DoD's $30M BAE Systems contract for custom programming services shows questionable value and limited competition

Contract Overview

Contract Amount: $30,125,700 ($30.1M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2013-11-04

End Date: 2017-11-30

Contract Duration: 1,487 days

Daily Burn Rate: $20.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS INCENTIVE FEE

Sector: IT

Official Description: BU2

Place of Performance

Location: WAYNE, PASSAIC County, NEW JERSEY, 07470

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $30.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BU2 Key points: 1. The contract's value proposition is unclear given the lack of detailed performance metrics and benchmarking. 2. Competition was limited, raising concerns about potential overpricing and reduced innovation. 3. The Cost Plus Incentive Fee (CPIF) structure can incentivize cost overruns if not managed tightly. 4. The contract duration of nearly four years suggests a long-term need for these services. 5. The specific services provided under 'Custom Computer Programming Services' require further clarification to assess impact. 6. The absence of small business participation is noted, potentially limiting broader economic benefits.

Value Assessment

Rating: questionable

Benchmarking this contract's value is challenging without specific deliverables and performance outcomes. The Cost Plus Incentive Fee (CPIF) pricing structure, while offering flexibility, can lead to higher costs if not rigorously managed and if the incentive targets are not well-defined. Comparing it to similar custom programming contracts is difficult due to the proprietary nature of specific service details and the lack of readily available public data on comparable CPIF contracts. The total award amount of approximately $30 million over its period of performance suggests a significant investment, but the return on investment in terms of tangible outcomes is not evident from the provided data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'NOT AVAILABLE FOR COMPETITION,' indicating a limited or sole-source procurement. This suggests that either only one source was capable of meeting the requirement, or there were specific circumstances (like urgency or proprietary technology) that precluded full and open competition. The lack of multiple bidders means that price discovery through competitive bidding was not achieved, potentially leading to less favorable pricing for the government.

Taxpayer Impact: Limited competition means taxpayers may not have received the best possible price for these custom programming services, as the government lacked the leverage of multiple competing offers.

Public Impact

The primary beneficiary is the Department of Defense, which receives custom computer programming services tailored to its specific needs. The services delivered are critical for supporting defense operations and potentially developing specialized software solutions. The geographic impact is likely concentrated around BAE Systems' operational sites, primarily in New Jersey. Workforce implications include employment for skilled programmers and technical staff at BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency in competition limits assessment of fair pricing.
CPIF contract type can lead to cost escalation if not closely monitored.
Absence of small business participation noted.
Specific performance metrics and outcomes are not detailed, hindering value assessment.

Positive Signals

Contract awarded to a known entity (BAE SYSTEMS) with established defense sector presence.
Long contract duration suggests a sustained need and potential for stable service provision.
Delivery Order award indicates a phased approach to service delivery.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically custom computer programming services. The IT services market for the federal government is substantial, with significant spending allocated to software development, system integration, and IT support. This contract represents a portion of the Department of Defense's broader IT spending, which often involves complex and specialized requirements. Comparable spending benchmarks for custom programming can vary widely based on complexity, security requirements, and labor rates, but a $30 million award over several years for specialized services is within the expected range for large defense contracts.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement or was not met (ss: false, sb: false). This means that opportunities for small businesses to participate as prime contractors or significant subcontractors were likely limited. The absence of a small business set-aside or subcontracting plan could mean that the benefits of this contract do not extend to the broader small business ecosystem, which is a key component of federal procurement goals.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures would be embedded within the Cost Plus Incentive Fee (CPIF) contract terms, focusing on achieving performance targets and managing costs. Transparency is limited by the 'NOT AVAILABLE FOR COMPETITION' award status and the proprietary nature of custom programming services. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense IT Services
Custom Software Development Contracts
Cost Plus Incentive Fee Contracts
BAE Systems Federal Contracts

Risk Flags

Limited Competition
Cost-Plus Contract Type
Lack of Performance Metrics
No Small Business Set-Aside

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. BU2

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $30.1 million.

What is the period of performance?

Start: 2013-11-04. End: 2017-11-30.

What specific custom computer programming services were delivered under this contract?

The provided data identifies the contract's North American Industry Classification System (NAICS) code as 541511, which corresponds to 'Custom Computer Programming Services.' However, the specific nature of these services is not detailed. This could range from developing new software applications, modifying existing systems, integrating disparate software components, or providing specialized programming expertise for unique defense requirements. Without further documentation, such as the Statement of Work (SOW) or contract modifications, it is impossible to ascertain the precise technical tasks performed. Understanding the specifics is crucial for evaluating the contract's effectiveness and relevance to DoD's mission.

How does the Cost Plus Incentive Fee (CPIF) structure compare to other contract types for similar services?

Cost Plus Incentive Fee (CPIF) contracts are used when the government needs flexibility and wants to incentivize contractor performance beyond just cost control. Unlike fixed-price contracts, CPIF allows for costs to fluctuate but ties the final profit (and thus total price) to achieving specific performance targets. For custom programming, this can be beneficial if the technical challenges are high and unpredictable. However, it carries a risk of cost overruns if targets are poorly defined or if the contractor has significant leverage. Compared to Cost Plus Fixed Fee (CPFF), CPIF offers a stronger incentive for performance. Compared to Firm-Fixed-Price (FFP), CPIF provides more flexibility but less cost certainty for the government. The effectiveness of CPIF heavily relies on well-defined performance metrics and robust government oversight.

What are the potential risks associated with a 'NOT AVAILABLE FOR COMPETITION' award for custom programming services?

Awarding a contract as 'NOT AVAILABLE FOR COMPETITION' (often referred to as sole-source or limited competition) carries several risks. Primarily, it eliminates the price competition that typically drives down costs and encourages innovation. The government may end up paying a higher price than if multiple vendors had bid. There's also a risk that the chosen contractor may not be the most capable or innovative, simply the only one available or deemed capable under the specific circumstances. This can lead to suboptimal solutions or missed opportunities for technological advancement. Furthermore, it can create a perception of favoritism or lack of due diligence in seeking competitive offers, potentially undermining public trust.

What is the historical spending pattern for BAE Systems Information and Electronic Systems Integration Inc. with the Department of Defense?

BAE Systems Information and Electronic Systems Integration Inc. is a major defense contractor, and historical spending data would likely show a significant and consistent relationship with the Department of Defense (DoD) across various service and product categories. This specific $30 million contract represents a fraction of their overall engagement with the DoD. Analyzing broader spending patterns would involve examining the total value and types of contracts awarded to BAE Systems over multiple fiscal years. This context is important for understanding the significance of this particular award and BAE's role as a key supplier to the DoD. Without access to a comprehensive federal procurement database, a detailed historical analysis is not possible from the provided snippet.

How does the contract's duration (1487 days) impact the assessment of its value and risk?

A contract duration of approximately 1487 days (around 4 years) for custom computer programming services suggests a long-term, strategic need for the capabilities being provided. From a value perspective, a longer duration can allow for deeper integration of services, more complex project development, and potentially economies of scale if managed efficiently. It also implies a stable revenue stream for the contractor. However, longer durations also increase risk. Technology evolves rapidly, and requirements can change significantly over four years, potentially making the initial scope obsolete or requiring costly modifications. Furthermore, the longer the contract, the greater the potential for cost overruns, performance issues, or contractor lock-in if not managed proactively. Robust oversight and flexibility clauses are crucial for mitigating these risks.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003910R0060

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 164 TOTOWA RD, WAYNE, NJ, 07470

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $30,941,700

Exercised Options: $30,941,700

Current Obligation: $30,125,700

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $72,483

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0003910D0060

IDV Type: IDC

Timeline