BAE SYSTEMS awarded $30.7M contract for defense information systems, spanning over 6 years

Contract Overview

Contract Amount: $30,724,056 ($30.7M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2004-07-15

End Date: 2011-02-12

Contract Duration: 2,403 days

Daily Burn Rate: $12.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: GREENLAWN, SUFFOLK County, NEW YORK, 11740

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $30.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: Key points: 1. Contract value appears reasonable given the extended duration and specialized nature of defense information systems. 2. Full and open competition suggests a competitive bidding process, potentially leading to better pricing. 3. The contract's long duration (over 6 years) presents potential risks related to technological obsolescence and changing requirements. 4. Performance context is within the Department of Defense's need for secure and advanced information and electronic systems. 5. This contract falls within the IT and Defense sectors, a significant area of federal spending.

Value Assessment

Rating: good

The contract value of $30.7 million over approximately 6.5 years averages to about $4.7 million annually. This figure seems within a reasonable range for complex defense information and electronic systems, especially considering the specialized nature of the work and the contractor's established presence in the sector. Benchmarking against similar large-scale defense IT contracts would provide a more precise value-for-money assessment, but initial indications suggest fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 3 bidders suggests a moderate level of competition. While more bidders could potentially drive prices lower, a competitive process generally ensures that the government receives proposals that reflect market conditions and technological capabilities.

Taxpayer Impact: A competitive award process helps ensure that taxpayer funds are used efficiently by fostering price discovery and encouraging contractors to offer their best value.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel, who will receive advanced information and electronic systems. Services delivered likely include the development, integration, and maintenance of critical defense communication and data processing capabilities. The geographic impact is likely global, supporting military operations and intelligence gathering worldwide. Workforce implications may include specialized IT and engineering roles within BAE SYSTEMS and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration increases risk of technological obsolescence.
Potential for scope creep in complex defense systems.
Dependence on a single contractor for critical systems.

Positive Signals

Contractor has a strong track record in defense contracting.
Full and open competition suggests a robust bidding process.
Firm fixed-price contract provides cost certainty.

Sector Analysis

This contract operates within the defense information technology sector, a critical and substantial segment of federal IT spending. The market is characterized by high barriers to entry, stringent security requirements, and a continuous need for technological advancement to maintain military superiority. Spending in this area is driven by national security imperatives and the constant evolution of threats and countermeasures. Comparable spending benchmarks would typically involve other large-scale IT procurements for defense agencies.

Small Business Impact

There is no explicit indication of a small business set-aside for this contract, and the prime contractor is a large entity. However, large defense contracts often involve significant subcontracting opportunities. It is possible that BAE SYSTEMS will engage small businesses for specialized components or services, contributing to the small business ecosystem. Further analysis of subcontracting plans would be needed to fully assess the impact on small businesses.

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 are inherent in the firm fixed-price contract type, which places cost risk on the contractor. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details may be classified.

Related Government Programs

Defense Information Systems Agency (DISA) contracts
Tactical Data Systems
Command and Control Systems
Intelligence, Surveillance, and Reconnaissance (ISR) technology

Risk Flags

Long-term contract duration may lead to technology obsolescence.
Potential for scope creep in complex defense systems.
Dependence on a single contractor for critical systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. See the official description on USAspending.

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 $30.7 million.

What is the period of performance?

Start: 2004-07-15. End: 2011-02-12.

What is BAE SYSTEMS' track record with similar Department of Defense contracts?

BAE SYSTEMS Information and Electronic Systems Integration Inc. has a substantial history of securing and performing on large, complex contracts with the Department of Defense. They are a major defense contractor known for expertise in areas such as electronic warfare, command and control systems, and information technology solutions. Their portfolio includes numerous firm-fixed-price contracts, often awarded through competitive processes, for systems development, integration, and sustainment. While specific performance metrics for individual contracts are not always publicly detailed, their continued success in winning significant awards suggests a generally positive track record and a strong capability to meet DoD requirements.

How does the $30.7 million award compare to other defense IT contracts of similar scope?

The $30.7 million award for this contract, spanning over 6 years, translates to an average annual value of approximately $4.7 million. This figure appears moderate when compared to the vast landscape of defense IT procurements. Larger, more complex programs involving the development of entirely new weapon systems or enterprise-wide IT infrastructure can easily reach hundreds of millions or even billions of dollars. However, for contracts focused on specific system enhancements, integration, or sustainment of existing electronic and information systems, $4.7 million per year is a reasonable benchmark. The key factors influencing cost are the complexity of the technology, the level of customization required, and the duration of support.

What are the primary risks associated with a contract of this duration and type?

The primary risks associated with a contract of this duration (over 6 years) and type (defense information and electronic systems) include technological obsolescence, evolving threat landscapes, and potential changes in military requirements. Technology can advance rapidly, rendering systems outdated before the contract term ends. Furthermore, the nature of defense operations means that requirements can shift based on geopolitical events or new intelligence. For the contractor, there's also the risk of underestimating the long-term costs of maintenance and support, or facing unforeseen technical challenges. For the government, the risk lies in paying for systems that may not meet future needs or become superseded by more advanced solutions.

How effective is full and open competition in ensuring value for taxpayer money in defense IT procurements?

Full and open competition is generally considered the most effective method for ensuring value for taxpayer money in defense IT procurements. By allowing all responsible sources to bid, it fosters a competitive environment that drives down prices, encourages innovation, and ensures that the government has access to the best available technologies and services. This process allows for price discovery, where the market determines a fair price based on multiple proposals. While it requires more upfront effort in terms of solicitation and evaluation, the long-term benefits of potentially lower costs and higher quality solutions typically outweigh these initial investments. The presence of multiple bidders, as seen with 3 bids in this case, further strengthens the competitive dynamic.

What is the historical spending trend for similar defense information and electronic systems contracts?

Historical spending trends for defense information and electronic systems contracts show a consistent and significant allocation of federal funds. The Department of Defense is a major consumer of IT and advanced electronics, driven by the need for secure communication, data processing, intelligence gathering, and command and control capabilities. Spending in this category has generally increased over the past two decades, reflecting the growing importance of technology in modern warfare and national security. While specific figures fluctuate based on global events and strategic priorities, the overall trend indicates a sustained demand for these types of systems and services, making it a substantial portion of the defense budget.

What are the implications of a firm fixed-price contract for this type of work?

A firm fixed-price (FFP) contract, like the one awarded to BAE SYSTEMS, places the primary responsibility for cost control on the contractor. This means that the contractor agrees to a set price for the work, regardless of their actual costs incurred. For the government, this offers significant cost certainty and predictability, making budgeting easier and protecting against cost overruns. The risk shifts to the contractor; if their costs exceed the agreed-upon price, their profit margin shrinks or they may incur a loss. This contract type is generally preferred when the scope of work is well-defined and technical risks are understood, as it incentivizes the contractor to be efficient and manage resources effectively.

Industry Classification

NAICS: Public Administration › National Security and International Affairs › International Affairs

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 450 PULASKI ROAD, GREENLAWN, NY, 01

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline