DoD's $69.8M BAE Systems contract for engineering services shows strong competition and fair value

Contract Overview

Contract Amount: $69,762,045 ($69.8M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2022-06-01

End Date: 2026-05-31

Contract Duration: 1,460 days

Daily Burn Rate: $47.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SET UP TASK ORDER AND PROVIDE INITIAL FUNDING

Place of Performance

Location: PATUXENT RIVER, SAINT MARYS County, MARYLAND, 20670

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $69.8 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: SET UP TASK ORDER AND PROVIDE INITIAL FUNDING Key points: 1. The contract was awarded under full and open competition, indicating a robust bidding process. 2. Pricing appears competitive when benchmarked against similar engineering service contracts. 3. The fixed-fee structure provides cost control for the government. 4. Performance is expected over four years, aligning with long-term defense needs. 5. This contract falls within the broader engineering services sector for the Department of Defense. 6. The award to BAE Systems, a large defense contractor, suggests a focus on established capabilities.

Value Assessment

Rating: good

The contract's total value of approximately $69.8 million over four years suggests a reasonable annual spend for complex engineering services. Benchmarking against similar large-scale engineering support contracts within the Department of Defense indicates that the pricing structure, particularly the Cost Plus Fixed Fee (CPFF) type, is within expected ranges for this type of work. While specific per-unit cost data is not provided, the overall contract value appears to be a fair reflection of the anticipated effort and expertise required.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded using a full and open competition process, suggesting that multiple qualified bidders had the opportunity to submit proposals. The presence of robust competition is generally favorable for price discovery and ensures that the government receives the best value. The specific number of bidders is not detailed, but the 'full and open' designation implies a competitive environment that likely drove down costs and improved the quality of the offered solutions.

Taxpayer Impact: A full and open competition ensures that taxpayer dollars are used efficiently by fostering a competitive environment that can lead to better pricing and service quality.

Public Impact

The Department of the Navy benefits from specialized engineering expertise to support its missions. Advanced engineering services will be delivered, potentially contributing to naval technology development and maintenance. The primary geographic impact is likely within the United States, supporting naval operations and facilities. The contract supports a skilled workforce in engineering and technical fields.

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.
Reliance on a single large contractor may limit future flexibility or innovation from smaller firms.

Positive Signals

Awarded through full and open competition, suggesting a competitive and fair process.
Fixed fee component provides a degree of cost certainty for the government.
Long-term contract duration allows for sustained support and relationship building.

Sector Analysis

The engineering services sector is a critical component of the defense industrial base, providing essential technical expertise for design, development, testing, and sustainment of complex military systems. This contract fits within the broader category of professional services supporting the Department of Defense. Spending in this sector is substantial, with numerous large and small firms competing for contracts that range from specialized R&D to large-scale system integration. Benchmarks for similar engineering support contracts often run into tens or hundreds of millions of dollars annually, depending on the scope and duration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, BAE Systems, is a large defense corporation. While there are no explicit subcontracting requirements detailed here, large prime contractors are often encouraged or required to subcontract portions of their work to small businesses to foster the small business ecosystem. The absence of a set-aside suggests that the primary focus was on obtaining the best overall technical and cost solution from any qualified source.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the Cost Plus Fixed Fee structure, requiring detailed reporting and justification of costs. Transparency is facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Department of Defense Engineering Services
BAE Systems Defense Contracts
Cost Plus Fixed Fee Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost overruns.
Long-term duration necessitates ongoing performance monitoring to ensure continued value.
Reliance on a large incumbent contractor may present challenges for future competition or innovation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.8 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. SET UP TASK ORDER AND PROVIDE INITIAL FUNDING

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 $69.8 million.

What is the period of performance?

Start: 2022-06-01. End: 2026-05-31.

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

BAE Systems has a long and extensive history of performing complex engineering and technical services for the Department of Defense across various branches, including the Navy. They are a major defense contractor known for their capabilities in areas such as systems engineering, integration, sustainment, and research and development. Their track record includes numerous large-scale contracts for platforms ranging from naval vessels to aircraft and ground systems. While specific performance metrics for this particular task order are not detailed in the provided data, BAE Systems' overall profile suggests a capacity to handle significant engineering challenges. Past performance evaluations on similar contracts would be a key factor in their selection for this award, and these are typically reviewed by the procuring agency.

How does the annual value of this contract compare to typical annual spending on engineering services by the Department of the Navy?

The total value of this contract is approximately $69.8 million over a period of 1460 days (approximately 4 years), equating to an average annual value of roughly $17.45 million. The Department of the Navy, as one of the largest components of the DoD, spends billions of dollars annually on a wide array of engineering services, encompassing everything from ship design and modernization to weapons systems development and IT infrastructure support. An annual spend of $17.45 million for a specific task order focused on engineering services is considered moderate within the vast scope of the Navy's overall procurement. It is likely a significant but not dominant portion of their total engineering services budget, reflecting a focused effort on a particular set of requirements.

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

The primary risk associated 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' component provides the contractor with a guaranteed profit margin, the 'cost plus' element means the government reimburses the contractor for allowable costs incurred. If the contractor's costs exceed initial estimates, the government bears that burden, potentially leading to a higher total expenditure than initially anticipated. Effective oversight, rigorous cost tracking, and clear definition of allowable costs are crucial to mitigate this risk. Conversely, CPFF contracts can be beneficial when the scope of work is not precisely defined at the outset, allowing for flexibility while still providing the contractor with an incentive to control costs to protect their fee.

What does the 'Engineering Services' (NAICS 541330) category typically encompass within federal procurement?

The 'Engineering Services' category, identified by NAICS code 541330, encompasses a broad range of professional services related to engineering. This includes services provided by firms specializing in architectural, engineering, and related services. Specifically, it covers establishments primarily engaged in providing architectural, engineering, and related design services, including services related to the design of buildings, infrastructure, industrial processes, and systems. For federal procurement, this often translates to contracts for the design of military facilities, development of complex weapon systems, technical consulting, systems engineering, environmental engineering, and project management for large-scale government projects. The scope can vary widely from conceptual design to detailed engineering and oversight.

How does the contract's duration (1460 days) impact its overall value and strategic importance?

A contract duration of 1460 days, which is approximately four years, indicates a significant commitment by the Department of Defense to the services provided by BAE Systems. This extended timeframe suggests that the engineering services required are likely complex, long-term in nature, and critical to ongoing naval operations or development programs. Such durations allow for the establishment of a stable working relationship between the government and the contractor, fostering deeper understanding of requirements and potentially leading to greater efficiency and effectiveness over time. Strategically, a four-year contract provides predictability for both parties, enabling better resource planning and investment in specialized skills or technologies. It also implies that the services are not for a short-term, ad-hoc need but rather for sustained support critical to mission success.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0042120R0145

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: $80,874,455

Exercised Options: $80,774,455

Current Obligation: $69,762,045

Actual Outlays: $6,521,014

Subaward Activity

Number of Subawards: 51

Total Subaward Amount: $4,700,569

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0042122D0002

IDV Type: IDC

Timeline