DoD's $19.7M contract for systems engineering services awarded to BAE Systems, with no competition

Contract Overview

Contract Amount: $19,674,374 ($19.7M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2008-10-01

End Date: 2011-06-30

Contract Duration: 1,002 days

Daily Burn Rate: $19.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: R&D

Official Description: SYSTEMS ENGINEERING

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898, UNITED STATES OF AMERICA

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $19.7 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: SYSTEMS ENGINEERING Key points: 1. Contract awarded on a sole-source basis, raising questions about potential overpayment and lack of market-driven pricing. 2. The contract's duration and value suggest a significant, long-term engagement for specialized R&D services. 3. Lack of competition limits opportunities for other firms and may not yield the best value for taxpayer dollars. 4. Performance context is limited, but the nature of R&D suggests inherent risks and potential for cost overruns. 5. This contract falls within the Research and Development sector, specifically focusing on physical and engineering sciences. 6. The absence of small business set-asides indicates a focus on large, established contractors for this specific need.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The $19.7 million price tag for systems engineering services over approximately three years suggests a substantial investment. Comparing this to similar sole-source R&D contracts would be necessary to assess if the pricing is reasonable. The lack of competition inherently reduces the pressure on the contractor to offer the most cost-effective solution, potentially leading to a higher effective cost per unit of service delivered.

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. This indicates that the Missile Defense Agency likely identified BAE Systems as the only capable or appropriate provider for the specific systems engineering requirements. The lack of multiple bidders means there was no opportunity for price discovery through a competitive process, which could lead to less favorable pricing for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can result in higher overall spending for the same level of service.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Missile Defense Agency, receiving critical systems engineering support. Services delivered are focused on research and development in physical, engineering, and life sciences, likely supporting advanced defense technologies. The geographic impact is primarily within Alabama, where the contract is administered. Workforce implications include employment for highly skilled engineers and technical personnel at BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value for money.
Lack of transparency in the selection process due to no-bid nature.
Potential for cost creep in R&D projects without competitive pressure.
Limited visibility into alternative solutions or innovative approaches from other vendors.

Positive Signals

Award to an established contractor (BAE Systems) suggests potential for reliable performance.
Focus on specialized R&D indicates support for critical national security objectives.
Contract administration in Alabama may provide local economic benefits.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically under the North American Industry Classification System (NAICS) code 541712 for Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology). This sector is characterized by innovation, high technical expertise, and often long development cycles. Comparable spending benchmarks in this area are highly variable, depending on the specific technological domain and project complexity. The $19.7 million value is moderate for a multi-year R&D effort within defense.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and the contractor, BAE Systems, is a large business. This suggests that the specific systems engineering requirements were deemed to be beyond the scope or capability of small businesses, or that the agency did not prioritize small business participation for this particular procurement. There is no information provided on subcontracting plans, so the impact on the small business ecosystem is unclear, but likely minimal if no subcontracting was mandated.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve program managers within the Missile Defense Agency, contract officers, and potentially the Department of Defense's Inspector General. Accountability measures would be tied to the delivery of systems engineering services as defined in the contract's statement of work. Transparency is limited due to the sole-source nature of the award, as the justification for not competing is often less publicly scrutinized than a competitive process.

Related Government Programs

Missile Defense Systems
Advanced Technology Development
Systems Engineering Services
Department of Defense Research Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns in R&D
Limited transparency in procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.7 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. SYSTEMS ENGINEERING

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $19.7 million.

What is the period of performance?

Start: 2008-10-01. End: 2011-06-30.

What is the specific nature of the systems engineering services provided under this contract?

The contract data indicates the service falls under NAICS code 541712, 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology).' This suggests the systems engineering services are highly specialized and likely involve the design, integration, testing, and lifecycle management of complex defense systems, potentially related to missile defense. The 'LABOR HOURS' contract type implies that the contractor is paid based on the time spent by their personnel, rather than fixed deliverables, which is common in R&D where project scope can evolve. The specific technical details would be found in the contract's Statement of Work (SOW), which is not provided in the summary data.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the agency's needs. For R&D contracts, this can occur if the technology is proprietary, requires unique expertise held by a single contractor, or if there's a critical need for continuity with existing systems developed by that contractor. The Missile Defense Agency would have had to provide a justification, such as 'only one responsible source' or 'urgent and compelling need,' to bypass full and open competition. Without access to that justification document, the precise reason remains speculative, but it implies a perceived lack of alternatives.

How does the $19.7 million contract value compare to similar systems engineering R&D contracts within the DoD?

Benchmarking this $19.7 million contract requires comparing it to similar R&D systems engineering efforts within the Missile Defense Agency or other DoD components focused on complex weapon systems. Given the duration (approximately 2 years and 9 months) and the specialized nature of missile defense R&D, $19.7 million is a substantial but not necessarily excessive amount. However, the lack of competition makes direct value-for-money comparisons difficult. If this were a competed contract, the price might have been driven lower. Similar sole-source contracts for highly specialized R&D can range widely, but this figure suggests a significant, ongoing project.

What are the potential risks associated with a sole-source R&D contract of this magnitude?

The primary risk with a sole-source R&D contract is the potential for reduced value for money due to the absence of competitive pressure on pricing and innovation. The government may pay more than necessary. There's also a risk of contractor complacency or 'cost-plus' mentality where efficiency is less incentivized. For R&D, inherent risks include technical feasibility, schedule delays, and cost overruns, which are exacerbated when there's no market check on the contractor's proposed approach or costs. Oversight becomes even more critical to mitigate these risks.

What is BAE Systems' track record with the Missile Defense Agency or similar DoD contracts?

BAE Systems is a major defense contractor with a significant history of performing work for the Department of Defense across various platforms and services. While specific performance details for this particular contract are not provided, BAE Systems generally has a substantial portfolio of large, complex contracts. Their track record with the Missile Defense Agency would likely involve contributions to various missile defense system components or related research. A deeper dive into contract performance databases and past performance reviews would be needed for a comprehensive assessment of their specific reliability and quality on similar projects.

What does the contract type ('LABOR HOURS') imply about the project's nature and risk?

A 'LABOR HOURS' contract type is a form of Time and Materials (T&M) contract where the contractor is reimbursed for direct labor hours at specified fixed hourly rates, plus the cost of materials. This type of contract is often used when the scope of work cannot be clearly defined at the outset, which is common in research and development or services where the exact effort required is uncertain. It places more risk on the government, as the total cost is not fixed and can increase if more labor hours are needed than initially anticipated. Effective oversight is crucial to ensure labor hours are reasonable and necessary.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 1601 RESEARCH BLVD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $22,266,922

Exercised Options: $22,266,922

Current Obligation: $19,674,374

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ014708D0002

IDV Type: IDC

Timeline