DoD awards $37.7M for navigation systems to BAE Systems, a sole-source contract

Contract Overview

Contract Amount: $37,738,893 ($37.7M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2023-05-30

End Date: 2027-06-28

Contract Duration: 1,490 days

Daily Burn Rate: $25.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY23-24 PRODUCTION

Place of Performance

Location: GREENLAWN, SUFFOLK County, NEW YORK, 11740

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $37.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: FY23-24 PRODUCTION Key points: 1. Contract awarded to a single vendor suggests potential lack of competitive pricing. 2. Long contract duration of nearly 5 years may limit opportunities for market shifts. 3. Firm Fixed Price contract type offers cost certainty for the government. 4. Sole-source award raises questions about the justification for not seeking multiple bids. 5. Focus on navigation systems indicates critical support for naval operations.

Value Assessment

Rating: questionable

Benchmarking the value of this $37.7 million contract is challenging without comparable sole-source awards for similar navigation systems. The firm fixed-price structure provides cost predictability, but the absence of competition means the government cannot be assured it received the best possible price. Further analysis would require understanding the specific technical requirements and the availability of alternative solutions.

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 solicited. The justification for this approach is not detailed in the provided data. Sole-source awards typically occur when a unique capability is required or only one vendor can meet the need, but they limit price discovery and potentially increase costs for the government.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from competitive pricing, potentially leading to higher overall expenditure for the required systems.

Public Impact

Naval forces will benefit from advanced search, detection, navigation, guidance, and aeronautical/nautical systems. The contract supports critical operational capabilities for the Department of the Navy. The geographic impact is primarily associated with the contractor's location in New York. Workforce implications include employment at BAE Systems and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
Sole-source award requires strong justification to ensure taxpayer value.
Long-term contract duration could reduce flexibility in adopting newer technologies.

Positive Signals

Firm Fixed Price contract provides cost certainty.
Award to established contractor BAE Systems suggests reliance on proven capabilities.
Contract supports essential defense navigation systems.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a specialized area within the broader defense industrial base. The market for such advanced systems is often characterized by high barriers to entry due to R&D costs and technical expertise. Spending in this niche is driven by defense modernization priorities and the need for reliable operational equipment.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans for small businesses. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem may be limited unless BAE Systems actively engages small businesses in its supply chain for this specific contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the contract terms, particularly the firm fixed-price structure. Transparency is limited by the sole-source nature of the award; further details on justification and performance monitoring would be necessary for a full assessment.

Related Government Programs

Naval Navigation Systems
Defense Electronics Manufacturing
Guidance and Control Systems
Search and Detection Equipment

Risk Flags

Sole-source award
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. FY23-24 PRODUCTION

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 $37.7 million.

What is the period of performance?

Start: 2023-05-30. End: 2027-06-28.

What is the specific justification for awarding this contract on a sole-source basis to BAE Systems?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of meeting the agency's needs. This could be due to unique technical requirements, proprietary technology, or a lack of competition in the market for the specific system. The Department of Defense would have a formal justification document (e.g., a Justification and Approval - J&A) outlining the rationale, which is often publicly available through sources like the Federal Business Opportunities (SAM.gov) website, though not provided here. Without this justification, it is difficult to assess if the sole-source decision was appropriate and served the government's best interest.

How does the $37.7 million value compare to similar navigation system contracts awarded by the DoD?

Comparing the $37.7 million value requires identifying similar contracts for comparable navigation systems, which is challenging with the limited data. However, for large-scale defense systems, this amount represents a significant investment. Without knowing the specific components and capabilities of the systems being procured, a direct comparison is difficult. Generally, sole-source awards can be higher than competitively bid contracts. To assess value, one would need to benchmark against other contracts for similar technological sophistication, quantity, and duration, considering factors like research and development costs and market exclusivity.

What are the key risks associated with a sole-source contract of this magnitude and duration?

The primary risk with a sole-source contract of this magnitude ($37.7M) and duration (nearly 5 years) is the potential for inflated pricing due to the lack of competitive pressure. The government may not be achieving the best possible value for its investment. Another risk is vendor lock-in, where the government becomes dependent on a single supplier, potentially hindering the adoption of newer, more advanced technologies that may emerge during the contract period. Furthermore, if BAE Systems faces performance issues or financial instability, the government has limited recourse to switch providers without significant disruption.

What is the track record of BAE Systems Information and Electronic Systems Integration Inc. in delivering similar navigation systems?

BAE Systems is a major defense contractor with a long history and extensive experience in developing and producing a wide range of electronic systems, including those for navigation, search, and detection. The company has a significant presence in the defense sector and has been awarded numerous contracts by various branches of the military. While specific performance metrics for this particular contract are not yet available due to its recent award, BAE Systems generally has a substantial track record in delivering complex defense technologies. However, as with any large contractor, past performance can vary, and a detailed review of their specific history with navigation systems would be beneficial.

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

The Firm Fixed Price (FFP) contract type is advantageous for the government as it shifts the risk of cost overruns to the contractor, BAE Systems. Under an FFP agreement, the price is set and not subject to adjustment based on the contractor's actual costs. This provides budget certainty for the Department of the Navy. In a sole-source situation, FFP is particularly important because it locks in the price from the outset, preventing potential price increases that might occur if the contractor's costs escalate during performance. While it doesn't guarantee the lowest possible price (as competition would), it does ensure the government knows its maximum liability.

What are the implications of the contract's end date (June 2027) for future technology adoption?

The contract's end date of June 2027, approximately 4.8 years from the start date, means that the government is committed to using systems procured under this award for a significant period. This duration could pose a challenge for adopting rapidly evolving navigation technologies. If significant advancements occur in navigation systems between now and 2027, the government might be constrained by the existing contract, potentially delaying the integration of superior capabilities. Planning for follow-on contracts or modifications would be crucial to ensure the Navy maintains a technological edge.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001922R0061

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 450 PULASKI RD, GREENLAWN, NY, 11740

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: $48,641,239

Exercised Options: $37,738,893

Current Obligation: $37,738,893

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $2,904,061

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline