DoD's $11.9M R&D contract with BAE Systems shows potential value concerns and limited competition

Contract Overview

Contract Amount: $11,925,995 ($11.9M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2007-07-31

End Date: 2012-02-29

Contract Duration: 1,674 days

Daily Burn Rate: $7.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: BOOTSTRAPPED LEARNING

Place of Performance

Location: BURLINGTON, MIDDLESEX County, MASSACHUSETTS, 01803

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $11.9 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BOOTSTRAPPED LEARNING Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 2. Limited competition raises questions about price discovery and potential overpayment. 3. The contract duration of over 4 years suggests a long-term commitment with evolving needs. 4. Research and Development focus indicates investment in future capabilities. 5. The contract's performance period ended in 2012, making current value assessment difficult. 6. The award was made by the Defense Contract Management Agency, suggesting a focus on defense-related R&D.

Value Assessment

Rating: questionable

Benchmarking this contract's value is challenging due to its age and R&D nature. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to higher costs compared to fixed-price contracts if not managed tightly. Without detailed cost breakdowns and performance metrics, it's difficult to definitively assess value for money. The total award amount of $11.9 million over nearly five years suggests a moderate investment for research, but the lack of specific deliverables makes a direct comparison to similar contracts problematic.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. However, the number of bids received is not specified, which limits the assessment of the competitive landscape. A robust competition typically involves several qualified bidders vying for the contract, driving down prices and ensuring fair market value. The fact that it was competed broadly is a positive sign, but the ultimate price achieved depends on the intensity of that competition.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it promotes a more competitive bidding process, which can lead to lower prices and better value. However, the effectiveness of this benefit is contingent on the actual number of bids received and the responsiveness of the market.

Public Impact

The primary beneficiary is the Department of Defense, which gains access to advanced research and development capabilities. The contract supports the development of new technologies and systems relevant to national security. The geographic impact is likely concentrated within the contractor's facilities, primarily in Massachusetts. The contract supports a specialized workforce in research and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to cost overruns if not closely monitored.
The age of the contract makes it difficult to assess current relevance and value.
Lack of specific performance metrics hinders a thorough value-for-money assessment.

Positive Signals

Awarded under full and open competition, suggesting a broad market search.
Focus on Research and Development aligns with strategic defense modernization goals.
Contractor BAE Systems is a major defense contractor with a significant track record.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This sector is characterized by innovation and the pursuit of technological advancements. The total federal spending on R&D is substantial, with defense-related R&D forming a significant portion. Contracts like this are crucial for maintaining a technological edge in defense capabilities. Comparable spending benchmarks would typically involve other R&D contracts within the defense sector, often measured by the scope of research and the technological maturity sought.

Small Business Impact

There is no indication that this contract included small business set-asides, and the prime contractor, BAE Systems, is a large defense corporation. Therefore, the direct impact on small businesses through prime contracting is likely minimal. However, large contractors often utilize small businesses as subcontractors, so there could be indirect benefits to the small business ecosystem depending on BAE Systems' subcontracting strategy for this particular R&D effort.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet their contractual obligations. Oversight mechanisms would typically include regular progress reviews, audits, and technical evaluations. Transparency for this specific contract, awarded in 2007, might be limited by current accessibility standards. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Research and Development Programs
BAE Systems Information and Electronic Systems Integration Contracts
Cost-Plus-Fixed-Fee R&D Contracts
Advanced Technology Development Programs

Risk Flags

Cost-plus-fixed-fee contract type
Limited competition potential
Age of contract limits current assessment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.9 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. BOOTSTRAPPED LEARNING

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 $11.9 million.

What is the period of performance?

Start: 2007-07-31. End: 2012-02-29.

What was the specific technological area or objective of this R&D contract?

The provided data indicates the contract falls under NAICS code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences.' However, it does not specify the precise technological area or objective. Contracts in this category can range widely, from materials science and aerospace engineering to cybersecurity and artificial intelligence research. To understand the specific objective, one would need to consult the contract's statement of work (SOW) or related documentation, which would detail the research goals, methodologies, and expected outcomes.

How did BAE Systems' past performance on similar contracts influence this award?

While the data confirms BAE Systems Information and Electronic Systems Integration Inc. as the contractor, it does not provide details on their past performance or how it factored into this specific award. Typically, agencies evaluate past performance as a significant factor in source selection, especially for R&D contracts where reliability and innovation are key. A review of BAE Systems' performance history with the Department of Defense, including any awards, past performance questionnaires, or debriefings from similar R&D efforts, would be necessary to assess its influence on this contract.

What were the key performance indicators (KPIs) or milestones for this contract?

The provided data does not include specific Key Performance Indicators (KPIs) or milestones for this contract. For R&D contracts, especially those using a Cost Plus Fixed Fee (CPFF) structure, milestones often relate to research progress, prototype development, testing phases, and final reports. The absence of this information makes it difficult to objectively measure the contractor's performance and the achievement of the contract's objectives. Accessing the contract's Statement of Work (SOW) or contract line item numbers (CLINs) would be necessary to identify these performance metrics.

Can the $11.9 million award value be benchmarked against similar R&D efforts in the defense sector during that period?

Benchmarking the $11.9 million award value against similar R&D efforts requires access to comparable contract data from the 2007-2012 period. Factors such as the specific research domain (e.g., electronics, materials, software), the technological maturity sought, the duration of the research, and the number of bidders would influence the price. Without these details, a direct comparison is difficult. However, $11.9 million over nearly five years for a specialized R&D effort by a major contractor like BAE Systems appears to be within a plausible range for significant research projects, though potentially on the higher side if the scope was limited or competition was less intense than ideal.

What was the rationale for choosing a Cost Plus Fixed Fee (CPFF) contract type for this R&D effort?

The Cost Plus Fixed Fee (CPFF) contract type is often chosen for Research and Development (R&D) efforts when the scope of work is not precisely defined, and there is uncertainty about the costs involved. This structure allows the contractor to incur costs deemed reasonable and allocable to the contract, plus a predetermined fixed fee representing profit. The rationale for using CPFF here likely stems from the inherent unpredictability of R&D, where the path to achieving desired outcomes can involve unforeseen challenges and discoveries. While it provides flexibility, it also shifts some cost risk to the government.

What is the historical spending trend for similar R&D contracts awarded by the Department of Defense?

The Department of Defense is consistently one of the largest federal funders of Research and Development. Historical spending trends show a significant and often increasing investment in R&D to maintain technological superiority. While specific figures fluctuate annually based on budget allocations and strategic priorities, the DoD's R&D spending typically runs into the tens of billions of dollars each fiscal year. This particular $11.9 million contract represents a small fraction of the overall DoD R&D budget during its performance period (2007-2012), reflecting a broader pattern of substantial investment in innovation across various scientific and engineering disciplines.

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: SEALED BID

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 6 NEW ENGLAND EXECUTIVE PARK, BURLINGTON, MA, 01803

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $54,815,044

Exercised Options: $52,799,501

Current Obligation: $11,925,995

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline