DoD's $32.8M R&D contract with BAE Systems shows strong competition but raises questions on value

Contract Overview

Contract Amount: $32,866,082 ($32.9M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2016-01-25

End Date: 2024-01-30

Contract Duration: 2,927 days

Daily Burn Rate: $11.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF INSIGHT TRANSITION

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92127

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $32.9 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: IGF::OT::IGF INSIGHT TRANSITION Key points: 1. Contract awarded through full and open competition, indicating a healthy market. 2. BAE Systems is a major defense contractor, suggesting established capabilities. 3. Research and Development focus in physical sciences, engineering, and life sciences. 4. Long contract duration of over 8 years may impact cost-effectiveness. 5. Cost Plus Fixed Fee (CPFF) structure can incentivize cost overruns. 6. No small business set-aside, potentially limiting broader participation.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging without specific deliverables and performance metrics. The Cost Plus Fixed Fee (CPFF) pricing structure, while common for R&D, carries inherent risks of cost escalation if not tightly managed. Comparing this to similar R&D efforts in advanced physical sciences and engineering would require detailed analysis of the scope of work and technological advancements sought. The fixed fee component provides some cost certainty for the contractor's effort, but the overall cost is variable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple capable vendors were invited to bid. The presence of two bids indicates a degree of competition, which is generally positive for price discovery and innovation. However, the specific number of bidders (two) might not represent the full spectrum of potential competition in this specialized R&D field.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to better pricing and more innovative solutions, although the specific cost savings are not quantifiable without more data.

Public Impact

Benefits the Department of Defense by advancing research in critical physical, engineering, and life sciences. Supports technological innovation and potential future defense capabilities. Primarily impacts the defense industrial base and specialized R&D workforce. Geographic impact is concentrated in California, where BAE Systems' relevant division is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not rigorously managed.
Long contract duration (over 8 years) increases the risk of scope creep and potential inefficiencies.
Lack of specific performance metrics makes it difficult to assess true value for money.
Limited competition (2 bidders) might not have yielded the most competitive pricing.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
BAE Systems is a large, established defense contractor with significant R&D experience.
Contract aligns with critical defense research and development needs.
Definitive contract structure provides a framework for ongoing research efforts.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical sciences, engineering, and life sciences (excluding biotechnology). This is a highly specialized area within the broader defense industrial base. Comparable spending benchmarks would depend on the specific technological advancements pursued, but R&D spending in defense is substantial, often involving long-term investments in cutting-edge technologies.

Small Business Impact

The contract was not set aside for small businesses, and the data indicates no indication of small business subcontracting. This suggests that the primary focus was on large, established prime contractors capable of undertaking complex R&D. This approach may limit opportunities for small businesses to participate directly in this specific contract, though they may be involved in the broader R&D ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. The Inspector General (IG) for the Department of Defense would have jurisdiction for audits and investigations. Transparency is facilitated through contract databases, but detailed performance and cost data may be sensitive. Accountability relies on program managers ensuring adherence to contract terms and objectives.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
BAE Systems Defense Contracts
Physical Sciences Research
Engineering Research and Development
Life Sciences Research (non-biotech)

Risk Flags

Cost Overrun Risk (CPFF)
Relevance Drift (Long Duration)
Limited Competition Data
Lack of Specific Deliverables

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.9 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. IGF::OT::IGF INSIGHT TRANSITION

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 (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $32.9 million.

What is the period of performance?

Start: 2016-01-25. End: 2024-01-30.

What is the specific technological area BAE Systems is researching under this contract, and what are the expected outcomes?

The contract specifies 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)' under NAICS code 541712. However, the provided data does not detail the specific technological areas or expected outcomes. This level of detail is typically found in the contract's Statement of Work (SOW) or technical exhibits, which are not included here. Understanding the precise research objectives is crucial for assessing the contract's relevance and potential impact. Without this information, it's difficult to gauge the novelty or strategic importance of the R&D being conducted.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other R&D contract types used by the DoD, and what are its implications for cost control?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred plus a fixed fee representing profit. This structure is common for R&D where the scope is not fully defined, providing flexibility. However, it can incentivize cost overruns as the contractor is reimbursed for all allowable costs, with the primary risk being the fixed fee. Compared to Fixed Price contracts, CPFF offers less cost certainty for the government but allows for greater adaptability in research. Compared to Cost Plus Incentive Fee (CPIF), the profit is fixed regardless of cost performance, potentially reducing the incentive for efficiency. Effective cost control under CPFF relies heavily on robust government oversight, detailed cost monitoring, and clear definition of allowable costs.

Given the 8-year duration, what mechanisms are in place to ensure the R&D remains relevant and aligned with evolving defense needs?

Long-duration R&D contracts typically incorporate mechanisms for adapting to evolving needs. This often includes periodic reviews, phased development approaches, and options for contract modifications or re-scoping based on technological advancements or changes in strategic priorities. The contract's Statement of Work (SOW) would likely outline these review points and modification procedures. Effective program management by the Air Force is critical to ensure the research stays aligned with current and future defense requirements, potentially through regular consultations with subject matter experts and end-users.

What is BAE Systems' track record with similar large-scale R&D contracts for the Department of Defense?

BAE Systems Information and Electronic Systems Integration Inc. is a major defense contractor with extensive experience in research and development across various domains, including electronics, aerospace, and cyber technologies. While specific details of their past R&D contracts are not provided here, their status as a prime contractor on numerous large-scale DoD programs suggests a significant track record. Performance on these contracts would be documented in government databases like the Contractor Performance Assessment Reporting System (CPARS), which informs future award decisions. Their established presence indicates a capacity to manage complex R&D efforts.

How does the $32.8 million total contract value compare to typical R&D spending in this specific scientific domain within the DoD?

The $32.8 million total contract value over approximately 8 years represents an average annual spend of roughly $4.1 million. This figure is moderate for large-scale defense R&D, which can range from millions to billions of dollars depending on the project's scope and technological ambition. Without knowing the specific R&D focus (e.g., materials science, advanced computing, sensor technology), it's difficult to provide a precise benchmark. However, it suggests a focused research effort rather than a broad, foundational research program. Comparable contracts would be those aimed at developing specific technological components or prototypes within the physical, engineering, or life sciences.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

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: BAE Systems PLC

Address: 10920 TECHNOLOGY PL, SAN DIEGO, CA, 92127

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

Financial Breakdown

Contract Ceiling: $32,901,273

Exercised Options: $32,901,273

Current Obligation: $32,866,082

Actual Outlays: $1,426,187

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline