DoD's $102M Logistics Engineering Contract Awarded to BAE Systems Raises Value Questions

Contract Overview

Contract Amount: $101,981,938 ($102.0M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2023-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $55.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LOGISTICS ENGINEERING&INTEGRATION

Place of Performance

Location: WASHINGTON NAVY YARD, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20374

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $102.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: LOGISTICS ENGINEERING&INTEGRATION Key points: 1. The contract's value proposition is unclear given the lack of competition and cost-plus structure. 2. Sole-source award limits price discovery and potentially inflates costs for taxpayers. 3. The extended duration of nearly five years suggests a long-term need, but performance metrics are not detailed. 4. The contract falls within engineering services, a broad category with varying market rates. 5. No small business set-aside was applied, indicating potential missed opportunities for smaller firms. 6. The contract's significant value warrants close scrutiny of BAE Systems' performance and pricing.

Value Assessment

Rating: questionable

The $102 million contract awarded to BAE Systems Technology Solutions & Services Inc. for logistics engineering and integration services is a cost-plus fixed fee type. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The lack of transparency in how the price was determined makes it challenging to assess value for money. The extended period of performance (1825 days) also means that the total cost could escalate significantly over time, further complicating value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, BAE Systems Technology Solutions & Services Inc., was solicited. This approach bypasses the competitive process, which typically leads to better price discovery and potentially lower costs for the government. The absence of multiple bidders means there was no direct comparison of technical approaches or pricing, raising concerns about whether the government secured the best possible value.

Taxpayer Impact: Sole-source awards limit taxpayer savings by preventing market forces from driving down prices. Without competition, there's a higher risk of paying more than necessary for the services rendered.

Public Impact

The Department of the Navy benefits from specialized logistics engineering and integration support. Services provided are critical for maintaining operational readiness and efficiency within naval logistics. The contract's impact is primarily felt within the Department of Defense's operational infrastructure. Workforce implications are likely concentrated within BAE Systems' engineering and logistics divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a contract of this magnitude.
Cost-plus fixed fee structure can incentivize higher spending.
Extended contract duration without clear performance benchmarks.
Absence of small business participation.

Positive Signals

BAE Systems is a large, established defense contractor with significant experience.
Logistics engineering is a critical function for military operations.

Sector Analysis

This contract falls under the Engineering Services sector, specifically related to logistics and integration. The broader engineering services market is substantial, with significant government spending allocated to defense-related engineering support. Comparable contracts often involve complex system integration, technical support, and operational analysis. Benchmarking this contract's value is difficult due to its sole-source nature and cost-plus structure, but the total value of $102 million places it as a significant award within this specialized niche.

Small Business Impact

The contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. This indicates that the primary award went to a large prime contractor, potentially limiting opportunities for smaller firms to participate in this significant defense contract. Without a set-aside or explicit subcontracting goals, the direct impact on the small business ecosystem for this specific award is likely minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency is limited due to the sole-source nature. The Inspector General for the Department of Defense may conduct audits or investigations if performance or cost concerns arise. Accountability relies heavily on the internal controls of both the agency and the contractor.

Related Government Programs

Defense Logistics Agency Support Contracts
Naval Sea Systems Command (NAVSEA) Engineering Services
Department of Defense Information Analysis Center (IAC) Contracts
Logistics and Supply Chain Management Services

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding
Extended contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $102.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. LOGISTICS ENGINEERING&INTEGRATION

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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $102.0 million.

What is the period of performance?

Start: 2018-10-01. End: 2023-09-30.

What is BAE Systems' track record with similar Department of Defense logistics contracts?

BAE Systems Technology Solutions & Services Inc. has a substantial history of performing complex engineering, integration, and logistics support services for the Department of Defense and other federal agencies. They are a major defense contractor with extensive experience in areas such as systems engineering, technical support, and program management. While specific details on past logistics contracts of this exact scope and value are not provided here, their overall profile suggests a capacity to handle large-scale defense requirements. However, the performance quality and cost-effectiveness of their past contracts would need to be reviewed through contract performance reports (e.g., CPARS) and historical spending data to fully assess their track record for this specific type of work.

How does the $102 million value compare to similar logistics engineering contracts?

Benchmarking the $102 million value of this sole-source contract is challenging due to the lack of competitive data. However, within the defense sector, large-scale engineering and integration contracts can range from tens to hundreds of millions of dollars, depending on the scope, duration, and complexity. Contracts for logistics support, systems integration, and technical services for major platforms or entire operational domains often reach these figures. The cost-plus fixed fee structure, combined with a nearly five-year performance period, suggests a comprehensive and potentially evolving set of requirements. Without comparable competitively awarded contracts for similar services, it's difficult to definitively state if $102 million represents a fair market price.

What are the primary risks associated with this sole-source, cost-plus contract?

The primary risks associated with this sole-source, cost-plus fixed fee contract include potential cost overruns, reduced incentive for efficiency, and a lack of price competition. Since the contractor is reimbursed for allowable costs plus a fixed fee, there is less pressure to minimize expenses compared to a fixed-price contract. The sole-source nature means the government did not explore potentially lower-cost alternatives or leverage competitive bidding to secure better pricing. The extended duration also increases the risk of costs escalating over time, especially if the scope of work changes or unforeseen issues arise. Effective oversight and robust cost-reimbursement controls are critical to mitigate these risks.

How effective is the cost-plus fixed fee (CPFF) contract type for logistics engineering services?

The Cost-Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not clearly defined at the outset or involves a high degree of uncertainty and research and development. For complex logistics engineering and integration services, where requirements might evolve or unforeseen technical challenges may arise, CPFF can provide flexibility. It allows the government to obtain necessary services while sharing the cost risk with the contractor. However, it also presents risks, including potential for cost escalation and reduced contractor incentive for cost control, as the contractor's profit (the fixed fee) is not directly tied to cost savings. Careful monitoring and strong oversight are essential to ensure value is achieved.

What is the historical spending trend for logistics engineering services within the Department of the Navy?

Historical spending data for logistics engineering services within the Department of the Navy indicates a consistent and significant investment in these capabilities. The Navy, like other branches of the DoD, relies heavily on specialized engineering and integration support to maintain its complex global operations and advanced platforms. Spending in this category typically fluctuates based on major acquisition programs, modernization efforts, and operational tempo. While specific annual figures for 'logistics engineering and integration' are not detailed here, the overall trend shows a substantial and ongoing requirement for such services, often awarded through a mix of competitive and sole-source contracts, with values frequently in the tens to hundreds of millions of dollars.

What oversight mechanisms are in place for this contract?

Oversight for this contract is managed by the Department of the Navy's contracting and program management personnel. As a definitive contract, it is subject to standard federal acquisition regulations, including requirements for performance monitoring, financial reporting, and compliance. The contracting officer is responsible for ensuring the contractor meets the terms and conditions of the contract. The cost-plus nature necessitates rigorous auditing of incurred costs by the Defense Contract Audit Agency (DCAA) and close monitoring by the Defense Contract Management Agency (DCMA) to ensure costs are allowable, allocable, and reasonable. The DoD Inspector General may also conduct audits or investigations if specific concerns are raised.

Industry Classification

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

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003019Q0007

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

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: $103,272,955

Exercised Options: $103,272,955

Current Obligation: $101,981,938

Actual Outlays: $11,866,801

Subaward Activity

Number of Subawards: 36

Total Subaward Amount: $8,198,932

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline