DoD's $159M BAE Systems contract for C-E platform services awarded without competition

Contract Overview

Contract Amount: $158,798,959 ($158.8M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2009-09-12

End Date: 2015-02-27

Contract Duration: 1,994 days

Daily Burn Rate: $79.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SERVICES TO SUPPORT C-E PLATFORMS

Place of Performance

Location: LEXINGTON PARK, SAINT MARYS County, MARYLAND, 20653

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $158.8 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: SERVICES TO SUPPORT C-E PLATFORMS Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. Long contract duration of nearly 2000 days suggests a need for ongoing, specialized support. 3. The Cost Plus Fixed Fee (CPFF) pricing structure may incentivize cost overruns. 4. Lack of competition limits opportunities for other capable firms and potentially reduces innovation. 5. Performance context is limited due to the absence of comparative contract data. 6. The contract's focus on engineering services indicates a critical role in defense technology development.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific engineering services provided for C-E platforms. Without competitive bids, it's difficult to ascertain if the fixed fee accurately reflects the market rate for such specialized support. The CPFF structure, while common for complex R&D, carries inherent risks of cost escalation. The provided benchmark of $79,638 (likely annual or a specific period) is too granular to assess the overall contract value effectively without more context on the scope of work and duration it represents.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not conduct a competitive bidding process. This typically occurs when only one vendor is deemed capable of performing the required services, often due to proprietary technology, unique expertise, or urgent national security needs. The absence of competition means potential savings from a bidding war were forgone, and the government relied solely on negotiation to establish terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure. Without multiple bids, there's a reduced likelihood of securing the lowest possible price for the services rendered.

Public Impact

The Department of Defense benefits from specialized engineering support for its C-E platforms, crucial for national security operations. BAE Systems Technology Solutions & Services Inc. receives significant revenue and maintains its role as a key defense contractor. Personnel in Maryland, where the contractor is located, likely benefit from employment opportunities in the defense sector. The services provided contribute to the advancement and maintenance of critical defense communication and electronic warfare capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially leads to higher costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely managed.
Long contract duration (nearly 2000 days) requires sustained oversight to ensure continued value.
Lack of transparency in the sole-source justification process.
Specific details on performance metrics and outcomes are not readily available without competitive context.

Positive Signals

BAE Systems is a major defense contractor with a track record in complex engineering solutions.
The contract addresses critical C-E platform needs for the Department of the Navy.
Engineering services are essential for maintaining and advancing sophisticated defense systems.
The fixed fee component provides some cost certainty compared to pure cost-reimbursement contracts.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader Defense industry. The market for defense engineering services is substantial, driven by continuous technological evolution and the need for specialized expertise in areas like C-E platforms (likely Communication-Electronics). Companies like BAE Systems are key players, often holding significant portions of government contracts due to their established relationships, security clearances, and demonstrated capabilities. Spending in this area is vital for maintaining a technological edge in national security.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, BAE Systems, is a large corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a set-aside suggests that the primary focus was on securing specialized capabilities, potentially overlooking opportunities to bolster the small business defense ecosystem through this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor expenditures against the fixed fee and ensure the contractor is not incurring excessive costs. Transparency is limited due to the sole-source nature, but the government should have internal mechanisms to track performance against the statement of work. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development
Naval Sea Systems Command (NAVSEA) Contracts
Defense Communication Systems
Electronic Warfare Systems Support
Engineering and Technical Services Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration
Lack of publicly available performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $158.8 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. SERVICES TO SUPPORT C-E PLATFORMS

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 $158.8 million.

What is the period of performance?

Start: 2009-09-12. End: 2015-02-27.

What is the specific nature of the 'C-E Platforms' supported by this contract, and why were they deemed to require sole-source engineering services?

The abbreviation 'C-E Platforms' likely refers to Communication-Electronics platforms, which are fundamental to military operations, encompassing everything from radio systems and satellite communications to electronic warfare and command and control systems. These platforms are often highly complex, proprietary, and integrated into larger defense networks. The decision for a sole-source award typically stems from a determination that only one contractor, in this case, BAE Systems Technology Solutions & Services Inc., possesses the unique technical expertise, proprietary knowledge, or existing infrastructure necessary to support or develop these specific systems. This could be due to prior development work, unique intellectual property, or the need for seamless integration with existing classified or highly specialized military hardware and software. Without this specific context, the justification remains opaque, but it generally points to a critical need that could not be met through open competition.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types used for similar engineering services in the defense sector?

The Cost Plus Fixed Fee (CPFF) contract type is common for research, development, and complex services where the scope of work is not precisely defined at the outset, or where innovation is a key objective. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This differs from Fixed Price contracts, where the price is set regardless of the final cost, offering more cost certainty to the buyer but potentially higher risk for the contractor. It also differs from Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) contracts, which include mechanisms to adjust the fee based on performance against targets. For engineering services, CPFF can be advantageous when the government needs flexibility to adapt the scope as the project evolves. However, it places a significant burden on the government to meticulously audit costs and closely monitor the contractor to prevent unnecessary spending, as the contractor has less financial incentive to control costs compared to fixed-price arrangements.

What are the potential risks associated with a sole-source contract of this magnitude and duration for the Department of Defense?

A sole-source contract of this magnitude ($159 million) and duration (nearly 2000 days) carries several significant risks for the Department of Defense (DoD). Firstly, the absence of competition inherently limits the government's ability to secure the best possible price. Without competing bids, there is a higher likelihood of paying above fair market value. Secondly, sole-source awards can stifle innovation by preventing other capable companies from contributing their expertise or developing alternative solutions. Thirdly, long-term sole-source contracts can create vendor lock-in, making it difficult and costly to switch providers in the future. Finally, without the transparency and scrutiny that competition brings, there is an increased risk of complacency, potential cost overruns (especially with CPFF), and reduced accountability if oversight is not exceptionally rigorous. The government must ensure robust contract management and performance monitoring to mitigate these risks.

Can the performance history of BAE Systems Technology Solutions & Services Inc. on similar contracts provide insight into the potential effectiveness of this award?

BAE Systems Technology Solutions & Services Inc. is a major defense contractor with a substantial portfolio of contracts across various defense agencies. Their performance history on similar engineering and technical support contracts generally indicates a capacity to handle complex projects. However, assessing the effectiveness of this specific sole-source award based solely on their general track record is limited. While BAE Systems has experience, the unique nature of 'C-E Platforms' and the specific requirements of this contract mean that past performance on unrelated projects may not be a perfect predictor. Without access to specific performance reviews, past issues, or successes directly related to C-E platform support under similar contract structures, it's difficult to draw definitive conclusions about the likely effectiveness of this particular $159 million contract. A deeper dive into their specific performance metrics on comparable DoD contracts would be necessary.

What does the historical spending pattern for engineering services related to C-E platforms reveal about the government's reliance on contractors like BAE Systems?

Historical spending patterns for engineering services related to Communication-Electronics (C-E) platforms within the Department of Defense (DoD) typically show a consistent and significant investment. These platforms are critical for modern military operations, requiring continuous upgrades, maintenance, and specialized technical support due to rapid technological advancements and evolving threats. This consistent need often leads to long-term relationships with established defense contractors possessing the requisite expertise and security clearances, such as BAE Systems. The data often indicates a trend of awarding substantial contracts, frequently on a sole-source or limited-competition basis, for highly specialized C-E systems. This reliance underscores the government's dependence on industry partners for maintaining its technological edge in this domain, highlighting the strategic importance of these services and the contractors providing them.

Industry Classification

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

Product/Service Code: INSTALLATION OF EQUIPMENT › INSTALLATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0042108R0116

Offers Received: 1

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: $159,633,709

Exercised Options: $159,633,709

Current Obligation: $158,798,959

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline