DoD's $5.6M contract for electronic components awarded to BAE Systems, raising questions on competition and value

Contract Overview

Contract Amount: $5,652,577 ($5.7M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2021-12-31

End Date: 2026-09-30

Contract Duration: 1,734 days

Daily Burn Rate: $3.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: RAGING PARAKEET

Place of Performance

Location: BURLINGTON, MIDDLESEX County, MASSACHUSETTS, 01803

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $5.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: RAGING PARAKEET Key points: 1. The contract's value of $5.6 million is modest in the context of defense spending, but its sole-source nature warrants scrutiny. 2. Competition dynamics are absent, as this was a sole-source award, potentially limiting price discovery and value for money. 3. Risk indicators include the lack of competition and the Cost Plus Fixed Fee (CPFF) contract type, which can incentivize cost overruns. 4. Performance context is limited without specific details on the electronic components and their intended use within the Air Force. 5. Sector positioning places this within 'Other Electronic Component Manufacturing,' a broad category that requires further definition for precise benchmarking. 6. The contract duration of over 1700 days suggests a long-term need for these components.

Value Assessment

Rating: questionable

Benchmarking the value of this $5.6 million contract is challenging without specific details on the electronic components procured and their intended application. The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility, can sometimes lead to higher costs compared to fixed-price contracts if not managed rigorously. Comparing this to similar sole-source awards for specialized electronic components would be necessary for a more definitive value assessment. The absence of competition inherently limits the ability to assess if the pricing is truly competitive.

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. While sole-source awards can be justified for unique capabilities or urgent needs, they typically result in less price transparency and potentially higher costs for the government compared to fully competed contracts. The lack of multiple bidders means there was no direct price comparison or negotiation leverage derived from market competition.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive bidding. This award limits the government's ability to explore alternative, potentially more cost-effective solutions from other suppliers.

Public Impact

The primary beneficiary is the Department of the Air Force, which will receive specialized electronic components. The services delivered involve the manufacturing and supply of electronic components, crucial for various defense systems. The geographic impact is primarily centered around BAE Systems' operations, likely within Massachusetts where the contract was registered. Workforce implications may include sustained employment for BAE Systems personnel involved in the production and delivery of these components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value.
Cost Plus Fixed Fee contract type can incentivize higher costs if not managed effectively.
Lack of transparency regarding the specific components and their necessity.
Long contract duration (over 4 years) increases exposure to potential cost escalations.

Positive Signals

Award to an established defense contractor (BAE Systems) suggests a degree of reliability.
Contract addresses a specific need within the Department of Defense.
Definitive contract type provides a framework for a long-term relationship.

Sector Analysis

This contract falls under the 'Other Electronic Component Manufacturing' sector, a broad category within the larger electronics industry. The defense sector relies heavily on specialized electronic components for advanced systems, ranging from communication equipment to weapon platforms. The market for these components is often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Comparable spending benchmarks would require identifying specific types of electronic components and their typical costs within defense procurement, which is not readily available from the provided data.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and there is no explicit mention of subcontracting requirements for small businesses (sb: false). This suggests that the primary awardee, BAE Systems, is likely a large business, and the contract may not directly contribute to the small business contracting ecosystem unless BAE Systems voluntarily engages small businesses as subcontractors. The absence of set-aside provisions means opportunities for small businesses to directly compete for this specific contract were not prioritized.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing would be expected to ensure costs are reasonable and allocable. Transparency is limited due to the sole-source nature and lack of public detail on the components. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Electronics Procurement
Air Force Component Manufacturing
Sole-Source Defense Contracts
Cost-Plus Contracts
BAE Systems Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
Limited transparency on component specifics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. RAGING PARAKEET

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 $5.7 million.

What is the period of performance?

Start: 2021-12-31. End: 2026-09-30.

What is the specific nature and intended use of the electronic components being procured under this contract?

The provided data classifies the North American Industry Classification System (NAICS) code as 334419, 'Other Electronic Component Manufacturing.' However, it does not specify the exact type of electronic components. These could range from integrated circuits, resistors, capacitors, to more complex sub-assemblies. Their intended use is within the Department of the Air Force, likely for integration into aircraft, communication systems, or other defense platforms. Without further details, it's impossible to ascertain the criticality or specific function of these components, which impacts the assessment of the contract's necessity and value.

How does the Cost Plus Fixed Fee (CPFF) structure potentially impact the final cost compared to other contract types for similar components?

The Cost Plus Fixed Fee (CPFF) contract type reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or when there is significant uncertainty in costs. While it allows for flexibility, it can incentivize contractors to incur higher costs, as their profit (the fixed fee) remains constant regardless of the actual expenses. For taxpayers, this means the government bears the cost risk. In contrast, fixed-price contracts shift cost risk to the contractor, potentially leading to lower prices if the contractor manages costs efficiently. Therefore, for similar components where cost certainty is higher, a fixed-price contract might yield better value for money.

What are the potential risks associated with awarding a sole-source contract for electronic components, especially given the long duration?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated prices and reduced innovation. Without competing bids, the government may overpay for the components and miss out on potentially superior or more cost-effective alternatives. For a long-duration contract (over 1700 days), these risks are amplified. Market conditions, technological advancements, and material costs can change significantly over several years. A sole-source arrangement limits the government's ability to adapt to these changes or renegotiate terms based on evolving market dynamics. Furthermore, reliance on a single supplier can create supply chain vulnerabilities.

What is BAE Systems' track record with similar sole-source defense contracts for electronic components?

BAE Systems is a major defense contractor with extensive experience in various defense systems and components. While specific data on their track record with sole-source contracts for electronic components of this nature is not provided, their general profile suggests they possess the technical capabilities and manufacturing capacity. However, the history of sole-source awards to any large contractor often warrants scrutiny regarding justification and pricing. A deeper analysis would involve reviewing past performance reviews, audit reports, and pricing data from previous sole-source awards by BAE Systems to assess consistency and value.

How does this $5.6 million contract compare to overall Air Force spending on electronic components?

The $5.6 million contract value is relatively small when considered against the total annual budget of the Department of the Air Force, which runs into hundreds of billions of dollars. However, within the specific sub-category of 'Other Electronic Component Manufacturing,' this amount could represent a significant portion of spending for particular types of components, especially if they are highly specialized or custom-made. Without data on the total Air Force expenditure for similar electronic components, it's difficult to provide a precise comparative context. This contract's significance is better understood by its sole-source nature and duration rather than its absolute dollar amount in the broader defense budget.

Are there any specific performance metrics or deliverables outlined in the contract that allow for assessment of its effectiveness?

The provided data does not include details on specific performance metrics or deliverables for this contract. A Cost Plus Fixed Fee (CPFF) contract typically outlines requirements for cost accounting and reporting, and the fixed fee is contingent upon meeting the contract's objectives. However, the effectiveness of the contract in delivering the intended electronic components relies on the quality, timeliness, and adherence to specifications. Without access to the contract's statement of work, delivery schedules, and quality assurance clauses, assessing its effectiveness is not possible based solely on the summary data.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

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

Address: 600 DISTRICT AVE, BURLINGTON, MA, 01803

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

Financial Breakdown

Contract Ceiling: $6,400,248

Exercised Options: $6,400,248

Current Obligation: $5,652,577

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline