DoD's $141M R&D contract for BAE Systems shows long-term engagement in advanced electronics

Contract Overview

Contract Amount: $14,125,141 ($14.1M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2007-06-21

End Date: 2012-11-30

Contract Duration: 1,989 days

Daily Burn Rate: $7.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: HIGH STARE

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $14.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: HIGH STARE Key points: 1. Contract awarded to a single, large defense contractor, indicating specialized capabilities. 2. Long contract duration suggests a sustained need for the research and development services. 3. Cost-plus-fixed-fee structure may incentivize cost overruns if not closely monitored. 4. Research and Development in Physical, Engineering, and Life Sciences is a critical but often unpredictable sector. 5. The contract's value is substantial, reflecting significant investment in technological advancement. 6. Limited competition could impact price competitiveness and innovation speed.

Value Assessment

Rating: fair

Benchmarking the value of this specific R&D contract is challenging due to its specialized nature and long duration. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D where final costs are uncertain, carries inherent risks of cost escalation. Without detailed breakdowns of labor, materials, and indirect costs, a precise value-for-money assessment is difficult. However, the significant duration and total award amount suggest a substantial investment, implying a perceived high value by the agency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. However, the presence of only 4 bids indicates a relatively focused competition, possibly due to the highly specialized nature of the R&D required. This level of competition is moderate and may not have driven the absolute lowest price but likely ensured a reasonable selection of qualified offerors.

Taxpayer Impact: Full and open competition, even with a limited number of bidders, generally benefits taxpayers by ensuring a baseline level of price discovery and preventing sole-source inflation.

Public Impact

The primary beneficiaries are the Department of Defense and potentially the warfighter, through advancements in electronic systems. Services delivered include cutting-edge research and development in physical, engineering, and life sciences. The geographic impact is centered in New Hampshire, where BAE Systems' Information and Electronic Systems Integration Inc. operates. Workforce implications include highly skilled jobs in R&D, engineering, and technical support within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to higher final costs than fixed-price contracts if not managed diligently.
The long duration of the contract (nearly 2000 days) increases the risk of scope creep or evolving requirements that may not be optimally priced.
Limited number of bidders (4) suggests potential barriers to entry for smaller or less specialized firms, potentially limiting broader innovation.

Positive Signals

Awarded under full and open competition, ensuring a broad initial opportunity for qualified contractors.
The contractor, BAE Systems, is a major defense industry player with a significant track record, suggesting reliability and expertise.
The contract focuses on R&D, which is crucial for maintaining technological superiority and future defense capabilities.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for defense modernization, involving innovation in areas like advanced materials, sensor technology, and electronic warfare. The market is dominated by large, specialized defense contractors capable of undertaking complex, long-term R&D projects. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of R&D, but significant government investment in this sector is consistent across defense agencies.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. The prime contractor is a large corporation, suggesting that any subcontracting opportunities for small businesses would be at the discretion of BAE Systems. The impact on the small business ecosystem is likely indirect, potentially through BAE Systems' supply chain, rather than direct set-aside awards.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program management office within the Department of the Air Force. The CPFF structure necessitates rigorous oversight of costs, progress, and adherence to research objectives. Transparency is generally maintained through contract reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Research and Development
Advanced Electronics Research
BAE Systems Contracts
Air Force Research Laboratory Programs
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Cost Overrun Risk (CPFF)
Technological Obsolescence
Long Contract Duration
Limited Competition Impact

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. HIGH STARE

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 $14.1 million.

What is the period of performance?

Start: 2007-06-21. End: 2012-11-30.

What is the historical spending trend for similar R&D contracts awarded by the Department of Defense in the physical, engineering, and life sciences sector?

Analyzing historical spending trends for similar R&D contracts requires access to comprehensive federal procurement data. Generally, the Department of Defense consistently allocates significant portions of its budget to R&D to maintain technological superiority. Spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' (NAICS 541710) category has seen fluctuations driven by geopolitical events, technological advancements, and evolving defense strategies. Large contracts like the one awarded to BAE Systems are indicative of major program investments. Over the past decade, there has been a sustained emphasis on areas like artificial intelligence, cybersecurity, advanced materials, and directed energy, all falling under this broad NAICS code. Specific trends would show peaks during periods of heightened national security concerns or major technological shifts. Without granular data on contract types, durations, and specific research areas within this NAICS code, a precise trend analysis is limited, but the overall investment remains substantial and critical for national defense.

How does the cost-plus-fixed-fee (CPFF) structure of this contract compare to other R&D contracts of similar scope and duration?

The Cost-Plus-Fixed-Fee (CPFF) contract type is frequently utilized for research and development efforts where the scope of work is not fully defined at the outset, or where cost uncertainties are high. This structure involves the contractor being reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. Compared to other R&D contracts, CPFF offers flexibility but also carries risks. Fixed-price contracts, for instance, shift cost risk to the contractor but may be unsuitable for exploratory R&D. Cost-plus-incentive-fee (CPIF) contracts introduce performance or cost targets to incentivize the contractor. For contracts of similar scope and duration, CPFF is a common choice when the government desires flexibility to adapt research directions while maintaining a degree of cost predictability through the fixed fee. However, rigorous oversight is crucial to prevent cost overruns, as the contractor has less incentive to control costs compared to fixed-price arrangements.

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. has a substantial track record of performing large-scale Research and Development (R&D) contracts for the Department of Defense (DoD). As a major defense contractor, the company is involved in numerous complex projects across various domains, including electronics, aerospace, and intelligence systems. Historical data indicates BAE Systems has successfully managed and executed numerous contracts involving advanced technology development, system integration, and engineering services for the DoD. Their performance on these contracts often involves navigating intricate technical challenges, adhering to strict security protocols, and delivering innovative solutions. While specific performance metrics for individual contracts are not publicly detailed, BAE Systems' continued success in securing and performing on high-value DoD R&D contracts suggests a generally positive performance history and a strong capability in meeting the government's demanding requirements in these specialized fields.

What are the potential risks associated with the long duration (1989 days) of this contract?

The long duration of this contract, spanning over five years, presents several potential risks. Firstly, the risk of 'scope creep' is elevated; as research progresses, requirements may evolve, leading to changes that could increase costs beyond the initial estimates, even with a fixed fee. Secondly, technological obsolescence is a concern; R&D is a fast-moving field, and the technology being developed might be surpassed by advancements elsewhere before the contract concludes. Thirdly, contractor performance can degrade over extended periods if motivation wanes or key personnel depart, impacting the quality and timeliness of deliverables. Finally, the extended timeline increases the government's exposure to market fluctuations in labor costs, material prices, and economic conditions, which could indirectly affect the overall value proposition if not adequately managed through contract clauses or oversight.

How does the award amount of $141 million compare to the average value of R&D contracts in the physical, engineering, and life sciences sector?

The award amount of $141 million for this R&D contract is substantial and falls within the upper range for contracts in the physical, engineering, and life sciences sector, particularly for specialized R&D efforts. While the average value can vary significantly based on the specific sub-discipline, duration, and agency, many R&D contracts are smaller, focusing on specific research tasks or prototypes. However, major defense initiatives, advanced technology development programs, and long-term research endeavors often reach or exceed this value. For instance, contracts related to next-generation weapon systems, advanced materials science, or complex simulation and modeling often command such significant funding. Therefore, while not necessarily the absolute highest, $141 million represents a considerable investment, indicative of a project with significant scope, complexity, and strategic importance to the Department of Defense.

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 65 SPIT BROOK RD, NASHUA, NH, 02

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

Financial Breakdown

Contract Ceiling: $65,196,535

Exercised Options: $30,664,366

Current Obligation: $14,125,141

Contract Characteristics

Cost or Pricing Data: NO

Timeline