FA2521-07-C-0009. Key points: 1. The contract value of $55.9M over approximately 6 years suggests a significant investment in critical navigation systems. 2. As a follow-on contract, it implies a degree of contractor performance satisfaction and potential for reduced startup costs. 3. The definitive contract type indicates a commitment to a specific scope of work and duration. 4. Awarded to BAE Systems, a major defense contractor, this suggests a focus on established capabilities and supply chains. 5. The absence of small business set-aside flags a potential gap in opportunities for smaller, specialized firms in this domain. 6. The contract's duration of over 2000 days points to a long-term need for these navigation systems.

Value Assessment

Rating: good

The contract value of $55.9M over 6 years averages to roughly $9.3M annually. Benchmarking this against similar contracts for navigation system manufacturing and support is challenging without more specific details on the system's complexity and scope. However, for a definitive contract of this duration and involving a major defense contractor, the pricing appears within a reasonable range, assuming the scope of work is substantial and complex. Further analysis would require comparing unit costs or specific service rates against industry standards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of three bidders, as suggested by the 'no' field, points to a competitive environment. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The specific details of the bidding process and the number of proposals received would provide a clearer picture of the intensity of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through competitive bidding, leading to better value for money on this significant defense expenditure.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units relying on advanced navigation systems for mission success. The contract delivers essential components and potentially services related to search, detection, navigation, guidance, and aeronautical/nautical systems. The geographic impact is likely national, supporting military operations across various theaters, with specific performance potentially centered in Florida where the contractor is located. Workforce implications include employment opportunities at BAE Systems and its subcontractors, particularly in engineering, manufacturing, and technical support roles related to aerospace and defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to the follow-on nature and the specific technology involved.
Risk of cost overruns if the scope of work expands beyond initial projections.
Dependence on a single large contractor could limit flexibility in adopting newer technologies.
The long duration may not account for rapid technological advancements in navigation systems.

Positive Signals

Follow-on nature suggests successful past performance and established working relationship.
Award to a major defense contractor like BAE Systems implies access to significant resources and expertise.
Full and open competition indicates a structured procurement process likely yielding a capable solution.
The definitive contract type provides clarity on the scope and expected deliverables.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on the niche of navigation, guidance, and control systems. This sector is characterized by high R&D investment, stringent quality requirements, and long product lifecycles. The market size for defense electronics, including navigation systems, is substantial, driven by ongoing modernization efforts and global security needs. This contract represents a portion of the government's investment in maintaining and upgrading its strategic aerospace capabilities.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the primary award went to a large defense contractor, BAE Systems. While there is no explicit mention of subcontracting plans for small businesses, large prime contractors are often required to meet certain subcontracting goals. The absence of a small business set-aside means that opportunities for direct prime contracting were likely limited to large businesses capable of meeting the extensive requirements of this navigation system contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. As a definitive contract, it likely includes specific milestones, reporting requirements, and performance metrics that are monitored by the contracting officer and relevant program executive offices. Transparency is typically managed through contract award databases and public reporting mechanisms. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

DoD Navigation Systems Procurement
Aerospace Electronics Manufacturing
Defense Navigation, Guidance, and Control Systems
BAE Systems Defense Contracts
Follow-on Defense Contracts
Full and Open Competition Defense Contracts

Risk Flags

Follow-on contract may indicate limited competition for subsequent awards.
Long contract duration could lead to technological obsolescence.
Cost No Fee structure might reduce contractor's incentive for cost efficiency.
Sole-source nature of follow-on could limit market options.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. FY15, THIS IS A FOLLOW-ON OF FA2521-07-C-0009.

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $55.9 million.

What is the period of performance?

Start: 2014-10-01. End: 2020-12-31.

What is the specific type of navigation system being procured, and what are its key functionalities?

The contract data indicates the procurement is related to 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS 334511). This broad classification suggests the systems are critical for military aircraft and potentially naval vessels, encompassing functions like precise positioning, target acquisition, flight path management, and situational awareness. The specific functionalities would detail the advanced capabilities required for modern defense operations, such as GPS-denied navigation, inertial navigation system integration, and advanced sensor fusion for enhanced detection and tracking. Without access to the contract's SOW, the precise technical specifications remain undisclosed, but the classification points to high-technology components essential for mission success.

How does the $55.9M contract value compare to previous spending on similar navigation systems by the Air Force?

The provided data states this is a follow-on to FA2521-07-C-0009. To compare spending, we would need the value and duration of the previous contract. Assuming the previous contract had a similar scope and duration, a follow-on award of $55.9M over approximately 6 years (2283 days) suggests a consistent or potentially increased investment in these navigation systems. If the previous contract was significantly smaller or shorter, this follow-on could indicate an expansion of capabilities or an increase in unit costs. Without the prior contract's financial details, a direct comparison is speculative, but the substantial value of this award implies sustained or growing reliance on these systems.

What are the key performance indicators (KPIs) or metrics used to assess BAE Systems' performance under this contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) or metrics for this contract. However, for a definitive contract of this nature, performance is typically assessed against criteria outlined in the Statement of Work (SOW). These often include metrics related to on-time delivery of components or systems, adherence to technical specifications and quality standards (e.g., defect rates, reliability), successful integration testing, and potentially cost control if it's a cost-reimbursable or cost-plus contract type (though this is 'Cost No Fee'). The 'Cost No Fee' designation implies that the contractor receives a fixed fee regardless of cost, but performance against technical and schedule requirements is still paramount for future awards and contract continuation.

What is the risk profile associated with BAE Systems as the sole contractor for this navigation system?

BAE Systems is a large, established defense contractor with a significant track record, which generally mitigates some risks associated with contractor viability and technical capability. However, awarding a substantial, long-term contract to a single entity, even a large one, carries inherent risks. These include potential complacency, reduced incentive for innovation if competition is limited post-award, and the risk of supply chain disruptions if BAE Systems faces internal issues. Furthermore, the government's reliance on one provider could lead to vendor lock-in, making it difficult and costly to switch providers or adopt alternative technologies in the future. The 'Cost No Fee' structure might also reduce the contractor's financial incentive to aggressively manage costs, although performance against technical requirements remains critical.

How does the 'Cost No Fee' contract type impact the government's financial exposure and the contractor's incentives?

The 'Cost No Fee' (CNF) contract type means the contractor is reimbursed for all allowable costs incurred but receives a fixed fee that is not adjusted based on actual costs. In this specific case, the fee appears to be zero, as indicated by 'Cost No Fee'. This structure is typically used when the scope of work is well-defined, and the primary focus is on ensuring the government receives the required goods or services at a predictable cost, with minimal profit motive for the contractor beyond covering their operational expenses. For the government, it offers cost certainty regarding the fee component, but the total cost is still subject to the contractor's ability to manage allowable expenses. The contractor's incentive is primarily driven by the desire for future contracts and maintaining a good performance record, rather than maximizing profit on this specific award.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA252107R0001

Offers Received: 3

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 520 GAITHER ROAD, ROCKVILLE, MD, 20850

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

Financial Breakdown

Contract Ceiling: $305,953,081

Exercised Options: $290,292,309

Current Obligation: $55,928,635

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline