DoD awards BAE Systems $103M for aircraft manufacturing, with a 6-year performance period

Contract Overview

Contract Amount: $103,178,536 ($103.2M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2023-12-20

End Date: 2029-06-29

Contract Duration: 2,018 days

Daily Burn Rate: $51.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BLOCK 4 BAE, PRODUCTION TOOLING

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $103.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BLOCK 4 BAE, PRODUCTION TOOLING Key points: 1. Contract value of $103M over six years suggests a significant investment in aircraft manufacturing capabilities. 2. The 'NOT COMPETED' award raises questions about the justification for avoiding a competitive bidding process. 3. A Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed carefully. 4. The contract's duration of over six years indicates a long-term need for these specific manufacturing services. 5. The North American Industry Classification System (NAICS) code 336411 points to a specialized segment of the aerospace industry. 6. The contract is for production tooling, implying support for existing or new aircraft production lines.

Value Assessment

Rating: questionable

The contract value of $103,178,536 over approximately six years averages to about $17.2 million per year. Without specific details on the scope of 'production tooling' and the nature of the aircraft, direct comparison to similar contracts is difficult. However, the CPFF structure warrants scrutiny for potential cost inefficiencies compared to fixed-price contracts, which offer greater price certainty. The benchmark of $51,129 for 'br' (likely a benchmark value or related cost element) is too vague to assess value for money effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT COMPETED' basis, indicating that a full and open competition was not conducted. The specific reasons for this sole-source award are not provided in the data. Typically, sole-source awards are justified when only one responsible source can provide the required supplies or services. The lack of competition means that the government did not benefit from a range of proposals and potentially lower prices that could have resulted from a competitive process.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive bidding. The justification for the sole-source award needs to be robust to ensure public funds are used efficiently.

Public Impact

The Department of the Navy benefits from the acquisition of essential production tooling for aircraft manufacturing. This contract supports the ongoing production or development of specific aircraft platforms. The contract is geographically focused on New Hampshire, where BAE Systems' relevant facility is located. The contract likely supports a specialized workforce within BAE Systems involved in advanced manufacturing and aerospace engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The sole-source nature of the award limits transparency and potential cost savings through competition.
Cost Plus Fixed Fee contracts carry inherent risks of cost escalation if not rigorously managed.
The specific 'production tooling' requirements are not detailed, making it difficult to assess the necessity and scope.
The contract's long duration could tie up significant resources without clear performance milestones being publicly available.

Positive Signals

The award to BAE Systems, a known defense contractor, suggests a reliance on established capabilities and expertise.
The contract addresses a specific need within the Department of Defense for aircraft manufacturing support.
The performance period extends over six years, indicating a sustained commitment to a critical capability.

Sector Analysis

The aerospace manufacturing sector is highly specialized and capital-intensive, characterized by long product development cycles and significant R&D investment. This contract falls within the Aircraft Manufacturing sub-sector (NAICS 336411). Spending in this area is often driven by defense procurement needs, requiring advanced technological capabilities and adherence to stringent quality standards. Comparable spending benchmarks are difficult to establish without knowing the exact nature of the 'production tooling,' but large defense contracts for manufacturing support can run into hundreds of millions or billions of dollars.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, there is potential for subcontracting opportunities for small businesses within BAE Systems' supply chain. However, the extent to which small businesses will benefit depends on BAE Systems' subcontracting plan and the specific nature of the tooling required. Without a competitive process, the direct impact on the small business ecosystem is less clear than in a competed scenario.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and potentially the Defense Contract Management Agency (DCMA). As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are crucial to ensure costs are reasonable and allocable. Transparency regarding the justification for the sole-source award and the specific deliverables for the production tooling would enhance accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Manufacturing
Defense Production
Aerospace Components
Military Aircraft Support
Production Equipment

Risk Flags

Sole-source award lacks competitive justification.
CPFF contract type poses risk of cost overruns.
Long performance period may lead to technological obsolescence.
Lack of detailed scope for 'production tooling'.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $103.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. BLOCK 4 BAE, PRODUCTION TOOLING

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 $103.2 million.

What is the period of performance?

Start: 2023-12-20. End: 2029-06-29.

What specific aircraft platforms or systems does this production tooling support?

The provided data does not specify the exact aircraft platforms or systems that the 'production tooling' will support. This information is critical for understanding the strategic importance of the contract and assessing its value. BAE Systems is a major defense contractor involved in various aircraft programs, including fighter jets, naval aviation, and unmanned systems. Knowing the specific application would allow for a more precise evaluation of the contract's necessity and alignment with broader defense objectives. Without this detail, the assessment remains general, focusing on the manufacturing support aspect rather than the end-use product.

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

The data explicitly states the contract was 'NOT COMPETED,' indicating a sole-source award. However, the specific justification for this determination is not provided. Typically, sole-source procurements are justified under circumstances such as unique capabilities, urgent needs, or when only one responsible source exists. For a contract of this magnitude ($103M), a detailed justification document, often requiring approval from higher authorities within the Department of Defense, would normally be required. Understanding this justification is key to assessing whether the government acted appropriately in foregoing a competitive process and potentially paying a higher price.

How does the Cost Plus Fixed Fee (CPFF) structure compare to alternative contract types for this acquisition?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves significant uncertainty, as might be the case with developing new production tooling. However, CPFF contracts carry a risk of cost overruns, as the contractor is incentivized to incur costs to achieve the fixed fee. Alternative contract types like Firm-Fixed-Price (FFP) could offer greater cost certainty for the government if the scope of work was well-defined. However, for complex or evolving manufacturing needs, CPFF might be deemed necessary, requiring robust government oversight to manage costs effectively.

What is the significance of the 'br' value of $51,129 in relation to the total contract value?

The meaning of the 'br' value of $51,129 is unclear from the provided data snippet. It is not a standard contract metric like base value, option value, or total obligated amount. It could potentially represent a benchmark cost, a specific component cost, or a related funding line item. Without further context or definition from the source system, it is impossible to accurately assess its significance or use it for benchmarking purposes against the total contract value of $103 million. Its small magnitude relative to the total contract value suggests it might be a minor element or a specific reference point.

What are the potential risks associated with the six-year performance period for production tooling?

A six-year performance period for production tooling presents several potential risks. Firstly, technology in manufacturing and aerospace evolves rapidly; tooling designed today might be less efficient or obsolete by the end of the contract term. Secondly, the long duration increases the risk of cost escalation, especially under a CPFF structure, as unforeseen issues can arise over an extended period. Thirdly, it ties up significant government funding and contractor resources for an extended duration, potentially limiting flexibility to adapt to changing requirements or adopt newer, more cost-effective solutions that may emerge. Finally, maintaining the tooling and ensuring its continued relevance and effectiveness over such a long period requires ongoing management and potential upgrades.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001922R0100

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

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: $103,818,476

Exercised Options: $103,178,536

Current Obligation: $103,178,536

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline