DoD Awards BAE Systems $721M for Engineering Services Over 12 Years

Contract Overview

Contract Amount: $721,120,997 ($721.1M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2004-09-01

End Date: 2016-09-30

Contract Duration: 4,412 days

Daily Burn Rate: $163.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $721.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: Key points: 1. Significant contract value of $721M highlights long-term commitment. 2. BAE Systems is a major defense contractor, indicating established competition. 3. Long duration (12 years) presents potential for cost escalation and evolving needs. 4. Engineering services sector is critical for defense modernization.

Value Assessment

Rating: fair

The contract's Cost Plus Award Fee structure allows for performance-based incentives but can lead to higher costs if not managed tightly. Benchmarking against similar long-term engineering service contracts is difficult without more granular data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the long duration and specific nature of engineering services may limit the pool of truly comparable bids over time.

Taxpayer Impact: Taxpayer funds are committed for an extended period, necessitating robust oversight to ensure value for money and prevent cost overruns.

Public Impact

Supports critical defense engineering and technical services. Ensures continuity of essential support for military programs. Potential for job creation within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration increases risk of scope creep and price increases.
Cost Plus Award Fee structure requires careful monitoring to control costs.
Lack of specific performance metrics makes assessing award fee justification difficult.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
BAE Systems is a reputable contractor with a track record.
Long-term nature provides stability for critical defense functions.

Sector Analysis

This contract falls within the Engineering Services sector, which is vital for the Department of Defense's research, development, and sustainment activities. Spending in this area is typically high due to the complexity and criticality of defense systems.

Small Business Impact

The contract was awarded to BAE Systems, a large prime contractor. There is no explicit information on subcontracting to small businesses, which could be an area for improvement or further analysis.

Oversight & Accountability

The long duration and cost-plus nature of this contract necessitate strong oversight from the Defense Contract Management Agency to ensure performance standards are met and costs are controlled effectively.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Long contract duration (12 years)
Cost Plus Award Fee pricing structure
Potential for scope creep
Limited visibility into specific performance metrics for award fees

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $721.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. See the official description on USAspending.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $721.1 million.

What is the period of performance?

Start: 2004-09-01. End: 2016-09-30.

How effectively were the award fees structured and applied to incentivize optimal performance and cost control over the contract's lifecycle?

The effectiveness of award fees hinges on clearly defined, measurable performance metrics tied to contract objectives. Without access to the specific criteria used for awarding fees to BAE Systems, it's challenging to definitively assess their efficacy. A robust system would ensure fees genuinely reflect superior performance and cost savings, rather than being a routine add-on.

What mechanisms were in place to mitigate the risks associated with a 12-year Cost Plus Award Fee contract, particularly regarding potential cost escalation?

Mitigation strategies for long-term, cost-plus contracts typically include stringent baseline cost controls, regular audits, and performance reviews. The Department of Defense likely employed mechanisms such as independent cost estimates, value engineering initiatives, and strict change order management. However, the inherent flexibility of cost-plus contracts always carries a risk of exceeding initial projections if not meticulously managed.

To what extent did the full and open competition ensure the best possible value and technical solution for the engineering services required?

Full and open competition generally promotes the best value by allowing a wide range of qualified vendors to bid, fostering price competition and innovation. For this $721M contract, it suggests that multiple capable firms likely participated. The ultimate value realized depends on the clarity of the requirements, the evaluation criteria used, and the ongoing management of the contract to ensure it meets evolving defense needs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002404R7038

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 1601 RESEARCH BLVD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002401D7014

IDV Type: IDC

Timeline