DoD's $12.9M BAE Systems contract for engineering services awarded without competition

Contract Overview

Contract Amount: $12,943,734 ($12.9M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2021-07-30

End Date: 2026-07-29

Contract Duration: 1,825 days

Daily Burn Rate: $7.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING AND TECHNICAL SUPPORT SERVICES AND SUPPLIES

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55421

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $12.9 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: ENGINEERING AND TECHNICAL SUPPORT SERVICES AND SUPPLIES Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract duration of 5 years (1825 days) suggests a long-term need for these specialized engineering services. 3. The use of a Cost Plus Fixed Fee (CPFF) pricing structure can incentivize cost overruns. 4. The contractor, BAE Systems, is a major defense industrial base participant, indicating established capabilities. 5. The contract's value, while significant, needs to be benchmarked against similar engineering support services. 6. The absence of competition limits opportunities for smaller businesses to enter the market for these services.

Value Assessment

Rating: questionable

The contract's value of $12.9 million over five years for engineering and technical support services is difficult to assess without specific deliverables and performance metrics. The Cost Plus Fixed Fee (CPFF) structure, while common in complex defense procurements, carries inherent risks of cost escalation. Benchmarking this contract's value against similar sole-source engineering support contracts within the Department of Defense or for comparable services would be necessary for a more definitive value-for-money assessment. The lack of competition further complicates a direct comparison of pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source is available or when a compelling justification for other-than-full-and-open competition exists. The lack of competition means that potential alternative providers were not considered, and the government did not benefit from a competitive bidding process to drive down prices or foster innovation. This approach can lead to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible pricing through competitive negotiation. Taxpayers may bear a higher cost for these engineering services due to the absence of market-driven price discovery.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other Department of Defense entities requiring specialized engineering and technical support. The contract delivers essential engineering services and supplies critical for defense systems and operations. The geographic impact is likely concentrated around BAE Systems' facilities and Navy operational bases, though the specific locations are not detailed. The contract supports a workforce skilled in engineering and technical disciplines within BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs.
Cost Plus Fixed Fee (CPFF) pricing can incentivize cost overruns.
Lack of transparency in the justification for sole-source award.
Potential for contractor lock-in due to specialized nature of services.

Positive Signals

BAE Systems is a well-established defense contractor with proven capabilities.
Contract addresses a specific, likely critical, engineering need for the Navy.
Long-term contract provides stability for essential services.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader defense industrial base. The market for specialized engineering and technical support services for defense applications is substantial, often characterized by long-term relationships between government agencies and established contractors. Spending in this sector is driven by the need for advanced technological development, system sustainment, and operational readiness. Comparable spending benchmarks would involve analyzing other large, sole-source or competitively awarded engineering support contracts within the DoD.

Small Business Impact

The contract data indicates that small business participation (sb) is false, and it was not set aside for small businesses (ss is false). This suggests that small businesses were not specifically targeted or included in this procurement. Consequently, there are no direct subcontracting implications for small businesses stemming from this specific award, and it does not contribute to the small business ecosystem through set-aside goals.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the terms and conditions of the Cost Plus Fixed Fee contract, including reporting requirements and performance reviews. Transparency is limited due to the sole-source nature of the award, with justifications for this approach typically being internal to the agency. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

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

Risk Flags

Sole Source Award
Cost Plus Fixed Fee Pricing
Lack of Competition
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.9 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. ENGINEERING AND TECHNICAL SUPPORT SERVICES AND SUPPLIES

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS LAND & ARMAMENTS L.P..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $12.9 million.

What is the period of performance?

Start: 2021-07-30. End: 2026-07-29.

What specific engineering and technical support services are being provided under this contract?

The contract data indicates 'ENGINEERING AND TECHNICAL SUPPORT SERVICES AND SUPPLIES' as the general description. However, the precise nature of these services is not detailed in the provided summary. Typically, such contracts could encompass a wide range of activities including design, development, testing, integration, maintenance, and lifecycle support for complex defense systems. Without further information on the specific Statement of Work (SOW), it is difficult to ascertain the exact technical disciplines or systems involved. This level of detail is crucial for understanding the contract's true scope and value.

What was the justification for awarding this contract on a sole-source basis?

The provided data explicitly states the contract was 'NOT COMPETED' (ct: NOT COMPETED), indicating a sole-source award. The specific justification for this sole-source determination is not included in the summary data. Common justifications for sole-source awards in defense contracting include the existence of only one responsible source capable of providing the required services, urgent and compelling needs where competition is impractical, or when the services are of a highly specialized nature that only a particular contractor can provide. A formal Justification for Other Than Full and Open Competition (JOFOC) would typically be required and documented by the agency.

How does the Cost Plus Fixed Fee (CPFF) pricing structure impact cost control and contractor incentives?

The Cost Plus Fixed Fee (CPFF) pricing structure means the contractor is reimbursed for allowable costs plus a predetermined fixed fee. While the fee is fixed, the contractor has an incentive to control costs to maximize their profit margin, as the fee does not increase with costs. However, unlike fixed-price contracts, the government bears the risk of cost overruns if actual costs exceed the estimate. This structure is often used for research and development or complex services where the scope is not well-defined, but it requires robust government oversight to ensure costs remain reasonable and necessary.

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

BAE Systems is a major defense contractor with a significant history of performing engineering and technical support services for the Department of the Navy and other military branches. While specific details of their past performance on similar contracts are not provided here, their status as a large, established entity suggests they possess the necessary infrastructure, expertise, and security clearances. A comprehensive review would involve examining their past performance evaluations, contract history, and any documented issues or successes on prior Navy contracts for comparable services.

Are there any comparable engineering services contracts awarded competitively by the Department of the Navy that could serve as a benchmark?

To establish a benchmark, one would need to identify competitively awarded contracts for similar engineering and technical support services by the Department of the Navy. This would involve searching federal procurement databases (like SAM.gov or FPDS) for contracts with similar North American Industry Classification System (NAICS) codes (e.g., 541330 - Engineering Services), similar scope of work, and comparable contract types (e.g., CPFF). Comparing the total contract values, durations, and per-unit costs (if applicable) of these competitive awards against the BAE Systems sole-source contract would provide insight into whether the government achieved a fair and reasonable price.

What are the potential risks associated with a 5-year contract for engineering services awarded without competition?

The primary risks associated with a 5-year, sole-source CPFF contract include potential cost overruns due to the pricing structure, the absence of competitive pressure to ensure optimal pricing and innovation, and the risk of contractor lock-in. If the services are critical and unique, the government may have limited leverage to negotiate favorable terms in the future. Furthermore, without competition, there's a reduced incentive for the contractor to proactively seek efficiencies or adopt cutting-edge solutions unless explicitly incentivized or required by the contract. Robust oversight and clear performance metrics are essential to mitigate these risks.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6339420R0003

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

Address: 4800 E RIVER RD, MINNEAPOLIS, MN, 55421

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $41,542,687

Exercised Options: $25,298,138

Current Obligation: $12,943,734

Actual Outlays: $114,540

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $3,049,668

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline