BAE Systems awarded $174.5M for engineering services, with a significant portion allocated to cost-plus-fixed-fee task orders

Contract Overview

Contract Amount: $174,524,653 ($174.5M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2008-08-27

End Date: 2025-07-02

Contract Duration: 6,153 days

Daily Burn Rate: $28.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TO N00178-04-D-4018-0014

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $174.5 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: TO N00178-04-D-4018-0014 Key points: 1. The contract's value suggests a substantial, long-term need for specialized engineering expertise within the Department of Defense. 2. A significant portion of the contract value is tied to Cost Plus Fixed Fee (CPFF) task orders, which can present cost control challenges. 3. The contract has been active since 2008, indicating a sustained relationship and potentially evolving requirements over time. 4. The award was made under full and open competition, suggesting a robust bidding process. 5. The contract's duration extends to mid-2025, implying ongoing service delivery and potential for future modifications. 6. The primary place of performance is Maryland, a hub for defense contracting and related industries.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the engineering services provided. However, the substantial award amount suggests a significant investment by the Department of Defense. The use of Cost Plus Fixed Fee (CPFF) pricing introduces a degree of risk, as contractor profit is guaranteed regardless of cost efficiency, though the fixed fee component provides some predictability. Further analysis would require comparing the scope of work and deliverables to similar engineering services contracts awarded by the DoD to assess value for money.

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. This process is designed to foster a competitive environment, theoretically leading to better pricing and service quality. The number of bidders and the specific evaluation criteria used would provide further insight into the effectiveness of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging multiple companies to vie for the contract, which can drive down costs and improve the quality of services received.

Public Impact

The Department of Defense benefits from access to specialized engineering services crucial for its operations and technological advancements. The contract supports the development, integration, and sustainment of complex defense systems. The primary geographic impact is in Maryland, supporting the local economy and defense industrial base. The contract likely supports a workforce of engineers, technicians, and support staff, contributing to employment in the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The use of Cost Plus Fixed Fee (CPFF) contract type can incentivize higher spending as the contractor is reimbursed for costs plus a fixed fee, potentially reducing the incentive for cost control.
The long duration of the contract (since 2008) may indicate a lack of flexibility to adapt to rapidly changing technological needs or market conditions.
Without detailed performance metrics, it is difficult to assess the true value and effectiveness of the engineering services provided.
The specific nature of the engineering services is not detailed, making it hard to evaluate if the contract is appropriately scoped and priced.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process that should yield favorable terms.
The sustained award since 2008 indicates a long-term need and potentially a successful, ongoing relationship with the contractor.
The contract is managed by the Defense Contract Management Agency (DCMA), which provides oversight for contract performance and compliance.
The primary place of performance in Maryland aligns with a significant concentration of defense industry activity and expertise.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader defense industry. The defense engineering services market is characterized by high barriers to entry, specialized expertise, and significant government spending. Companies in this sector often provide support for complex weapon systems, research and development, and program management. Comparable spending benchmarks would typically involve analyzing the total annual spending by the DoD on engineering and technical support services, which runs into billions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss=false, sb=false). Therefore, its direct impact on small businesses is likely limited to potential subcontracting opportunities. The prime contractor, BAE Systems, would need to adhere to subcontracting plans if applicable, which could involve awarding a portion of the work to small businesses. The extent of small business participation will depend on the specific subcontracting requirements outlined in the prime contract and the contractor's strategy.

Oversight & Accountability

The Defense Contract Management Agency (DCMA) is responsible for overseeing the performance of this contract, ensuring compliance with terms and conditions. Oversight mechanisms would include monitoring contractor progress, reviewing invoices, and ensuring adherence to the contract's technical and financial requirements. Transparency is generally facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Engineering Services
Technical Support Services
Systems Engineering
Research and Development Support
Department of Defense IT Services

Risk Flags

Cost Plus Fixed Fee (CPFF) pricing structure may lead to cost overruns.
Long contract duration could indicate potential for scope creep or outdated requirements.
Lack of detailed service breakdown makes value assessment difficult.
Potential for contractor profit to be less tied to cost efficiency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $174.5 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. TO N00178-04-D-4018-0014

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 Contract Management Agency).

What is the total obligated amount?

The obligated amount is $174.5 million.

What is the period of performance?

Start: 2008-08-27. End: 2025-07-02.

What is the specific breakdown of services provided under this contract, and how do they align with current defense priorities?

The provided data indicates the contract is for 'Engineering Services' (nd: Engineering Services) with the North American Industry Classification System (NAICS) code 541330. However, the specific breakdown of services is not detailed. These services likely encompass a range of activities such as systems engineering, design, analysis, testing, and technical support for defense programs. To align with current defense priorities, one would need to examine the Department of Defense's strategic objectives, such as modernization of legacy systems, development of next-generation platforms, cybersecurity enhancements, and advanced manufacturing. The nature of BAE Systems' work under this contract would need to be cross-referenced with these priorities to assess its relevance and contribution to national defense goals.

How does the Cost Plus Fixed Fee (CPFF) pricing structure for task orders under this contract compare to industry standards for similar engineering services?

The Cost Plus Fixed Fee (CPFF) contract type reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. For engineering services, CPFF is often used when the scope of work is not well-defined or involves significant uncertainty and risk. Industry standards suggest that CPFF can be appropriate for research and development or complex system integration where precise cost estimation is difficult. However, it carries a risk of cost overruns as the government bears the cost risk. Compared to fixed-price contracts, CPFF generally offers less incentive for cost efficiency. Benchmarking would involve analyzing the fixed fee percentage relative to total estimated costs for similar CPFF contracts within the defense sector and assessing the contractor's historical performance in managing costs under such agreements.

What is the historical spending pattern for this contract since its inception in 2008, and are there any significant fluctuations?

The contract was awarded on August 27, 2008, with an estimated completion date of July 2, 2025. The total award amount is $174,524,652.72. Without access to the detailed financial transaction history for this specific contract (delivery order 0014 under base ID N00178-04-D-4018), it is impossible to determine the historical spending pattern or identify significant fluctuations. Typically, spending would be distributed across the years the contract has been active, with potential peaks and troughs depending on the phases of the engineering services being delivered and the funding allocated by the agency. Annual reports or contract databases would be necessary to analyze this granular spending data.

What is the track record of BAE Systems Technology Solutions & Services Inc. in delivering complex engineering services for the Department of Defense?

BAE Systems Technology Solutions & Services Inc. is a subsidiary of BAE Systems, a major global defense, aerospace, and security company. The parent company has a long and extensive track record of delivering a wide range of complex engineering services, including systems integration, platform modernization, electronic warfare, and cybersecurity solutions, to defense organizations worldwide, including the U.S. Department of Defense. While specific performance data for this particular contract (N00178-04-D-4018-0014) is not detailed here, BAE Systems generally possesses significant capabilities and experience in managing large, complex defense engineering programs. Assessing their track record would involve reviewing past performance evaluations, contract awards, and any reported issues or successes on similar DoD contracts.

Given the contract's duration and CPFF structure, what are the primary risks associated with cost overruns and scope creep?

The primary risks associated with this contract are cost overruns and scope creep, particularly due to the Cost Plus Fixed Fee (CPFF) pricing structure and its long duration. Under CPFF, the government bears the risk of cost increases, as the contractor is reimbursed for all allowable costs. If the scope of work expands beyond the original agreement (scope creep) without adequate adjustments to the fee or contract terms, costs can escalate significantly. The fixed fee provides some predictability for the contractor's profit, but it doesn't inherently control the total cost to the government. Effective oversight, clear definition of requirements, robust change control processes, and regular performance reviews are crucial to mitigate these risks. Without these, the total expenditure could exceed initial estimates.

Industry Classification

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

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002408R3108

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 520 GAITHER ROAD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $174,992,051

Exercised Options: $174,992,051

Current Obligation: $174,524,653

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4018

IDV Type: IDC

Timeline