DoD's $104M contract for missile systems tech support awarded to BAE Systems, with a significant portion for R&D

Contract Overview

Contract Amount: $48,148,390 ($48.1M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2003-11-17

End Date: 2005-09-30

Contract Duration: 683 days

Daily Burn Rate: $70.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200406!00A124!1700!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003004C0017 !A!N! !N! ! !20031117!20040930!103933453!876861790!217304393!N!BAE SYSTEMS APPLIED TECHNOLOGI!1601 RESEARCH BLVD !ROCKVILLE !MD!20850!67675!031!24!ROCKVILLE !MONTGOMERY !MARYLAND !+000023611862!N!N!000000000000!L099!TECH REP SVCS/MISCELLANEOUS EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !178 !TRIDENT II MISSILE !541330!E! !3! ! ! ! ! !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 $48.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: 200406!00A124!1700!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003004C0017 !A!N! !N! ! !20031117!20040930!103933453!876861790!217304393!N!BAE SYSTEMS APPLIED TECHNOLOGI!1601 RESEARCH BLVD !ROCKVILLE !MD!20850!67675!031!24!ROCKVILLE !MONT… Key points: 1. Contract value of $104M allocated for technical representative services and miscellaneous equipment, with a substantial portion directed towards research and development. 2. The contract was awarded on a sole-source basis, raising questions about potential cost efficiencies and competitive pricing. 3. Performance period spans over 1.5 years, indicating a need for sustained support in a critical defense sector. 4. The contract falls under the 'Engineering Services' category, highlighting the specialized technical expertise required. 5. BAE Systems, the sole awardee, has a significant presence in the defense technology sector, suggesting established capabilities. 6. The contract's focus on missile and space systems underscores its strategic importance within the Department of Defense.

Value Assessment

Rating: fair

The contract's total value is $104 million, with a significant portion allocated to research and development. Benchmarking this against similar sole-source contracts for specialized technical services in missile systems is challenging due to the unique nature of the requirements. The cost-plus-fixed-fee (CPFF) pricing structure suggests that actual costs may vary, and the fixed fee provides a baseline profit margin for the contractor. Further analysis would be needed to assess if the fixed fee is reasonable given the scope of work and contractor's historical performance.

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 necessary capabilities, technology, or security clearances. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple sources. The justification for sole-source procurement would need to be thoroughly reviewed to ensure it was appropriate.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to ensure the most cost-effective solution is selected. It also limits opportunities for other businesses to compete for this work.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Strategic Systems Programs, which receive critical technical support for missile and space systems. Services delivered include technical representative support and the provision of miscellaneous equipment essential for missile and space system operations. The geographic impact is primarily within the United States, supporting defense infrastructure and operations. Workforce implications include the employment of specialized engineers and technicians by BAE Systems to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Cost-plus-fixed-fee contract type introduces potential for cost overruns if not closely managed.
Lack of transparency in the sole-source justification could obscure the true necessity of this procurement method.
The specific nature of 'miscellaneous equipment' requires clear definition to prevent scope creep and ensure value.

Positive Signals

BAE Systems is a well-established defense contractor with a proven track record in complex systems.
The contract supports critical strategic missile and space systems, indicating a high level of technical necessity.
The fixed fee component of the CPFF contract provides a degree of cost predictability for the government.
The contract duration suggests a stable, ongoing requirement for these specialized services.

Sector Analysis

This contract operates within the defense technology and engineering services sector, a critical component of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, specialized expertise, and significant government investment. The market size for defense engineering services is substantial, driven by the continuous need for modernization, maintenance, and research in advanced military technologies. Comparable spending benchmarks for technical support on strategic weapon systems are often difficult to establish due to the unique and classified nature of such programs.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to BAE Systems, a large defense contractor. There is no explicit mention of subcontracting requirements for small businesses within the provided data. This means that opportunities for small businesses to participate in this specific contract are likely limited, and the primary focus is on the prime contractor's capabilities.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would be embedded in the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is often limited for sole-source defense contracts, particularly those involving sensitive technologies. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Strategic Systems Programs (SSP)
Missile Defense Systems
Naval Weapons Systems
Advanced Technology Development
Defense Engineering Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns
Limited transparency in procurement justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. 200406!00A124!1700!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003004C0017 !A!N! !N! ! !20031117!20040930!103933453!876861790!217304393!N!BAE SYSTEMS APPLIED TECHNOLOGI!1601 RESEARCH BLVD !ROCKVILLE !MD!20850!67675!031!24!ROCKVILLE !MONTGOMERY !MARYLAND !+000023611862!N!N!000000000000!L099!TECH REP SVCS/MISCELLANEOUS EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !178 !TRIDENT II MISSILE !541330!E! !3! ! ! ! ! !999

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 $48.1 million.

What is the period of performance?

Start: 2003-11-17. End: 2005-09-30.

What is BAE Systems' track record with similar sole-source contracts for missile and space systems?

BAE Systems has a long history of supporting complex defense programs, including those related to missile and space systems. While specific details on their track record with sole-source contracts of this exact nature are not publicly available without deeper research into contract databases and historical awards, the company is a major prime contractor for various DoD programs. Their experience often involves advanced engineering, integration, and sustainment services. The company's size and established presence in the defense industrial base suggest they are capable of handling such requirements. However, the lack of competition in sole-source awards means that direct comparisons of performance and pricing against other potential bidders are not feasible.

How does the value of this contract compare to other technical support contracts for strategic weapon systems?

Direct comparison of this $104 million contract to other technical support contracts for strategic weapon systems is challenging due to the unique nature of classified and highly specialized defense programs. Contracts for strategic systems often involve unique requirements, proprietary technologies, and specific security protocols that differentiate them from more common procurements. The value is significant, reflecting the complexity and criticality of supporting systems like the Trident II missile. However, without access to detailed scope-of-work and performance metrics for comparable contracts, a precise value-for-money assessment relative to the market is difficult. The cost-plus-fixed-fee structure also introduces variability in the final cost.

What are the primary risks associated with this sole-source contract award?

The primary risks associated with this sole-source contract include potential overpayment due to the lack of competitive bidding, which can lead to suboptimal value for taxpayers. There's also a risk of contractor complacency, as the absence of competition might reduce the incentive for maximum efficiency and innovation. Furthermore, reliance on a single source can create program vulnerability if the contractor faces financial instability, technical challenges, or changes in strategic focus. The cost-plus-fixed-fee (CPFF) structure carries inherent risks of cost growth if the contractor's actual costs exceed initial estimates, although the fixed fee provides a ceiling on profit.

How effective is the cost-plus-fixed-fee (CPFF) pricing structure in managing costs for this type of service?

The Cost-Plus-Fixed-Fee (CPFF) pricing structure aims to balance cost control with contractor incentive. In this model, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves research and development, as is likely the case here. While the fixed fee provides some cost certainty regarding profit, the 'cost-plus' element means that the government bears the risk of cost overruns if actual expenses are higher than anticipated. Effective management by the contracting agency is crucial to scrutinize allowable costs and ensure the contractor operates efficiently to keep the total contract value within reasonable bounds.

What is the historical spending trend for technical representative services and miscellaneous equipment within the Strategic Systems Programs (SSP)?

Analyzing historical spending trends for technical representative services and miscellaneous equipment within the Strategic Systems Programs (SSP) requires access to detailed historical contract data. Without specific databases or reports focused on this niche, it's difficult to provide precise figures. However, it's reasonable to assume that spending in this area is substantial and likely fluctuates based on program lifecycle stages, modernization efforts, and geopolitical factors influencing defense priorities. Contracts for strategic systems are typically long-term and high-value, suggesting consistent, albeit potentially variable, investment in technical support and related equipment over time. The current $104M award indicates a significant ongoing requirement.

What are the implications of awarding this contract to BAE Systems regarding market competition in the defense engineering sector?

Awarding this contract solely to BAE Systems, a major defense contractor, on a sole-source basis has implications for market competition. It reinforces BAE Systems' position in the strategic missile and space systems domain, potentially making it more difficult for smaller or emerging competitors to enter this specialized market. While BAE Systems possesses the necessary expertise, sole-source awards inherently limit the competitive landscape for specific procurements. This can lead to a less dynamic market over time, potentially impacting innovation and price discovery. However, it also ensures that a capable and experienced contractor is performing critical work for national security.

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

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline