DoD's $30M BAE Systems contract for engineering and logistics support shows fair value and strong competition

Contract Overview

Contract Amount: $29,951,010 ($30.0M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2009-07-01

End Date: 2011-03-31

Contract Duration: 638 days

Daily Burn Rate: $46.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IN-SERVICE ENGINEERING AND INTEGRATED LOGISTICS SUPPORT SERVICES

Place of Performance

Location: KEYPORT, KITSAP County, WASHINGTON, 98345

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $30.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: IN-SERVICE ENGINEERING AND INTEGRATED LOGISTICS SUPPORT SERVICES Key points: 1. The contract demonstrates a reasonable value for the engineering and integrated logistics support services provided. 2. Full and open competition suggests a healthy market dynamic for these specialized services. 3. The contract's duration and delivery order structure indicate a need for ongoing, adaptable support. 4. Performance context is crucial, as the quality of engineering and logistics directly impacts operational readiness. 5. This contract falls within the broader Defense sector, specifically supporting naval engineering capabilities.

Value Assessment

Rating: good

The contract's total value of approximately $30 million over two years suggests a moderate investment for comprehensive engineering and logistics support. Benchmarking against similar contracts for specialized defense services indicates that this pricing is within a competitive range. The Cost Plus Fixed Fee (CPFF) contract type, while carrying some risk, allows for flexibility in scope while aiming for cost control through a fixed fee. The value appears fair given the critical nature of in-service engineering and integrated logistics.

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. The presence of three bidders suggests a competitive environment for these specialized engineering and logistics services. This level of competition is generally favorable for price discovery and ensures that the government receives proposals from a range of qualified contractors, potentially leading to better value.

Taxpayer Impact: Taxpayers benefit from full and open competition as it drives down prices and encourages innovation among contractors vying for the award.

Public Impact

The Department of the Navy benefits directly through enhanced in-service engineering and integrated logistics support for its assets. Services delivered include critical engineering analysis, maintenance planning, and supply chain management. The geographic impact is primarily within naval operational areas, supporting fleet readiness. Workforce implications include the employment of skilled engineers, logisticians, and technical support staff by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can sometimes lead to cost overruns if not managed diligently.
The duration of the contract (638 days) requires sustained oversight to ensure performance remains aligned with objectives.
Dependence on a single contractor for critical logistics support could pose a risk if performance degrades.

Positive Signals

Awarded under full and open competition, indicating a robust selection process.
The contractor, BAE Systems, is a well-established entity in the defense sector with significant experience.
The contract addresses essential in-service engineering and logistics, crucial for maintaining operational capabilities.

Sector Analysis

This contract operates within the Defense Engineering Services sector, a critical component of the broader aerospace and defense industry. This market is characterized by high technical barriers to entry, significant government spending, and a focus on specialized expertise. Comparable spending benchmarks for similar integrated logistics and engineering support contracts within the DoD often range from tens to hundreds of millions of dollars, depending on scope and duration. This contract represents a mid-tier investment for essential naval support functions.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside provisions. While BAE Systems is a large prime contractor, there is potential for subcontracting opportunities for small businesses within their supply chain. The extent of small business participation would depend on BAE Systems' subcontracting plan and the availability of specialized small businesses capable of providing the required services or components.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the Cost Plus Fixed Fee structure, requiring detailed reporting and justification of costs. Transparency is facilitated through contract award databases and reporting requirements. The Inspector General's office within the Department of Defense may conduct audits or investigations as deemed necessary to ensure proper use of funds and adherence to contract terms.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Defense Logistics Agency (DLA) Support Services
Engineering and Technical Services Contracts
Integrated Logistics Support (ILS) Programs
Department of Defense Maintenance and Sustainment Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Long-term reliance on a single contractor for critical support functions.
Performance metrics and quality assurance are key to ensuring value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. IN-SERVICE ENGINEERING AND INTEGRATED LOGISTICS SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $30.0 million.

What is the period of performance?

Start: 2009-07-01. End: 2011-03-31.

What is the track record of BAE Systems Technology Solutions & Services Inc. in delivering similar engineering and logistics support to the Department of Defense?

BAE Systems Technology Solutions & Services Inc. has a substantial track record with the Department of Defense, often serving as a prime contractor for complex engineering, integration, and logistics support services across various military branches. Their experience typically spans decades, involving support for major defense platforms and systems. For the Navy specifically, they have been involved in providing sustainment, modernization, and operational support, which aligns closely with the requirements of this contract. Their history generally indicates a capacity to manage large-scale, technically demanding projects, though specific performance metrics for individual contracts would require deeper analysis of past performance reviews and award fee determinations.

How does the pricing structure (Cost Plus Fixed Fee) compare to other contract types for similar services, and what are the implications for value?

The Cost Plus Fixed Fee (CPFF) contract type is common for services where the scope may evolve or is difficult to define precisely at the outset, such as complex engineering and long-term logistics support. It allows the contractor to recover all allowable costs plus a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility but less cost certainty for the government. While FFP incentivizes contractor efficiency, CPFF can be advantageous when innovation or adaptation is paramount. For value, CPFF requires robust government oversight to manage costs effectively and ensure the fixed fee remains a reasonable profit margin relative to the effort and risk undertaken by the contractor. If managed well, it can yield good value by ensuring necessary services are delivered even with evolving requirements.

What are the primary risks associated with this contract, and what mitigation strategies are likely in place?

The primary risks associated with this contract include potential cost overruns due to the CPFF structure, performance degradation impacting critical naval operations, and contractor dependency. Cost overruns are mitigated by stringent government oversight, regular audits, and detailed cost reporting requirements. Performance risks are addressed through performance metrics, award fees, and defined deliverables within the contract. Contractor dependency is managed by ensuring clear contract terms, maintaining strong communication channels, and potentially having contingency plans or alternative support options identified. The competitive award process itself also serves as a risk mitigation by selecting a contractor with a demonstrated capability.

How has historical spending on engineering and logistics support for the Department of the Navy trended, and does this contract align with those patterns?

Historical spending by the Department of the Navy on engineering and logistics support has consistently been substantial, reflecting the complexity and operational demands of its global fleet. These expenditures often represent a significant portion of the Navy's overall budget, particularly for sustainment and readiness. Spending patterns typically show a steady demand for services related to platform maintenance, system upgrades, supply chain management, and technical expertise. This $30 million contract, awarded over approximately two years, aligns with the typical scale of such support contracts, representing a focused investment within the broader context of the Navy's ongoing sustainment and operational requirements. It does not appear to be an outlier but rather a component of sustained support.

What is the significance of the 'Engineering Services' (NAICS 541330) classification for this contract?

The NAICS code 541330, 'Engineering Services,' signifies that the primary focus of this contract is on providing professional engineering expertise. This includes activities such as research and development, design, consultation, and project management related to engineering disciplines. For this specific contract, it implies that BAE Systems is providing specialized technical knowledge and solutions to support the Navy's in-service systems and platforms. This could encompass areas like systems engineering, naval architecture, mechanical, electrical, or software engineering, all crucial for maintaining the operational effectiveness and longevity of naval assets. The classification underscores the high-skill, knowledge-intensive nature of the services procured.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002409R3414

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 520 GAITHER ROAD, ROCKVILLE, MD, 20850

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

Financial Breakdown

Contract Ceiling: $34,063,287

Exercised Options: $34,063,287

Current Obligation: $29,951,010

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4018

IDV Type: IDC

Timeline