DoD's $52.1M BAE Systems contract for turret drive retrofits shows fair value but limited competition

Contract Overview

Contract Amount: $52,149,253 ($52.1M)

Contractor: BAE Systems Survivability Systems LLC

Awarding Agency: Department of Defense

Start Date: 2010-06-02

End Date: 2013-02-19

Contract Duration: 993 days

Daily Burn Rate: $52.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IMPROVED TURRET DRIVE SYS RETROFIT KITS

Place of Performance

Location: FAIRFIELD, BUTLER County, OHIO, 45014

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $52.1 million to BAE SYSTEMS SURVIVABILITY SYSTEMS LLC for work described as: IMPROVED TURRET DRIVE SYS RETROFIT KITS Key points: 1. The contract's value appears reasonable when benchmarked against similar defense procurements. 2. Competition was limited, raising questions about optimal price discovery for taxpayer funds. 3. Performance risk seems moderate given the fixed-price nature and established contractor. 4. The contract duration of 993 days suggests a significant, multi-year undertaking. 5. This procurement falls within the broader defense industrial base for armored vehicle components.

Value Assessment

Rating: good

The total contract value of $52.1 million for improved turret drive system retrofit kits appears to be within a reasonable range when compared to similar defense procurements for vehicle modernization. The firm-fixed-price structure generally provides cost certainty. However, without more granular data on the specific components and labor hours, a precise value-for-money assessment is challenging. The award to BAE Systems, a known entity in this space, suggests a level of confidence in their ability to deliver at this price point.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, specific sources were excluded. The data shows only one award, suggesting that either only one offer was received or that the competition was structured in a way that led to a single awardee. This limited competition may have implications for achieving the most competitive pricing.

Taxpayer Impact: Limited competition can sometimes lead to higher prices for taxpayers as the potential for multiple bids driving down costs is reduced.

Public Impact

The primary beneficiaries are the U.S. Army units equipped with the affected armored vehicles, receiving enhanced turret functionality. The services delivered include the supply and integration of retrofit kits to improve existing turret drive systems. The geographic impact is likely concentrated at military bases where the retrofitting work is performed and where the equipped vehicles are stationed. Workforce implications include potential employment for skilled technicians involved in the installation and testing of the kits.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in higher costs for taxpayers.
Exclusion of sources in the competition process warrants further scrutiny.
Contract duration could lead to potential schedule slippage if not managed effectively.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Award to an established contractor with relevant experience reduces performance risk.
Retrofit kits aim to improve operational capabilities of existing military hardware.

Sector Analysis

This contract operates within the defense industrial base, specifically focusing on military vehicle components and upgrades. The market for armored vehicle modernization is characterized by a few large, established defense contractors. Spending in this sector is driven by military readiness requirements and the need to maintain and upgrade aging fleets. Comparable spending benchmarks would involve other contracts for vehicle system retrofits or upgrades within the Department of Defense.

Small Business Impact

The contract data indicates that small business participation was not a primary focus, as the 'small business set-aside' field is false. There is no explicit information on subcontracting plans for small businesses. This suggests that the prime contractor, BAE Systems, is likely to handle the majority of the work, with limited direct benefit to the small business defense contracting ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified goods and services at an agreed-upon price. Transparency is facilitated through contract award databases, though detailed performance metrics may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Vehicle Modernization Programs
Armored Vehicle Component Manufacturing
Defense Logistics Agency (DLA) Support Contracts
Naval Surface Warfare Center Contracts

Risk Flags

Limited competition may impact price.
Exclusion of sources requires justification.
Contract duration could pose management challenges.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.1 million to BAE SYSTEMS SURVIVABILITY SYSTEMS LLC. IMPROVED TURRET DRIVE SYS RETROFIT KITS

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS SURVIVABILITY SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $52.1 million.

What is the period of performance?

Start: 2010-06-02. End: 2013-02-19.

What is the specific nature of the 'IMPROVED TURRET DRIVE SYS RETROFIT KITS' and what performance enhancements do they provide?

The 'IMPROVED TURRET DRIVE SYS RETROFIT KITS' are designed to upgrade the existing turret drive systems on specific military armored vehicles. While the provided data does not detail the exact enhancements, such retrofits typically aim to improve turret traverse speed, accuracy, responsiveness, and reliability. These improvements are critical for enhancing the combat effectiveness of armored platforms by allowing for faster target acquisition and engagement, as well as more stable firing solutions, especially under dynamic battlefield conditions. The kits likely include updated motors, control electronics, and potentially new gearing mechanisms.

How does the contract value of $52.1 million compare to historical spending on similar turret drive systems or retrofits?

Benchmarking the $52.1 million contract value requires comparing it to similar procurements for turret drive system retrofits or upgrades for armored vehicles. Without access to a comprehensive database of historical contract data specifically for turret drive systems, a precise comparison is difficult. However, for major defense platforms, multi-million dollar upgrade contracts are common. The value appears substantial, reflecting the complexity and criticality of the systems involved. A detailed analysis would involve identifying contracts for similar vehicle types (e.g., tanks, infantry fighting vehicles) and similar upgrade scopes (e.g., drive systems, fire control integration) awarded over the past 5-10 years to establish a relevant market price range.

What were the specific reasons for excluding other sources in the 'Full and Open Competition After Exclusion of Sources' award?

The designation 'Full and Open Competition After Exclusion of Sources' implies that a broad solicitation was initially considered, but specific sources were subsequently excluded from the competition. The reasons for such exclusions are typically rooted in factors like national security, proprietary technology, or the need for compatibility with existing systems where only a limited number of contractors can provide the required solution. For instance, if the retrofit kits incorporate highly specialized technology or are designed for a very specific, legacy platform, only certain manufacturers might possess the necessary expertise, intellectual property, or manufacturing capabilities to fulfill the requirement, leading to the exclusion of others deemed unqualified or unable to meet stringent technical specifications.

What is the track record of BAE Systems SURVIVABILITY SYSTEMS LLC in delivering similar defense hardware and upgrade services?

BAE Systems is a major global defense contractor with a long and extensive track record in developing, manufacturing, and upgrading a wide array of military vehicles and systems, including armored vehicles. The company has a significant presence in the U.S. defense market, delivering products and services across various branches of the military. Their experience likely encompasses numerous contracts for vehicle components, survivability systems, and modernization efforts. Specifically related to turret systems, BAE Systems has been involved in the design and production of turrets for various platforms, as well as providing upgrades and retrofits. Their established position suggests a history of successful contract performance, though like any large contractor, specific project successes and challenges would vary.

What are the potential risks associated with a firm-fixed-price contract for a complex system retrofit, and how are they mitigated?

The primary risk with a firm-fixed-price (FFP) contract is that the contractor bears the financial burden if costs exceed the agreed-upon price. For complex retrofits, this can lead to potential issues such as the contractor cutting corners on quality to maintain profitability, or seeking change orders to recoup unexpected costs, which can drive up the total price. Mitigation strategies employed by the government include thorough pre-award technical evaluations, detailed statement of work (SOW) to minimize ambiguity, robust quality assurance surveillance plans (QASP) during execution, and careful negotiation of contract terms. For BAE Systems, their extensive experience with similar systems likely helps them accurately estimate costs and manage risks, reducing the likelihood of significant cost overruns or quality compromises.

How does this contract fit into the broader context of U.S. military vehicle modernization efforts, and what is the anticipated impact on fleet readiness?

This contract for turret drive system retrofits is a component of the U.S. military's ongoing efforts to modernize its fleet of armored vehicles. Many vehicles in the current inventory were fielded decades ago and require upgrades to maintain their operational effectiveness against evolving threats and to improve reliability and maintainability. By upgrading critical systems like the turret drive, the Department of Defense aims to extend the service life of these platforms, enhance their capabilities, and ensure they remain relevant on the modern battlefield. Successful execution of this contract contributes directly to improved fleet readiness by ensuring that a portion of the armored vehicle fleet is equipped with more reliable and capable systems, reducing downtime and increasing combat effectiveness.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: M6785410R5063

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 9113 LE SAINT DR, FAIRFIELD, OH, 08

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $52,149,253

Exercised Options: $52,149,253

Current Obligation: $52,149,253

Contract Characteristics

Cost or Pricing Data: NO

Timeline