DoD's $49M BAE Systems contract for engineering services shows fair value with a competitive landscape

Contract Overview

Contract Amount: $49,088,111 ($49.1M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2007-07-30

End Date: 2011-09-30

Contract Duration: 1,523 days

Daily Burn Rate: $32.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: N00178-04-D-4018-N405

Place of Performance

Location: WEST PALM BEACH, PALM BEACH County, FLORIDA, 33416

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $49.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: N00178-04-D-4018-N405 Key points: 1. The contract demonstrates a reasonable value proposition given the scope of engineering services provided. 2. Full and open competition suggests a healthy market dynamic for these specialized services. 3. The fixed-fee pricing structure, while common, warrants scrutiny for potential cost overruns. 4. Performance duration of over 1500 days indicates a long-term need and potential for sustained service delivery. 5. The contract's focus on engineering services positions it within a critical support sector for defense operations. 6. The absence of small business set-asides may limit opportunities for smaller firms in this specific award.

Value Assessment

Rating: good

The contract's total value of approximately $49 million over its period of performance appears reasonable for complex engineering services. Benchmarking against similar large-scale engineering contracts within the Department of Defense suggests that the pricing is within an expected range. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, necessitates careful monitoring to ensure costs remain aligned with the fixed fee and do not escalate unnecessarily. The value delivered is likely tied to specialized technical expertise and support critical to naval operations.

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 and evaluated. The presence of a competitive bidding process is a positive sign for price discovery and ensures that the government receives proposals from a range of qualified contractors. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust competition that likely drove competitive pricing and service offerings.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it fosters a competitive environment, which typically leads to more favorable pricing and better service terms compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational units, receiving essential engineering support. Services delivered likely include design, analysis, testing, and technical support for naval systems and infrastructure. The contract's geographic impact is centered in Florida, suggesting a concentration of naval activities or facilities requiring engineering expertise. The contract supports a workforce of engineers and technical specialists, contributing to specialized employment within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee (CPFF) contract type can incentivize contractors to incur costs to achieve a higher fixed fee if not properly managed.
Lack of specific performance metrics or award fee structure makes it difficult to assess contractor performance beyond basic delivery.
The duration of the contract (over 4 years) increases the risk of scope creep or evolving requirements not being adequately addressed in the original award.
The absence of small business participation could indicate a missed opportunity to leverage diverse capabilities and foster economic growth.

Positive Signals

Awarded under full and open competition, suggesting a competitive environment that likely resulted in fair pricing.
The contract is for engineering services, a critical component of defense readiness and technological advancement.
The fixed fee component provides a degree of cost certainty for the government, assuming effective oversight.
The contractor, BAE Systems, is a large and established defense contractor with a significant track record.

Sector Analysis

Engineering services represent a significant segment of the federal contracting market, particularly within the Department of Defense. This contract falls under the broader category of professional, scientific, and technical services. The market for defense engineering services is characterized by high barriers to entry due to specialized knowledge, security clearances, and established relationships. Comparable spending benchmarks for similar engineering support contracts within the DoD often run into tens or hundreds of millions of dollars, making this $49 million award a mid-to-large size engagement.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by the 'sb: false' field. This means that the competition was open to all responsible sources, including large businesses. While this ensures maximum competition, it may limit direct opportunities for small businesses to secure prime contracts of this nature. However, BAE Systems, as a large prime contractor, may engage small businesses as subcontractors, though the extent of such subcontracting is not detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and their representatives within the Department of the Navy. Accountability measures are inherent in the contract terms, particularly the fixed fee, which is earned upon satisfactory performance. Transparency is generally maintained through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Department of Defense Engineering Support Services
BAE Systems Defense Contracts
Florida Defense Industry Contracts
Cost Plus Fixed Fee Engineering Contracts

Risk Flags

Cost Overrun Risk (CPFF)
Performance Monitoring Challenges
Scope Creep Potential
Lack of Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.1 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. N00178-04-D-4018-N405

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 $49.1 million.

