DoD's $231M BAE Systems contract for aircraft parts lacks competition, raising value concerns

Contract Overview

Contract Amount: $231,480,446 ($231.5M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2021-06-30

End Date: 2027-04-30

Contract Duration: 2,130 days

Daily Burn Rate: $108.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BIG SAFARI

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $231.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BIG SAFARI Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. Significant contract value suggests a substantial need for these aircraft parts. 3. The 'Cost Plus Fixed Fee' pricing structure may incentivize cost overruns. 4. Long contract duration (2021-2027) indicates a sustained requirement. 5. Lack of small business involvement noted, with no set-aside or reported subcontracting. 6. Geographic concentration in New Hampshire for the contractor.

Value Assessment

Rating: questionable

The contract's value of over $231 million is substantial. However, the lack of competition and the 'Cost Plus Fixed Fee' structure raise concerns about whether the government is achieving optimal value for money. Without competitive bids, it's difficult to benchmark pricing against market rates or other similar contracts. The fixed fee component, while providing some cost control, doesn't eliminate the risk of inflated base costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. This limits the opportunity for multiple vendors to bid, which typically drives down prices and fosters innovation. The absence of competition means the government did not benefit from a marketplace evaluation of the best price and technical solution.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without competing the requirement, there is a higher risk of overpaying for the goods and services provided.

Public Impact

The Department of the Air Force benefits from the supply of critical aircraft parts. This contract supports the maintenance and operational readiness of Air Force aircraft. The primary impact is on the defense industrial base, specifically supporting BAE Systems. Workforce implications are likely concentrated within BAE Systems' facilities in New Hampshire.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher base costs from the contractor.
Lack of transparency in pricing due to non-competitive nature.
No indication of small business participation or subcontracting opportunities.
Long contract duration could mask inefficiencies over time.

Positive Signals

Contract awarded to a known entity (BAE Systems) with existing capabilities.
Fixed fee provides some level of cost certainty for the contractor's profit.
Sustained funding ensures availability of critical aircraft parts for the Air Force.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a critical component of the broader aerospace and defense industry. The total addressable market for aircraft parts manufacturing is substantial, driven by military readiness and commercial aviation needs. This specific contract represents a significant portion of spending within its niche, highlighting the importance of reliable suppliers like BAE Systems to the Department of Defense's operational capabilities.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there any indication of subcontracting plans for small businesses. This means that opportunities for small businesses to participate in this significant defense spending are likely limited. The absence of small business involvement could reduce the overall economic impact on the small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The 'Cost Plus Fixed Fee' structure requires diligent monitoring of costs incurred by the contractor to ensure they align with the fixed fee. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the agency should be in place.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Support
Aerospace Component Supply
Air Force Maintenance, Repair, and Overhaul (MRO)

Risk Flags

Sole-source award
Lack of competition
Cost Plus Fixed Fee contract type
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $231.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. BIG SAFARI

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 Air Force).

What is the total obligated amount?

The obligated amount is $231.5 million.

What is the period of performance?

Start: 2021-06-30. End: 2027-04-30.

What is BAE Systems' track record with similar sole-source contracts for aircraft parts?

BAE Systems is a major defense contractor with extensive experience in aerospace manufacturing. While specific data on their track record with sole-source contracts for this exact category of parts is not provided, their history suggests a capacity to deliver complex components. However, sole-source awards, by their nature, limit public data on competitive performance. Analysis would typically involve reviewing past performance evaluations, any documented issues or successes on prior contracts, and their overall financial health as a large, established entity within the defense industrial base. Without specific comparative data points from other sole-source awards, assessing their performance in this context remains general.

How does the 'Cost Plus Fixed Fee' structure compare to other contract types for this type of procurement?

The 'Cost Plus Fixed Fee' (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is uncertainty in the costs involved, such as in research and development or complex manufacturing. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF offers less cost certainty for the government but can be advantageous when risks are high. However, it places a greater burden on the government to closely monitor contractor costs to prevent overruns. For standard aircraft parts manufacturing where costs might be more predictable, a fixed-price contract could potentially offer better value and cost control for the government.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($231 million) include inflated pricing due to the lack of competitive pressure, potential for reduced innovation, and a lack of transparency in cost justification. Without competing the requirement, the government may not be securing the best possible price or the most technologically advanced solution. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier, potentially weakening its negotiating position in the future. Furthermore, the absence of competition can sometimes lead to complacency in performance or quality if not rigorously overseen.

What is the historical spending pattern for this specific type of aircraft part by the Department of Defense?

Historical spending data for this specific type of aircraft part (NAICS 336413) by the Department of Defense is not detailed in the provided data. However, the significant value of this single contract suggests a substantial and ongoing requirement for these components. Defense spending on aircraft parts is generally driven by fleet size, operational tempo, maintenance schedules, and modernization programs. Analyzing broader trends in defense procurement for aerospace components would reveal fluctuations based on geopolitical events, budget allocations, and strategic priorities. Without granular historical data for this specific part, it's difficult to ascertain if this $231 million award represents an increase, decrease, or stable level of spending compared to previous periods.

What are the potential implications for future procurements if this sole-source contract is successful?

If this sole-source contract is deemed successful by the Department of the Air Force, it could set a precedent for future procurements of similar aircraft parts. This might lead to continued reliance on BAE Systems without further competitive bidding, potentially reinforcing the 'sole-source' status. While successful performance is positive, it doesn't negate the inherent risks of non-competition. Future solicitations might need to actively address the rationale for continued sole-sourcing or implement strategies to introduce competition, perhaps by breaking down the requirement into smaller lots or encouraging new entrants into the supply chain. The long-term implication could be a less dynamic and potentially more expensive supply chain if competition is not re-established.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

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: 65 SPIT BROOK RD, NASHUA, NH, 03060

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

Financial Breakdown

Contract Ceiling: $231,480,446

Exercised Options: $231,480,446

Current Obligation: $231,480,446

Subaward Activity

Number of Subawards: 64

Total Subaward Amount: $31,968,092

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862016G3028

IDV Type: BOA

Timeline