DoD's $115.6M contract for missile guidance sections awarded to BAE Systems, highlighting manufacturing capabilities

Contract Overview

Contract Amount: $115,630,730 ($115.6M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2014-03-27

End Date: 2019-05-31

Contract Duration: 1,891 days

Daily Burn Rate: $61.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: APKWS II FRP III WGU-59/B GUIDANCE SECTIONS

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $115.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: APKWS II FRP III WGU-59/B GUIDANCE SECTIONS Key points: 1. Contract value of $115.6 million for missile guidance sections indicates significant investment in defense manufacturing. 2. BAE Systems, a major defense contractor, secured this award, suggesting strong existing capabilities and market position. 3. The contract type, Firm Fixed Price, aims to control costs and transfer risk to the contractor. 4. Awarded by the Department of the Navy, this contract supports a critical component of guided missile systems. 5. The duration of the contract (1891 days) suggests a long-term need for these components. 6. The North American Industry Classification System (NAICS) code 336414 points to specialized guided missile and space vehicle manufacturing.

Value Assessment

Rating: good

The contract value of $115.6 million for guidance sections appears reasonable given the specialized nature of missile components and the firm fixed-price structure which typically includes contingency. Benchmarking against similar, highly technical defense manufacturing contracts is challenging due to proprietary data, but the scale suggests a competitive procurement process likely yielded a fair price. The absence of extensive modifications or overruns, if applicable, would further support its value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES'. This designation implies that while the competition was intended to be broad, specific circumstances or prior agreements may have limited the pool of eligible bidders. Further details on the 'exclusion of sources' would clarify the extent of competition and its potential impact on price discovery.

Taxpayer Impact: While some level of competition was present, the exclusion of certain sources could mean taxpayers did not benefit from the widest possible range of bids, potentially leading to a higher price than under unrestricted full and open competition.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other branches of the Department of Defense requiring advanced missile systems. The contract delivers critical guidance sections for guided missiles, essential for national defense capabilities. The geographic impact is primarily within the United States, supporting domestic defense manufacturing and supply chains. This contract supports specialized manufacturing jobs within the aerospace and defense sector, likely requiring skilled engineers and technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition due to 'exclusion of sources' could impact long-term cost-effectiveness.
Reliance on a single contractor for a critical component may pose supply chain risks.
The specialized nature of the product means few alternative suppliers exist, potentially limiting future negotiation leverage.

Positive Signals

Firm Fixed Price contract structure helps control costs and manage budget predictability.
Award to a major defense contractor like BAE Systems suggests a high likelihood of meeting technical specifications and delivery schedules.
The contract supports the production of essential defense materiel, contributing to national security.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector (NAICS 336414), a highly specialized segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements. Spending in this area is driven by national security needs and technological advancements in defense systems. Comparable spending benchmarks are difficult to ascertain publicly due to the classified or sensitive nature of many missile programs.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale, specialized manufacturing contract awarded to a major defense contractor, it is unlikely to involve significant direct subcontracting opportunities for small businesses in the core guidance section manufacturing. However, the prime contractor may engage small businesses for ancillary services or components further down the supply chain.

Oversight & Accountability

Oversight for this Department of Defense contract would typically be managed by the Naval Sea Systems Command (NAVSEA) or a similar contracting activity. Accountability measures are embedded in the Firm Fixed Price contract terms, requiring delivery of specified goods at an agreed-upon price. Transparency is generally limited for defense contracts of this nature, though contract awards and basic details are publicly available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Air-to-Ground Munitions
Naval Weapon Systems
Advanced Ordnance Manufacturing
Aerospace Component Production

Risk Flags

Limited competition potential
Supply chain dependency
Technical specification adherence risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $115.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. APKWS II FRP III WGU-59/B GUIDANCE SECTIONS

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 Navy).

What is the total obligated amount?

The obligated amount is $115.6 million.

What is the period of performance?

Start: 2014-03-27. End: 2019-05-31.

What is the specific nature of the 'exclusion of sources' in this contract's competition?

The designation 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' suggests that while the procurement was initially intended to be open, certain potential sources were excluded from bidding. The reasons for exclusion can vary, including national security concerns, proprietary technology limitations, or specific requirements that only a limited number of entities could meet. Without further documentation or clarification from the awarding agency, the precise rationale and the number of excluded sources remain unspecified. This exclusion potentially limits the competitive landscape, which could impact price negotiation and the overall value realized by the government.

How does the $115.6 million contract value compare to similar missile guidance section procurements?

Direct comparison of this $115.6 million contract value for APKWS II guidance sections is challenging due to the proprietary and sensitive nature of defense procurement data. However, considering the scale and complexity of guided missile components, this figure appears substantial, reflecting the advanced technology and manufacturing precision required. The value is influenced by factors such as the quantity of units, specific technical requirements, and the contractor's overhead and profit margins. Benchmarking would ideally involve comparing unit costs or total contract values for similar systems from different manufacturers or across different contract periods, information often not publicly available.

What are the key performance risks associated with this contract for BAE Systems?

Key performance risks for BAE Systems on this contract include meeting stringent technical specifications and quality standards for the APKWS II guidance sections, ensuring timely delivery to avoid impacting naval readiness, and managing production costs under a Firm Fixed Price agreement. Failure to meet any of these could result in contract penalties, reputational damage, and potential loss of future business. Additionally, managing the supply chain for specialized components and adapting to any potential design changes or evolving threat environments present further risks.

What is the historical spending pattern for this type of missile guidance section by the Department of the Navy?

Historical spending on missile guidance sections by the Department of the Navy is substantial and ongoing, reflecting a continuous need for advanced munitions. The Advanced Precision Kill Weapon System (APKWS) II program, for which these guidance sections are intended, has seen consistent funding over several years to equip various platforms. While specific historical dollar amounts for this exact component may not be readily available, the Navy's overall budget allocation for missile procurement and upgrades indicates a significant and sustained investment in such technologies. This particular contract represents a portion of that broader, long-term spending strategy.

What is the strategic importance of the APKWS II guidance sections to the Navy's operational capabilities?

The APKWS II guidance sections are strategically vital as they transform unguided rockets into precision-guided munitions. This capability allows naval platforms, such as helicopters and fixed-wing aircraft, to engage targets with significantly reduced collateral damage and increased effectiveness, even in complex environments. The system enhances standoff capability, improves target discrimination, and provides a cost-effective precision strike option compared to larger missiles. Ensuring a steady supply of these guidance sections is crucial for maintaining the Navy's asymmetric warfare capabilities and its ability to conduct precise strikes across a range of missions.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 65 SPIT BROOK RD, NASHUA, NH, 03060

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

Financial Breakdown

Contract Ceiling: $115,630,730

Exercised Options: $115,630,730

Current Obligation: $115,630,730

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline