DoD's $10.76M R&D contract with BAE Systems saw 2 bidders over 7 years

Contract Overview

Contract Amount: $10,759,090 ($10.8M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2005-03-24

End Date: 2011-03-31

Contract Duration: 2,198 days

Daily Burn Rate: $4.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $10.8 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: Key points: 1. The contract's value appears reasonable given the R&D nature and duration. 2. Limited competition may have impacted price discovery. 3. Contract duration and type suggest potential for cost overruns. 4. Performance context is limited without specific project details. 5. This contract falls within the Defense R&D sector. 6. The contractor has a significant presence in defense electronics.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without specific deliverables. However, for a multi-year R&D effort, $10.76 million is not inherently excessive. The Cost Plus Fixed Fee (CPFF) structure means the government pays costs plus a fixed fee, which can lead to cost growth if not managed tightly. Compared to similar large-scale R&D projects, the price per year is moderate, but the overall value is highly dependent on the innovation achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple sources were solicited. With two bidders, the competition level is moderate. While better than a sole-source award, it suggests that the market may not have been fully engaged, potentially limiting the government's ability to secure the most competitive pricing. Further analysis would be needed to understand why only two bids were received.

Taxpayer Impact: Moderate competition means taxpayers may not have received the lowest possible price, but it still provides some price discipline compared to sole-source arrangements.

Public Impact

The primary beneficiaries are the Department of Defense, which receives advanced research and development capabilities. The contract supports the development of new technologies and systems for national security. Geographic impact is concentrated in New Hampshire, where the contractor is located. Workforce implications include employment for researchers, engineers, and support staff at BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractor spending to increase the cost base, potentially leading to higher overall costs.
The long duration of the contract (2198 days) increases the risk of scope creep and cost escalation if not rigorously managed.
Limited competition (2 bidders) may have reduced the pressure on the contractor to offer the most cost-effective solutions.

Positive Signals

Awarded under full and open competition, suggesting a broad market search.
BAE Systems is a major defense contractor with a proven track record in complex R&D projects.
The fixed fee component of the contract provides some cost certainty for the government regarding contractor profit.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences. The defense industry is a significant consumer of R&D services, constantly seeking technological advancements for military applications. Comparable spending benchmarks in this area are difficult to establish without knowing the specific technological domain, but large R&D contracts can range from millions to billions of dollars depending on complexity and strategic importance.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). As a large prime contract awarded to BAE Systems, a major defense contractor, the primary impact on small businesses would be through potential subcontracting opportunities. The extent of small business participation would depend on BAE Systems' subcontracting plan and the nature of the R&D work required.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The CPFF structure necessitates close monitoring of costs and progress to prevent overruns. Transparency is generally maintained through contract reporting requirements, though specific project details might be sensitive due to national security implications. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Research and Development
Advanced Technology Development
Systems Engineering
BAE Systems Contracts

Risk Flags

Cost Overrun Risk
Limited Competition Impact
Contract Management Intensity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.8 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 $10.8 million.

What is the period of performance?

Start: 2005-03-24. End: 2011-03-31.

What specific R&D activities were undertaken under this contract?

The provided data does not specify the exact nature of the R&D activities. The North American Industry Classification System (NAICS) code 541710 covers 'Research and Development in the Physical, Engineering, and Life Sciences.' This broad category could encompass a wide range of projects, from materials science and electronics to advanced computing and aerospace technologies. Without access to the contract's statement of work or technical reports, the precise R&D focus remains unknown. Further investigation would require accessing contract details beyond the summary data.

How does the $10.76 million total award compare to similar R&D contracts in the defense sector?

Comparing this $10.76 million award requires context on the specific R&D domain and the contract's duration. For a multi-year R&D effort, this amount is moderate. Large defense R&D programs can easily reach hundreds of millions or even billions of dollars for cutting-edge, long-term projects. However, smaller, more focused R&D initiatives might also be in the single-digit millions. Given the 7-year performance period, the average annual spend was approximately $1.5 million, which is a reasonable figure for specialized research, but its true value is tied to the technological advancements achieved.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this duration?

The primary risks with a CPFF contract, especially one spanning nearly seven years, include potential cost overruns and contractor inefficiency. While the fixed fee provides some profit certainty, the CPFF structure incentivizes the contractor to incur costs, as the government pays for all allowable expenses. If cost controls are weak or the scope of work expands (scope creep), the total cost to the government can significantly exceed initial estimates. The long duration also increases the risk of technological obsolescence or shifts in strategic priorities, potentially rendering the R&D less valuable by the time it is completed.

What does the limited competition (2 bidders) imply for the government's negotiating position?

Limited competition, with only two bidders, suggests that the government's negotiating position may have been weaker than if there had been a larger pool of interested and capable contractors. While 'full and open competition' was utilized, receiving only two proposals indicates potential barriers to entry, such as highly specialized requirements, significant upfront investment needed by potential bidders, or a concentrated market. This reduced competition could lead to less aggressive pricing and potentially less innovation driven by competitive pressure. The government would need to rely heavily on its technical evaluation and negotiation expertise to ensure fair value.

What is BAE Systems' track record with similar DoD R&D contracts?

BAE Systems is a major global defense contractor with extensive experience in research and development for the Department of Defense. They have a long history of securing and executing large, complex contracts across various defense domains, including electronics, systems integration, and advanced technologies. While specific performance metrics for this particular $10.76 million contract are not detailed here, BAE Systems generally has a strong, albeit sometimes scrutinized, track record. Their ability to win such contracts indicates they meet DoD's technical and capability requirements. However, like any large contractor, they may have faced challenges or criticisms on specific projects regarding cost, schedule, or performance.

How has historical spending on R&D in the physical, engineering, and life sciences sector by the DoD trended?

Historical spending by the DoD on R&D within the physical, engineering, and life sciences sector has generally been substantial and cyclical, often influenced by geopolitical events and technological advancements. The DoD is consistently one of the largest government funders of R&D. While specific year-over-year trends for NAICS code 541710 are not provided in this data snippet, overall DoD R&D budgets fluctuate based on national security priorities and budget allocations. Periods of heightened global tension or perceived technological gaps often lead to increased R&D investment. Conversely, budget constraints or shifts in focus can lead to reductions. The trend is generally towards investing in areas like AI, cyber, hypersonics, and advanced materials.

Industry Classification

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

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: 2

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