DoD's $13.8M Navy contract for engineering services awarded to BAE Systems shows fair value with potential for cost efficiencies

Contract Overview

Contract Amount: $13,855,178 ($13.9M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2020-08-01

End Date: 2024-07-31

Contract Duration: 1,460 days

Daily Burn Rate: $9.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ESTABLISH TASK ORDER AND INCREMENTALLY FUND CLINS 0001 1001

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $13.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: ESTABLISH TASK ORDER AND INCREMENTALLY FUND CLINS 0001 1001 Key points: 1. The contract's cost-plus-fixed-fee structure allows for flexibility but requires diligent oversight to manage expenses. 2. Competition was robust, suggesting a competitive market for these specialized engineering services. 3. Performance is tracked against established milestones, with a focus on timely delivery of engineering solutions. 4. The contract duration of 4 years indicates a significant, long-term need for these services. 5. Geographic concentration in Maryland suggests a focus on specific naval facilities or operations. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

The contract's total value of $13.8 million over four years averages to approximately $3.45 million annually. While specific benchmarks for this exact type of engineering service are difficult to pinpoint without more granular data, the cost-plus-fixed-fee (CPFF) pricing structure is common for complex projects where scope may evolve. The fixed fee component provides a degree of cost control for the government. Benchmarking against similar large-scale engineering support contracts for naval operations would be necessary for a definitive value assessment, but the pricing appears within a reasonable range given the duration and scope.

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 and evaluated. The specific number of bids received is not provided, but the 'full and open' designation suggests a healthy competitive environment. This level of competition generally drives down prices and encourages innovation as contractors vie for the award. The government's ability to select from a broad pool of qualified vendors is a positive outcome of this procurement method.

Taxpayer Impact: Full and open competition ensures that taxpayer dollars are used efficiently by fostering a marketplace where contractors must offer competitive pricing and strong value propositions to win. This process helps prevent overpayment and encourages the government to secure the best possible services at the most reasonable cost.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational readiness, receiving critical engineering support. Services delivered include essential engineering expertise to support naval programs and infrastructure. The geographic impact is concentrated in Maryland, likely supporting key naval installations or research facilities in the region. Workforce implications include the employment of skilled engineers and technical personnel by BAE Systems and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Fixed Fee contracts if not closely monitored.
Lack of specific small business participation targets may limit opportunities for smaller firms in the supply chain.
Dependence on a single large contractor for critical engineering services could pose a risk if performance falters.

Positive Signals

Award to an established contractor with a significant presence in defense technology.
Full and open competition suggests a robust selection process and potential for competitive pricing.
Long-term contract duration provides stability and continuity for essential engineering support.

Sector Analysis

The engineering services sector within the defense industry is highly specialized, supporting complex military platforms and infrastructure. This contract falls within the broader professional, scientific, and technical services category, which is a significant component of federal spending. The market is characterized by a mix of large prime contractors like BAE Systems and numerous niche subcontractors. Spending in this area is driven by the need for advanced technical expertise in areas such as systems engineering, design, integration, and lifecycle support for defense assets. Comparable spending benchmarks would typically be found within specific naval modernization or platform support categories.

Small Business Impact

This contract does not appear to have a specific small business set-aside designation. While BAE Systems is a large prime contractor, the absence of explicit set-asides means that opportunities for small businesses would primarily arise through subcontracting. The government's contracting goals often encourage prime contractors to utilize small businesses, but the extent of this contract's impact on the small business ecosystem depends on BAE Systems' subcontracting plan and execution. Further analysis of subcontracting awards would be needed to fully assess the impact.

Oversight & Accountability

Oversight for this contract is likely managed by the Department of the Navy's contracting officers and program managers. Performance will be monitored against the terms of the contract, including delivery schedules and technical requirements. The Cost Plus Fixed Fee structure necessitates close financial oversight to ensure costs remain reasonable and the fixed fee is justified. Transparency is typically maintained through contract reporting mechanisms, though detailed public access to performance metrics may be limited. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Engineering Services
Department of Defense Research and Development Contracts
Defense Engineering and Technical Support Services
BAE Systems Defense Contracts

Risk Flags

Cost Overrun Risk (CPFF)
Limited Small Business Participation Potential
Contractor Performance Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.9 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. ESTABLISH TASK ORDER AND INCREMENTALLY FUND CLINS 0001 1001

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 $13.9 million.

What is the period of performance?

Start: 2020-08-01. End: 2024-07-31.

What is BAE Systems' track record with similar Department of the Navy engineering contracts?

BAE Systems Technology Solutions & Services Inc. has a substantial history of performing engineering and technical support services for the Department of the Navy and other Department of Defense agencies. Their portfolio often includes complex system design, integration, testing, and lifecycle support for various naval platforms and programs. While specific performance metrics for past contracts are not detailed here, their continued selection for significant contracts suggests a generally satisfactory performance history. However, a deeper dive into past performance reviews, any contract disputes, or awards/penalties associated with previous Navy contracts would provide a more comprehensive understanding of their reliability and effectiveness in delivering similar services.

How does the average annual cost of this contract compare to similar engineering support contracts for naval operations?

The average annual cost of this contract is approximately $3.45 million ($13.8M / 4 years). Benchmarking this figure against similar engineering support contracts for naval operations requires access to detailed contract databases and analysis of contracts with comparable scope, duration, and complexity. Factors such as the specific engineering disciplines required (e.g., naval architecture, systems engineering, cybersecurity engineering), the level of security clearance needed, and the geographic location of service delivery can significantly influence pricing. Without direct comparable data, it's challenging to definitively state if this represents a high, low, or average cost. However, for specialized, long-term engineering support for a major defense branch, this annual figure appears within a plausible range, assuming the scope of work is substantial.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this engineering service?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to BAE Systems, is the potential for cost overruns. While the fixed fee provides the contractor with a defined profit margin, the 'cost plus' portion means the government reimburses the contractor for allowable costs incurred. If costs escalate beyond initial estimates due to unforeseen complexities, scope creep, or inefficient performance, the total contract value can increase significantly. This necessitates robust government oversight to scrutinize all claimed costs, ensure they are reasonable and allocable to the contract, and prevent unnecessary expenditures. The risk for the government is paying more than anticipated, while the contractor's risk is limited to ensuring their costs don't exceed what allows for their fixed fee profit.

What is the expected effectiveness of the engineering services provided under this contract in supporting Navy readiness?

The effectiveness of the engineering services provided under this contract is expected to be high, given the nature of the work and the selection of BAE Systems, a major defense contractor. These services are crucial for maintaining, upgrading, and developing naval systems and infrastructure, directly contributing to operational readiness. The contract's four-year duration suggests a sustained need for these capabilities, implying they are integral to ongoing Navy operations or modernization efforts. The effectiveness will ultimately be measured by the successful completion of engineering tasks, the quality of technical solutions provided, and the extent to which these services enable the Navy to meet its mission objectives. Performance metrics within the contract, if publicly available, would offer more specific insights into expected outcomes.

How does historical spending on engineering services by the Department of the Navy compare to this contract's value?

The Department of the Navy consistently spends billions of dollars annually on a wide array of engineering and technical services, encompassing everything from ship design and maintenance to advanced weapons systems development and IT infrastructure support. This $13.8 million contract, while substantial for a single task order, represents a relatively small fraction of the Navy's overall engineering services budget. Historical spending patterns show a significant and ongoing investment in these capabilities to maintain technological superiority and operational readiness. The value of this specific contract is consistent with the type of specialized, long-term support typically procured by the Navy for critical programs, fitting within the broader trend of substantial federal investment in defense engineering.

What are the implications of awarding this contract to BAE Systems regarding market concentration in defense engineering services?

Awarding this contract to BAE Systems, a large and established defense contractor, contributes to the existing market concentration within the defense engineering services sector. Large primes like BAE Systems often possess the scale, resources, and security clearances necessary to compete for and execute major government contracts. While this ensures capability, it can also limit opportunities for smaller, more specialized firms to enter the market or grow. The full and open competition aspect helps mitigate this by allowing any qualified entity to bid, but the reality is that large incumbents often have an advantage. This trend underscores the importance of government initiatives aimed at fostering innovation and ensuring a diverse supplier base, including robust subcontracting opportunities for small and medium-sized businesses.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0042115R0002

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: $14,235,048

Exercised Options: $14,235,048

Current Obligation: $13,855,178

Actual Outlays: $143,006

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $658,985

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042119D0047

IDV Type: IDC

Timeline