DoD's $28.7M R&D contract with BAE Systems for tech solutions shows fair value, but limited competition data

Contract Overview

Contract Amount: $28,711,756 ($28.7M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2009-01-27

End Date: 2012-02-25

Contract Duration: 1,124 days

Daily Burn Rate: $25.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: BASE YEAR LABOR TAS::97 0100::TAS

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $28.7 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: BASE YEAR LABOR TAS::97 0100::TAS Key points: 1. Contract value appears reasonable for specialized R&D services. 2. Competition was full and open, suggesting a competitive bidding process. 3. Contract duration of over three years indicates a significant project scope. 4. Performance was in Virginia, a hub for defense contracting. 5. The contract falls under R&D in physical, engineering, and life sciences. 6. BAE Systems is a major defense contractor with a substantial track record.

Value Assessment

Rating: good

The contract's base year labor cost of $28.7 million for R&D services is within a reasonable range for specialized defense technology development. Benchmarking against similar contracts for advanced research and engineering support would provide a more precise value-for-money assessment. However, given the nature of R&D, where innovation and specialized expertise are paramount, the pricing appears to reflect the complexity and potential of the work. The fixed-fee structure on a cost-plus basis suggests an alignment of incentives between the government and the contractor to manage costs effectively while pursuing research objectives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. While the specific number of bidders is not detailed, this procurement method generally fosters a competitive environment, which should lead to better pricing and innovation. The Defense Information Systems Agency (DISA) likely sought proposals from a wide range of qualified R&D firms to ensure they secured the best technical solution and value.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the pool of potential offerors, driving down prices through market forces and increasing the likelihood of selecting the most cost-effective solution.

Public Impact

The Department of Defense benefits from advanced research and development in physical, engineering, and life sciences. This contract supports the development of cutting-edge technologies potentially enhancing national security capabilities. The primary geographic impact is in Virginia, a key location for defense and technology sectors. The contract likely supports a specialized workforce of scientists, engineers, and researchers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns in R&D projects if not closely managed.
Scope creep is a risk in research contracts if objectives are not clearly defined and controlled.

Positive Signals

Full and open competition suggests a robust market assessment and potential for competitive pricing.
BAE Systems' established presence in defense contracting indicates a high likelihood of technical capability.
The contract's focus on R&D aligns with strategic defense modernization goals.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences, excluding biotechnology. This is a critical area for defense modernization, involving innovation in areas like advanced materials, sensor technology, and complex systems engineering. The market for such services is dominated by large defense contractors and specialized R&D firms. Spending in this category is substantial across the federal government, particularly within the Department of Defense, as it seeks to maintain a technological edge.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary award went to a large prime contractor, BAE Systems. While this may limit direct opportunities for small businesses on this specific contract, large prime contractors often engage small businesses for specialized support or components, though the extent of this is not detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer's representative (COR) within the Defense Information Systems Agency (DISA). The cost-plus-fixed-fee (CPFF) structure necessitates close monitoring of costs incurred by the contractor to ensure they align with the fixed fee and the overall research objectives. Transparency is generally maintained through regular reporting requirements and contract performance reviews. Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) Contracts
Naval Research Laboratory Contracts
Air Force Research Laboratory Contracts
Army Research Laboratory Contracts
Science and Technology Research Contracts

Risk Flags

Contract duration exceeds one year.
Contract type is Cost Plus Fixed Fee.
Contractor is a large business.
No small business set-aside indicated.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.7 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. BASE YEAR LABOR TAS::97 0100::TAS

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 (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $28.7 million.

What is the period of performance?

Start: 2009-01-27. End: 2012-02-25.

What is BAE Systems' track record with similar R&D contracts for the Department of Defense?

BAE Systems has a long and extensive history of performing research and development contracts for the Department of Defense across various agencies and scientific domains. They are a major defense contractor known for their capabilities in areas such as systems engineering, advanced electronics, cyber solutions, and platform integration. Their track record includes numerous successful R&D efforts that have contributed to military modernization and technological advancement. While specific performance metrics for this particular $28.7 million contract are not detailed here, BAE Systems' overall reputation suggests a strong capacity to deliver complex R&D outcomes. Analyzing their past performance on cost, schedule, and technical achievement on comparable contracts would provide further insight into their reliability for this type of work.

