DoD's $21M Engineering Services Contract Awarded to BAE Systems Faces Scrutiny Over Cost Controls

Contract Overview

Contract Amount: $21,048,350 ($21.0M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2018-08-20

End Date: 2021-08-19

Contract Duration: 1,095 days

Daily Burn Rate: $19.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LABOR: RDT&E, O&M, AND PROCUREMENT FUNDED.

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $21.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: LABOR: RDT&E, O&M, AND PROCUREMENT FUNDED. Key points: 1. Contract value of $21.05 million for RDT&E, O&M, and Procurement. 2. BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. is the sole awardee. 3. Full and open competition was utilized. 4. Risk assessment indicates potential concerns regarding cost-plus fixed fee structure.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed tightly. The awarded amount of $21.05 million needs to be benchmarked against similar engineering services contracts to assess value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the CPFF pricing structure may limit price discovery and incentivize cost escalation.

Taxpayer Impact: Taxpayer funds are utilized for RDT&E, O&M, and Procurement. The CPFF structure necessitates robust oversight to ensure cost-effectiveness and prevent unnecessary spending.

Public Impact

Defense spending on engineering services impacts national security capabilities. The use of CPFF contracts requires diligent oversight to protect taxpayer interests. Competition in defense contracting is crucial for achieving best value. Contract performance directly influences the effectiveness of military research, operations, and procurement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) pricing model
Potential for cost overruns without strict oversight
Limited visibility into BAE Systems' internal cost management

Positive Signals

Awarded under full and open competition
Contract supports critical RDT&E, O&M, and Procurement functions

Sector Analysis

This contract falls within the Engineering Services sector, which is vital for supporting government research, development, testing, and evaluation. Benchmarks for similar contracts are essential for evaluating cost efficiency.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as indicated by 'sb': false. Further analysis would be needed to determine if subcontracting opportunities were provided to small businesses.

Oversight & Accountability

The Cost Plus Fixed Fee (CPFF) structure necessitates strong government oversight to ensure costs are reasonable and fixed fees are justified. Regular audits and performance reviews are critical for accountability.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Cost Plus Fixed Fee (CPFF) pricing model
Potential for cost overruns
Limited transparency into contractor's cost management
Need for robust government oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. LABOR: RDT&E, O&M, AND PROCUREMENT FUNDED.

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 $21.0 million.

What is the period of performance?

Start: 2018-08-20. End: 2021-08-19.

What is the typical profit margin for CPFF contracts in the defense engineering sector, and how does BAE Systems' fixed fee compare?

Profit margins for CPFF contracts in defense engineering can vary, but typically range from 7-15%. A thorough review of BAE Systems' fixed fee, considering the contract's scope, complexity, and risk, is necessary to determine if it aligns with industry standards and represents fair value for the services rendered.

How effectively has the Department of the Navy managed cost growth on similar CPFF contracts awarded to BAE Systems?

Assessing the Department of the Navy's historical management of cost growth on similar CPFF contracts with BAE Systems is crucial. Analyzing past performance, including any incurred cost overruns, audit findings, or contract modifications related to cost increases, will provide insight into the effectiveness of oversight mechanisms and the potential risk of future cost escalation on this contract.

What specific performance metrics are being used to evaluate the success of the engineering services provided under this contract?

The effectiveness of the engineering services hinges on clearly defined performance metrics. These should include measurable outcomes related to RDT&E milestones, operational readiness improvements, and procurement efficiency. Without specific, quantifiable metrics, it is challenging to objectively assess whether the contract is delivering the intended value and achieving its objectives.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0042110R1063

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

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: $28,578,609

Exercised Options: $27,821,369

Current Obligation: $21,048,350

Actual Outlays: $225,856

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $217,397

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042113D0010

IDV Type: IDC

Timeline