DoD's $14.3M contract for lead integration services awarded to BAE Systems without competition

Contract Overview

Contract Amount: $14,301,300 ($14.3M)

Contractor: BAE Systems Information & Electronic Systems Integration Inc

Awarding Agency: Department of Defense

Start Date: 2024-12-01

End Date: 2026-11-30

Contract Duration: 729 days

Daily Burn Rate: $19.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LEAD INTEGRATOR.

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78224

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $14.3 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC for work described as: LEAD INTEGRATOR. Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award limits price discovery and may not represent the best value. 3. Lack of competition raises concerns about contractor performance and innovation. 4. Contract duration of 729 days suggests a significant, ongoing need for these services. 5. Awarded by the Department of the Air Force, highlighting a specific defense need. 6. The North American Industry Classification System (NAICS) code 541990 covers 'All Other Professional, Scientific, and Technical Services', a broad category.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the broad scope of 'All Other Professional, Scientific, and Technical Services'. Without competitive bids, it's difficult to assess if BAE Systems' pricing is aligned with market rates or if the fixed fee adequately incentivizes efficiency. The cost-plus structure inherently carries a risk of exceeding the initial estimate, making ongoing oversight crucial to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source procurement method, meaning only one vendor, BAE Systems Information & Electronic Systems Integration Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. The absence of competition means there was no direct comparison of proposals or pricing, potentially leading to less favorable terms for the government.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding. This limits the government's ability to secure the most cost-effective solution.

Public Impact

The Department of the Air Force is the primary beneficiary, receiving lead integration services. These services are crucial for the operational effectiveness and integration of complex defense systems. The contract is being performed in Texas, potentially impacting the local economy and workforce. The specific nature of 'lead integration' suggests a role in managing and coordinating various technical components of a larger defense program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing and performance.
Cost-plus-fixed-fee structure may not fully incentivize cost control.
Broad service category makes it difficult to precisely benchmark performance and cost.
Lack of transparency in the selection process due to sole-source award.

Positive Signals

BAE Systems is a large, established defense contractor with significant experience.
The contract is for a defined period, allowing for structured project management.
The fixed fee component provides some level of cost certainty for the government.

Sector Analysis

The defense sector relies heavily on complex integration services to ensure the interoperability and effectiveness of its advanced systems. This contract falls within the broader professional, scientific, and technical services market, which is a significant segment of government contracting. Comparable spending in this area often involves large, specialized firms like BAE Systems that possess the expertise and security clearances required for defense-related integration projects.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the likely complexity of 'lead integration' services for the Department of Defense, it is improbable that significant subcontracting opportunities for small businesses will be mandated or readily available through this specific award. Further analysis would be needed to determine if BAE Systems has existing subcontracting plans that include small businesses for other aspects of their operations.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officers and program managers within the Department of the Air Force. Accountability measures would typically include performance reviews, milestone tracking, and financial audits, especially given the cost-plus nature of the award. Transparency may be limited due to the sole-source procurement, but contract performance data and financial expenditures should be subject to standard government reporting requirements and potential Inspector General review.

Related Government Programs

Department of Defense IT Services
Defense Systems Integration
Aerospace and Defense Contracting
Professional and Technical Services

Risk Flags

Sole-source award
Cost-plus contract type
Broad service category (NAICS 541990)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.3 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC. LEAD INTEGRATOR.

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 Air Force).

What is the total obligated amount?

The obligated amount is $14.3 million.

What is the period of performance?

Start: 2024-12-01. End: 2026-11-30.

What is BAE Systems' track record with similar sole-source integration contracts within the Department of Defense?

BAE Systems has a long history of contracting with the Department of Defense, often securing large, complex contracts. While specific data on their sole-source integration contracts requires deep dives into historical procurement databases, their extensive portfolio suggests they are frequently chosen for specialized roles. Their track record generally indicates a capacity to deliver on large-scale defense projects. However, the absence of competition in sole-source awards means that performance metrics and value assessments are often based on internal government evaluations rather than direct market comparisons. It is crucial to examine past performance reviews and any associated cost variances for similar sole-source awards to BAE Systems to gauge their reliability and cost-effectiveness in such scenarios.

How does the cost-plus-fixed-fee structure compare to other contract types for integration services?

The Cost-Plus-Fixed-Fee (CPFF) structure is common for complex projects where the scope may evolve or is not fully defined at the outset, such as advanced integration services. In a CPFF contract, the contractor is reimbursed for all allowable costs plus a predetermined fixed fee representing profit. This differs from Fixed-Price contracts, where the price is set regardless of the final cost, incentivizing the contractor to control expenses. It also differs from Cost-Plus-Incentive-Fee (CPIF) contracts, which include mechanisms to adjust the fee based on performance against targets. For integration services, CPFF can provide flexibility but carries a higher risk of cost overruns for the government compared to fixed-price options. The fixed fee, however, provides a predictable profit margin for the contractor.

What are the potential risks associated with a sole-source award for lead integration services?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated pricing and reduced incentives for efficiency and innovation. Without competing bids, the government may not secure the best possible value for its investment. There's also a risk that the chosen contractor may not be the most capable or that alternative, potentially superior, solutions are overlooked. Furthermore, sole-source awards can raise concerns about fairness and transparency in the procurement process. For complex integration services, this could mean the government is locked into a specific approach or technology without exploring potentially more cost-effective or advanced alternatives that other firms might offer.

What is the typical market size and spending for 'All Other Professional, Scientific, and Technical Services' within the DoD?

The 'All Other Professional, Scientific, and Technical Services' category (NAICS 541990) is a broad classification encompassing a wide array of specialized services. Within the Department of Defense, spending in this sector can be substantial, reflecting the diverse and complex needs of military operations, research, and development. While specific figures for this exact NAICS code within the DoD fluctuate annually, the overall market for professional, scientific, and technical services is in the tens of billions of dollars. Contracts within this broad category can range from highly specialized scientific research and engineering support to niche technical consulting and integration services, making direct comparisons difficult without further defining the specific services rendered.

Are there specific performance metrics or Key Performance Indicators (KPIs) typically associated with lead integration contracts?

Lead integration contracts often involve KPIs related to system performance, interoperability, reliability, and schedule adherence. For example, metrics might include the successful integration of specified subsystems, achievement of target system uptime or availability, reduction in system errors or latency, and timely completion of integration milestones. Depending on the nature of the integration, cybersecurity metrics and compliance with relevant standards could also be critical. The effectiveness of these KPIs is crucial for managing a CPFF contract, as they provide objective measures against which performance can be assessed, potentially influencing future contract awards or modifications, even within a sole-source context.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

Address: 144 DANIEL WEBSTER HWY, MERRIMACK, NH, 03054

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: $48,578,112

Exercised Options: $26,217,721

Current Obligation: $14,301,300

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline