DoD's $106M BAE Systems contract for guided missile manufacturing awarded without competition

Contract Overview

Contract Amount: $106,336,788 ($106.3M)

Contractor: BAE Systems Information & Electronic Systems Integration Inc

Awarding Agency: Department of Defense

Start Date: 2021-04-15

End Date: 2025-04-29

Contract Duration: 1,475 days

Daily Burn Rate: $72.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FRP-10 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 $106.3 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC for work described as: FRP-10 WGU-59/B GUIDANCE SECTIONS Key points: 1. Contract awarded on a firm-fixed-price basis, indicating a defined scope and cost structure. 2. The contract spans over 1400 days, suggesting a long-term need for these specialized components. 3. The absence of competition raises questions about potential cost efficiencies and market responsiveness. 4. This award represents a significant investment in the guided missile manufacturing sector. 5. The contractor, BAE Systems, is a major player in defense electronics and systems integration. 6. The contract is for guidance sections, a critical component in missile systems.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized product. Without competitive bids, it's difficult to ascertain if the $106 million represents optimal value for money. The firm-fixed-price structure provides cost certainty for the government, but the lack of competition may have limited opportunities for price negotiation or discovery of more cost-effective solutions. Further analysis would require understanding the specific technical requirements and the contractor's cost structure.

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 approach is typically employed when only one responsible source can provide the required goods or services. The lack of competition means that the Department of the Navy did not solicit bids from multiple vendors, potentially limiting price discovery and the government's ability to secure the most advantageous terms through a competitive process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from the cost savings typically achieved through competitive bidding. It also limits opportunities for other businesses to compete for this significant contract.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring advanced missile systems. The contract delivers critical guidance sections for guided missiles, essential for national defense capabilities. The geographic impact is primarily within New Hampshire, where BAE Systems' relevant facility is located. This contract supports specialized manufacturing jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a competed contract.
Sole-source awards can reduce transparency in pricing and cost justification.
Dependence on a single supplier could create supply chain risks if not managed proactively.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
BAE Systems is an established defense contractor with relevant expertise.
Contract addresses a critical need for national defense capabilities.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical 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. The market is dominated by a few large, established defense contractors. Spending in this area is driven by national security priorities and technological advancements in missile defense and offensive capabilities.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the specialized nature of guided missile components and the sole-source award to a large prime contractor, it is unlikely that significant subcontracting opportunities for small businesses are mandated within this specific award. However, BAE Systems may engage small businesses in its broader supply chain for components or services not directly covered by this contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification for this procurement method would be subject to review. Inspector General (IG) oversight may be exercised to ensure compliance with regulations and prevent fraud, waste, and abuse, particularly concerning the justification for the sole-source award and the reasonableness of the price.

Related Government Programs

Guided Missile Manufacturing
Defense Electronics
Aerospace Manufacturing
Department of the Navy Procurement
Sole-Source Defense Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Limited transparency on cost build-up and profit margins.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $106.3 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC. FRP-10 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 $106.3 million.

What is the period of performance?

Start: 2021-04-15. End: 2025-04-29.

What is the specific type of guidance section being procured, and what are its key technical specifications?

The provided data indicates the contract is for 'GUIDANCE SECTIONS' under NAICS code 336414 (Guided Missile and Space Vehicle Manufacturing). However, the specific technical specifications, such as the missile platform it's intended for, its operational parameters, or unique technological features, are not detailed in the summary data. These details are typically found in the contract's Statement of Work (SOW) or technical exhibits, which are usually not publicly disclosed in full for national security reasons. Understanding these specifications is crucial for assessing the uniqueness of the requirement and the justification for a sole-source award.

How does the $106 million contract value compare to historical spending on similar guidance sections?

Direct historical spending comparisons for this specific guidance section are difficult without more granular data on previous contracts for the same or highly similar components. The contract value of $106 million over approximately 1475 days (roughly 4 years) suggests an average annual value of around $26.5 million. To benchmark this, one would need to analyze prior contracts for guidance sections for the same or comparable missile systems, considering factors like quantity, technological complexity, and inflation. The absence of competitive bidding in this award makes direct price-to-price comparisons with previously competed contracts less meaningful, as market forces were not applied.

What was the justification for awarding this contract on a sole-source basis?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations (FAR). Common justifications include: only one responsible source exists, urgent and compelling needs where competition is not feasible, or specific national security requirements that limit the pool of eligible contractors. For this BAE Systems contract, the justification would likely stem from the highly specialized nature of the guidance sections, proprietary technology, or a critical need that could not be met in a timely manner through a competitive process. The specific FAR citation (e.g., FAR Part 6) and detailed rationale would be documented in the contract file.

What is BAE Systems' track record with the Department of the Navy and in producing guided missile components?

BAE Systems is a major global defense contractor with a long-standing relationship with the Department of Defense, including the Department of the Navy. They have a significant presence in electronic systems, naval systems, and aerospace manufacturing. Their track record in producing components for guided missiles and related systems is extensive, often involving complex electronics, software, and integration. While specific performance metrics for this particular guidance section contract are not detailed here, BAE Systems' overall position as a prime contractor suggests a history of delivering on complex defense programs, though like any large contractor, they may have faced past performance challenges on other contracts.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risks associated with a sole-source contract of this magnitude ($106 million) include: 1) Higher Costs: Without competition, the government may pay a premium compared to what could be achieved in a competitive environment. 2) Lack of Innovation: The absence of multiple bidders can reduce the incentive for the contractor to innovate or offer more cost-effective solutions. 3) Reduced Transparency: It can be harder to scrutinize pricing and ensure the government is receiving fair value. 4) Contractor Lock-in: The government becomes dependent on a single supplier, potentially limiting future flexibility and increasing switching costs. 5) Potential for Complacency: The contractor may face less pressure to maintain high performance standards or efficiency.

How does this contract align with broader trends in guided missile technology and defense spending?

This contract aligns with the ongoing global emphasis on advanced missile capabilities, including precision-guided munitions, hypersonic weapons, and missile defense systems. Defense spending in this sector remains robust as nations seek to maintain technological superiority and deter adversaries. The procurement of guidance sections is fundamental to these capabilities. Trends include increasing complexity, miniaturization, enhanced targeting, and greater integration with networked warfare systems. This contract likely supports the development or sustainment of existing or next-generation missile platforms, reflecting the strategic importance placed on such technologies by the Department of the Navy and the broader DoD.

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

Solicitation ID: N0001918R0018

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

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: $106,336,788

Exercised Options: $106,336,788

Current Obligation: $106,336,788

Subaward Activity

Number of Subawards: 93

Total Subaward Amount: $66,112,221

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001919D0026

IDV Type: IDC

Timeline