BAE Systems awarded $12.8M contract for advanced electronics R&D, highlighting a competitive landscape

Contract Overview

Contract Amount: $47,190,777 ($47.2M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2005-05-02

End Date: 2015-05-29

Contract Duration: 3,679 days

Daily Burn Rate: $12.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: 200508!002019!5700!FA8650!DET 1 AFRL/PK !FA865005C1802 !A!N! !Y! ! !20050502!20080826!005149120!876861790!217304393!N!BAE SYSTEMS INFORMATION AND EL!65 SPIT BROOK RD !NASHUA !NH!03060!50260!011!33!NASHUA !HILLSBOROUGH !N.H. !+000001091930!N!N!000006851545!AC63!RDTE/ELECTRONICS&COMMUNICATION EQ-ADV TECH DEV !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !541710!E! !3! ! ! ! ! !20200930!B! ! !A! !A!N!U!2!002!E! !Z!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $47.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: 200508!002019!5700!FA8650!DET 1 AFRL/PK !FA865005C1802 !A!N! !Y! ! !20050502!20080826!005149120!876861790!217304393!N!BAE SYSTEMS INFORMATION AND EL!65 SPIT BROOK RD !NASHUA !NH!03060!50260!011!33!NASHUA !HILL… Key points: 1. Contract value of $12.8 million for advanced electronics research and development. 2. Competition was full and open, suggesting a potentially favorable pricing environment. 3. Contract type is Cost Plus Fixed Fee, which can carry cost overrun risks. 4. Performance period spans over 10 years, indicating a long-term research focus. 5. The contract falls under the Research and Development sector for electronics. 6. BAE Systems is a significant player in defense and aerospace technology.

Value Assessment

Rating: good

The contract value of $12.8 million for over 10 years of R&D in advanced electronics appears reasonable given the specialized nature of the work. Benchmarking against similar long-term, high-technology development contracts is challenging without more specific details on the deliverables. However, the fixed fee component suggests a defined profit margin for the contractor, which can be a positive indicator of value if the scope is well-managed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This level of competition is generally beneficial for price discovery and can lead to more competitive pricing for the government. The presence of two bids suggests a moderate level of interest from qualified contractors.

Taxpayer Impact: Full and open competition typically results in better value for taxpayers by driving down costs through a competitive bidding process.

Public Impact

The primary beneficiary is the U.S. Air Force Research Laboratory (AFRL), which will receive advancements in electronics and communication equipment. The contract supports the development of cutting-edge technologies with potential applications in defense and national security. Geographic impact is primarily centered in Nashua, New Hampshire, where BAE Systems is located, potentially supporting local jobs. Workforce implications include highly skilled engineers and researchers in the advanced electronics field.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to increase costs to maximize profit if not carefully monitored.
Long contract duration (over 10 years) increases the risk of scope creep or technological obsolescence.
Reliance on a single contractor for a long-term R&D project may limit future innovation options.

Positive Signals

Full and open competition suggests a robust market and potential for competitive pricing.
BAE Systems is a well-established defense contractor with a proven track record in advanced technologies.
The contract focuses on R&D, which is crucial for maintaining technological superiority.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on advanced electronics and communication equipment. The market for defense-related R&D is highly specialized, with a few large prime contractors dominating. Spending in this area is critical for national security and technological advancement. Comparable spending benchmarks would typically be found within broader defense R&D budgets, often measured in billions annually across various agencies.

Small Business Impact

There is no indication of a small business set-aside for this contract. Given the specialized nature of advanced electronics R&D and the prime contractor being BAE Systems, a large corporation, it is unlikely that significant subcontracting opportunities for small businesses will be a primary focus unless specifically mandated. The impact on the small business ecosystem would be minimal unless BAE Systems actively seeks out small business partners for specific components or research areas.

Oversight & Accountability

Oversight for this contract would likely be managed by the Defense Contract Management Agency (DCMA) and the relevant Air Force Research Laboratory (AFRL) program office. Accountability measures would be tied to the Cost Plus Fixed Fee structure, requiring detailed reporting on costs and progress. Transparency is generally maintained through contract award databases and reporting requirements, though specific R&D details may be sensitive.

Related Government Programs

Air Force Research Laboratory (AFRL) Contracts
Department of Defense Research and Development
Advanced Electronics Development
Communication Equipment Research

Risk Flags

Cost Overrun Risk (CPFF)
Technological Obsolescence
Scope Creep Potential
Long-term R&D Uncertainty

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.2 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. 200508!002019!5700!FA8650!DET 1 AFRL/PK !FA865005C1802 !A!N! !Y! ! !20050502!20080826!005149120!876861790!217304393!N!BAE SYSTEMS INFORMATION AND EL!65 SPIT BROOK RD !NASHUA !NH!03060!50260!011!33!NASHUA !HILLSBOROUGH !N.H. !+000001091930!N!N!000006851545!AC63!RDTE/ELECTRONICS&COMMUNICATION EQ-ADV TECH DEV !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !541710!E! !3! ! ! ! ! !20200

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 $47.2 million.

What is the period of performance?

Start: 2005-05-02. End: 2015-05-29.

What is the specific technological advancement BAE Systems is expected to deliver under this contract?

The contract data indicates the work falls under 'Research and Development in the Physical, Engineering, and Life Sciences' with a specific product service code (PSC) related to 'Electronics and Communication Equipment - Advanced Technology Development'. While the exact technological advancements are not detailed in the provided summary, it is highly probable that the contract aims to develop next-generation communication systems, advanced sensor technologies, or novel electronic warfare capabilities for the U.S. Air Force. The long duration suggests a foundational research effort rather than a specific product build, focusing on exploring new concepts and prototypes in areas like signal processing, secure communications, or integrated electronic systems.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for R&D, and what are the associated risks?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred plus a predetermined fixed fee, representing profit. For R&D, CPFF is often used when the scope of work is not precisely defined, allowing flexibility. Compared to Firm Fixed Price (FFP), CPFF offers more flexibility but carries a higher risk of cost overruns for the government, as the contractor is incentivized to incur costs to achieve the fixed fee. Conversely, compared to Cost Plus Incentive Fee (CPIF), CPFF offers less incentive for the contractor to control costs beyond what is necessary to complete the work, as the fee is fixed regardless of final cost. The primary risk for the government is that the final cost could significantly exceed initial estimates if cost controls are weak.

What is BAE Systems' track record with similar advanced electronics R&D contracts with the Department of Defense?

BAE Systems Information and Electronic Systems Integration Inc. has a substantial track record with the Department of Defense, particularly in areas related to electronics, communications, and advanced technology development. As a major defense contractor, they frequently engage in R&D efforts across various platforms and systems. While specific details of past R&D contracts are not provided here, their consistent presence in defense contracting suggests experience in managing complex, long-term research projects. Their portfolio often includes work on radar systems, electronic warfare, secure communication networks, and avionics, aligning with the general scope indicated by the PSC and NAICS codes for this contract.

How does the $12.8 million contract value compare to overall DoD spending on advanced electronics R&D?

The $12.8 million contract value represents a relatively modest investment within the vast landscape of Department of Defense (DoD) research and development spending. The DoD's annual R&D budget typically runs into the tens of billions of dollars, encompassing a wide array of scientific research, technology development, and prototyping across all military branches and defense agencies. While $12.8 million is a significant sum for a single contract, it is a small fraction of the total R&D expenditure. This contract likely focuses on a specific niche or a particular phase of advanced electronics development, contributing to the broader strategic goals of technological superiority rather than representing a major program initiative.

What are the potential risks associated with the long performance period of over 10 years for this R&D contract?

A performance period exceeding 10 years for an R&D contract presents several potential risks. Firstly, technological obsolescence is a significant concern; the technologies being researched today might be outdated by the time the contract concludes, or even during its execution. Secondly, the scope of work may become misaligned with evolving military requirements or strategic priorities over such an extended period, leading to scope creep or the need for costly modifications. Thirdly, maintaining consistent oversight and contractor performance over a decade can be challenging. Finally, the long duration increases the uncertainty of the final outcomes and the potential for cost growth, especially under a CPFF arrangement, as unforeseen technical hurdles or changes in research direction may arise.

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: BASIC RESEARCH

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

Address: 65 SPIT BROOK RD, NASHUA, NH, 03060

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $47,279,881

Exercised Options: $47,279,881

Current Obligation: $47,190,777

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline