DoD's $15.6M R&D contract with BAE Systems shows mixed value and limited competition

Contract Overview

Contract Amount: $15,586,664 ($15.6M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2006-08-10

End Date: 2010-02-28

Contract Duration: 1,298 days

Daily Burn Rate: $12.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 13

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $15.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: Key points: 1. The contract's value proposition is unclear due to a lack of detailed performance metrics and benchmarking against similar R&D efforts. 2. Competition was limited, raising concerns about potential overpricing and reduced innovation incentives. 3. The contract carries moderate risk, indicated by its cost-plus-fixed-fee structure and a duration that extended beyond the initial award. 4. Performance context is difficult to assess without clear deliverables and outcome-based evaluations. 5. This contract falls within the Defense sector's R&D spending, focusing on advanced physical and engineering sciences. 6. The absence of small business involvement suggests missed opportunities for broader economic impact and specialized subcontracting.

Value Assessment

Rating: fair

Benchmarking this $15.6 million contract against similar R&D efforts is challenging due to limited public data on specific deliverables and outcomes. The cost-plus-fixed-fee structure, while common in R&D, can lead to cost overruns if not tightly managed. Without detailed performance reports or comparisons to industry standards for similar research, assessing the true value-for-money is difficult. The contract's duration, extending significantly beyond its initial end date, also warrants scrutiny regarding efficiency and scope creep.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting an initial intent to solicit a broad range of capable contractors. However, the number of bidders is not specified, making it difficult to gauge the actual level of competition. A robust competitive process typically drives down costs and fosters innovation. The limited information on the bidding process raises questions about whether the full benefits of competition were realized for this specific R&D effort.

Taxpayer Impact: While full and open competition was the stated method, the lack of detail on the number of bidders means taxpayers may not have received the full benefit of price discovery and innovation that a highly competitive environment usually provides.

Public Impact

The primary beneficiaries are likely the Department of Defense, which receives the research outcomes, and BAE Systems, through contract revenue. The contract supports research and development in physical, engineering, and life sciences, potentially leading to advancements in defense technologies. The geographic impact is centered in New Hampshire, where BAE Systems is located, potentially supporting local employment and economic activity. Workforce implications include the employment of specialized researchers, engineers, and technical staff at BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize higher spending if not meticulously monitored.
Extended contract duration beyond initial estimates may indicate scope changes or inefficiencies.
Lack of specific performance metrics makes it hard to evaluate the R&D's ultimate success.
Limited public information on competition details hinders a full assessment of price reasonableness.

Positive Signals

Awarded under full and open competition, indicating an effort to engage a wide market.
Contractor, BAE Systems, is a major defense contractor with a significant track record.
Focus on R&D aligns with strategic defense objectives for technological advancement.

Sector Analysis

This contract falls within the broader Research and Development sector, specifically focusing on physical, engineering, and life sciences (excluding biotechnology), with a North American Industry Classification System (NAICS) code of 541712. The defense R&D market is substantial, driven by the need for technological superiority. Comparable spending benchmarks are difficult to establish without knowing the specific research area, but R&D contracts often represent a significant portion of defense budgets, emphasizing innovation and future capabilities.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement (ss: false, sb: false). This suggests that small businesses were not specifically targeted for set-asides or significant subcontracting roles in this particular award. Consequently, the contract may not have directly contributed to the small business ecosystem or provided opportunities for smaller, specialized firms to engage in defense R&D through subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the cost-plus-fixed-fee structure, requiring detailed reporting and justification of costs. Transparency is limited by the availability of public data; while the award itself is public, detailed R&D progress reports and cost breakdowns are often considered sensitive. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development Programs
BAE Systems Defense Contracts
Advanced Technology Development Contracts
Physical and Engineering Sciences Research

Risk Flags

Cost-plus-fixed-fee contract type can lead to cost overruns if not managed properly.
Extended contract duration may indicate scope creep or performance issues.
Limited public data on competition details hinders full value assessment.
Lack of specific performance metrics makes outcome evaluation difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $15.6 million.

What is the period of performance?

Start: 2006-08-10. End: 2010-02-28.

What specific research outcomes or technological advancements were achieved under this contract?

Detailed public information regarding the specific research outcomes or technological advancements achieved under this $15.6 million contract is not readily available. Contracts classified under NAICS code 541712, 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology),' often involve proprietary or classified research. While the contract was awarded to BAE Systems Information and Electronic Systems Integration Inc. by the Department of Defense, the nature of R&D means that tangible, publicly shareable results may not materialize for years, or may remain classified for national security reasons. Further inquiry would require accessing specific contract performance reports or declassified summaries, which are typically not part of standard public contract databases.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types used for similar R&D projects within the DoD?

The Cost-Plus-Fixed-Fee (CPFF) structure is common for research and development contracts, particularly when the scope of work is not precisely defined or when innovation is a primary goal, making it difficult to estimate costs accurately upfront. Compared to fixed-price contracts, CPFF offers flexibility but can lead to higher overall costs if not managed diligently, as the government bears the risk of cost overruns while the contractor receives a predetermined fee. Other R&D contracts might use Cost Plus Incentive Fee (CPIF) to incentivize performance or Cost Plus Award Fee (CPAF) to reward exceptional outcomes. For projects with well-defined objectives, a Firm-Fixed-Price (FFP) contract might be used, but this is less common for exploratory R&D. The DoD utilizes a mix of these, with CPFF being prevalent when technical uncertainty is high.

What is BAE Systems' track record with similar DoD R&D contracts in terms of cost performance and timely delivery?

BAE Systems Information and Electronic Systems Integration Inc. is a major defense contractor with extensive experience in R&D. Analyzing their track record on similar DoD contracts requires examining numerous individual awards. Generally, large contractors like BAE Systems have a history of managing complex R&D projects, but performance can vary significantly based on project specifics, management, and unforeseen technical challenges. Data on cost performance and delivery timeliness for specific past contracts would be needed for a precise comparison. Publicly available contract databases often show award histories, but detailed performance metrics (e.g., cost variances, schedule slippages) are not always accessible. However, BAE Systems' continued success in winning large DoD contracts suggests a generally acceptable performance record, though specific instances of overruns or delays are not uncommon in the R&D domain.

Were there any specific technological advancements or program milestones that justified the $15.6 million investment?

The justification for the $15.6 million investment in this R&D contract would stem from the Department of Defense's strategic priorities and anticipated technological needs. Contracts under NAICS 541712 focus on advancements in physical and engineering sciences, which could relate to areas such as materials science, sensor technology, advanced computing, or propulsion systems, all critical for maintaining military superiority. Specific program milestones are typically outlined in the contract's Statement of Work (SOW). Without access to the SOW or subsequent performance reports, it's impossible to detail the exact milestones. However, the investment is generally justified by the potential for these advancements to enhance national security, improve existing military platforms, or create entirely new defense capabilities.

How does the $15.6 million spending compare to the total DoD R&D budget for the period of this contract (2006-2010)?

The Department of Defense's R&D budget is substantial, typically running into tens of billions of dollars annually. For the period of this contract (August 2006 to February 2010), the DoD's R&D spending was significant. For example, in Fiscal Year 2007, the DoD requested approximately $77 billion for R&D. In FY2008, it was around $79 billion, and in FY2009, approximately $81 billion. Therefore, a single $15.6 million contract, while substantial in absolute terms, represents a very small fraction of the total DoD R&D investment during that timeframe. It signifies a focused investment in a specific area of research rather than a major programmatic expenditure. This scale suggests it was likely for a particular research task or a component of a larger R&D initiative.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 13

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

Address: 65 SPIT BROOK RD, NASHUA, NH, 03060

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline