DoD awards $23.6M for Engineering Services to BAE Systems, highlighting cost-plus fixed-fee contract
Contract Overview
Contract Amount: $23,578,805 ($23.6M)
Contractor: BAE Systems Information and Electronic Systems Integration Inc.
Awarding Agency: Department of Defense
Start Date: 2007-08-14
End Date: 2010-05-31
Contract Duration: 1,021 days
Daily Burn Rate: $23.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: WAYNE, PASSAIC County, NEW JERSEY, 07474
Plain-Language Summary
Department of Defense obligated $23.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded to BAE Systems for engineering services. 2. Significant value of $23.6 million over 1021 days. 3. Full and open competition was utilized. 4. Cost-plus fixed-fee contract type indicates potential for cost overruns. 5. Sector is Defense, specifically microelectronics.
Value Assessment
Rating: fair
The cost-plus fixed-fee (CPFF) contract type can lead to higher costs for the government compared to fixed-price contracts, as contractor profit is tied to costs. The awarded amount of $23.6M for 1021 days needs further analysis against benchmarks for similar engineering services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a robust price discovery process. However, the CPFF structure may still allow for costs to escalate beyond initial expectations.
Taxpayer Impact: Taxpayer funds are utilized for this contract. While competition is positive, the CPFF structure warrants careful monitoring to ensure cost efficiency and prevent unnecessary spending.
Public Impact
Defense capabilities are enhanced through specialized engineering services. Taxpayer money is allocated to a major defense contractor. Potential for cost escalation due to contract type impacts budget predictability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus fixed-fee contract type
- Long duration of contract
- No specific small business participation noted
Positive Signals
- Full and open competition
- Award to established contractor (BAE Systems)
Sector Analysis
This contract falls within the Engineering Services sector, specifically supporting the Department of Defense's microelectronics initiatives. Benchmarks for similar engineering services contracts within the defense sector would be crucial for a comprehensive value assessment.
Small Business Impact
The data indicates that small business participation was not a factor in this award (ss: false, sb: false). This suggests that the prime contractor, BAE Systems, is handling the entirety of the contract, potentially missing opportunities for small business subcontracting.
Oversight & Accountability
Oversight of this contract would be managed by the Defense Microelectronics Activity. The cost-plus fixed-fee nature necessitates rigorous oversight to control costs and ensure the government receives value for its investment.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Microelectronics Activity Programs
Risk Flags
- Cost-plus fixed-fee contract type may lead to cost overruns.
- Lack of small business participation noted.
- Long contract duration increases exposure to changing requirements and economic conditions.
- Potential for scope creep given the nature of engineering services.
Tags
engineering-services, department-of-defense, nj, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $23.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. ENGINEERING SERVICES
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 Microelectronics Activity).
What is the total obligated amount?
The obligated amount is $23.6 million.
What is the period of performance?
Start: 2007-08-14. End: 2010-05-31.
What is the typical profit margin for Cost Plus Fixed Fee (CPFF) contracts in the defense engineering sector, and how does BAE Systems' profit on this contract compare?
CPFF contracts typically include a fixed fee that represents the contractor's profit, intended to be a reasonable incentive for performance. Profit margins can vary based on contract complexity, risk, and negotiation. For defense engineering, margins might range from 7-15%. A detailed review of BAE Systems' fee structure on this specific contract, compared to industry averages and other similar DoD contracts, would be needed to assess if the profit is reasonable and reflects the value delivered.
Given the full and open competition, what factors might have led to the selection of a Cost Plus Fixed Fee contract type instead of a fixed-price alternative?
The selection of a CPFF contract type, even after full and open competition, often indicates a high degree of uncertainty regarding the scope of work, technical requirements, or potential costs. For complex engineering services, especially in rapidly evolving fields like microelectronics, it may be difficult to define all requirements precisely upfront. This structure allows the contractor to incur costs deemed necessary, with the government paying those costs plus a predetermined fixed fee, shifting some cost risk to the government.
How does the $23.6 million award for 1021 days of engineering services compare to industry benchmarks for similar services, particularly within the defense microelectronics domain?
Benchmarking this contract requires comparing the per-diem or per-year cost against similar engineering services contracts awarded by the DoD or other agencies for microelectronics R&D or support. Factors like the specific technical expertise required, the level of innovation, and the contractor's overhead structure influence pricing. Without access to detailed task orders and specific deliverables, a precise benchmark is difficult, but the total value suggests a significant undertaking requiring specialized skills.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: BAE Systems PLC (UEI: 217304393)
Address: 65 SPIT BROOK RD, NASHUA, NH, 02
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $23,578,805
Exercised Options: $23,578,805
Current Obligation: $23,578,805
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: H9400304D0002
IDV Type: IDC
Timeline
Start Date: 2007-08-14
Current End Date: 2010-05-31
Potential End Date: 2010-05-31 00:00:00
Last Modified: 2011-08-01
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