DoD's $94M E&RM System Development Faces Evolving Scope and Potential Cost Overruns

Contract Overview

Contract Amount: $94,062,613 ($94.1M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2013-07-30

End Date: 2017-08-31

Contract Duration: 1,493 days

Daily Burn Rate: $63.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: THE INSIGHT PROGRAM IS DEVELOPING AN ADAPTABLE, INTEGRATED HUMAN-MACHINE EXPLOITATION AND RESOURCE MANAGEMENT (E&RM) SYSTEM. PHASE 1 OF THE PROGRAM CREATED THE BASELINE SYSTEM WITH AN INITIAL FOCUS ON COUNTERINSURGENCY OPERATIONS; PHASE 2 WILL MATURE THE PHASE 1 CAPABILITIES AND ADD ADDITIONAL ONES TO BROADEN THE SYSTEM'S APPLICABILITY TO EXPANDED MISSION SPACES.

Place of Performance

Location: BURLINGTON, MIDDLESEX County, MASSACHUSETTS, 01803

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $94.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: THE INSIGHT PROGRAM IS DEVELOPING AN ADAPTABLE, INTEGRATED HUMAN-MACHINE EXPLOITATION AND RESOURCE MANAGEMENT (E&RM) SYSTEM. PHASE 1 OF THE PROGRAM CREATED THE BASELINE SYSTEM WITH AN INITIAL FOCUS ON COUNTERINSURGENCY OPERATIONS; PHASE 2 WILL MATURE THE PHASE 1 CAPABILITIES AND … Key points: 1. The E&RM system aims to integrate human-machine capabilities for resource management, evolving from counterinsurgency to broader mission spaces. 2. BAE Systems is the sole contractor, raising questions about competitive pricing and potential lack of market pressure. 3. The project's Cost Plus Fixed Fee (CPFF) contract type carries inherent risk for cost overruns as scope expands. 4. Spending is categorized under R&D (NAICS 541712), a sector known for its inherent uncertainties and potential for cost escalation.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract structure, combined with an evolving scope, makes a definitive pricing assessment difficult. Without clear benchmarks for similar integrated human-machine systems, it's challenging to determine if the $94M spent represents fair value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

While the contract was awarded under full and open competition, BAE Systems appears to be the sole performer. This lack of ongoing competition during development could limit price discovery and potentially lead to less favorable pricing for the government.

Taxpayer Impact: The evolving scope and CPFF contract type present a risk of cost overruns, potentially increasing the taxpayer burden beyond initial estimates.

Public Impact

Taxpayers may fund further scope expansion without competitive re-evaluation. The system's ultimate effectiveness and utility for expanded mission spaces remain to be seen. Lack of ongoing competition could set a precedent for sole-source follow-on work.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Evolving scope increases risk of cost overruns.
CPFF contract type offers limited incentive for contractor cost control.
Sole performer raises concerns about competitive pricing.
Long duration (1493 days) increases exposure to changing requirements.

Positive Signals

Initial phase completed, establishing a baseline system.
Contract awarded under full and open competition.
System aims to enhance critical resource management capabilities.

Sector Analysis

This R&D project falls within the physical, engineering, and life sciences sector. Spending benchmarks for complex, integrated human-machine systems are difficult to establish due to their unique nature and evolving technological landscape.

Small Business Impact

The data indicates no specific set-aside for small businesses. The prime contractor, BAE Systems, is a large business, suggesting limited direct opportunities for small businesses in this particular contract.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency (DCMA), indicating established oversight. However, the evolving scope and CPFF structure necessitate vigilant monitoring to ensure cost control and adherence to requirements.

Related Government Programs

Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Potential for cost overruns due to evolving scope and CPFF contract.
Lack of ongoing competition may lead to reduced price pressure.
Difficulty in benchmarking unique, evolving technology.
Contract duration increases risk of requirement drift.
Uncertainty in measuring effectiveness for new mission spaces.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $94.1 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. THE INSIGHT PROGRAM IS DEVELOPING AN ADAPTABLE, INTEGRATED HUMAN-MACHINE EXPLOITATION AND RESOURCE MANAGEMENT (E&RM) SYSTEM. PHASE 1 OF THE PROGRAM CREATED THE BASELINE SYSTEM WITH AN INITIAL FOCUS ON COUNTERINSURGENCY OPERATIONS; PHASE 2 WILL MATURE THE PHASE 1 CAPABILITIES AND ADD ADDITIONAL ONES TO BROADEN THE SYSTEM'S APPLICABILITY TO EXPANDED MISSION SPACES.

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 $94.1 million.

What is the period of performance?

Start: 2013-07-30. End: 2017-08-31.

What specific metrics will be used to assess the 'maturation' of Phase 1 capabilities in Phase 2, and how will these metrics ensure the expanded applicability justifies the additional investment?

The program should define clear, measurable performance metrics for Phase 2 that directly correlate to the expanded mission spaces. These metrics should go beyond simple feature addition and focus on demonstrable improvements in efficiency, effectiveness, and adaptability. Independent verification and validation against these metrics will be crucial to ensure the investment aligns with actual capability gains and justifies the cost.

Given the sole performer status of BAE Systems post-award, what mechanisms are in place to ensure continued price reasonableness and prevent potential 'lock-in' effects as the system evolves?

While the initial award was competitive, ongoing price reasonableness requires proactive measures. This could include independent cost estimates for any scope changes, benchmarking against industry standards for similar technologies, and potentially incorporating incentive fees tied to cost savings or performance improvements. Regular reviews of the contractor's cost accounting practices are also essential.

How will the effectiveness of the integrated human-machine system be measured in real-world operational environments, particularly considering the shift from counterinsurgency to broader mission space

Effectiveness measurement should involve rigorous operational testing and evaluation (OT&E) in simulated or actual mission scenarios relevant to the expanded scope. This includes gathering feedback from end-users, analyzing system performance data (e.g., response times, accuracy, resource allocation efficiency), and comparing outcomes against pre-defined mission objectives. Post-deployment analysis will be critical.

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: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 1

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

Financial Breakdown

Contract Ceiling: $100,588,576

Exercised Options: $94,796,430

Current Obligation: $94,062,613

Actual Outlays: $16,173

Subaward Activity

Number of Subawards: 51

Total Subaward Amount: $59,757,788

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline