DoD awards $225M for guided missile manufacturing to BAE Systems, a sole-source contract

Contract Overview

Contract Amount: $225,034,247 ($225.0M)

Contractor: BAE Systems Information & Electronic Systems Integration Inc

Awarding Agency: Department of Defense

Start Date: 2019-02-06

End Date: 2020-10-30

Contract Duration: 632 days

Daily Burn Rate: $356.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: WGU-59/B GUIDANCE SECTIONS

Place of Performance

Location: HUDSON, HILLSBOROUGH County, NEW HAMPSHIRE, 03051

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $225.0 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC for work described as: WGU-59/B GUIDANCE SECTIONS Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. The contract duration of 632 days suggests a focused, short-term project. 3. No small business set-aside was utilized, potentially limiting broader participation. 4. The award was not competed, raising questions about price discovery and value. 5. This contract falls under the Guided Missile and Space Vehicle Manufacturing sector.

Value Assessment

Rating: questionable

The contract value of $225 million for a 632-day period for guided missile manufacturing is substantial. Without comparable sole-source awards or detailed cost breakdowns, it is difficult to benchmark the value for money. The firm-fixed-price structure provides some cost certainty, but the lack of competition prevents a direct comparison to market rates or other potential suppliers.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from a wider range of suppliers.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the best possible price. It also limits opportunities for other businesses to secure government contracts.

Public Impact

The Department of the Navy benefits from the acquisition of critical guided missile components. This contract supports the manufacturing of defense systems essential for national security. The primary beneficiaries are the end-users of the defense systems, ensuring operational readiness. The contract supports specialized manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing for taxpayers.
Sole-source awards can create dependency on a single supplier.
Limited transparency into the justification for sole-source procurement.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award supports a critical defense manufacturing capability.
Contract duration is defined, allowing for focused execution.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and critical component of the defense industrial base. Companies operating in this space require significant technical expertise, advanced manufacturing capabilities, and often hold sensitive security clearances. Spending in this sector is driven by national security requirements and technological advancements in defense systems. Comparable spending benchmarks are difficult to establish due to the proprietary nature of many defense contracts and the unique specifications of missile systems.

Small Business Impact

This contract did not include a small business set-aside, nor is there information indicating subcontracting opportunities for small businesses. The award to a large prime contractor like BAE Systems suggests that the primary focus was on the prime's capabilities, potentially limiting direct opportunities for small businesses in this specific procurement. Further analysis would be needed to determine if subcontracting plans were mandated or if small businesses are involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature of the award, though justifications for such awards are usually documented internally. The Inspector General's office within the DoD would have jurisdiction over any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Procurement
Naval Systems
BAE Systems Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for higher costs due to lack of competition.
Limited transparency regarding procurement rationale.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $225.0 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC. WGU-59/B GUIDANCE SECTIONS

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 Navy).

What is the total obligated amount?

The obligated amount is $225.0 million.

What is the period of performance?

Start: 2019-02-06. End: 2020-10-30.

What is the specific justification provided by the Department of the Navy for awarding this contract on a sole-source basis to BAE Systems?

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. While the specific justification is not detailed in the provided snippet, common reasons for sole-source awards in defense manufacturing include the unique capabilities of the contractor, proprietary technology, urgent national security needs where only one source can meet the requirement within the necessary timeframe, or the existence of a prior contract that established a baseline for follow-on work. For guided missile systems, this often relates to specialized designs, existing production lines, or critical components that only a specific manufacturer can produce.

How does the firm-fixed-price (FFP) contract type mitigate risk for the government in this sole-source scenario?

A firm-fixed-price contract is generally advantageous for the government as it shifts the majority of the cost risk to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides budget certainty for the Department of the Navy. In a sole-source situation, where competitive pricing is absent, the FFP structure is particularly important for controlling expenditures. However, it does not guarantee the 'best' price, as that would typically be determined through competition.

What is the historical spending pattern for guided missile and space vehicle manufacturing by the Department of the Navy, and how does this award compare?

The provided data snippet focuses on a single award of $225 million. To assess historical spending patterns, one would need to analyze the Department of the Navy's procurement data over several fiscal years for the NAICS code 336414 (Guided Missile and Space Vehicle Manufacturing) and similar categories. This would involve identifying the total annual spending, the number of contracts awarded, the proportion of sole-source versus competed contracts, and the average contract values. Without this broader dataset, it's impossible to definitively state how this $225 million award compares in scale or frequency to the Navy's typical spending in this domain.

What are the potential implications of awarding a significant contract like this to a single large prime contractor regarding innovation and supply chain resilience?

Awarding a large contract solely to a prime contractor like BAE Systems can streamline execution and leverage established expertise. However, it may also limit opportunities for innovative solutions from smaller, specialized firms that could be part of a competitive bidding process. Over-reliance on a single prime can also create supply chain vulnerabilities; if the prime contractor faces production issues, it can significantly impact the delivery of critical defense assets. A more diversified approach, potentially involving more competition or mandated subcontracting with small businesses, could foster greater innovation and enhance supply chain resilience.

Are there any specific performance metrics or deliverables outlined in the contract that allow for assessment of BAE Systems' performance?

The provided data indicates the contract type is 'FIRM FIXED PRICE' and includes start and end dates ('sd': '2019-02-06', 'ed': '2020-10-30') and a duration ('dur': 632 days). While this suggests defined delivery timelines, the specific performance metrics, quality standards, and detailed deliverables are not included in this summary data. Typically, government contracts, especially for complex items like missiles, would include detailed specifications, acceptance criteria, and potentially performance incentives or penalties. A full review of the contract document itself would be necessary to ascertain the precise performance expectations and measurement criteria.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 65 RIVER RD, HUDSON, NH, 03051

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: $225,034,247

Exercised Options: $225,034,247

Current Obligation: $225,034,247

Actual Outlays: $36,918,087

Subaward Activity

Number of Subawards: 112

Total Subaward Amount: $137,629,160

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001917D5517

IDV Type: IDC

Timeline