DoD's $26.7M R&D contract with BAE Systems shows strong performance signals but limited competition

Contract Overview

Contract Amount: $26,679,529 ($26.7M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2018-08-21

End Date: 2024-02-20

Contract Duration: 2,009 days

Daily Burn Rate: $13.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 99

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::CT::IGF

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $26.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: IGF::CT::IGF Key points: 1. Contract awarded to a single, large defense contractor, indicating potential for concentrated market power. 2. Performance metrics suggest high quality and timely delivery, aligning with research and development objectives. 3. The contract's duration and cost-plus structure warrant scrutiny for potential cost overruns. 4. Sector positioning within physical, engineering, and life sciences R&D highlights a critical area of defense innovation. 5. Limited competition may impact price discovery and potentially lead to less favorable terms for the government. 6. The absence of small business set-asides suggests a focus on prime contractors with specialized capabilities.

Value Assessment

Rating: good

The contract's total award value of $26.7 million over its period of performance appears reasonable for specialized R&D. Benchmarking against similar contracts in the physical, engineering, and life sciences R&D sector is challenging without more specific technical details. However, the cost-plus-fixed-fee structure, while common for R&D, necessitates careful oversight to ensure costs remain within projected bounds and that the fixed fee adequately compensates the contractor for the agreed-upon scope.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders had the opportunity to submit proposals. However, the data indicates only 99 proposals were received, and the prime contractor is BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. Further details on the number of bids actually evaluated and the specific evaluation criteria would be needed to fully assess the competitive landscape. The fact that a single large entity was awarded the contract may suggest a highly specialized requirement or a consolidation within the defense R&D market.

Taxpayer Impact: While awarded under full and open competition, the limited number of proposals and the award to a single large contractor could mean that taxpayers did not benefit from the most aggressive pricing that a broader competitive field might have generated.

Public Impact

This contract supports advancements in physical, engineering, and life sciences research, directly benefiting national security through technological innovation. The research outcomes are expected to enhance the capabilities of the Department of the Navy, indirectly benefiting service members. The contract's geographic impact is primarily centered in New Hampshire, where BAE Systems' relevant facilities are located, potentially supporting the local economy and workforce. Workforce implications include the employment of highly skilled scientists, engineers, and technicians involved in cutting-edge research.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can incentivize cost overruns if not closely monitored.
Limited number of proposals received may indicate barriers to entry for smaller or less established firms.
The contract's long duration (2009 to 2024) requires sustained oversight to ensure continued relevance and value.

Positive Signals

Awarded under full and open competition, allowing for broad market participation.
BAE Systems is a well-established defense contractor with a proven track record.
The contract supports critical R&D in advanced scientific fields.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences, excluding nanotechnology and biotechnology. This is a critical area for defense innovation, aiming to develop next-generation technologies. The market for defense R&D is characterized by high barriers to entry, specialized expertise, and significant government investment. Comparable spending benchmarks would depend heavily on the specific sub-field of R&D, but overall defense R&D spending is substantial, with agencies like the Department of Defense being major investors.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false). This is common for large, complex R&D contracts that require specialized expertise and significant resources typically found in larger, established defense contractors. There is no explicit information on subcontracting plans, but it is likely that BAE Systems would engage subcontractors, potentially including small businesses, for specific components or services, though this is not guaranteed by the contract terms.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy contracting officers and program managers. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to track expenditures against the fixed fee and ensure compliance with contract terms. Transparency is facilitated through contract reporting mechanisms. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse, with the DoD IG having oversight authority.

Related Government Programs

Department of Defense Research and Development Programs
Navy Science and Technology Programs
Advanced Technology Development Contracts
Engineering and Physical Sciences Research

Risk Flags

Cost-plus-fixed-fee contract type requires diligent oversight.
Limited number of proposals may indicate reduced competition.
Long contract duration necessitates sustained monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. IGF::CT::IGF

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 Navy).

What is the total obligated amount?

The obligated amount is $26.7 million.

What is the period of performance?

Start: 2018-08-21. End: 2024-02-20.

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

BAE Systems has a long history of performing complex R&D contracts for the Department of Defense, including those utilizing cost-plus-fixed-fee (CPFF) structures. CPFF contracts are common for R&D where the scope may evolve or be difficult to define precisely upfront. While CPFF offers flexibility, it requires robust government oversight to manage costs effectively. BAE Systems' extensive experience suggests they are capable of managing the technical and administrative aspects of such contracts. However, a detailed review of their past performance on similar CPFF R&D contracts, including any instances of cost overruns or performance issues, would be necessary for a comprehensive assessment. Their overall performance ratings on federal contracts, if available, would also provide valuable context.

How does the value of this contract compare to other R&D contracts in the physical, engineering, and life sciences sector awarded by the Department of the Navy?

The $26.7 million award value for this contract is within a moderate range for specialized R&D projects within the Department of the Navy. The Navy, like other branches of the DoD, invests heavily in R&D across various scientific disciplines. Contracts of this magnitude are typical for developing specific technologies or conducting in-depth research that requires significant expertise and resources over several years. To provide a precise comparison, one would need to analyze the average award values for contracts with similar NAICS codes (e.g., 541715) and specific research areas awarded by the Navy over comparable timeframes. However, without that granular data, it can be stated that $26.7 million represents a substantial, but not exceptionally large, investment for a focused R&D effort.

What are the primary risks associated with the cost-plus-fixed-fee contract type for this R&D effort?

The primary risk associated with a cost-plus-fixed-fee (CPFF) contract, especially for R&D, is the potential for cost escalation. While the contractor is reimbursed for allowable costs, the fixed fee provides a set profit margin. This structure can, in some cases, reduce the contractor's incentive to control costs rigorously, as their profit is not directly tied to cost savings. For the government, the risk lies in potentially paying more than necessary if costs are not meticulously tracked and managed. Effective oversight, detailed cost reporting, and clear performance metrics are crucial to mitigate these risks and ensure the government receives good value. The evolving nature of R&D also presents a risk that the initial scope may become outdated or require significant adjustments, impacting the overall cost and timeline.

How effective is the 'full and open competition' process when only 99 proposals are received for a specialized R&D contract?

The effectiveness of 'full and open competition' can be debated when the number of proposals received is relatively low, as in this case with 99 proposals. While the process theoretically allows any responsible source to compete, a lower number of submissions might indicate several factors: the market for this specific R&D is niche, requiring highly specialized capabilities that only a limited number of firms possess; there were significant barriers to entry (e.g., high R&D costs, complex proposal requirements); or the solicitation may not have reached the most relevant potential bidders. For taxpayers, a limited pool of bidders can mean less competitive pricing and potentially fewer innovative solutions compared to a scenario with a larger number of diverse proposals. It underscores the importance of market research to ensure solicitations are designed to attract a robust and competitive field.

What are the historical spending patterns for R&D contracts under NAICS code 541715 by the Department of the Navy?

Historical spending patterns for R&D contracts under NAICS code 541715 (Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)) by the Department of the Navy typically show consistent and significant investment. The Navy, as a major component of the DoD, relies heavily on scientific and technological advancements to maintain its operational superiority. Spending in this category often fluctuates based on strategic priorities, emerging threats, and budget allocations. Over the years, the Navy has funded numerous projects in areas such as materials science, advanced propulsion, sensor technology, and C4ISR (Command, Control, Communications, Computers, and Intelligence, Surveillance, and Reconnaissance) systems. The total annual spending can range from hundreds of millions to billions of dollars, depending on the fiscal year and specific program needs. Contracts are often awarded to large defense contractors and research institutions.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001418SB001

Offers Received: 99

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $39,004,530

Exercised Options: $36,291,802

Current Obligation: $26,679,529

Actual Outlays: $2,796,334

Subaward Activity

Number of Subawards: 31

Total Subaward Amount: $6,315,690

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline