DoD awards $108.6M for guided missile manufacturing to BAE Systems, a sole-source contract

Contract Overview

Contract Amount: $108,642,525 ($108.6M)

Contractor: BAE Systems Information & Electronic Systems Integration Inc

Awarding Agency: Department of Defense

Start Date: 2022-04-29

End Date: 2026-08-31

Contract Duration: 1,585 days

Daily Burn Rate: $68.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FRP-11 WGU-59A/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 $108.6 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC for work described as: FRP-11 WGU-59A/B GUIDANCE SECTIONS Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant contract value for guided missile and space vehicle manufacturing. 3. Long performance period extending over three years. 4. No small business set-aside indicated, potentially limiting small business participation. 5. Firm fixed-price contract type shifts cost risk to the contractor. 6. Awarded by the Department of Defense, a major federal spender.

Value Assessment

Rating: fair

The contract value of $108.6 million for guided missile and space vehicle manufacturing is substantial. Without comparable sole-source contracts or detailed cost breakdowns, a precise value-for-money assessment is challenging. However, the firm fixed-price structure generally provides cost certainty for the government. Benchmarking against similar sole-source awards in this specialized manufacturing sector would be necessary for a more definitive value assessment.

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 the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than if multiple offers had been solicited.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The government's ability to negotiate the best possible price is diminished in a sole-source scenario.

Public Impact

The Department of Defense benefits from the continued production of guided missile and space vehicle components. This contract supports the defense industrial base, ensuring the availability of critical weapon systems. The contract is geographically focused on New Hampshire, supporting local industry and workforce. Employment in specialized manufacturing roles within BAE Systems is likely sustained or increased.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of small business set-aside may reduce opportunities for smaller firms.
Long contract duration could mask potential inefficiencies if not closely monitored.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Award to an established defense contractor suggests a degree of reliability.
Contract supports critical defense manufacturing capabilities.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a highly specialized and critical segment of the defense industrial base. Companies operating in this area require significant technological expertise, advanced manufacturing capabilities, and stringent security clearances. Spending in this sector is driven by national security requirements and geopolitical factors. Comparable spending benchmarks are difficult to establish due to the proprietary nature of defense technologies and the limited number of qualified suppliers.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific contract are likely limited. The focus is on a large, established prime contractor, which may concentrate the economic benefits within larger corporations rather than distributing them throughout the small business ecosystem.

Oversight & Accountability

Oversight for this contract will be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed-price nature of the contract provides a degree of accountability by placing cost risk on the contractor. Transparency regarding the specific details of the sole-source justification and pricing negotiations would be crucial for a comprehensive assessment of oversight effectiveness.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Procurement
BAE Systems Contracts
Department of Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for higher costs
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $108.6 million to BAE SYSTEMS INFORMATION & ELECTRONIC SYSTEMS INTEGRATION INC. FRP-11 WGU-59A/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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $108.6 million.

What is the period of performance?

Start: 2022-04-29. End: 2026-08-31.

What is the historical spending pattern for guided missile and space vehicle manufacturing by the Department of Defense?

The Department of Defense (DoD) consistently allocates significant funding towards guided missile and space vehicle manufacturing, reflecting its critical role in national security. Annual spending in this category can fluctuate based on geopolitical events, modernization programs, and specific platform requirements. Historically, the DoD has awarded billions of dollars annually for research, development, testing, and production of these systems. Major contractors like BAE Systems, Lockheed Martin, Raytheon, and Northrop Grumman are frequent recipients of such contracts. Analyzing historical spending data reveals trends in technology adoption, program priorities, and the overall demand for advanced missile and space capabilities. For instance, periods of heightened international tension often correlate with increased investment in missile defense and offensive strike capabilities.

How does the pricing of this sole-source contract compare to potentially competed alternatives?

Assessing the pricing of a sole-source contract against hypothetical competed alternatives is inherently challenging without access to detailed cost data and market intelligence. Sole-source awards, by definition, lack direct competitive benchmarking. However, the absence of competition typically implies a reduced downward pressure on prices compared to a scenario where multiple bidders vie for the contract. Government agencies often rely on historical pricing, should-cost analyses, or should-cost models to estimate a fair and reasonable price in sole-source situations. If this contract were competed, it is plausible that multiple bidders would offer lower prices to secure the award, driven by competitive pressures. The firm fixed-price (FFP) nature does offer cost certainty, but the initial price negotiation is critical in sole-source awards.

What are the specific risks associated with sole-source defense contracts of this magnitude?

Sole-source defense contracts of this magnitude carry several inherent risks. Foremost is the risk of inflated pricing due to the lack of competitive pressure, potentially leading to inefficient use of taxpayer funds. There's also a risk of reduced innovation, as the incumbent contractor may have less incentive to develop cost-saving or performance-enhancing improvements without competitive threats. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch suppliers in the future. Dependence on a single supplier can also introduce supply chain risks, particularly if the contractor faces production issues, financial instability, or geopolitical challenges. Robust oversight and negotiation are crucial to mitigate these risks.

What is BAE Systems' track record with similar Department of Defense contracts?

BAE Systems Information & Electronic Systems Integration Inc. has a substantial track record of performing complex defense contracts for the Department of Defense. As a major defense contractor, the company is involved in a wide array of programs, including electronic warfare systems, communication systems, naval weapons, and armored vehicles. Their performance history on similar contracts generally indicates a capacity to deliver sophisticated defense technologies and manufacturing services. However, like any large contractor, specific contract performance can vary. Reviews of past performance databases and contract award histories would provide more granular insights into their on-time delivery, quality adherence, and cost management on comparable projects. Their long-standing presence in the defense sector suggests a generally reliable, albeit sometimes costly, supplier.

What are the potential performance implications of a firm fixed-price contract for guided missile manufacturing?

A firm fixed-price (FFP) contract for guided missile manufacturing places the primary responsibility for cost control and performance risk on the contractor, BAE Systems. This means that the contractor is obligated to complete the work for the agreed-upon price, regardless of actual costs incurred. This structure is advantageous for the government as it provides cost certainty and protects against cost overruns. However, it also means that the contractor bears the risk of unexpected cost increases, which could incentivize them to cut corners on quality or performance if not adequately monitored. For the government, effective oversight is crucial to ensure that the contractor meets all technical specifications and quality standards despite the FFP arrangement.

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: $108,642,525

Exercised Options: $108,642,525

Current Obligation: $108,642,525

Subaward Activity

Number of Subawards: 100

Total Subaward Amount: $54,864,629

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