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BAE may gain $100 million in work from Army space contract delay

The U.S. Army’s decision to extend without competition its contract with BAE Systems for space and missile defense research may give the company access to more than $100 million in new orders.

BAE was picked in 2006 to provide services to the Army’s Space and Missile Defense Command under a contract that was scheduled to expire Sept. 30, when BAE would have had to defend its position against rivals. Instead, the Army decided to wrap the work into a multibillion-dollar program it is planning, known as D3I, and extend BAE’s contract for as long as two years in the interim, with a cap of $561 million.

The decision to create the D3I program, with multiple awardees, means London-based BAE may face heightened competition to provide the services once the extended contract lapses.

“It’s going to be an extraordinarily tough competition,’’ Scott Kowerduck, BAE’s director of missile and space programs, said in an Oct. 11 interview. “It’s a contract that’s appealing in a lot of different ways for a lot of different kinds of companies.’’

Lockheed Martin of Bethesda is the largest vendor to the Space and Missile Defense Command, according to data compiled by Bloomberg. It plans to bid on the contract, said Jim Bowlin, the company’s D3I capture manager. Raytheon of Waltham, Mass., the command’s No. 2 vendor, also plans to bid, said Raytheon spokesman Mike Nason.

Under the new program, contractors will provide research and development in areas including missile defense and data exploitation, according to a synopsis of the planned contract.

Contract ceiling raised

BAE’s extension allows it to hold onto a contract that has increased in value since it was awarded in 2006. The contract’s ceiling of $482 million was raised in 2009 to $561 million because of “much higher than anticipated demand for task orders,’’ according to an Army document.

The contract, known as Concepts and Operations for Space and Missile Defense Integration Capabilities, or COSMIC, has been renewed until Sept. 30, 2012, with the option to extend it an additional year.

“It’s always good to be the incumbent,’’ Kowerduck said. “Having the COSMIC contract for another year, it’s pretty valuable to us.’’

Quantum Research International of Huntsville, Ala., also receives task orders under COSMIC. BAE received 83 percent of the orders, or $424.6 million since 2006, according to the most recent government data compiled by Bloomberg.

BAE could receive as much as $136.4 million in additional awards under the contract before reaching the $561 million ceiling, the data show.

The primary purpose of the contract is to provide support for “the entire range of Future Warfare Center responsibilities,” such as concept development and integration of electronic surveillance and reconnaissance systems.

The Army can’t let COSMIC expire and hold individual competitions for the tasks instead, because doing so “would have a severe and negative effect’’ on the space command’s mission and isn’t possible given its “current manpower allocation,’’ according to an Army justification of the contract extension.

The Army hasn’t said when it will award the new umbrella contract for space-related services or how many companies it will pick to compete for task orders.

The contract ceiling for the new program could be more than $6 billion with 10 or more prime vendors eligible to bid on orders, Lockheed’s Bowlin said in an Oct. 24 e-mail.

More competitive contract

The contract will be divided into multiple “domains,’’ with a separate ceiling for orders under each one, according to an Army notice.

“It makes it more competitive,’’ Kowerduck said. “The total potential is much larger, and then it’s up to us do a good job to maximize our capture in that competitive environment.’’

The Army had planned to announce D3I awards before the end of the year. The program’s start date has been postponed, and the contract is in final review as a result of the decision to combine BAE’s space work with D3I, John Cummings, an Army spokesman, said in an Oct. 21 e-mail. The Army hasn’t yet released a request for proposals. All of the military services, NASA and other government agencies involved in intelligence gathering, cyberspace and homeland defense will be eligible to place orders on D3I, according to the Army’s description of the contract. By comparison, 99.7 percent of BAE’s award dollars under its space command contract since 2006 came from the Army, according to data compiled by Bloomberg.

Lockheed is “very pleased’’ that the Army is including other military branches and members of the intelligence community as participants in the contract, Bowlin said.

“Effective collaboration will extend the value of the limited resources available in this era of reduced budgets,’’ he said.

— Bloomberg Government



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