DoD awards BAE Systems $62.5M for NRE OTPS Engineering & Development, with a 5-year performance period

Contract Overview

Contract Amount: $62,460,902 ($62.5M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2025-09-18

End Date: 2030-08-05

Contract Duration: 1,782 days

Daily Burn Rate: $35.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: NRE OTPS ENGINEERING & DEVELOPMENT

Place of Performance

Location: GREENLAWN, SUFFOLK County, NEW YORK, 11740

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $62.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: NRE OTPS ENGINEERING & DEVELOPMENT Key points: 1. Contract value of $62.5M over 5 years suggests a significant investment in research and development. 2. Sole-source award raises questions about potential lack of competition and its impact on pricing. 3. The 'Other Measuring and Controlling Device Manufacturing' NAICS code indicates a focus on specialized hardware or systems. 4. Performance period extending to August 2030 implies a long-term project with potential for follow-on work. 5. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 6. Lack of small business set-aside indicates this contract was not specifically targeted for small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more specific details on the NRE OTPS Engineering & Development services. However, a $62.5 million award over five years, averaging over $12 million annually, is substantial. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D, carries inherent risks of cost escalation if not managed rigorously. Without comparable sole-source awards for similar R&D in this specific domain, it's difficult to definitively assess pricing fairness, but the lack of competition inherently limits price discovery.

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 INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC., was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where full and open competition is not feasible. The absence of multiple bidders means that the government did not benefit from competitive pricing or a wider range of technical solutions that might have emerged from a broader solicitation.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also limits opportunities for other capable companies to secure government contracts.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive advanced engineering and development services. The contract supports the development of 'NRE OTPS' which likely refers to non-recurring engineering for operational technology or other critical systems. The contract is geographically focused in New York (NY), indicating a concentration of work at BAE Systems' facilities in that state. This contract may indirectly benefit the defense industrial base by fostering innovation and potentially creating or sustaining high-skilled jobs within BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential for cost savings.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not closely managed.
Lack of transparency regarding the specific nature of 'NRE OTPS' makes independent value assessment difficult.
Long performance period (5 years) increases exposure to potential scope creep or evolving requirements.
No explicit small business subcontracting goals mentioned, potentially limiting opportunities for smaller firms.

Positive Signals

Award to a large, established defense contractor (BAE Systems) suggests access to significant technical expertise and resources.
The substantial funding indicates a high priority placed on the NRE OTPS development by the Department of the Navy.
The extended performance period allows for in-depth research and development, potentially leading to robust solutions.
The contract is for engineering and development, which is crucial for technological advancement in defense capabilities.

Sector Analysis

This contract falls within the 'Other Measuring and Controlling Device Manufacturing' sector (NAICS 334519), which encompasses establishments primarily engaged in manufacturing measuring and controlling instruments. This is a specialized segment of the broader manufacturing and defense industrial base. Spending in this area is often tied to specific defense programs requiring advanced sensor, control, or diagnostic technologies. Comparable spending benchmarks are difficult to establish without knowing the precise application of 'NRE OTPS', but R&D contracts of this magnitude are typical for critical defense modernization efforts.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). As a sole-source award, it was not competed, which inherently limits opportunities for small businesses to participate directly as the prime contractor. There is no explicit mention of subcontracting requirements for small businesses within the provided data. This means that any involvement of small businesses would likely be at the discretion of BAE Systems as a subcontractor, and their participation is not guaranteed or mandated by the contract terms.

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 and auditing would be expected to monitor costs and ensure adherence to the fixed fee. Transparency is limited due to the sole-source nature and the proprietary aspects often associated with R&D. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research, Development, Test, and Evaluation (RDT&E)
Naval Sea Systems Command (NAVSEA) Contracts
Advanced Manufacturing Contracts
Defense Instrumentation and Control Systems

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of specific technical details
Long performance period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $62.5 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. NRE OTPS ENGINEERING & DEVELOPMENT

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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $62.5 million.

What is the period of performance?

Start: 2025-09-18. End: 2030-08-05.

What is the specific nature of 'NRE OTPS' and why is it critical for the Department of the Navy?

The acronym 'NRE OTPS' likely stands for Non-Recurring Engineering (NRE) for Operational Technology or Systems. NRE refers to the one-time costs incurred to design and develop a new product or system, which are not repeated for subsequent units. 'Operational Technology' or 'Systems' suggests that this development is crucial for the functioning of naval assets or platforms. Without further classification details, it's difficult to pinpoint the exact application, but it could range from advanced sensor suites, control systems for new weapon platforms, diagnostic equipment, or software integration for existing hardware. The criticality stems from the need to modernize naval capabilities, enhance operational effectiveness, or replace aging systems with state-of-the-art technology. The substantial funding and long performance period indicate a high-priority development effort for the Navy.

What are the risks associated with a Cost Plus Fixed Fee (CPFF) contract type for this R&D effort?

The Cost Plus Fixed Fee (CPFF) contract type, while common for research and development where costs can be uncertain, carries inherent risks. The government agrees to pay the contractor's allowable costs plus a fixed fee representing profit. The primary risk is that the contractor may have less incentive to control costs compared to fixed-price contracts, as they are reimbursed for their expenses. If the contractor's costs exceed initial estimates, the government pays the higher amount, potentially leading to budget overruns. The fixed fee, however, provides some incentive for the contractor to complete the work efficiently to maximize their profit margin relative to the effort expended. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate these risks and ensure value for the government.

How does the sole-source nature of this award impact potential cost savings for the government?

A sole-source award inherently limits the government's ability to achieve cost savings through competition. In a competitive bidding process, multiple companies vie for the contract, often leading to lower prices as they seek to underbid rivals. They may also propose more innovative or cost-effective solutions. Without this competitive pressure, the government relies on negotiation and the contractor's willingness to offer fair pricing. For sole-source contracts, especially those involving specialized R&D, the government must conduct thorough market research and cost analysis to ensure the proposed price is reasonable. However, the absence of competing proposals means there is no direct benchmark to validate the pricing, potentially resulting in a higher cost than if the contract had been competed.

What is BAE Systems' track record with similar sole-source R&D contracts within the Department of Defense?

BAE Systems is a major defense contractor with extensive experience across various domains, including research and development. They frequently receive sole-source awards, particularly for specialized technologies or when they possess unique capabilities. Analyzing their specific track record with sole-source R&D contracts within the Department of Defense would require a deep dive into historical contract databases (like FPDS or USASpending). Generally, large contractors like BAE Systems are expected to have robust internal processes for managing R&D projects and adhering to contract terms. However, the specifics of their performance, cost control, and adherence to schedule on past sole-source R&D efforts would need to be evaluated on a case-by-case basis, considering factors like contract type, program complexity, and oversight effectiveness.

Are there any publicly available benchmarks for 'Other Measuring and Controlling Device Manufacturing' R&D contracts of similar scope and duration?

Publicly available benchmarks for 'Other Measuring and Controlling Device Manufacturing' R&D contracts of similar scope and duration are challenging to establish without more specific details about the 'NRE OTPS' application. The NAICS code 334519 is broad and covers a wide array of devices. R&D contracts, especially those involving novel technologies for defense applications, are often highly specialized and proprietary, making direct comparisons difficult. While general R&D spending trends or average contract values within the defense sector can be found, pinpointing a precise benchmark for this specific type of NRE work requires understanding the technological domain, the complexity of the system being developed, and the specific performance requirements. Without this context, any benchmark would be speculative.

What are the potential implications of this contract on future technological advancements in naval systems?

This contract has the potential to significantly influence future technological advancements in naval systems, depending on the success of the NRE OTPS development. If BAE Systems successfully develops innovative solutions, these could lead to enhanced capabilities in areas such as sensor technology, data processing, autonomous systems, or communication networks for naval platforms. The investment in non-recurring engineering suggests a focus on foundational technologies that could be integrated into multiple future programs or upgrades. Successful R&D could provide the Department of the Navy with a technological edge, improving operational effectiveness, safety, and efficiency. Conversely, if the development faces significant challenges or does not yield the expected breakthroughs, the impact on future advancements could be limited.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Other Measuring and Controlling Device Manufacturing

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6833523R0005

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 450 PULASKI RD, GREENLAWN, NY, 11740

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $62,460,902

Exercised Options: $62,460,902

Current Obligation: $62,460,902

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline