DoD's $140M C4I services contract awarded to BAE Systems, raising questions on value and competition

Contract Overview

Contract Amount: $140,355,103 ($140.4M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2007-02-01

End Date: 2012-09-30

Contract Duration: 2,068 days

Daily Burn Rate: $67.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SERVICES TO SUPPORT C4I

Place of Performance

Location: SAINT INIGOES, SAINT MARYS County, MARYLAND, 20684

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $140.4 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: SERVICES TO SUPPORT C4I Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending. 2. Limited public data on performance metrics makes value assessment challenging. 3. A single awardee suggests potential for reduced price competition. 4. The contract duration of over 5 years indicates a long-term commitment. 5. Engineering services are critical for C4I systems, but specific deliverables are not detailed. 6. The contract's significant value warrants close scrutiny of cost controls.

Value Assessment

Rating: questionable

Benchmarking the value of this $140 million contract is difficult without detailed performance data and comparable contract information. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or services where costs are uncertain, can lead to higher overall expenditures compared to fixed-price contracts. The absence of specific metrics for 'services to support C4I' makes it hard to assess if the government received optimal value for its investment over the contract's 5-year duration. Further analysis of the contractor's actual costs and profit margins would be needed for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. However, the award details do not specify the number of bids received or the evaluation process. A single awardee, BAE Systems, suggests that either they were the sole technically acceptable offeror, or the evaluation criteria heavily favored their proposal. Without more information on the competitive landscape, it's difficult to definitively assess the extent to which competition drove down prices.

Taxpayer Impact: While full and open competition is generally beneficial for taxpayers, a single awardee in this instance may mean that the full potential for cost savings through robust bidding was not realized.

Public Impact

The primary beneficiaries are the Department of the Navy and the broader Department of Defense, receiving support for critical Command, Control, Communications, Computers, and Intelligence (C4I) systems. Services provided likely include system design, integration, maintenance, and potentially software development to enhance C4I capabilities. The geographic impact is likely concentrated within areas where the Navy operates and maintains its C4I infrastructure, potentially worldwide. The contract supports a workforce of engineers and technical specialists, contributing to employment in the defense technology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may lead to cost overruns.
Lack of detailed performance metrics hinders value-for-money assessment.
Single awardee raises concerns about the intensity of competition.
Long contract duration could lock in potentially suboptimal pricing.
Ambiguity in 'services to support C4I' makes scope and deliverables unclear.

Positive Signals

Awarded under full and open competition, suggesting a broad initial search for qualified contractors.
BAE Systems is a major defense contractor with established expertise in C4I systems.
The contract addresses critical national defense needs for C4I infrastructure.
The definitive contract award type provides a clear framework for service delivery.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting the defense industry's complex C4I systems. The market for C4I solutions is substantial, driven by continuous technological advancements and evolving geopolitical threats. Comparable spending benchmarks in this area are difficult to pinpoint without more specific service details, but large-scale system support contracts for defense agencies often run into hundreds of millions of dollars over their lifecycle. This contract represents a significant investment in maintaining and enhancing the technological backbone of military operations.

Small Business Impact

The contract details indicate that small business participation was not a primary focus, as the awardee is a large corporation and there is no explicit mention of small business set-asides or subcontracting goals. This suggests that opportunities for small businesses may have been limited unless they were direct subcontractors to BAE Systems. Further investigation into BAE Systems' subcontracting plan would be necessary to understand the actual impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract's terms, including reporting requirements and performance standards. Transparency is often limited for defense contracts due to national security considerations, but contract awards and basic details are usually publicly available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense-wide C4I Systems
Naval Information Warfare Systems
Command and Control Systems Support
Defense Engineering Services
Information Technology Support Services

Risk Flags

Cost-plus-fixed-fee structure
Lack of specific performance metrics
Single awardee under full and open competition
Ambiguous service description

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $140.4 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. SERVICES TO SUPPORT C4I

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 $140.4 million.

What is the period of performance?

Start: 2007-02-01. End: 2012-09-30.

What specific C4I systems or capabilities does this contract support, and what are the key performance indicators (KPIs) for BAE Systems?

The contract broadly covers 'SERVICES TO SUPPORT C4I' without specifying particular systems or capabilities. This lack of specificity makes it challenging to define precise Key Performance Indicators (KPIs). Typically, C4I support contracts would include metrics related to system uptime, response times for technical support, successful integration of new technologies, cybersecurity compliance, and the reliability of communication links. Without access to the contract's Statement of Work (SOW) and any associated performance metrics or Service Level Agreements (SLAs), a detailed assessment of BAE Systems' performance and the value delivered is not possible. The $140 million value suggests a significant scope, likely encompassing a range of critical functions for the Navy's operational readiness.

How did the cost-plus-fixed-fee (CPFF) structure impact the final cost compared to a fixed-price contract, and what was the contractor's profit margin?

The Cost-Plus-Fixed-Fee (CPFF) structure means that BAE Systems was reimbursed for its allowable costs plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not well-defined or involves significant uncertainty, allowing flexibility but potentially leading to higher costs than fixed-price contracts if costs escalate. The 'fixed fee' component is intended to provide profit regardless of cost fluctuations, though it doesn't cap the total expenditure. Without access to the contractor's cost data and the final negotiated fee, it's impossible to determine the exact profit margin or how the final cost compared to what a fixed-price contract might have yielded. The total award amount of $140,355,103.48 represents the ceiling for costs and fees.

What was the competitive landscape for this contract, and how many bids were received?

The contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that the solicitation was made available to all responsible sources. However, the provided data only states the award type and does not specify the number of bids received or the names of other participating companies. While 'full and open' suggests a competitive process, the fact that BAE Systems was the sole awardee could imply that only one proposal met the technical requirements, or that competition was not as robust as the 'full and open' designation might initially suggest. A deeper dive into the solicitation details or award justification documents would be needed to understand the number of bidders and the competitive dynamics.

What is the historical spending trend for C4I services by the Department of the Navy, and how does this contract compare?

Historical spending on C4I services by the Department of the Navy is substantial and has likely trended upwards due to increasing reliance on networked systems and evolving threats. While specific historical data for this exact service category isn't provided, the Navy consistently invests billions annually in IT, communications, and intelligence systems. This $140 million contract, spanning over five years (2007-2012), represents a significant, but not extraordinary, portion of the Navy's C4I budget for that period. It aligns with the ongoing need for robust C4I capabilities, reflecting a sustained investment in this critical area of defense.

Are there any known performance issues or past controversies associated with BAE Systems' contracts for similar C4I services?

BAE Systems is a large, established defense contractor with a long history of performing complex C4I-related work for the U.S. military. While specific performance issues or controversies related to this particular $140 million contract are not detailed in the provided data, large contractors often face scrutiny regarding contract performance, cost overruns, or technical challenges on various programs. Without access to performance reviews, contract close-out reports, or public records of disputes for this specific contract, it's difficult to assess BAE Systems' track record here. However, their continued success in securing large defense contracts suggests a generally satisfactory performance history.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0042105R0102

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 1601 RESEARCH BLVD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $156,161,469

Exercised Options: $156,161,469

Current Obligation: $140,355,103

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline