DoD's $49.3M AEGIS Destroyer Radio Communication Services Contract Awarded to BAE Systems

Contract Overview

Contract Amount: $49,334,967 ($49.3M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2013-12-23

End Date: 2020-10-31

Contract Duration: 2,504 days

Daily Burn Rate: $19.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING AND TECHNICAL SERVICES IN SUPPORT OF AEGIS DESTROYER RADIO COMMUNICATION SYSTEMS.

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $49.3 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: ENGINEERING AND TECHNICAL SERVICES IN SUPPORT OF AEGIS DESTROYER RADIO COMMUNICATION SYSTEMS. Key points: 1. Contract awarded to BAE Systems for critical AEGIS destroyer communication systems. 2. Significant spending on specialized engineering and technical services. 3. Lack of competition raises concerns about potential overpricing and value. 4. Services are essential for naval defense capabilities.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes a direct pricing assessment difficult. Without benchmarks from similar sole-source contracts, it's hard to determine if the $49.3M represents fair value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there was no competitive pressure to drive down prices.

Taxpayer Impact: The absence of competition for a contract of this magnitude means taxpayers may have paid a premium for these essential engineering services.

Public Impact

Ensures operational readiness of AEGIS destroyers' vital communication systems. Supports advanced naval warfare capabilities through specialized technical expertise. Potential for taxpayer savings if future contracts are competed. Highlights reliance on specific contractors for specialized defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus contract type
Long contract duration

Positive Signals

Essential for national defense
Supports critical naval infrastructure

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting complex defense systems. Spending benchmarks for sole-source, cost-plus contracts in this niche can vary widely, making direct comparisons challenging without more data.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as BAE Systems is a large corporation. There is no indication of subcontracting opportunities for small businesses within this award.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny regarding the justification for not competing the contract. Oversight should focus on ensuring the fixed fee was reasonable and that costs were appropriately managed.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competition
Cost-plus contract type
Potential for cost overruns
Limited transparency in pricing
Long contract duration (2013-2020)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.3 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. ENGINEERING AND TECHNICAL SERVICES IN SUPPORT OF AEGIS DESTROYER RADIO COMMUNICATION SYSTEMS.

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 $49.3 million.

What is the period of performance?

Start: 2013-12-23. End: 2020-10-31.

What was the justification for awarding this contract on a sole-source basis instead of seeking competitive bids?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. For this contract, the specific rationale would likely relate to BAE Systems' specialized knowledge and existing integration with the AEGIS system's radio communication components, potentially deemed critical and time-sensitive.

How does the cost-plus-fixed-fee structure impact the government's ability to control costs on this contract?

The cost-plus-fixed-fee (CPFF) structure allows the contractor to recover all allowable costs plus a predetermined fixed fee. While the fee provides some incentive for efficiency, the government bears the risk of cost overruns. This structure can lead to higher overall costs compared to fixed-price contracts, especially without robust oversight and clear performance metrics.

What is the long-term strategic implication of relying on a single provider for such critical communication systems?

Long-term reliance on a single provider can create vendor lock-in, reduce bargaining power, and potentially stifle innovation. It also increases vulnerability if the provider faces financial difficulties or strategic shifts. Diversifying suppliers or developing in-house capabilities, where feasible, could mitigate these risks and ensure greater system resilience and cost-effectiveness over time.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0042113R0099

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 520 GAITHER ROAD, 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: $51,360,666

Exercised Options: $51,360,666

Current Obligation: $49,334,967

Actual Outlays: $170,392

Subaward Activity

Number of Subawards: 55

Total Subaward Amount: $9,601,167

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline