BAE Systems awarded $31.6M for FA&E Support Services, a sole-source contract with a 5-year duration

Contract Overview

Contract Amount: $31,587,963 ($31.6M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2021-10-01

End Date: 2026-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $17.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FA&E SUPPORT SERVICES

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $31.6 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: FA&E SUPPORT SERVICES Key points: 1. Contract awarded to a single, established provider, raising questions about competitive pricing. 2. Long-term contract duration suggests a need for sustained support, but limits flexibility. 3. Cost-plus-fixed-fee structure incentivizes cost incurrence, requiring robust oversight. 4. Engineering services sector is critical for defense, but often involves complex, specialized needs. 5. Sole-source award indicates potential barriers to entry for other qualified firms. 6. Contract value is moderate within the context of large defense procurements.

Value Assessment

Rating: fair

The contract value of $31.6 million over five years for FA&E Support Services appears reasonable for specialized engineering support. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or identify potential cost savings. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex services where costs are hard to predict, can lead to higher overall expenditures compared to fixed-price contracts if not managed diligently. Further analysis of the fixed fee and the base cost components would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, BAE Systems Technology Solutions & Services Inc., was solicited. This approach is typically used when a unique capability or urgent need exists that only one contractor can fulfill. 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 offerors. This raises concerns about whether the government secured the best possible value.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing bids, there's a risk that the price is not optimized, potentially leading to higher overall spending for the services rendered.

Public Impact

The primary beneficiaries are the Department of the Navy, which receives essential FA&E support services. These services are crucial for maintaining and advancing the Navy's operational capabilities. The contract supports specialized engineering expertise, likely contributing to national defense readiness. Workforce implications include employment for engineers and technical staff at BAE Systems, primarily in Maryland.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher costs if not closely monitored.
Long contract duration (5 years) may reduce flexibility to adapt to changing requirements or market conditions.

Positive Signals

Award to an established contractor like BAE Systems suggests a known quantity with potentially reliable performance.
The contract addresses critical FA&E support services, indicating a necessary function for the agency.
The fixed fee component provides some cost certainty for the contractor's profit margin.

Sector Analysis

The engineering services sector (NAICS 541330) is a vital component of the defense industrial base, providing specialized expertise for complex projects. This contract fits within the broader category of defense contracting, where long-term, high-value agreements are common. Spending in this sector is driven by the need for advanced technological solutions and ongoing support for military platforms. Comparable spending benchmarks would typically involve analyzing other sole-source or competed engineering support contracts within the Department of Defense for similar services.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, BAE Systems, is a large defense contractor. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without this information, it's difficult to assess the direct benefits or implications for small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight is essential to monitor costs and ensure the fixed fee is justified. Transparency may be limited due to the sole-source nature and the proprietary information often involved in engineering services. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Engineering Services Contracts
BAE Systems Defense Contracts
Navy FA&E Support Services
Sole-Source Defense Procurements
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award may result in suboptimal pricing.
Cost-plus-fixed-fee structure requires diligent oversight to control costs.
Long contract duration could limit adaptability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.6 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. FA&E SUPPORT SERVICES

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 $31.6 million.

What is the period of performance?

Start: 2021-10-01. End: 2026-09-30.

What is BAE Systems' track record with the Department of the Navy for similar engineering services?

BAE Systems Technology Solutions & Services Inc. has a significant history of contracting with the Department of Defense, including the Navy, for a wide range of engineering and technical support services. While specific performance metrics for this particular FA&E support contract are not detailed here, the company's longevity and continued awards suggest a generally satisfactory performance history. However, a deeper dive into past performance reviews, contract modifications, and any disputes or terminations related to their Navy contracts would provide a more comprehensive understanding of their reliability and capability in delivering complex engineering solutions.

How does the $31.6 million contract value compare to similar FA&E support services contracts awarded by the Navy?

Benchmarking the $31.6 million value requires comparing it to contracts for similar FA&E (Fleet Aviation and Engineering) support services, particularly those awarded by the Department of the Navy. Given this is a sole-source award for a 5-year period, direct comparisons to competitively bid contracts might be misleading. However, if similar sole-source contracts for comparable scope and duration exist, they would serve as a better benchmark. Generally, engineering services for defense applications can range significantly in cost depending on specialization, duration, and complexity. Without access to a database of comparable sole-source contracts, it's challenging to definitively state if this value is high or low, but it falls within a typical range for specialized, long-term defense support.

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

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to a higher price than could be achieved through bidding. This lack of competition means the government relies heavily on the contractor's proposed pricing and the agency's negotiation skills. Secondly, the Cost-Plus-Fixed-Fee (CPFF) structure, while providing flexibility for unpredictable costs, can incentivize the contractor to incur more costs, as their fee is a fixed percentage of the total costs. This necessitates robust government oversight to scrutinize costs, prevent overruns, and ensure the fixed fee remains appropriate for the services rendered. Effective risk mitigation requires strong contract administration and performance monitoring.

How effective is the cost-plus-fixed-fee structure in ensuring value for money in this context?

The effectiveness of the Cost-Plus-Fixed-Fee (CPFF) structure in ensuring value for money is contingent on strong contract oversight. While CPFF is suitable for research and development or complex services where cost estimation is difficult, it can lead to higher overall spending compared to fixed-price contracts. The 'fixed fee' provides some incentive for the contractor to control costs to maximize profit, but the 'cost-plus' element means the government bears the risk of cost overruns. Value for money is best achieved through diligent monitoring of incurred costs, ensuring they are reasonable and allocable, and verifying that the fixed fee accurately reflects the effort and risk involved. Without stringent oversight, CPFF contracts can be less cost-effective.

What are the historical spending patterns for FA&E support services within the Department of the Navy?

Historical spending patterns for FA&E (Fleet Aviation and Engineering) support services within the Department of the Navy typically show consistent investment in maintaining and upgrading complex aviation and engineering systems. This spending is driven by the operational tempo, modernization requirements, and the lifecycle management of naval assets. While the exact total annual spending fluctuates based on specific program needs and budget allocations, it generally represents a significant portion of the Navy's procurement and service contracts budget. Analyzing past five-year spending trends would reveal whether this $31.6 million award is in line with historical levels or represents an increase/decrease in investment for these critical support functions.

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: N0003022R6007

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

Address: 520 GAITHER RD, 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: $34,552,778

Exercised Options: $34,417,992

Current Obligation: $31,587,963

Subaward Activity

Number of Subawards: 28

Total Subaward Amount: $2,801,888

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline