BAE Systems awarded $295.7M contract for optical sighting and ranging equipment, highlighting significant defense spending in specialized electronics

Contract Overview

Contract Amount: $295,673,595 ($295.7M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2004-03-30

End Date: 2009-06-30

Contract Duration: 1,918 days

Daily Burn Rate: $154.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200406!004002!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !W15P7T04CA204 !A!N! !N! ! !20040330!20090329!005149120!876861790!217304393!N!BAE SYSTEMS INFORMATION AND EL!65 SPIT BROOK ROAD !NASHUA !NH!03061!50260!011!33!NASHUA !HILLSBOROUGH !N.H. !+000019859304!N!N!000020436543!1240!OPTICAL SIGHTING AND RANGING EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334511!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!J!2!003!B! !A!N!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: LEXINGTON, MIDDLESEX County, MASSACHUSETTS, 02421

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $295.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: 200406!004002!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !W15P7T04CA204 !A!N! !N! ! !20040330!20090329!005149120!876861790!217304393!N!BAE SYSTEMS INFORMATION AND EL!65 SPIT BROOK ROAD !NASHUA !NH!03061!50260!011!33!NASHUA !HILL… Key points: 1. Contract value of $295.7 million indicates substantial investment in advanced defense technology. 2. Full and open competition suggests a robust market for this specialized equipment. 3. Contract duration of 1918 days points to a long-term need and integration effort. 4. The award to BAE Systems, a major defense contractor, positions them strongly in the electronics sector. 5. The North American Industry Classification System (NAICS) code 334511 signifies a focus on instrument manufacturing for guidance and detection systems. 6. The contract's primary purpose relates to critical optical sighting and ranging capabilities for military applications.

Value Assessment

Rating: good

The total contract value of $295.7 million over its duration appears reasonable given the specialized nature of optical sighting and ranging equipment. Benchmarking against similar complex defense systems suggests this is within expected spending ranges for advanced technological procurement. The firm fixed-price structure provides cost certainty for the government, although it places the financial risk on the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple capable vendors had the opportunity to bid. The presence of 3 bids suggests a competitive environment, though the exact number of potential bidders is not specified. This level of competition is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive environment among potential suppliers.

Public Impact

The primary beneficiaries are the U.S. Army, receiving advanced optical sighting and ranging equipment essential for military operations. The contract delivers critical technological capabilities that enhance situational awareness and targeting accuracy for defense personnel. Geographic impact is national, supporting defense readiness across various operational theaters. Workforce implications include specialized manufacturing and engineering roles within BAE Systems and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the firm fixed-price contract does not adequately account for unforeseen technical challenges.
Dependence on a single large contractor could limit future innovation or price negotiation flexibility.
Long contract duration may lead to technology obsolescence if not managed proactively.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that likely secured a fair price.
Firm fixed-price contract provides budget certainty for the government.
BAE Systems is a well-established defense contractor with a track record in complex systems integration.
The contract addresses a critical military need for advanced sighting and ranging technology.

Sector Analysis

This contract falls within the broader defense electronics sector, specifically focusing on advanced sensor and targeting systems. The market for such specialized equipment is characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this area is driven by the continuous need for military modernization and maintaining a technological edge. Comparable spending benchmarks would involve other large-scale procurements of advanced optics, radar, or electronic warfare systems.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, and the prime contractor is a large corporation. There is no explicit information on subcontracting plans for small businesses within this award. The impact on the small business ecosystem would depend on whether BAE Systems actively engages small businesses for components or specialized services, which is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, requiring delivery of specified goods. Transparency is facilitated by public contract databases, though detailed performance metrics may be sensitive. The Inspector General's office for the Department of Defense would have jurisdiction for investigating fraud, waste, or abuse.

Related Government Programs

Advanced Targeting Systems Procurement
Defense Electronics Manufacturing
Optical and Electro-Optical Systems
Military Sensor Technology
Army Weapon Systems Modernization

Risk Flags

Long contract duration may increase risk of technological obsolescence.
Firm fixed-price contracts can sometimes include higher initial costs to cover contractor risk.
Dependence on a single large contractor for critical components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $295.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. 200406!004002!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !W15P7T04CA204 !A!N! !N! ! !20040330!20090329!005149120!876861790!217304393!N!BAE SYSTEMS INFORMATION AND EL!65 SPIT BROOK ROAD !NASHUA !NH!03061!50260!011!33!NASHUA !HILLSBOROUGH !N.H. !+000019859304!N!N!000020436543!1240!OPTICAL SIGHTING AND RANGING EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334511!E! !3! ! ! ! ! !999

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 Army).

What is the total obligated amount?

The obligated amount is $295.7 million.

What is the period of performance?

Start: 2004-03-30. End: 2009-06-30.

What is the historical spending trend for optical sighting and ranging equipment by the Department of the Army?

Analyzing historical spending trends for optical sighting and ranging equipment by the Department of the Army requires access to detailed procurement data over multiple fiscal years. Generally, spending in this category fluctuates based on modernization priorities, operational tempo, and the introduction of new technologies. Contracts for such specialized systems are often awarded as sole-source or limited competition due to the unique technological requirements and the small number of qualified manufacturers. The average contract value can vary significantly, from millions for individual components to hundreds of millions for integrated systems like the one awarded to BAE Systems. Factors influencing trends include geopolitical events, budget allocations, and the lifecycle of existing equipment.

How does the awarded price compare to industry benchmarks for similar optical sighting and ranging systems?

Determining precise industry benchmarks for highly specialized military equipment like optical sighting and ranging systems is challenging due to proprietary information and the unique specifications of each contract. However, the $295.7 million value for a system with a duration of approximately five years (1918 days) suggests a significant investment. When compared to other large-scale defense procurements for advanced sensor or targeting technology, this contract value appears within a plausible range, especially considering the research, development, and manufacturing complexities involved. The firm fixed-price nature implies that BAE Systems absorbed the primary cost risk, which can sometimes lead to higher initial pricing compared to cost-plus contracts, but offers greater budget certainty for the government.

What are the key performance indicators (KPIs) used to evaluate the success of this contract?

Key performance indicators (KPIs) for a contract of this nature typically focus on technical performance, delivery schedules, and quality. For optical sighting and ranging equipment, KPIs would likely include accuracy (e.g., range precision, target acquisition speed), reliability (e.g., mean time between failures), durability under various environmental conditions (e.g., temperature, shock, vibration), and compliance with stringent military specifications. Delivery KPIs would ensure that components and final systems are provided on time according to the contract schedule. Quality KPIs would involve adherence to manufacturing standards, successful completion of testing protocols, and minimal defect rates. The government would monitor these KPIs throughout the contract lifecycle to ensure the delivered equipment meets the required operational capabilities.

What is BAE Systems' track record with similar defense contracts, particularly in electronics and optics?

BAE Systems has a substantial and well-documented track record as a major global defense contractor, with significant expertise in electronic systems integration, sensor technology, and advanced optics. The company has been awarded numerous large-scale contracts by the U.S. Department of Defense and other allied nations for a wide array of defense platforms and systems. Their portfolio includes work on combat vehicles, naval systems, aerospace technology, and C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) systems, many of which incorporate sophisticated optical and electronic components. Past performance reviews and contract awards databases generally indicate BAE Systems' capability to deliver complex, high-value defense solutions, although like any large contractor, they may have faced challenges on specific projects.

What are the potential risks associated with the long duration (1918 days) of this contract?

The long duration of this contract presents several potential risks. Technological obsolescence is a primary concern; the landscape of optical and electronic systems evolves rapidly, and equipment delivered towards the end of the contract might be less advanced than current market offerings or emerging military requirements. Programmatic risks include potential cost increases if inflation or material costs escalate beyond initial projections, although the firm fixed-price nature aims to mitigate this. Furthermore, extended timelines can increase the likelihood of personnel turnover within both the contractor's team and the government's oversight staff, potentially leading to knowledge gaps. Maintaining consistent quality and performance over nearly five years also requires robust program management and quality assurance processes from BAE Systems.

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: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 2 FORBES RD, LEXINGTON, MA, 05

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline