DoD's $39M contract for defense systems awarded to BAE Systems, with a 28.9M baseline value

Contract Overview

Contract Amount: $39,168,244 ($39.2M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2007-10-01

End Date: 2011-06-15

Contract Duration: 1,353 days

Daily Burn Rate: $28.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: DEFENSE SYSTEM

Place of Performance

Location: SAN JOSE, SANTA CLARA County, CALIFORNIA, 95119

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $39.2 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: DEFENSE SYSTEM Key points: 1. The contract's baseline value of $28.9 million suggests a significant investment in specialized defense systems. 2. BAE Systems, a major defense contractor, secured this award, indicating established capabilities in the sector. 3. The contract type, Cost Plus Incentive Fee (CPIF), suggests a performance-based structure aiming to control costs while incentivizing efficiency. 4. The duration of 1353 days points to a long-term project requiring sustained effort and development. 5. The exclusion of sources in the competition phase warrants further investigation into the rationale behind limited bidding. 6. The contract's baseline value represents a substantial portion of the total awarded amount, highlighting initial cost estimations.

Value Assessment

Rating: fair

The baseline value of $28.9 million for this defense system contract appears substantial. Without specific details on the system's capabilities or comparable procurements, it's difficult to definitively benchmark value. However, the CPIF contract type suggests an attempt to manage costs through performance incentives. Further analysis would require understanding the specific technological advancements and operational requirements this system is intended to fulfill.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while the initial solicitation may have been open, certain sources were later excluded. The presence of 3 bidders suggests some level of competition, but the exclusion of other potential sources raises questions about the breadth of the competitive landscape. This limited competition could potentially impact price discovery and may suggest specialized requirements that only a few firms could meet.

Taxpayer Impact: The limited competition may have resulted in a higher price for taxpayers compared to a fully open and unrestricted bidding process. It suggests that the government may not have received the most competitive offers available in the market.

Public Impact

The primary beneficiaries are likely the Department of Defense, receiving advanced defense systems to enhance operational capabilities. The contract supports the development and delivery of specialized search, detection, navigation, guidance, and related systems. The geographic impact is primarily within the United States, with potential for deployment to various operational theaters. This contract likely supports a specialized workforce within BAE Systems and its subcontractors, requiring expertise in advanced engineering and manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition raises concerns about potential price inflation and reduced innovation.
The CPIF contract type can lead to cost overruns if not managed diligently, despite incentive clauses.
The exclusion of sources requires clear justification to ensure fairness and maximize taxpayer value.
The long contract duration increases the risk of scope creep and evolving technological obsolescence.

Positive Signals

Award to a major defense contractor like BAE Systems suggests a high likelihood of technical capability and successful delivery.
The CPIF structure, if managed effectively, can lead to cost savings and improved performance.
The contract addresses critical defense needs, contributing to national security objectives.
The baseline value indicates a significant commitment to acquiring advanced technology.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a critical component of the defense industry. This industry is characterized by high R&D investment, stringent quality standards, and long product development cycles. Spending in this sector is heavily influenced by geopolitical factors and national security priorities. Comparable spending benchmarks would typically involve other large-scale defense system procurements, often in the tens to hundreds of millions of dollars.

Small Business Impact

There is no explicit indication of small business set-asides for this contract, and the 'sb' field is false. This suggests that the primary award was not specifically targeted towards small businesses. However, BAE Systems, as a large prime contractor, may engage small businesses as subcontractors. The extent of small business subcontracting would need to be assessed separately to understand the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The CPIF structure implies performance monitoring to trigger incentive payments. Transparency would be facilitated through contract reporting mechanisms, though specific details on public access to performance data are not provided. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense System Procurement
Navigation and Guidance Systems
Search and Detection Equipment
Aeronautical and Nautical Instruments
Cost Plus Incentive Fee Contracts

Risk Flags

Limited competition raises concerns about price fairness.
CPIF contract type requires diligent oversight to prevent cost overruns.
Exclusion of sources needs clear justification.
Long contract duration increases risk exposure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.2 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. DEFENSE SYSTEM

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS LAND & ARMAMENTS L.P..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $39.2 million.

What is the period of performance?

Start: 2007-10-01. End: 2011-06-15.

What is the specific nature of the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' being procured?

The provided data indicates the contract falls under the North American Industry Classification System (NAICS) code 334511, which covers establishments primarily engaged in manufacturing electronic search, detection, navigation, guidance, aeronautical, and nautical systems and instruments. This can encompass a wide range of equipment, from radar and sonar systems to GPS devices and flight control instruments. Without more specific contract details, the exact nature of the system remains broad. However, given the significant value and the contractor, it likely involves sophisticated, mission-critical technology for defense applications, potentially including advanced sensor arrays, integrated navigation suites, or specialized guidance components for military platforms.

How does the $28.9 million baseline value compare to similar defense system procurements?

The baseline value of $28.9 million represents a substantial investment for a single contract, placing it in the mid-to-large range for specialized defense system procurements. To provide a precise comparison, one would need to analyze historical data for contracts with similar NAICS codes (334511) and contract types (CPIF) awarded by the Department of Defense. However, generally, procurements in this range often involve the development or production of complex subsystems or moderately scaled systems rather than entire major weapon platforms. The total award value of over $39 million suggests significant potential for growth or cost escalation beyond the initial baseline, which is common in CPIF contracts.

What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract of this magnitude?

The primary risks with a CPIF contract of this magnitude ($39.1M total, $28.9M baseline) revolve around cost control and contractor performance. While the incentive fee structure aims to align contractor and government interests by rewarding cost savings and performance targets, there's a risk that poorly defined targets or inadequate government oversight could lead to cost overruns. The government bears the risk of the incurred costs, plus a fee that varies based on performance. For BAE Systems, the risk lies in not meeting the incentive targets, which would reduce their profit margin. Effective management requires robust government monitoring of costs, progress, and adherence to specifications to ensure the incentives are driving the desired outcomes and that the final cost remains justifiable.

What is the significance of 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' for this contract?

This contract type, 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicates a complex procurement history. It suggests that the initial solicitation was intended to be fully open to all responsible sources. However, at some point during the process, certain sources were excluded. This exclusion could be due to various reasons, such as the inability of some firms to meet specific technical requirements, security concerns, or other pre-award qualifications. While it implies some level of initial competition, the exclusion narrows the field, potentially impacting the final price and the range of innovative solutions considered. The rationale for exclusion is critical for understanding the true level of competition and its impact on value for money.

What is BAE Systems' track record with similar defense system contracts?

BAE Systems is a major global defense contractor with extensive experience in developing and manufacturing a wide array of defense systems, including those related to search, detection, navigation, and guidance. Their track record typically involves large, complex programs for various military branches across multiple countries. While specific performance metrics for this particular contract are not detailed here, BAE Systems generally has a history of delivering sophisticated technological solutions. However, like any large contractor, they may have faced challenges on specific programs related to cost, schedule, or technical performance. A deeper dive into their contract history, particularly with CPIF contracts and systems in NAICS 334511, would provide a more granular assessment.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 2890 DE LA CRUZ BLVD, SANTA CLARA, CA, 95050

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $115,927,723

Exercised Options: $40,367,906

Current Obligation: $39,168,244

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline