DoD's $30.8M R&D contract with BAE Systems for physical sciences research shows mixed value and limited competition

Contract Overview

Contract Amount: $30,798,653 ($30.8M)

Contractor: BAE Systems Space & Mission Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2006-03-24

End Date: 2012-07-31

Contract Duration: 2,321 days

Daily Burn Rate: $13.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Place of Performance

Location: BOULDER, BOULDER County, COLORADO, 80301

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $30.8 million to BAE SYSTEMS SPACE & MISSION SYSTEMS INC. for work described as: Key points: 1. The contract's value proposition is unclear due to a lack of detailed performance metrics and comparable benchmarks. 2. Competition was limited, raising concerns about potential overpricing and reduced innovation incentives. 3. The Cost Plus Award Fee (CPA) structure introduces performance-based incentives but can also lead to cost overruns if not managed tightly. 4. The contract duration of over 6 years suggests a long-term need for the research, but the specific outcomes remain to be seen. 5. This contract falls within the broader category of R&D spending, which is crucial for technological advancement but often carries inherent risks. 6. The lack of small business involvement is noted, potentially limiting broader economic impact.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging without specific deliverables and performance outcomes. The Cost Plus Award Fee (CPA) structure allows for flexibility but requires rigorous oversight to ensure cost-effectiveness. Compared to other R&D contracts, the $30.8 million award over six years is substantial, but its true value hinges on the successful completion of research objectives and the resulting technological advancements. Without more granular data on milestones achieved and the impact of those achievements, a definitive value assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. However, the number of actual bids received is not specified, which is crucial for understanding the true level of competition. A robust competitive process typically drives down prices and encourages innovation. If only a few bids were submitted, it could suggest barriers to entry or a specialized market, potentially impacting price discovery.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through market forces. However, the effectiveness depends on the number of responsive bids received and the rigor of the evaluation process.

Public Impact

The primary beneficiaries are likely the Department of Defense and potentially the broader scientific community through the dissemination of research findings. The contract supports research and development in physical, engineering, and life sciences, aiming to advance technological capabilities. The geographic impact is primarily linked to the contractor's facilities, with potential for broader national security implications. Workforce implications include employment for scientists, engineers, and support staff at BAE Systems and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency regarding specific research deliverables and performance metrics makes value assessment difficult.
The Cost Plus Award Fee structure, while incentivizing, can lead to cost escalation if not meticulously managed.
Limited information on the number of bidders in the full and open competition raises questions about the intensity of market pressure on pricing.
Absence of small business participation may limit the broader economic benefits and subcontracting opportunities.

Positive Signals

Awarded through full and open competition, suggesting an effort to leverage market forces for best value.
The contract supports critical research and development in advanced scientific fields, aligning with national security objectives.
The long contract duration indicates a sustained commitment to a specific research area, potentially leading to significant breakthroughs.
The use of an Award Fee component incentivizes contractor performance beyond minimum requirements.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. The R&D market is characterized by high innovation, significant investment, and inherent uncertainty. Government spending in this area is crucial for maintaining technological superiority and addressing future challenges. Comparable spending benchmarks are difficult to establish without knowing the specific research domain, but R&D contracts can range from millions to billions of dollars depending on the scope and complexity.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. Furthermore, the 'st': 'CO' and 'sn': 'COLORADO' suggest the primary awardee is a large business. There is no explicit mention of subcontracting goals for small businesses. This lack of small business involvement means that the potential economic benefits, such as technology transfer and job creation within the small business ecosystem, may be limited for this specific contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), given its role in contract administration for the Department of Defense. Accountability measures are embedded within the Cost Plus Award Fee structure, which links a portion of the contractor's profit to performance. Transparency is moderate; while the award itself is public, detailed research progress and specific cost breakdowns may be considered sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Physical Sciences Research Grants
Engineering Research Initiatives
Life Sciences Research Funding

Risk Flags

Potential for cost overruns due to CPA structure.
Limited competition may impact price discovery.
Lack of specific performance metrics hinders value assessment.
Long contract duration increases exposure to changing requirements or technologies.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.8 million to BAE SYSTEMS SPACE & MISSION SYSTEMS INC.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS SPACE & MISSION SYSTEMS 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 $30.8 million.

What is the period of performance?

Start: 2006-03-24. End: 2012-07-31.

What specific research objectives were outlined in this contract, and what were the key performance indicators (KPIs) for BAE Systems?

The provided data does not detail the specific research objectives or Key Performance Indicators (KPIs) for this contract. Contracts for Research and Development in the Physical, Engineering, and Life Sciences (NAICS 541710) can encompass a vast array of activities, from fundamental scientific inquiry to applied engineering solutions. Without access to the contract's statement of work (SOW) or performance work statement (PWS), it is impossible to ascertain the precise goals. KPIs for such contracts often include milestones related to experimental results, prototype development, data analysis, technical reports, and successful demonstrations of new technologies. The effectiveness of the contract hinges on achieving these unstated objectives within the allocated budget and timeframe.

How does the $30.8 million award compare to other similar R&D contracts awarded by the Department of Defense in the physical sciences domain?

The $30.8 million award over approximately six years (from March 2006 to July 2012) for R&D in physical sciences is a significant but not extraordinary sum for a large defense contractor like BAE Systems. The Department of Defense awards numerous R&D contracts annually, with values varying widely based on the research scope, technological maturity, and program duration. Contracts for basic research might be smaller, while those for developing complex systems or technologies could reach hundreds of millions or even billions. To provide a precise comparison, one would need to analyze contracts with similar NAICS codes (541710), similar research areas (physical sciences), and similar contract types (like Cost Plus Award Fee) awarded within a comparable timeframe. However, generally, this award falls within the mid-to-large range for specialized R&D efforts.

What are the potential risks associated with a Cost Plus Award Fee (CPA) contract structure for this type of research?

Cost Plus Award Fee (CPA) contracts, while offering flexibility for R&D where outcomes can be uncertain, carry inherent risks. A primary risk is cost escalation; the government agrees to reimburse the contractor's allowable costs, and the 'cost plus' nature means the final price isn't fixed upfront. If cost controls are weak or the scope expands, costs can exceed initial estimates. The 'award fee' component introduces another layer of complexity. While intended to incentivize superior performance, the criteria for earning the award fee must be clearly defined and objectively measurable. Ambiguity in award fee criteria can lead to disputes or subjective assessments. For taxpayers, the risk is paying higher-than-necessary costs if performance is merely adequate or if the award fee criteria are not rigorously applied. Effective oversight is crucial to mitigate these risks.

Given the 'full and open competition' designation, how many bids were likely received, and what does this imply about market competition?

The designation 'full and open competition' means that the solicitation was made available to all responsible sources, and the contract was awarded without restriction. However, this designation does not specify the number of bids actually received. In practice, for complex R&D contracts awarded to large defense contractors, the number of responsive bids can vary. It could range from a few highly qualified bidders to a larger number if the opportunity is particularly attractive or the barriers to entry are low. If only a small number of bids were received (e.g., two or three), it might suggest a specialized market, high technical requirements, or limited industry players capable of meeting the need. This could potentially reduce the competitive pressure on pricing and innovation compared to a scenario with numerous bidders.

What is the track record of BAE Systems Space & Mission Systems Inc. in managing similar large-scale R&D contracts for the Department of Defense?

BAE Systems is a major defense contractor with a long history of managing complex R&D programs for the Department of Defense and other government agencies. Their track record typically involves a wide range of projects, from developing advanced materials and propulsion systems to sophisticated electronics and software. While specific performance details for individual contracts are often not publicly disclosed in detail, BAE Systems generally possesses the infrastructure, expertise, and security clearances necessary for such endeavors. However, like any large organization, they may have faced challenges or scrutiny on specific programs regarding cost, schedule, or performance. A comprehensive assessment would require reviewing past performance evaluations, contract award histories, and any publicly available reports on their project execution.

What are the potential long-term implications of this R&D investment for national security or technological advancement?

Investments in R&D, particularly in areas like physical, engineering, and life sciences, are fundamental to maintaining and enhancing national security and technological leadership. The specific implications of this $30.8 million contract depend entirely on the nature of the research conducted. Successful outcomes could lead to advancements in areas such as materials science for defense applications, improved sensor technologies, novel communication systems, enhanced cybersecurity capabilities, or breakthroughs in areas impacting soldier performance and survivability. These advancements can provide a critical advantage over potential adversaries, deter aggression, and foster innovation that spills over into the commercial sector, driving economic growth and improving quality of life. Conversely, if the research does not yield significant results, the investment represents a missed opportunity and a drain on resources.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corp (UEI: 006419147)

Address: 1600 COMMERCE ST, BOULDER, CO, 80301

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: FA881806D0002

IDV Type: IDC

Timeline