What is the period of performance?

Start: 2007-07-30. End: 2011-09-30.

What is BAE Systems' track record with similar engineering services contracts for the Department of Defense?

BAE Systems Technology Solutions & Services Inc. has a substantial history of performing engineering and technical services for the Department of Defense. As a major defense contractor, they frequently secure large-value contracts across various branches, including the Navy and Air Force. Their track record typically involves complex system design, integration, testing, and lifecycle support. While specific performance metrics for past contracts are not detailed here, their continued success in winning competitive bids suggests a generally positive performance history and capability to meet DoD requirements. Analysis of past performance evaluations, where available, would provide a more granular understanding of their reliability and quality of service.

How does the value of this contract compare to other engineering services contracts awarded by the Department of the Navy in the same period?

The $49 million total value for this engineering services contract awarded in 2007 places it as a significant, but not exceptionally large, award within the Department of the Navy's portfolio for that era. The Navy frequently awards contracts for engineering, technical, and professional services that range from a few million to hundreds of millions of dollars. Contracts for major platform development, sustainment, or research and development often exceed this value considerably. However, for specific, focused engineering support services, $49 million over approximately four years represents a substantial commitment, indicating a critical need for the services rendered. Benchmarking against contracts with similar scope (e.g., systems engineering, technical support for specific naval systems) would provide a more precise comparison.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for engineering services?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. While the contractor is incentivized to control costs to ensure their fixed fee is profitable, the government bears the risk of all allowable costs. If the contractor's cost estimates are inaccurate or if unforeseen technical challenges arise, the total cost to the government can exceed initial projections. There's also a risk that the contractor might prioritize profit over optimal solutions if cost controls are lax. Effective oversight, detailed cost tracking, and clear definition of allowable costs are crucial to mitigate these risks. The fixed fee itself is negotiated upfront, providing some budget certainty, but the 'cost' portion remains variable.

How effective is 'full and open competition' in ensuring optimal value for taxpayers in the defense engineering sector?

Full and open competition is generally considered the most effective method for ensuring optimal value for taxpayers in the defense engineering sector. By allowing all responsible sources to submit bids, it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive pricing and innovative solutions. This process drives down costs through market forces and encourages contractors to offer their best value propositions. While it requires more administrative effort upfront to solicit and evaluate bids, the long-term benefits in terms of cost savings and quality of services typically outweigh these initial investments. It also promotes transparency and fairness in the procurement process.

What are the implications of this contract being awarded in Florida, a state with a significant defense presence?

Awarding this engineering services contract in Florida has several implications, given the state's robust defense industry and numerous military installations. Firstly, it likely means the contractor, BAE Systems, will establish or utilize existing facilities in Florida, potentially creating or sustaining high-skilled jobs in engineering and technical fields within the state. Secondly, it suggests that the services provided are in direct support of naval operations or facilities located in or managed from Florida, such as naval air stations, shipyards, or training commands. This geographic concentration can foster a local ecosystem of defense-related businesses and expertise, potentially leading to more efficient collaboration and reduced logistical costs for certain aspects of the contract.

What is the typical duration for engineering services contracts of this magnitude within the DoD?

Engineering services contracts within the DoD, especially those involving complex systems or long-term support, often have durations ranging from one to five years, with options for extension. A duration of approximately 1523 days (just over 4 years) for a $49 million contract is quite typical. This length allows for the contractor to gain deep familiarity with the systems or requirements, plan effectively, and deliver sustained support. Shorter contracts might be suitable for specific, well-defined tasks, while longer durations are common for ongoing research, development, sustainment, or complex project management where stability and continuity are paramount. The extended period also allows for potential adjustments to scope or requirements as the program evolves.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002407R3225

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 520 GAITHER ROAD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $49,088,117

Exercised Options: $49,088,117

Current Obligation: $49,088,111

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4018

IDV Type: IDC

Timeline