DoD's $26.6M Engineering Services Contract Awarded to BAE Systems Without Competition

Contract Overview

Contract Amount: $26,654,590 ($26.7M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2004-04-16

End Date: 2008-09-30

Contract Duration: 1,628 days

Daily Burn Rate: $16.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20847

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $26.7 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. The sole-source nature of this award limits opportunities for competitive pricing and potentially higher value. 3. A significant duration of over 4 years suggests a substantial, long-term need for these engineering services. 4. The contract's value of $26.6 million indicates a considerable investment in specialized engineering capabilities. 5. Performance is located in Maryland, potentially impacting the local economy and workforce. 6. The absence of small business set-asides or reported subcontracting raises questions about broader economic inclusion.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific engineering services provided. Without competitive bids, it's difficult to ascertain if the $26.6 million represents a fair market price. The cost-plus-fixed-fee structure necessitates close oversight to ensure costs remain reasonable and that the fixed fee adequately compensates the contractor for the defined scope. Comparing this to similar sole-source engineering contracts within the DoD would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the unique capabilities or resources required for the service, or in cases of urgent need. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a competed award. The justification for this sole-source award would need to be thoroughly reviewed to ensure it was appropriate.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the most cost-effective solution, potentially increasing the overall expenditure for these engineering services.

Public Impact

The Department of the Navy benefits from specialized engineering services crucial for its operations. The contract supports the development and maintenance of defense systems, enhancing national security. Services are delivered within Maryland, contributing to the regional economy and potentially utilizing local expertise. The contract likely supports a workforce of engineers and technical specialists employed by BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing for taxpayers.
Cost-plus-fixed-fee contracts require diligent oversight to prevent cost overruns.
Absence of small business participation limits opportunities for smaller firms in the defense sector.
The specific engineering services are not detailed, making it hard to assess performance risks.
Long contract duration without clear performance metrics could obscure potential inefficiencies.

Positive Signals

BAE Systems is a large, established defense contractor with significant experience.
The contract addresses a specific, likely critical, engineering need for the Department of the Navy.
The fixed fee component provides some cost certainty for the government, provided the scope is well-defined.
The contract duration suggests a stable, ongoing requirement, allowing for focused expertise development.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional, scientific, and technical services industry. This sector supports a wide range of government and private-sector activities, including defense, infrastructure, and technology development. The market for defense engineering services is substantial, dominated by large prime contractors like BAE Systems. Benchmarking requires comparing this contract's scope and value against other sole-source or competed engineering support contracts awarded by the Department of Defense or other federal agencies for similar technical requirements.

Small Business Impact

This contract does not appear to include any specific small business set-aside provisions, nor is there information regarding subcontracting plans. As a sole-source award to a large prime contractor, it may limit opportunities for small businesses to participate directly in this specific contract. The absence of subcontracting requirements could mean that the prime contractor is expected to perform the majority of the work in-house, potentially bypassing the small business ecosystem that often relies on such opportunities for growth and revenue.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and the Department of the Navy's program management office. Accountability measures would be defined within the contract's terms and conditions, including reporting requirements and performance standards. Transparency is limited due to the sole-source nature and the lack of publicly available detailed justifications. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Engineering Support Services
Naval Sea Systems Command (NAVSEA) Contracts
BAE Systems Defense Contracts
Sole-Source Defense Procurements
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus-fixed-fee contract requires robust oversight.
No indication of small business participation.
Specific scope of services not detailed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. See the official description on USAspending.

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 $26.7 million.

What is the period of performance?

Start: 2004-04-16. End: 2008-09-30.

What specific engineering services are being provided under this contract, and what is the justification for the sole-source award?

The provided data indicates the contract is for 'Engineering Services' (NAICS code 541330) awarded to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. However, the specific nature of these engineering services is not detailed. Sole-source awards are typically justified when only one responsible source is available or capable of meeting the agency's needs. For a contract of this magnitude ($26.6 million over 4 years), the justification would likely involve unique technical expertise, proprietary technology, or a critical, time-sensitive requirement where competition is not feasible. A thorough review of the contract's justification for other than full and open competition (J&A) would be necessary to understand the precise reasons and evaluate their validity.

How does the $26.6 million contract value compare to similar engineering services contracts awarded by the Department of the Navy?

Direct comparison of the $26.6 million value is difficult without knowing the specific engineering disciplines and scope of work. However, the Department of the Navy procures a wide range of engineering services, from naval architecture and marine engineering to systems engineering and software development. Contracts can range from a few million to hundreds of millions of dollars. Given this contract's duration (over 4 years) and its sole-source nature, the $26.6 million suggests a significant, specialized requirement. Benchmarking would ideally involve comparing it to other sole-source or competed contracts for similar types of engineering support, considering factors like labor hours, complexity, and required security clearances.

What are the potential risks associated with a sole-source, cost-plus-fixed-fee contract for engineering services?

Sole-source contracts inherently carry the risk of higher costs due to the lack of competitive pressure. Taxpayers may not receive the best possible price. Cost-plus-fixed-fee (CPFF) contracts, while providing flexibility, also pose risks. The 'cost-plus' element means the government pays the contractor's allowable costs plus a predetermined fixed fee. If costs escalate beyond initial estimates, the government bears the burden, potentially leading to budget overruns. The 'fixed fee' provides an incentive for the contractor to control costs, but effective oversight is crucial to ensure costs are reasonable and the fee is commensurate with the effort. Without strong program management and technical oversight, CPFF contracts can be susceptible to inefficiencies and cost creep.

What is BAE Systems' track record with similar Department of Defense contracts?

BAE Systems is a major global defense contractor with extensive experience across numerous DoD programs. They frequently hold large, complex contracts involving engineering, systems integration, and platform support. Their track record typically includes both successful program execution and, like many large contractors, instances of contract modifications, cost adjustments, and performance reviews. Specific to engineering services, BAE Systems has a history of providing support for naval systems, aerospace, and C4ISR (Command, Control, Communications, Computers, and Intelligence, Surveillance, and Reconnaissance). A detailed review of their performance on prior DoD contracts, particularly those with similar contract types (CPFF) and scopes, would be necessary to fully assess their reliability for this specific requirement.

How has federal spending on engineering services, particularly within the Department of Defense, trended over the past decade?

Federal spending on engineering services, especially within the Department of Defense, has remained substantial over the past decade, driven by modernization efforts, platform sustainment, and research and development. While specific figures fluctuate based on budget allocations and geopolitical priorities, the DoD consistently represents a significant portion of the federal engineering services market. Trends often reflect shifts towards areas like cybersecurity, artificial intelligence, advanced materials, and systems integration. Contracts like this one, even if sole-source, contribute to the overall spending picture, highlighting the ongoing demand for specialized technical expertise to support complex defense systems and initiatives.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

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: 1601 RESEARCH BLVD, ROCKVILLE, MD, 08

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline