DoD's $55M Engineering Support Contract Awarded to BAE Systems Shows Fair Competition

Contract Overview

Contract Amount: $54,869,738 ($54.9M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2017-05-01

End Date: 2022-10-31

Contract Duration: 2,009 days

Daily Burn Rate: $27.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF IN-SERVICE ENGINEERING SUPPORT SERVICES

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $54.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: IGF::OT::IGF IN-SERVICE ENGINEERING SUPPORT SERVICES Key points: 1. Contract awarded via full and open competition, indicating a competitive bidding process. 2. The contract's duration spans over 5 years, suggesting a long-term need for these services. 3. The Cost Plus Fixed Fee (CPFF) pricing structure can lead to cost overruns if not managed carefully. 4. The contract is for engineering services, a critical support function for defense operations. 5. The award value of approximately $55 million over its life indicates significant investment in engineering support. 6. The contract was awarded as a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.

Value Assessment

Rating: good

The contract's value of $54.9 million over five years for engineering services appears reasonable given the scope and duration. Benchmarking against similar large-scale engineering support contracts within the Department of Defense suggests this award falls within expected spending ranges. The CPFF structure, while carrying some risk, is common for complex services where final costs are difficult to predict upfront. Oversight will be key to ensuring value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The presence of 3 bidders, as indicated by the 'no' field, suggests a healthy level of competition for this significant engineering support requirement. This competitive environment is generally favorable for price discovery and achieving a fair market price.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which is expected to drive down costs and ensure the government receives the best value for its investment in engineering services.

Public Impact

The Department of Defense benefits from specialized engineering expertise to support its complex systems and operations. Services delivered likely include design, analysis, testing, and sustainment engineering for defense platforms. The contract's impact is primarily national, supporting defense readiness and technological advancement. The contract supports a workforce of skilled engineers and technical professionals, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost growth under the CPFF contract type if not rigorously managed.
Reliance on a single contractor for critical engineering support could pose a risk if performance falters.
The specific details of the engineering services required are not fully elaborated, making a precise risk assessment challenging.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
The contractor, BAE Systems, is a well-established defense technology company with a strong track record.
The contract duration suggests a stable, long-term need being met, providing continuity for critical functions.

Sector Analysis

This contract falls within the Engineering Services sector, a vital component of the broader aerospace and defense industry. The market for defense engineering services is substantial, driven by the continuous need for modernization, sustainment, and development of military platforms and systems. Spending in this area is often characterized by long-term, high-value contracts awarded through competitive processes, reflecting the complexity and criticality of the services provided.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While BAE Systems is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on BAE Systems' strategy and the specific requirements of the engineering services.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. Accountability measures would be embedded within the contract terms, including performance metrics and reporting requirements. Transparency is generally maintained through contract award databases and public reporting, though specific project details may be sensitive.

Related Government Programs

Defense Engineering Services
Aerospace and Defense Support Contracts
Department of Defense IT and Technical Services
Weapon Systems Engineering Support

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost overruns.
Long contract duration increases the risk of performance degradation or evolving requirements not being fully met.
Reliance on a single prime contractor for critical services warrants close monitoring of performance and financial stability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. IGF::OT::IGF IN-SERVICE ENGINEERING 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $54.9 million.

What is the period of performance?

Start: 2017-05-01. End: 2022-10-31.

What is BAE Systems' track record with similar large-scale engineering support contracts for the Department of Defense?

BAE Systems Technology Solutions & Services Inc. has a significant history of performing large-scale engineering and technical support contracts for the Department of Defense. As a major defense contractor, they are involved in various aspects of defense systems development, sustainment, and modernization. Their portfolio often includes complex engineering services, program management, and integration support across multiple military branches. While specific contract performance details are often proprietary, their continued success in winning competitive bids for substantial contracts suggests a generally positive track record and capability to meet DoD requirements. Further analysis would involve examining past performance reviews and any reported issues on previous similar contracts.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for engineering services, and what are the implications for value?

The Cost Plus Fixed Fee (CPFF) contract type is common for research and development or complex services where the scope of work is not precisely defined at the outset, making it difficult to establish a firm fixed price. Under CPFF, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to control costs to maximize their fee, but it also carries a risk of cost overruns if the initial cost estimates are inaccurate or if unforeseen complexities arise. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility but less cost certainty for the government. For value, effective oversight and robust cost-tracking mechanisms are crucial to ensure that the government pays a fair price for the services rendered and that the fixed fee remains appropriate for the effort involved.

What are the potential risks associated with a 5-year engineering support contract, and how are they typically mitigated?

A 5-year engineering support contract presents several potential risks. These include the risk of contractor performance degradation over time, potential cost growth due to evolving requirements or unforeseen technical challenges, and the risk of obsolescence if technology rapidly advances beyond the scope of the contract. Mitigation strategies typically involve strong contract management, including regular performance reviews, clear performance metrics (e.g., Key Performance Indicators - KPIs), and robust change management processes. Incentive clauses, award fees, or penalties can be incorporated to encourage high performance and cost control. Furthermore, maintaining open communication channels and fostering a collaborative relationship between the government and the contractor can help proactively identify and address issues before they escalate.

How does the $54.9 million award value compare to historical spending on similar engineering services within the DoD?

The $54.9 million award value for this 5-year engineering support contract represents an average annual value of approximately $11 million. This figure needs to be contextualized within the broader DoD budget for engineering and technical services, which runs into billions of dollars annually. When compared to other large-scale, multi-year engineering support contracts awarded by the DoD, this contract appears to be of moderate to significant size. For instance, major platform development or sustainment programs often involve engineering contracts valued in the tens or hundreds of millions of dollars per year. Therefore, while substantial, this contract's value is consistent with the significant investments the DoD makes in specialized engineering expertise to maintain its technological edge and operational readiness.

What is the significance of this contract being awarded as a 'Delivery Order' under a broader IDIQ contract?

The designation 'Delivery Order' indicates that this contract is a specific task order issued under a larger, pre-existing Indefinite-Delivery/Indefinite-Quantity (IDIQ) contract vehicle. IDIQ contracts establish terms and conditions, including pricing, for services over a period, allowing agencies to issue multiple delivery or task orders as needed. Awarding this as a delivery order suggests that the underlying IDIQ contract likely underwent a competitive process itself, potentially allowing for further competition among awardees for specific orders, or that this order was placed under a pre-negotiated structure. This approach provides flexibility for the government to procure services efficiently as requirements arise, while the initial IDIQ competition ensures a baseline level of value and vetted contractors.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002414R3454

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

Address: 520 GAITHER ROAD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $55,591,869

Exercised Options: $55,591,869

Current Obligation: $54,869,738

Actual Outlays: $4,531,857

Subaward Activity

Number of Subawards: 84

Total Subaward Amount: $22,920,665

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4018

IDV Type: IDC

Timeline