DoD's $71.5M Logistics Engineering Contract Awarded to BAE Systems Raises Questions on Competition and Value

Contract Overview

Contract Amount: $71,504,509 ($71.5M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2014-10-01

End Date: 2018-09-30

Contract Duration: 1,460 days

Daily Burn Rate: $49.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF FY15 LOGISTICS ENGINEERING&INTEGRATION

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $71.5 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: IGF::OT::IGF FY15 LOGISTICS ENGINEERING&INTEGRATION Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize cost overruns, impacting overall value for money. 2. Awarded on a sole-source basis, the lack of competition limits price discovery and potentially inflates costs. 3. The contract duration of 1460 days (4 years) suggests a long-term need for these engineering services. 4. Performance context is limited due to the absence of competitive bidding and publicly available performance metrics. 5. This contract falls within the Engineering Services sector, a critical support function for defense operations. 6. The absence of small business set-asides or subcontracting plans warrants further investigation into broader economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this $71.5 million contract is challenging due to its sole-source nature and lack of publicly disclosed performance metrics. The cost-plus-fixed-fee (CPFF) pricing type, while allowing for flexibility, can lead to higher costs compared to fixed-price contracts if not managed rigorously. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value for logistics engineering and integration services. The contract's duration and total value suggest a significant investment, making a thorough review of its cost-effectiveness crucial.

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. However, the lack of competition means that potential cost savings that could arise from a bidding process were not realized. It also limits the government's ability to explore alternative solutions or innovations that other companies might offer.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. The government missed an opportunity to leverage market forces to secure the best possible price and terms.

Public Impact

The Department of Defense benefits from specialized logistics engineering and integration support, crucial for operational readiness. Services delivered likely include strategic planning, system design, and implementation for complex logistics operations. The geographic impact is primarily within the United States, supporting DoD operations and potentially involving personnel at various military installations. Workforce implications include the employment of engineers and technical specialists by BAE Systems, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize increased spending.
Absence of small business participation requirements limits economic opportunity.
Limited transparency on performance metrics makes value assessment difficult.

Positive Signals

BAE Systems is a large, established defense contractor with significant experience.
The contract addresses a critical need for logistics engineering within the DoD.
The fixed fee component of the contract provides some cost certainty.

Sector Analysis

The Engineering Services sector is a vital component of the defense industrial base, providing specialized technical expertise to government agencies. This contract, valued at over $71 million, represents a significant investment within this sector. Comparable spending in engineering services for the DoD can range from millions to billions annually, depending on the scope and complexity of the requirements. This specific contract focuses on logistics, a critical area for maintaining operational efficiency and readiness for military forces.

Small Business Impact

This contract was not competed and did not include small business set-asides. The absence of specific subcontracting plans or goals for small businesses means that opportunities for smaller firms to participate in this significant defense contract are likely limited. This could reduce the overall economic impact on the small business ecosystem within the defense sector, as they may not benefit from the flow of funds or the development of new capabilities through this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract terms, particularly the fixed fee component, which is earned upon meeting specific milestones. Transparency is limited due to the sole-source nature and the lack of publicly detailed performance reports. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

DoD Logistics Modernization Programs
Defense Engineering Services Contracts
BAE Systems Defense Contracts
Cost-Plus-Fixed-Fee Contracts
Sole-Source Defense Acquisitions

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus-fixed-fee structure may incentivize higher costs.
Limited public data on performance and value.
No explicit small business subcontracting requirements noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.5 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. IGF::OT::IGF FY15 LOGISTICS ENGINEERING&INTEGRATION

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 $71.5 million.

What is the period of performance?

Start: 2014-10-01. End: 2018-09-30.

What is BAE Systems' track record with similar Department of Defense contracts, particularly in logistics engineering?

BAE Systems is a major defense contractor with a long history of performing complex engineering and logistics services for the Department of Defense. While specific details on their performance for this particular contract are not publicly available due to its sole-source nature and limited reporting, the company generally has extensive experience in areas such as systems integration, supply chain management, and operational support. Their track record includes numerous large-scale contracts across various defense branches. However, like any large contractor, they have also faced scrutiny on specific contracts regarding cost, schedule, and performance. A deeper dive into their past performance on comparable logistics and engineering contracts would require access to government performance databases and contract award histories.

How does the $71.5 million value of this contract compare to similar logistics engineering contracts awarded by the DoD?

The $71.5 million value for this 4-year logistics engineering contract is substantial, placing it in the mid-to-large range for specialized engineering services within the DoD. However, without knowing the precise scope of work and the specific services rendered, direct comparisons are difficult. The DoD awards numerous contracts for logistics support, ranging from IT systems integration to physical supply chain management, with values that can span from a few million to hundreds of millions of dollars. Given that this was a sole-source award, it suggests a highly specialized or critical need. Benchmarking would ideally involve comparing it to other sole-source or competitively awarded contracts for similar engineering services, considering factors like contract duration, complexity, and the specific technologies or systems involved.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract of this magnitude are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to achieve cost efficiencies. The government may not be getting the best possible value for its money. Secondly, the CPFF structure, while providing flexibility, carries the risk of cost overruns. The contractor is reimbursed for allowable costs plus a fixed fee, which can incentivize them to incur more costs to increase their overall profit margin (the fixed fee is a percentage of the initially estimated cost). Effective government oversight and robust cost controls are critical to mitigate these risks.

What specific logistics engineering and integration services are being provided under this contract?

The contract title, 'LOGISTICS ENGINEERING & INTEGRATION,' suggests that the services provided are focused on the design, development, implementation, and optimization of complex logistics systems and processes for the Department of Defense. This could encompass a wide range of activities, including supply chain analysis, inventory management systems, transportation logistics planning, maintenance engineering, and the integration of various IT systems that support these functions. The 'engineering' aspect implies a focus on technical solutions, system architecture, and process improvement, while 'integration' points to ensuring that different logistical components and systems work together seamlessly. The exact scope would be detailed in the contract's statement of work.

What is the historical spending pattern for logistics engineering services within the Department of Defense, and how does this contract fit?

The Department of Defense consistently allocates significant portions of its budget to logistics and engineering services, recognizing their critical role in maintaining operational readiness and supporting global missions. Historical spending in this area is substantial, often running into billions of dollars annually across various contracts and programs. This $71.5 million contract represents a specific, albeit significant, investment within that broader spending landscape. It fits as a dedicated effort to enhance or maintain the complex engineering and integration capabilities essential for the DoD's vast and intricate logistics network. Understanding its place requires viewing it within the context of the DoD's overall acquisition strategy and its continuous efforts to modernize and optimize its logistical infrastructure.

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

Solicitation ID: N0003015Q0007

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 520 GAITHER ROAD, ROCKVILLE, MD, 20850

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

Financial Breakdown

Contract Ceiling: $71,506,808

Exercised Options: $71,506,808

Current Obligation: $71,504,509

Subaward Activity

Number of Subawards: 22

Total Subaward Amount: $2,513,721

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline