Naval Air Warfare Center contract for engineering services awarded to BAE Systems for over $117 million

Contract Overview

Contract Amount: $117,874,826 ($117.9M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2004-05-21

End Date: 2009-09-11

Contract Duration: 1,939 days

Daily Burn Rate: $60.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: 200408!000271!1700!A8102 !NAVAL AIR WARFARE CENTER, AIRCRA!N0042104C0069 !A!N! !N! ! !20040521!20050521!103933453!876861790!217304393!N!BAE SYSTEMS APPLIED TECHNOLOGI!1601 RESEARCH BLVD !ROCKVILLE !MD!20850!69525!037!24!ST. INIGOES !ST. MARY S !MARYLAND !+000001000000!N!N!000094894564!AC65!RDTE/ELECTRONICS & COMMUNICATION EQ-ENG/MANUF DEV !S1 !SERVICES !000 !* !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !A!U!U!2!001!B! !C!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! !N00421!0001! !

Place of Performance

Location: PATUXENT RIVER, SAINT MARYS County, MARYLAND, 20670

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $117.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: 200408!000271!1700!A8102 !NAVAL AIR WARFARE CENTER, AIRCRA!N0042104C0069 !A!N! !N! ! !20040521!20050521!103933453!876861790!217304393!N!BAE SYSTEMS APPLIED TECHNOLOGI!1601 RESEARCH BLVD !ROCKVILLE !MD!20850!69525!037!24!ST. INIGOES !ST. … Key points: 1. Contract awarded for engineering and manufacturing development of electronics and communication equipment. 2. BAE Systems has a significant track record with the Department of Defense. 3. The contract duration of 1939 days suggests a long-term project. 4. The contract type is Cost Plus Fixed Fee, which can carry cost overrun risks. 5. The award was made under full and open competition. 6. The primary place of performance is St. Inigoes, Maryland.

Value Assessment

Rating: fair

The contract value of $117,874,825.85 for engineering services over approximately 5.3 years appears to be within a reasonable range for complex defense projects. However, without specific benchmarks for the type of electronics and communication equipment development, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can lead to higher costs than fixed-price contracts if not managed closely. The contractor, BAE Systems, is a major defense contractor with extensive experience, which may justify a certain cost level.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The fact that it was competed broadly suggests a healthy market for these types of engineering services. The specific number of bidders is not provided, but the open competition mechanism is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Taxpayers benefit from the competitive process, which aims to secure the best possible price and technical solution for the required engineering and development work.

Public Impact

The primary beneficiary is the U.S. Navy, specifically the Naval Air Warfare Center, which receives advanced electronics and communication equipment. The contract supports the development and manufacturing of critical defense technologies. The geographic impact is concentrated in St. Mary's County, Maryland, where the performance is located. This contract likely supports a specialized workforce in engineering, manufacturing, and related technical fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to incur costs without direct financial penalty, potentially leading to cost overruns if not rigorously overseen.
The long contract duration (1939 days) increases the risk of scope creep or evolving technological requirements that may not be fully captured in the initial award.
Lack of specific performance metrics or detailed breakdown of services within the provided data makes it difficult to assess efficiency and effectiveness.
The raw dollar amount is substantial, requiring robust oversight to ensure funds are used appropriately and effectively.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process that should yield a fair price.
The contractor, BAE Systems, is a large and experienced defense contractor with a proven track record.
The contract supports critical defense capabilities for the Naval Air Warfare Center.
The place of performance is within the United States, supporting domestic industry and workforce.

Sector Analysis

This contract falls within the Engineering Services sector, specifically related to the development and manufacturing of electronics and communication equipment for defense applications. The market for defense engineering services is substantial, driven by continuous technological advancement and the need for specialized military capabilities. Comparable spending benchmarks would typically involve other large-scale R&D and engineering development contracts awarded by the Department of Defense for similar complex systems.

Small Business Impact

The provided data indicates this contract was not set aside for small businesses (ss=false, sb=false). As a large-value contract awarded to a major defense contractor, it is unlikely to have significant direct subcontracting opportunities for small businesses unless specified within the contract's detailed terms, which are not available here. The focus is on a large prime contractor fulfilling a complex requirement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Naval Air Warfare Center. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are crucial to monitor costs and ensure compliance with the contract terms. The Department of Defense's Inspector General would also have jurisdiction to investigate any potential fraud, waste, or abuse related to this award. Transparency would be enhanced through regular reporting requirements from the contractor.

Related Government Programs

Naval Air Systems Command (NAVAIR) Contracts
Department of Defense Research, Development, Test, and Evaluation (RDTE)
Electronics and Communication Equipment Manufacturing
Defense Engineering Services Contracts
BAE Systems Defense Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires close monitoring of expenditures.
Long contract duration may present challenges in adapting to evolving technological requirements.
Specific performance metrics and deliverables are not detailed in the provided summary data.
Potential for cost overruns inherent in CPFF contracts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $117.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. 200408!000271!1700!A8102 !NAVAL AIR WARFARE CENTER, AIRCRA!N0042104C0069 !A!N! !N! ! !20040521!20050521!103933453!876861790!217304393!N!BAE SYSTEMS APPLIED TECHNOLOGI!1601 RESEARCH BLVD !ROCKVILLE !MD!20850!69525!037!24!ST. INIGOES !ST. MARY S !MARYLAND !+000001000000!N!N!000094894564!AC65!RDTE/ELECTRONICS & COMMUNICATION EQ-ENG/MANUF DEV !S1 !SERVICES !000 !* !541330!E! !3! ! ! ! ! !999

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 $117.9 million.

What is the period of performance?

Start: 2004-05-21. End: 2009-09-11.

What is the specific nature of the 'electronics & communication eq-eng/manuf dev' being developed under this contract?

The provided data abbreviates the work as 'RDTE/ELECTRONICS & COMMUNICATION EQ-ENG/MANUF DEV'. This indicates the contract is for Research, Development, Test, and Evaluation related to the engineering and manufacturing development of electronic and communication equipment. Without further details, the exact systems or technologies are not specified. However, given the Naval Air Warfare Center's mission, it likely pertains to advanced avionics, radar systems, communication suites, electronic warfare capabilities, or related components for naval aircraft and platforms. The scope suggests a focus on creating new or significantly improved systems rather than off-the-shelf procurement.

How does the Cost Plus Fixed Fee (CPFF) structure impact the risk and potential cost for this contract?

A Cost Plus Fixed Fee (CPFF) contract structure means the contractor (BAE Systems) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves significant uncertainty, as is common in R&D. For the government, the primary risk is that the final cost can exceed initial estimates, as the contractor is incentivized to complete the work but not necessarily to control costs beyond what is necessary to achieve the fixed fee. The fixed fee itself is negotiated upfront. For BAE Systems, the risk is lower regarding cost overruns, as they are guaranteed their fee, but they must still manage costs to remain profitable within that fee. Robust government oversight is critical to scrutinize allowable costs and ensure the project stays within reasonable budgetary expectations.

What is BAE Systems' track record with similar contracts within the Department of Defense?

BAE Systems is a major global defense contractor with a substantial and long-standing presence within the Department of Defense (DoD). They consistently receive numerous contracts across various branches and agencies, covering a wide range of defense systems, platforms, and services. Their portfolio includes work on naval systems, aerospace, electronic warfare, C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance), and munitions. Given their scale and experience, BAE Systems is well-positioned to handle complex R&D and manufacturing development contracts like this one. Historical data generally shows them as a capable, albeit large, contractor managing significant defense programs.

What does the contract duration of 1939 days imply about the project's complexity and scope?

A contract duration of 1939 days, which is approximately 5.3 years, suggests a project of considerable complexity and long-term development. This timeframe is typical for research, development, and manufacturing efforts that involve multiple phases, testing, integration, and potential iterations. It implies that the 'electronics & communication eq-eng/manuf dev' is not a simple or short-term task but rather a substantial undertaking requiring sustained effort over several years. Such durations often indicate the development of novel technologies or systems that require extensive engineering, prototyping, and validation processes before they can be fielded.

How does the '541330' NAICS code relate to the services provided under this contract?

The North American Industry Classification System (NAICS) code '541330' corresponds to 'Engineering Services'. This code encompasses establishments primarily engaged in providing architectural, engineering, and related design services. For this specific contract, it signifies that the core service procured from BAE Systems is engineering expertise. This includes activities such as design, development, analysis, testing, and potentially manufacturing support for the specified electronics and communication equipment. The code accurately reflects the nature of the work, which is centered on the application of engineering principles to create or improve defense technologies.

What are the potential implications of this contract for future defense spending in related areas?

This contract, focused on the development of advanced electronics and communication equipment, signals continued investment by the Navy in modernizing its technological capabilities. Successful development under this award could lead to follow-on production contracts, sustainment contracts, or further R&D efforts for next-generation systems. It also indicates a strategic focus on areas like electronic warfare, secure communications, and integrated avionics, which are critical for maintaining a technological edge. Spending in these areas is likely to remain robust as the DoD prioritizes advanced capabilities to counter evolving threats.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 1601 RESEARCH BLVD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline