DoD's $54M Engineering Services Contract Awarded to BAE Systems Shows Fair Value Amidst Limited Competition

Contract Overview

Contract Amount: $54,096,622 ($54.1M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2007-02-01

End Date: 2012-03-31

Contract Duration: 1,885 days

Daily Burn Rate: $28.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ATC&LS ENGINEERING SERVICES&PRODUCTS

Place of Performance

Location: SAINT INIGOES, SAINT MARYS County, MARYLAND, 20684

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $54.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: ATC&LS ENGINEERING SERVICES&PRODUCTS Key points: 1. The contract demonstrates a reasonable value for engineering services, aligning with industry benchmarks. 2. Competition was full and open, suggesting a competitive pricing environment. 3. The contract type (Cost Plus Fixed Fee) introduces some cost-plus risk, but the fixed fee component provides a degree of cost certainty. 4. Performance occurred over a significant duration, allowing for sustained support. 5. This contract falls within the broader 'Engineering Services' sector, a critical area for defense procurement. 6. The award to a large, established contractor like BAE Systems is typical for complex defense needs.

Value Assessment

Rating: good

The total award amount of $54.1 million for engineering services over approximately five years appears reasonable when benchmarked against similar large-scale defense engineering contracts. While specific per-unit cost data is not provided, the fixed fee component within the Cost Plus Fixed Fee structure suggests that the contractor's profit margin was capped, contributing to a more predictable overall cost. The absence of significant cost overruns or contract modifications, based on available data, further supports the assessment of good value for the services rendered.

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 that the Department of the Navy sought the best possible technical solution and price. The presence of multiple bidders typically drives down costs and encourages innovation, leading to a more favorable outcome for the government.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and access to a wider range of innovative solutions, ensuring that defense funds are used efficiently.

Public Impact

The primary beneficiaries are the Department of the Navy and its various programs requiring specialized engineering expertise. Services delivered likely included design, development, testing, and technical support for complex defense systems. The geographic impact is primarily centered around BAE Systems' facilities and potentially Navy installations where the engineering support was applied. Workforce implications include employment for engineers, technicians, and support staff within BAE Systems and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts carry inherent risk of cost overruns if not managed diligently.
The long duration of the contract could lead to scope creep if not properly defined and monitored.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
The fixed fee component provides a degree of cost certainty for the government.
The contractor, BAE Systems, is a well-established entity with a track record in defense contracting.

Sector Analysis

The 'Engineering Services' sector (NAICS 541330) is a vital component of the defense industrial base, providing essential technical expertise for the design, development, and sustainment of military platforms and systems. Spending in this sector is substantial, reflecting the complexity and technological demands of modern defense. This contract represents a portion of that broader spending, focusing on specific engineering needs for the Navy.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses, nor is there information suggesting significant subcontracting opportunities for small businesses. The award to a large prime contractor like BAE Systems often means that the bulk of the work is performed in-house or through established large-subcontractor relationships, potentially limiting direct opportunities for smaller firms in this specific award.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and their representatives within the Department of the Navy. Accountability measures would be embedded in the contract terms, including performance standards, reporting requirements, and payment schedules tied to milestones. Transparency is generally maintained through contract databases, though specific performance details may be sensitive.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Department of Defense Engineering Support Services
BAE Systems Defense Contracts
Cost Plus Fixed Fee Contracts

Risk Flags

Cost Plus Fixed Fee contract type carries inherent cost risk.
Long contract duration may increase risk of scope creep if not managed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. ATC&LS ENGINEERING SERVICES&PRODUCTS

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 $54.1 million.

What is the period of performance?

Start: 2007-02-01. End: 2012-03-31.

What was the specific nature of the engineering services provided under this contract?

While the contract falls under the broad category of 'Engineering Services' (NAICS 541330), the specific nature of the services provided under this $54.1 million award to BAE Systems is not detailed in the provided data. Typically, such contracts for the Department of the Navy could encompass a wide range of activities including, but not limited to, systems engineering, design and development of new platforms or upgrades, technical analysis, testing and evaluation, logistics support engineering, and program management support for naval systems. The duration of the contract (over 5 years) suggests a sustained need for these services, likely supporting major naval programs or platforms.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for similar services?

The Cost Plus Fixed Fee (CPFF) structure is common in defense contracting, especially for research and development or services where the scope is not fully defined at the outset. It allows the contractor to recover all allowable costs incurred, plus a predetermined fixed fee representing profit. This differs from fixed-price contracts, where the price is set regardless of costs, and cost-reimbursement contracts without a fixed fee. CPFF offers some cost certainty to the government due to the fixed fee, unlike pure cost-plus contracts, but still carries the risk of cost overruns if actual costs exceed estimates significantly. For engineering services, it balances the need for flexibility with some level of cost control compared to other cost-reimbursement types.

What is BAE Systems' track record with the Department of Defense, particularly for engineering services?

BAE Systems is a major global defense contractor with a substantial and long-standing track record of performing a wide array of services and providing systems for the Department of Defense (DoD). They are consistently among the top contractors receiving significant federal funding. Their portfolio includes work across all branches of the military, encompassing areas such as naval systems, combat vehicles, aerospace, electronics, and cyber solutions. For engineering services specifically, BAE Systems has a proven history of delivering complex technical solutions, system integration, and support for advanced military platforms, making them a frequent choice for large-scale, critical defense contracts like the one analyzed.

Were there any significant contract modifications or cost overruns associated with this contract?

The provided summary data does not indicate any significant contract modifications or cost overruns for this specific contract. The total award amount is listed as $54,096,622.40, and the contract duration was 1885 days (approximately 5.16 years). The absence of reported modifications or overruns in summary data suggests that the contract was likely executed within its original scope and budget, or that any adjustments were minor and did not substantially alter the overall value or timeline. Further detailed contract history would be needed for a definitive assessment.

How does the spending on engineering services by the Department of the Navy compare to other agencies or branches?

The Department of the Navy consistently represents a significant portion of the Department of Defense's overall budget, and a substantial amount of this is allocated to engineering services due to the complexity of naval platforms and systems. While specific comparative figures are not in the provided data, the Navy's spending on engineering services is generally comparable to, and sometimes exceeds, that of the Army and Air Force, depending on the current acquisition priorities and major program needs. All branches rely heavily on engineering services for R&D, modernization, and sustainment, making it a critical spending category across the entire DoD.

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

Solicitation ID: N0042106R0020

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

Financial Breakdown

Contract Ceiling: $59,675,352

Exercised Options: $59,675,352

Current Obligation: $54,096,622

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline