DoD's $8M Engineering Services Contract with BAE Systems Shows Fair Value Amidst Limited Competition

Contract Overview

Contract Amount: $8,054,089 ($8.1M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2021-01-01

End Date: 2026-03-31

Contract Duration: 1,915 days

Daily Burn Rate: $4.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LABOR (PROC & O&M) MATCALS TASK ORDER

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $8.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: LABOR (PROC & O&M) MATCALS TASK ORDER Key points: 1. Contract value of $8.05 million for engineering services over approximately 5 years. 2. Awarded under full and open competition, indicating a broad search for qualified contractors. 3. The contract type is Cost Plus Fixed Fee (CPFF), which can incentivize cost control but requires careful oversight. 4. Performance period spans from January 2021 to March 2026, suggesting a long-term need for these services. 5. The contract is not set aside for small businesses, potentially limiting opportunities for smaller firms. 6. The primary service category is Engineering Services (NAICS 541330). 7. The contract is a Delivery Order under a larger IDIQ or similar vehicle, not a standalone award. 8. The base award amount is $4.2 million, with potential for growth through task orders.

Value Assessment

Rating: good

The contract's base award of $4.2 million and total potential of $8.05 million for engineering services over five years appears reasonable when benchmarked against similar long-term, complex engineering support contracts within the Department of Defense. The Cost Plus Fixed Fee (CPFF) pricing structure, while common for services requiring flexibility, necessitates diligent monitoring to ensure costs remain aligned with the fixed fee and overall value. Without specific performance metrics or detailed cost breakdowns, a definitive value-for-money assessment is challenging, but the competitive award process suggests a fair market price was likely achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning the solicitation was made available to all responsible sources. While the specific number of bidders is not provided, this approach generally fosters a competitive environment, encouraging multiple companies to submit proposals. This level of competition is expected to drive innovation and potentially lead to more favorable pricing for the government compared to sole-source or limited competition awards. The process aims to identify the best technical solution at a reasonable cost.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the pool of potential offerors, increasing the likelihood of securing the best value and competitive pricing. This broad approach helps prevent price inflation that can occur with less competitive contract types.

Public Impact

The Department of the Navy benefits from specialized engineering expertise to support its operational and developmental needs. Services delivered likely include design, analysis, testing, and technical support for naval systems and platforms. The geographic impact is primarily centered around the contractor's facilities and the Navy installations they support, likely within Maryland. Workforce implications include employment for engineers, technicians, and support staff at BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts require robust oversight to manage costs and prevent overruns, as the contractor is reimbursed for allowable costs plus a fixed fee.
The duration of the contract (nearly 5 years) necessitates ongoing performance monitoring to ensure continued value and alignment with evolving requirements.
Lack of specific small business set-aside may limit opportunities for smaller, specialized engineering firms to participate directly.

Positive Signals

Awarded under full and open competition, indicating a competitive process that likely yielded a fair price.
The contract is for essential engineering services, suggesting a critical need and potential for positive impact on naval capabilities.
BAE Systems is a large, established defense contractor with a significant track record, implying a lower risk of performance failure.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader aerospace and defense industry. This sector is characterized by high technical expertise, significant R&D investment, and long-term government contracts. The market size for defense engineering services is substantial, driven by the continuous need for modernization, maintenance, and development of complex military systems. Comparable spending benchmarks for similar engineering support contracts within the DoD often range from millions to tens of millions of dollars annually, depending on the scope and duration.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it indicate specific subcontracting goals for small businesses in the provided data. This means that prime opportunities were likely pursued by larger, established contractors. While BAE Systems may engage small businesses as subcontractors, the absence of a formal set-aside or explicit subcontracting plan means the direct impact on the small business ecosystem for this specific award is limited. Larger prime contractors often have established relationships with specific subcontractors, which may or may not include a broad range of small businesses.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee (CPFF) contract would typically involve the Department of the Navy's contracting officers and technical representatives. They are responsible for monitoring contractor performance, reviewing incurred costs, ensuring compliance with contract terms, and approving payments. Transparency is facilitated through contract reporting requirements and potential audits by agencies like the Defense Contract Audit Agency (DCAA). Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Engineering Services Contracts
Naval Systems Engineering Support
Cost Plus Fixed Fee Contracts
Full and Open Competition Awards
BAE Systems Defense Contracts

Risk Flags

Cost Plus Fixed Fee (CPFF) requires diligent cost oversight.
Contract duration necessitates ongoing performance monitoring.
Limited visibility into specific performance metrics.
Potential for cost growth beyond base award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. LABOR (PROC & O&M) MATCALS TASK ORDER

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 $8.1 million.

What is the period of performance?

Start: 2021-01-01. End: 2026-03-31.

What is BAE Systems' track record with the Department of Defense, particularly on similar engineering services contracts?

BAE Systems Technology Solutions & Services Inc. has a substantial and long-standing track record with the Department of Defense, holding numerous contracts across various service and product categories. They are a major defense contractor known for providing a wide range of engineering, technical, IT, and support services. Historical data indicates BAE Systems frequently wins large-value contracts, often through competitive bidding processes. Their performance on previous contracts, while generally considered satisfactory given their continued awards, would be detailed in past performance evaluations used during the source selection process for new awards. Specific performance metrics for this particular contract are not publicly detailed but are managed internally by the contracting agency.

How does the $8.05 million total value compare to other engineering services contracts awarded by the Navy in recent years?

The total potential value of $8.05 million for this engineering services contract is moderate within the context of large federal procurements. The Department of the Navy awards numerous engineering services contracts annually, with values ranging from hundreds of thousands to hundreds of millions of dollars. Contracts of this size are typical for specific project support, specialized technical assistance, or sustainment engineering over a multi-year period. Larger, more comprehensive engineering support contracts, especially those involving major platform development or sustainment, would significantly exceed this value. Benchmarking against similar scope and duration contracts suggests this award is within a common range for targeted engineering support.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract structure for engineering services?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract structure involve potential cost overruns and the contractor's incentive to control costs. In a CPFF arrangement, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fixed fee theoretically incentivizes efficiency, the contractor may have less motivation to aggressively control costs compared to fixed-price contracts, as their profit margin is guaranteed regardless of cost efficiency beyond a certain point. For the government, the risk lies in managing and auditing the contractor's incurred costs to ensure they are reasonable, allocable, and allowable. Robust oversight, detailed cost reporting, and effective negotiation are crucial to mitigate these risks and ensure fair value.

What is the typical duration for engineering services contracts of this nature within the Department of Defense?

Engineering services contracts within the Department of Defense often have durations ranging from one to five years, with options for extension. Contracts awarded as Delivery Orders under larger Indefinite Delivery/Indefinite Quantity (IDIQ) vehicles, like this one appears to be, can have varying performance periods for individual orders. A duration of approximately five years, as seen here (January 2021 to March 2026), is common for requirements that involve sustained support, research and development phases, or long-term system sustainment. Shorter-term contracts might focus on specific project milestones or studies, while longer durations are typical for ongoing operational or developmental needs.

How does the 'full and open competition' award status impact the overall cost-effectiveness for taxpayers?

Awarding contracts under 'full and open competition' generally enhances cost-effectiveness for taxpayers. This method maximizes the number of potential bidders by allowing any interested and qualified source to submit a proposal. A larger pool of bidders typically leads to more competitive pricing, as companies vie to win the contract. It also encourages innovation and allows the government to select the offer that provides the best overall value, considering both technical merit and price. While the administrative effort to manage a broad competition can be higher initially, the long-term benefits of competitive pricing and superior technical solutions usually outweigh these costs, resulting in better value for taxpayer funds.

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: TWO STEP

Solicitation ID: N0042119R0109

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: $14,740,009

Exercised Options: $14,740,009

Current Obligation: $8,054,089

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $52,550

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042121D0002

IDV Type: IDC

Timeline