DoD's $36.9M BAE Systems contract for engineering support shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $36,913,947 ($36.9M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2019-09-12

End Date: 2024-10-31

Contract Duration: 1,876 days

Daily Burn Rate: $19.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BASE YEAR - FOSOV ENGINEERING SUPPORT

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $36.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: BASE YEAR - FOSOV ENGINEERING SUPPORT Key points: 1. Contract value appears reasonable given the scope of engineering services. 2. Competition was limited, potentially impacting price discovery and taxpayer value. 3. Performance risks are moderate, typical for complex engineering support contracts. 4. This contract supports critical naval engineering functions. 5. BAE Systems is a major defense contractor with a significant presence in this sector. 6. The contract's duration extends over several years, indicating long-term needs.

Value Assessment

Rating: fair

The contract's base year value of approximately $36.9 million for engineering services appears to be within a reasonable range when compared to similar large-scale engineering support contracts awarded by the Department of Defense. However, without detailed breakdowns of labor categories, hours, and specific deliverables, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type allows for cost reimbursement plus a fixed fee, which can lead to cost overruns if not managed tightly. Benchmarking against industry standards for similar engineering support services would provide a clearer picture of whether the pricing is competitive.

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 were likely solicited. However, the data provided does not specify the number of bids received. A high level of competition typically drives down prices and encourages innovation. If only a few bids were received, it could suggest a specialized market or potential barriers to entry for other qualified firms. The specific details of the bidding process and the number of competitors are crucial for a thorough assessment of price discovery.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it fosters a competitive environment that can lead to better pricing and service quality. However, the ultimate benefit depends on the actual number of responsive bids received and the effectiveness of the evaluation process.

Public Impact

The Department of the Navy benefits from specialized engineering expertise to support its operations and maintenance. Services delivered include engineering support, crucial for naval readiness and technological advancement. The geographic impact is likely concentrated around naval facilities and bases where BAE Systems personnel are deployed. Workforce implications include the employment of skilled engineers and technical staff by BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Fixed Fee contracts if not rigorously monitored.
Limited competition, even if full and open, could result in less than optimal pricing.
Dependence on a single contractor for critical engineering functions may pose a risk if performance falters.

Positive Signals

Award to a large, established defense contractor like BAE Systems suggests a high likelihood of meeting technical requirements.
Long contract duration indicates a stable, ongoing need for these services, suggesting program maturity.
Engineering support is vital for maintaining complex naval systems, contributing to national security.

Sector Analysis

The engineering services sector within the defense industry is highly specialized and competitive, with major players like BAE Systems Technology Solutions & Services Inc. providing critical support to government agencies. This contract falls within the broader professional, scientific, and technical services market, which is a significant component of federal spending. Comparable spending benchmarks for engineering support services can vary widely based on the complexity of the systems supported, the level of security clearance required, and the specific technical expertise needed. The market size for defense engineering services is substantial, driven by the continuous need for modernization, maintenance, and development of military platforms and systems.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. Furthermore, the prime contractor, BAE Systems, is a large business. While large prime contracts can sometimes include subcontracting opportunities for small businesses, there is no explicit information here to suggest a focus on small business participation. The absence of a set-aside or specific subcontracting goals means that the direct impact on the small business ecosystem for this particular award is likely minimal, unless BAE Systems voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance metrics, reporting requirements, and payment schedules tied to milestones. Transparency is facilitated through contract databases like FPDS, where basic award information is publicly available. The Inspector General for the Department of Defense may conduct audits or investigations into contract performance and financial management if specific concerns arise.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Engineering Services
Defense Engineering and Technical Support Services
Aerospace and Defense Engineering Services
Professional, Scientific, and Technical Services

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Limited number of bidders (potentially) could impact price competitiveness.
Need for detailed performance metrics to ensure value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. BASE YEAR - FOSOV ENGINEERING SUPPORT

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 $36.9 million.

What is the period of performance?

Start: 2019-09-12. End: 2024-10-31.

What is the historical spending pattern for engineering support services by the Department of the Navy with BAE Systems?

Analyzing historical spending patterns for engineering support services between the Department of the Navy and BAE Systems would provide crucial context for the current $36.9 million award. This involves examining past contract values, durations, and the nature of services rendered. For instance, if previous contracts of similar scope were awarded at significantly lower or higher price points, it could indicate trends in market pricing or changes in service requirements. Consistent, long-term awards suggest a strong working relationship and proven capability, but also necessitate scrutiny to ensure continued value and prevent complacency. Understanding the historical relationship helps in assessing whether the current award represents a fair market price and if there are opportunities for cost savings through competitive re-solicitation or negotiation.

How does the Cost Plus Fixed Fee (CPFF) contract type influence the risk profile and potential for cost overruns compared to other contract types?

The Cost Plus Fixed Fee (CPFF) contract type, used here, reimburses the contractor for allowable costs incurred plus a predetermined fixed fee representing profit. This structure shifts a significant portion of the cost risk to the government, as the contractor is incentivized to incur costs to perform the work, and the government pays for them. While it can be suitable for research and development or complex services where the scope is not well-defined, it carries a higher risk of cost overruns compared to fixed-price contracts. Effective oversight, detailed cost tracking, and robust negotiation of the fixed fee are critical to mitigate these risks. The government must ensure that all costs claimed by the contractor are reasonable, allocable, and necessary for the contract's performance.

What specific engineering disciplines are covered under this contract, and how do they align with current naval modernization priorities?

The provided data indicates 'FOSOV ENGINEERING SUPPORT' and the North American Industry Classification System (NAICS) code 541330 for Engineering Services. However, it does not specify the exact engineering disciplines involved. FOSOV likely refers to Fleet Operational Support or a similar naval designation. To assess alignment with naval modernization, a detailed breakdown of the engineering services is needed. This could include areas such as naval architecture, marine engineering, electrical engineering, systems engineering, cybersecurity engineering, or specialized software development. Understanding these specific disciplines would allow for an evaluation of how they contribute to critical naval modernization efforts, such as upgrading combat systems, enhancing platform survivability, improving operational efficiency, or integrating new technologies.

What is the track record of BAE Systems Technology Solutions & Services Inc. in delivering similar engineering support contracts for the Department of the Navy?

BAE Systems Technology Solutions & Services Inc. is a major defense contractor with a substantial history of performing engineering and technical support services for various branches of the U.S. military, including the Department of the Navy. Their track record typically involves supporting complex platforms, systems integration, and lifecycle management. Assessing their specific performance on similar contracts would involve reviewing past performance evaluations, any documented instances of outstanding performance or deficiencies, and their ability to meet cost, schedule, and technical requirements. Generally, large contractors like BAE Systems have established processes and experienced personnel, but individual contract performance can vary. A review of their past performance ratings and any contract disputes or awards would provide a clearer picture of their reliability for this specific FOSOV engineering support requirement.

Given the 'full and open competition' designation, how many bids were actually received, and what does this imply about market concentration for these specialized services?

While the contract was awarded under 'full and open competition,' the number of bids received is a critical metric not explicitly provided in the summary data. If a large number of bids were submitted (e.g., five or more), it strongly suggests robust competition, likely leading to competitive pricing and a wide range of technical solutions. Conversely, if only one or two bids were received, it could indicate a highly specialized market with limited qualified providers, potential barriers to entry, or that the solicitation was structured in a way that favored specific capabilities. Market concentration in specialized engineering services can sometimes lead to higher prices and reduced innovation over time, making it important for the government to actively encourage broader competition where feasible.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0042117R0003

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

Address: 520 GAITHER RD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $37,057,873

Exercised Options: $37,057,873

Current Obligation: $36,913,947

Actual Outlays: $11,241,864

Subaward Activity

Number of Subawards: 32

Total Subaward Amount: $7,285,730

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042119D0055

IDV Type: IDC

Timeline