DoD's $19.9M R&D Contract for Space Systems Awarded to BAE Systems, Raising Value-for-Money Questions

Contract Overview

Contract Amount: $19,887,603 ($19.9M)

Contractor: BAE Systems Space & Mission Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2006-10-27

End Date: 2012-02-03

Contract Duration: 1,925 days

Daily Burn Rate: $10.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: GDPAA

Place of Performance

Location: BOULDER, BOULDER County, COLORADO, 80301

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $19.9 million to BAE SYSTEMS SPACE & MISSION SYSTEMS INC. for work described as: GDPAA Key points: 1. The contract's value, while significant, requires deeper analysis against comparable R&D efforts to ascertain true value for money. 2. Competition dynamics appear robust with two bidders, suggesting a potentially competitive pricing environment. 3. Risk indicators are moderate, with the cost-plus-fixed-fee structure potentially leading to cost overruns if not managed tightly. 4. Performance context is limited without specific milestones or deliverables outlined in the provided data. 5. The contract positions BAE Systems within the critical defense R&D sector, focusing on advanced space and mission systems. 6. The duration of the contract (1925 days) suggests a long-term project with substantial development requirements.

Value Assessment

Rating: fair

Benchmarking the $19.9 million cost against similar R&D contracts for space systems is crucial. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, carries inherent risks of cost escalation if not meticulously managed. Without detailed performance metrics or a breakdown of labor categories and rates, a definitive value-for-money assessment is challenging. However, the presence of two bidders suggests some level of market price discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all eligible sources were permitted to bid. The data shows two bids were received, which suggests a moderate level of competition. While two bidders are better than one, a higher number of bids often leads to more aggressive pricing and innovation.

Taxpayer Impact: The full and open competition, with two bidders, likely resulted in a reasonably competitive price for taxpayers, though more bidders could have potentially driven costs lower.

Public Impact

The primary beneficiaries are the Department of Defense and potentially national security, through advancements in space and mission systems. The contract supports research and development activities, likely leading to new technologies or improved existing ones for defense applications. Geographic impact is centered around BAE Systems' operational locations, with potential for specialized workforce development in those areas. Workforce implications include the employment of highly skilled engineers, scientists, and technicians involved in advanced R&D.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize contractors to incur costs, potentially leading to budget overruns if not closely monitored.
The long contract duration necessitates sustained oversight to ensure project milestones are met and the scope remains aligned with evolving defense needs.
Lack of specific performance metrics in the provided data makes it difficult to assess the efficiency and effectiveness of the R&D process.

Positive Signals

Awarded under full and open competition, indicating a fair and accessible bidding process.
The involvement of a major defense contractor like BAE Systems suggests access to significant technical expertise and resources.
The contract supports critical research and development in the vital area of space and mission systems for national defense.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences, with a strong emphasis on defense-related space and mission systems. The market for defense R&D is characterized by high barriers to entry, specialized expertise, and significant government investment. Comparable spending benchmarks would involve analyzing other DoD contracts for similar advanced technology development, particularly in areas like satellite technology, command and control systems, and space-based intelligence.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale R&D contract awarded to a major prime contractor, there may be opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting is not detailed here and would require further investigation into the contractor's subcontracting plan.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. Accountability measures would be tied to the contract's milestones, deliverables, and financial reporting requirements. Transparency is generally facilitated through contract award databases, though detailed R&D progress reports are often sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

DoD Research and Development Programs
Space Systems Development Contracts
Advanced Technology Development
National Security Space Initiatives

Risk Flags

Cost Overrun Risk (CPFF)
Long-Term Project Management
Technological Obsolescence Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.9 million to BAE SYSTEMS SPACE & MISSION SYSTEMS INC.. GDPAA

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS SPACE & MISSION SYSTEMS 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 $19.9 million.

What is the period of performance?

Start: 2006-10-27. End: 2012-02-03.

What is BAE Systems' track record with similar cost-plus-fixed-fee R&D contracts for the Department of Defense?

BAE Systems has a long history of performing complex R&D contracts for the DoD, including those utilizing cost-plus-fixed-fee (CPFF) structures. CPFF contracts are common for R&D where the scope or final cost is uncertain at the outset. While this structure allows for flexibility and encourages innovation, it also requires robust government oversight to manage costs effectively. BAE Systems' experience suggests they are capable of navigating the complexities of such agreements. However, a detailed review of their past CPFF contracts would be necessary to identify any patterns of cost overruns, performance issues, or successful project completions to fully assess their reliability in this specific instance.

How does the $19.9 million contract value compare to similar R&D efforts in space systems?

Comparing the $19.9 million contract value requires access to a broader dataset of similar R&D contracts for space systems. Factors such as the specific technologies being developed (e.g., satellite components, communication systems, sensor technology), the maturity of the research, and the contract duration significantly influence cost. Contracts for early-stage, foundational research might be lower, while those involving advanced prototyping or system integration could be higher. Without specific details on the deliverables and the technological scope, a direct comparison is difficult. However, for a multi-year R&D effort in a specialized field like space systems, $19.9 million represents a substantial investment, suggesting a project of considerable technical depth and potential impact.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this R&D project?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract type for this R&D project is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. If the actual costs exceed initial estimates, the government bears the burden of these increased expenses, while the contractor's fee remains constant. This can lead to the project costing more than initially budgeted. Effective risk mitigation requires stringent government oversight of incurred costs, clear definition of allowable expenses, and robust performance monitoring to ensure the contractor remains efficient and focused on achieving the project objectives within reasonable cost parameters.

What does the 'Research and Development in the Physical, Engineering, and Life Sciences' NAICS code imply for this contract?

The North American Industry Classification System (NAICS) code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences,' indicates that this contract is for activities involving systematic study to gain new knowledge and understanding in these scientific fields, leading to the development of new or improved products, processes, or services. For this specific contract with BAE Systems, it implies the work involves advanced scientific inquiry and engineering application, likely focused on creating novel technologies or enhancing existing ones related to space and mission systems. This code suggests a high level of technical expertise and innovation is expected from the contractor.

How does the contract's duration of 1925 days impact the assessment of its value and risk?

A contract duration of 1925 days, approximately 5.27 years, signifies a long-term commitment to a complex research and development effort. This extended timeline allows for in-depth investigation, iterative development, and potential adaptation to evolving requirements. From a value perspective, it suggests a project with significant scope and potential for substantial technological advancement. However, the extended duration also increases inherent risks, including the potential for technological obsolescence, shifts in strategic priorities, and the challenge of maintaining consistent oversight and contractor focus over several years. Managing such a long-term project effectively requires adaptive planning, regular performance reviews, and proactive risk management to ensure continued alignment with defense objectives and value realization.

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: Ball Corp (UEI: 006419147)

Address: 1600 COMMERCE ST, BOULDER, CO, 02

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

Financial Breakdown

Contract Ceiling: $22,075,436

Exercised Options: $20,186,394

Current Obligation: $19,887,603

Contract Characteristics

Cost or Pricing Data: NO

Timeline