How does the $28.7 million base year cost compare to similar R&D contracts in physical and engineering sciences?

The $28.7 million base year cost for R&D in physical, engineering, and life sciences is a significant but not extraordinary figure for a contract of this nature, especially when awarded to a major defense contractor like BAE Systems. Contracts in this domain often involve substantial investment due to the specialized expertise, equipment, and long-term research horizons required. Benchmarking this against other contracts of similar scope, duration, and technical complexity awarded by agencies like DISA, DARPA, or other military branches would be necessary for a precise value assessment. However, considering the typical costs associated with advanced R&D, including highly skilled personnel and potential prototyping, this figure appears to be within a plausible range, assuming the scope of work is substantial and technically challenging.

What are the primary risks associated with this type of cost-plus-fixed-fee R&D contract?

Cost-plus-fixed-fee (CPFF) contracts, particularly in R&D, carry inherent risks for both the government and the contractor. For the government, the primary risk is that the contractor may not be sufficiently incentivized to control costs rigorously, as the government bears the cost of performance plus a fixed fee. This can lead to cost overruns if the contractor's initial cost estimates are inaccurate or if unforeseen technical challenges arise. Scope creep is another significant risk; as research progresses, new avenues may emerge, potentially expanding the project's scope beyond the original agreement, which could necessitate contract modifications and increased spending. For the contractor, the risk lies in underestimating the costs required to achieve the fixed fee, potentially leading to reduced profit margins or even a loss if actual costs significantly exceed projections.

How effective is full and open competition in ensuring value for money in R&D procurements?

Full and open competition is generally considered the most effective method for ensuring value for money in R&D procurements. By allowing all responsible sources to compete, the government maximizes the potential pool of innovative solutions and competitive bids. This broad competition drives down prices, encourages efficiency, and increases the likelihood that the most technically capable and cost-effective solution will be selected. In R&D, where technical merit is often as crucial as cost, a wide competition allows the government to evaluate diverse approaches and select the one that best balances innovation, feasibility, and affordability. While R&D inherently involves uncertainty, a competitive process helps mitigate risks by vetting multiple proposals and selecting contractors with proven capabilities and realistic cost projections.

What is the historical spending trend for R&D contracts in physical, engineering, and life sciences by the Department of Defense?

The Department of Defense historically represents one of the largest federal spenders on Research and Development (R&D) across all scientific disciplines, including physical, engineering, and life sciences. Annual spending in these areas fluctuates based on strategic priorities, technological advancements, and budgetary allocations. In recent years, DoD R&D spending has been substantial, often in the tens of billions of dollars annually, driven by needs in areas like artificial intelligence, cybersecurity, hypersonics, quantum computing, and advanced materials. Contracts like the one awarded to BAE Systems are part of this larger investment strategy aimed at maintaining a technological advantage. Analyzing historical spending patterns reveals a consistent and significant commitment to R&D, underscoring its critical role in national security.

What are the implications of the contract being awarded in Virginia for the local economy and defense ecosystem?

Awarding a significant R&D contract like this to BAE Systems in Virginia has several implications for the local economy and the broader defense ecosystem. Virginia is a major hub for the U.S. defense industry, with a high concentration of government agencies, military installations, and defense contractors. This contract likely supports high-skilled jobs in engineering, research, and technical support within the state, contributing to the local tax base and economic activity. Furthermore, it strengthens the existing defense industrial base in the region, fostering collaboration and innovation among various entities. The presence of such contracts also attracts and retains specialized talent, reinforcing Virginia's position as a leader in defense technology and R&D.

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: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 520 GAITHER ROAD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $28,711,756

Exercised Options: $28,711,756

Current Obligation: $28,711,756

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC102808D2014

IDV Type: IDC

Timeline