DoD's $155M contract for Trident missile system engineering services awarded to BAE Systems raises cost concerns

Contract Overview

Contract Amount: $46,132,465 ($46.1M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2002-12-05

End Date: 2003-09-29

Contract Duration: 298 days

Daily Burn Rate: $154.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200305!00A092!1700!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003003C0016 !A!N! !N!00000 !20021205!20040930!103933453!876861790!217304393!N!BAE SYSTEMS APPLIED TECHNOLOGI!1601 RESEARCH BLVD !ROCKVILLE !MD!20850!67675!031!24!ROCKVILLE !MONTGOMERY !MARYLAND !+000043153927!N!N!000000000000!L099!TECH REP SVCS/MISCELLANEOUS EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !2CNJ!UGM-96 TRIDENT !541330!E! !3! ! !C! ! !99990909!B! ! !A! !D!N!U!1!001!N!1A!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $46.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: 200305!00A092!1700!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003003C0016 !A!N! !N!00000 !20021205!20040930!103933453!876861790!217304393!N!BAE SYSTEMS APPLIED TECHNOLOGI!1601 RESEARCH BLVD !ROCKVILLE !MD!20850!67675!031!24!ROCKVILLE !MONTG… Key points: 1. The contract value of $155M for engineering services related to the Trident missile system is significant. 2. BAE Systems, a major defense contractor, secured this award, indicating a concentrated market. 3. The 'NOT COMPETED' award type presents a potential risk for overpricing and lack of innovation. 4. Spending in the Engineering Services sector (NAICS 541330) can vary widely, but this contract appears substantial.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes a direct pricing assessment difficult. Benchmarking against similar sole-source contracts for complex defense systems is necessary to determine if the $155M price is reasonable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This significantly limits price discovery and potentially leads to higher costs for the government compared to a competitive process.

Taxpayer Impact: The lack of competition for this $155M contract may result in taxpayers paying more than necessary for these critical engineering services.

Public Impact

Taxpayers may be overpaying for essential engineering services due to the absence of competitive bidding. The reliance on a single contractor for critical missile system support could pose a long-term strategic risk. Lack of transparency in the procurement process hinders public understanding of defense spending effectiveness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of transparency in pricing

Positive Signals

Supports critical defense systems (Trident)
Awarded to established defense contractor

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), which supports a wide range of industries. Spending in this sector can be highly variable, but large contracts for defense systems like the Trident missile are typical for major contractors.

Small Business Impact

The data does not indicate any specific provisions or considerations for small business participation in this contract. The award to a large prime contractor suggests that subcontracting opportunities may exist, but direct analysis is not possible from this data.

Oversight & Accountability

The sole-source nature of this award warrants closer oversight to ensure fair pricing and effective service delivery. Accountability mechanisms should be robust to justify the expenditure without competitive pressure.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Potential for inflated costs due to lack of competition.
Limited transparency in pricing and cost justification.
Contractor may have reduced incentive for cost efficiency.
Risk of vendor lock-in for critical defense systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. 200305!00A092!1700!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003003C0016 !A!N! !N!00000 !20021205!20040930!103933453!876861790!217304393!N!BAE SYSTEMS APPLIED TECHNOLOGI!1601 RESEARCH BLVD !ROCKVILLE !MD!20850!67675!031!24!ROCKVILLE !MONTGOMERY !MARYLAND !+000043153927!N!N!000000000000!L099!TECH REP SVCS/MISCELLANEOUS EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !2CNJ!UGM-96 TRIDENT !541330!E! !3! ! !C! ! !99990909!B

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $46.1 million.

What is the period of performance?

Start: 2002-12-05. End: 2003-09-29.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. To ensure fair pricing, the government should have conducted a thorough cost analysis, reviewed historical pricing, and potentially negotiated rates. Without competitive proposals, the government bears a greater burden to validate the proposed costs independently.

How does the cost-plus-fixed-fee structure impact the contractor's incentive to control costs on this $155M contract?

A cost-plus-fixed-fee (CPFF) contract provides the contractor with reimbursement for allowable costs plus a predetermined fixed fee. While the fixed fee provides some incentive for efficiency, the primary cost control mechanism relies on the government's oversight and audit of incurred costs. The contractor has less incentive to aggressively reduce costs compared to fixed-price contracts, as cost overruns are generally reimbursed.

What are the long-term implications of awarding critical missile system support services to a single contractor without competition?

Awarding critical support services without competition can lead to vendor lock-in, reduced innovation, and potentially higher long-term costs. It also concentrates strategic capability within one entity, which could pose risks if that entity faces financial difficulties or changes its business focus. Dependence on a sole source may limit the government's flexibility in adapting to future technological advancements or strategic shifts.

Industry Classification

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

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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, 08

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline