DoD's $49.8M BAE Systems contract for IDS integration support labor lacked competition, raising value concerns

Contract Overview

Contract Amount: $49,773,592 ($49.8M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2014-07-01

End Date: 2016-06-30

Contract Duration: 730 days

Daily Burn Rate: $68.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IDS INTEGRATION SUPPORT LABOR

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $49.8 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: IDS INTEGRATION SUPPORT LABOR Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Performance occurred over two years, suggesting a need for ongoing support rather than a one-time project. 3. The cost-plus-fixed-fee structure can incentivize cost escalation, requiring robust oversight. 4. The engineering services sector is competitive, making the lack of competition for this contract notable. 5. The contract's value is significant within the context of specialized engineering support services. 6. The absence of small business involvement raises questions about broader economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of 'IDS integration support labor.' However, the cost-plus-fixed-fee (CPFF) contract type, while common for complex R&D or services where costs are uncertain, can lead to higher overall expenditures compared to fixed-price contracts if not managed tightly. Without competitive bids, it's difficult to ascertain if BAE Systems' pricing was at fair market value. The contract's duration of two years also suggests a substantial, ongoing need for these services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' method, indicating a sole-source procurement. This means that BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. was the only vendor considered for this award. The lack of competition means that the Department of the Navy did not solicit offers from multiple potential suppliers. This approach is typically justified when only one source can provide the required goods or services, but it bypasses the price discovery mechanisms inherent in competitive bidding.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure to lower prices. Without a bidding process, there is less assurance that the government secured the best possible value for the funds expended.

Public Impact

The Department of Defense, specifically the Department of the Navy, benefits from specialized engineering services for its Integrated Defense Systems (IDS). The contract supported the integration of complex defense systems, crucial for national security operations. The primary geographic impact is likely within the operational areas and support facilities of the U.S. Navy. The contract supported a workforce of engineers and technical specialists, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize cost growth if not rigorously managed.
Lack of transparency in the procurement process due to sole-source award.
No small business participation noted, potentially missing opportunities for economic inclusion.

Positive Signals

BAE Systems is a known entity in defense contracting, suggesting a level of established capability.
The contract addressed a specific need for integration support within complex defense systems.
The fixed fee component of the CPFF contract provides some cost predictability for the contractor's effort.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), which is a significant part of the broader professional, scientific, and technical services industry supporting the defense sector. The market for defense engineering services is substantial, with numerous large and specialized firms competing for government contracts. However, specific integration support for complex systems like those within the Department of Defense often involves unique requirements that can sometimes lead to sole-source awards if only one contractor possesses the requisite expertise or security clearances. Comparable spending benchmarks are difficult without more specific service details, but multi-million dollar contracts for specialized engineering are common in defense.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting plans involving small businesses. The award to a large prime contractor like BAE Systems suggests that the primary focus was on the prime's capabilities. This represents a missed opportunity to engage the small business defense industrial base, which plays a crucial role in innovation and specialized support. Without specific subcontracting requirements, the direct economic benefit to small businesses from this particular contract is likely minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a sole-source award, scrutiny might be heightened to ensure fair pricing and adequate performance. The cost-plus-fixed-fee structure necessitates close monitoring of costs incurred by the contractor to ensure they align with the fixed fee and the overall objective. Transparency is limited due to the non-competitive nature, but contract performance reports and audits would be key accountability measures. Inspector General involvement would be possible if specific allegations of fraud, waste, or abuse arose.

Related Government Programs

Department of Defense IT Services
Defense Engineering Support Contracts
Naval Systems Integration
Aerospace and Defense Engineering

Risk Flags

Sole-source award
Lack of competition
Cost-plus-fixed-fee contract type
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.8 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. IDS INTEGRATION SUPPORT LABOR

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 $49.8 million.

What is the period of performance?

Start: 2014-07-01. End: 2016-06-30.

What specific 'IDS integration support labor' was provided under this contract?

The contract details 'IDS INTEGRATION SUPPORT LABOR,' which broadly refers to the technical and engineering services required to integrate various components and systems within the Department of Defense's Integrated Defense Systems (IDS). This could encompass a wide range of activities, including software integration, hardware compatibility testing, system configuration, network integration, and ensuring interoperability between different defense platforms and subsystems. The specific nature of the integration would depend on the particular IDS programs being supported by the Department of the Navy at the time. Without further documentation, the precise technical scope remains generalized.

Can the value of this contract be benchmarked against similar sole-source engineering contracts?

Benchmarking the value of this $49.8 million sole-source contract is challenging due to the lack of competitive data. Sole-source awards inherently bypass the market forces that establish competitive pricing. To assess value, one would need to compare the labor rates, overhead, and fee structure against other sole-source contracts for similar engineering services within the Department of Defense or other federal agencies, assuming comparable scope and complexity. Alternatively, an independent government cost estimate or a review of historical pricing for similar services provided by the same contractor could offer some insight, but the absence of competition remains a significant limitation in definitively assessing value for money.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated prices as the contractor faces no direct market incentive to offer the lowest possible cost. Secondly, the CPFF structure, while providing flexibility for uncertain cost environments, can incentivize cost overruns. The contractor is reimbursed for allowable costs plus a fixed fee, meaning that increased costs do not necessarily reduce the contractor's profit margin (which is based on the fixed fee). This necessitates robust government oversight to scrutinize costs and ensure efficiency, which can be resource-intensive.

What was the historical spending pattern for IDS integration support labor prior to or after this contract?

Analyzing historical spending patterns for 'IDS INTEGRATION SUPPORT LABOR' requires access to broader contract databases and specific program information. This particular contract (awarded July 1, 2014, ending June 30, 2016) represents a specific period of spending. To understand historical trends, one would need to examine prior contracts for similar services awarded to BAE Systems or other contractors by the Department of the Navy or DoD for IDS support, as well as subsequent contracts. Without this broader context, it's difficult to determine if this $49.8 million award was an anomaly, a consistent level of investment, or part of a growing/shrinking expenditure trend for these services.

What is BAE Systems' track record with the Department of Defense for similar services?

BAE Systems is a major defense contractor with a long-standing and extensive track record of providing a wide array of services and products to the Department of Defense (DoD). This includes complex engineering, systems integration, technology solutions, and support services across various military branches. Their history with the DoD is characterized by numerous large-scale contracts, some of which have faced scrutiny regarding cost and performance, as is common for large defense firms. For 'IDS integration support labor,' BAE Systems likely possesses significant experience given their broad capabilities in defense systems. A detailed review of their past performance evaluations and contract history would provide a more granular understanding of their specific track record for this type of work.

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: N0042114R0010

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: $59,261,314

Exercised Options: $59,261,314

Current Obligation: $49,773,592

Subaward Activity

Number of Subawards: 27

Total Subaward Amount: $5,718,785

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline