DoD's $394M Engineering Services Contract Awarded to BAE Systems for Over 8 Years

Contract Overview

Contract Amount: $39,425,324 ($39.4M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2002-11-04

End Date: 2011-03-25

Contract Duration: 3,063 days

Daily Burn Rate: $12.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $39.4 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract's duration of over 8 years (3063 days) indicates a long-term need for engineering services. 3. The Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed carefully. 4. The awardee, BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC., is a significant defense contractor. 5. The contract's value of $394.25 million over its life suggests substantial engineering support requirements. 6. The North American Industry Classification System (NAICS) code 541330 points to a focus on engineering services.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific deliverables and performance metrics. However, the total award amount of $394.25 million spread over more than 8 years averages to approximately $49.28 million per year. This figure needs to be compared against the scope and complexity of the engineering services provided. The Cost Plus Fixed Fee (CPFF) structure, while common, carries inherent risks of cost escalation if the fixed fee becomes disproportionately small compared to the actual costs incurred by the contractor. Without detailed performance data, assessing true value-for-money is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The presence of 2 bids suggests a moderate level of competition for this significant engineering services requirement. While two bidders participated, the specific details of the bidding process, including the evaluation criteria and the nature of the competition, are not provided. A higher number of bidders typically leads to more competitive pricing and a broader range of technical solutions.

Taxpayer Impact: A full and open competition, even with two bidders, generally provides a better opportunity for taxpayers to receive competitive pricing compared to sole-source or limited competition scenarios. This process aims to ensure that the government obtains the best value by considering multiple offers.

Public Impact

The Department of Defense benefits from specialized engineering expertise to support its complex technological requirements. Services delivered likely include design, development, testing, and integration of various defense systems. The geographic impact is primarily within Maryland, where the contract was managed, but the services could support DoD operations nationwide or globally. The contract supports a workforce of engineers and technical specialists, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can incentivize contractors to incur costs, potentially leading to higher overall expenditures than anticipated if not closely monitored.
The long duration of the contract (over 8 years) increases the risk of scope creep or evolving requirements that may not be adequately captured in the initial pricing.
Limited competition (2 bidders) may have resulted in a less competitive price than if more firms had participated.

Positive Signals

Awarded through full and open competition, which generally promotes fair pricing and access to a wide range of capabilities.
The contractor, BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC., is a well-established entity in the defense sector, suggesting a degree of reliability and expertise.
The contract's clear NAICS code (541330) and award type (DCA) indicate a defined scope of engineering services.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for defense engineering services is substantial, driven by the continuous need for modernization, research, and development of military platforms and systems. Companies like BAE Systems are key players, providing specialized expertise that government agencies often cannot maintain in-house. Spending in this sector is highly dependent on defense budgets and geopolitical factors, with contracts often being long-term and high-value due to the complexity and criticality of the services required.

Small Business Impact

This contract indicates that small business participation was not a primary set-aside objective, as the 'sb' field is false. There is no explicit mention of subcontracting goals for small businesses within the provided data. This suggests that the prime contractor, BAE Systems, is expected to fulfill the majority of the work, and the direct impact on the small business ecosystem through this specific contract may be limited unless subcontracting opportunities arise organically.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. The CPFF contract type necessitates rigorous oversight to ensure that costs are reasonable and allocable, and that the fixed fee is earned appropriately. Transparency would be facilitated through regular reporting requirements from the contractor and potentially through contract audit agency reviews. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Engineering Services
Aerospace and Defense Contracting
BAE Systems Contracts
Department of Defense IT and Engineering Support

Risk Flags

Cost Plus Fixed Fee (CPFF) contract type carries inherent cost overrun risks.
Limited competition (2 bidders) may reduce price competitiveness.
Long contract duration increases potential for scope creep and requirement changes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.4 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. See the official description on USAspending.

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 $39.4 million.

What is the period of performance?

Start: 2002-11-04. End: 2011-03-25.

What specific types of engineering services were provided under this contract?

The provided data indicates the contract falls under NAICS code 541330, 'Engineering Services.' While the specific sub-categories of engineering are not detailed, this typically encompasses a broad range of activities including research and development, design, analysis, testing, and integration of complex systems. For a defense contract of this magnitude, services could include systems engineering, software engineering, mechanical engineering, electrical engineering, and specialized technical support for military platforms, weapons systems, or command and control infrastructure. The Cost Plus Fixed Fee (CPFF) structure suggests that the scope might have involved evolving requirements or significant research and development components where precise cost estimation upfront was challenging.

How does the $394.25 million award compare to similar engineering services contracts within the DoD?

The $394.25 million total award for BAE Systems over an 8-year period represents an average annual value of approximately $49.28 million. This figure is substantial but falls within the typical range for large-scale, long-term engineering support contracts awarded by the Department of Defense. Major defense contractors frequently secure contracts in the tens to hundreds of millions of dollars for specialized engineering services supporting major defense programs. Benchmarking requires comparing the specific scope, complexity, and duration against other contracts for similar services (e.g., systems engineering for aircraft, naval vessels, or ground systems) awarded around the same period. Without more granular data on deliverables and performance, a precise comparison is difficult, but the value indicates a significant, long-term support requirement.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type used here?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. While the contractor is reimbursed for allowable costs, the fixed fee provides a set profit margin. If costs escalate significantly beyond initial projections, the contractor may be incentivized to continue work to earn the fee, potentially leading to higher overall expenditures for the government than anticipated. Effective oversight is crucial to ensure that costs are reasonable, allocable, and that the contractor is managing the project efficiently. The government bears the risk of cost increases, while the contractor's profit is capped at the fixed fee, which can sometimes lead to reduced contractor motivation if the fee is perceived as too low relative to the effort required.

What does the limited competition (2 bidders) imply for the government and taxpayers?

Limited competition, such as the two bids received for this contract, can have several implications. On the positive side, it still indicates that the contract was competed, which is generally preferable to a sole-source award. However, with only two bidders, the government may not have benefited from the full spectrum of competitive pressures that could drive down prices and foster innovation. This could potentially lead to higher costs for taxpayers compared to a scenario with multiple, more diverse bids. It also suggests that the market for this specific type of engineering service might be concentrated among a few large players, or that the requirements were highly specialized, limiting the number of capable bidders.

How has BAE Systems performed on similar large-scale DoD engineering contracts historically?

BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. is a major defense contractor with a long history of performing complex engineering and technical services for the Department of Defense and other government agencies. Historical performance data, often available through sources like the Federal Procurement Data System (FPDS) or contractor performance assessment reporting tools (CPARS), would provide insights into their track record. Generally, large contractors like BAE Systems have extensive experience, but performance can vary significantly across individual contracts. Factors such as on-time delivery, adherence to budget, quality of work, and responsiveness to government needs are key indicators. Without specific performance reviews for this particular contract or closely related ones, a definitive assessment is not possible, but their established presence suggests a capacity to handle such requirements.

What is the historical spending trend for engineering services under NAICS code 541330 within the DoD?

Historical spending by the Department of Defense (DoD) on engineering services (NAICS 541330) has consistently been in the billions of dollars annually. This category represents a significant portion of the DoD's procurement budget, reflecting the continuous need for advanced technological development, system integration, and lifecycle support for military assets. Spending trends are influenced by defense budgets, strategic priorities, and the pace of technological advancement. Periods of increased global tension or major defense modernization programs typically correlate with higher spending in this sector. The DoD is one of the largest purchasers of engineering services, making this a critical area of federal expenditure.

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

Offers Received: 2

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: NO

Timeline