DoD awards $119.4M contract for armored vehicle components to BAE Systems, with limited competition

Contract Overview

Contract Amount: $119,421,046 ($119.4M)

Contractor: BAE Systems Survivability Systems LLC

Awarding Agency: Department of Defense

Start Date: 2008-03-14

End Date: 2010-01-15

Contract Duration: 672 days

Daily Burn Rate: $177.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UCA FOR 12,519 BPMTUS

Place of Performance

Location: FAIRFIELD, BUTLER County, OHIO, 45014

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $119.4 million to BAE SYSTEMS SURVIVABILITY SYSTEMS LLC for work described as: UCA FOR 12,519 BPMTUS Key points: 1. Contract value of $119.4 million for armored vehicle components. 2. Awarded to a single, established defense contractor. 3. Limited competition raises questions about optimal pricing and value. 4. Contract duration of 672 days, indicating a medium-term project. 5. Focus on military armored vehicle manufacturing, a critical defense sector. 6. Potential for follow-on work or broader platform integration.

Value Assessment

Rating: fair

The contract value of $119.4 million for armored vehicle components appears substantial. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or assess the overall value for money. The fixed-price nature of the contract suggests cost certainty for the government, but the lack of competition may have led to a higher price than could have been achieved through open bidding. Further analysis would require comparison with similar sole-source or limited-competition awards for comparable components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, BAE Systems Survivability Systems LLC, was considered. This approach is typically used when a specific capability or technology is only available from a single source, or in cases of urgent need where competition is not feasible. The lack of competition limits the government's ability to leverage market forces to drive down costs and ensure the best possible price. It also means that the government did not benefit from the innovation and efficiency that multiple bidders might have brought.

Taxpayer Impact: The sole-source nature of this award means taxpayers may not have received the most competitive pricing. Without the pressure of competing bids, the awarded price might be higher than if multiple companies had vied for the contract, potentially leading to less efficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Army, receiving critical components for its armored vehicle fleet. Services delivered include the manufacturing and supply of specialized components for military vehicles. Geographic impact is primarily within the United States, supporting domestic defense manufacturing. Workforce implications include job creation and retention within BAE Systems and its supply chain, particularly in Ohio.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated costs for taxpayers.
Sole-source awards can reduce innovation by not encouraging broader market participation.
Dependence on a single supplier can create supply chain risks.

Positive Signals

Award to an established contractor with a track record in defense manufacturing.
Fixed-price contract provides cost predictability for the government.
Contract supports critical military hardware, aligning with national security objectives.

Sector Analysis

The defense industrial base, specifically the manufacturing of military armored vehicles and their components, is a highly specialized sector. This contract falls within the broader aerospace and defense industry, which is characterized by long-term government contracts, high technological barriers to entry, and significant consolidation. Spending in this sector is driven by national security priorities and modernization efforts. Comparable spending benchmarks would involve analyzing other sole-source or competitively awarded contracts for similar vehicle components or platforms within the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award to a large prime contractor like BAE Systems suggests that subcontracting opportunities may exist for small businesses within their supply chain. However, the lack of a specific set-aside or explicit subcontracting plan details in the provided data makes it difficult to assess the direct impact on the small business ecosystem. Further investigation into BAE Systems' subcontracting practices would be necessary.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance standards and delivery schedules. Transparency is often limited in sole-source awards, but contract awards are generally reported in federal databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Armored Vehicle Modernization Programs
Tactical Wheeled Vehicle Programs
Combat Vehicle Production
Defense Supply Chain Management

Risk Flags

Sole-source award lacks competitive pricing validation.
Potential for higher costs due to absence of market competition.
Limited transparency inherent in non-competitive procurements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $119.4 million to BAE SYSTEMS SURVIVABILITY SYSTEMS LLC. UCA FOR 12,519 BPMTUS

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 Army).

What is the total obligated amount?

The obligated amount is $119.4 million.

What is the period of performance?

Start: 2008-03-14. End: 2010-01-15.

What is BAE Systems Survivability Systems LLC's track record with the Department of Defense for similar armored vehicle components?

BAE Systems Survivability Systems LLC, a subsidiary of BAE Systems, has a significant and established track record within the Department of Defense, particularly in the realm of armored vehicle manufacturing and survivability systems. The company is a major prime contractor for various U.S. military programs, including the Bradley Fighting Vehicle and the M109 Paladin self-propelled howitzer. Their expertise encompasses the design, development, production, and sustainment of armored platforms and critical components. Given their long-standing relationship with the Army and their specialized capabilities in this niche, the sole-source award for these specific components is likely based on their proven performance, existing infrastructure, and proprietary knowledge. Historical data from the Federal Procurement Data System (FPDS) would likely show numerous other contracts awarded to BAE Systems for similar defense articles and services, underscoring their established position as a key supplier.

How does the $119.4 million contract value compare to similar armored vehicle component contracts awarded by the DoD?

Benchmarking the $119.4 million contract value for armored vehicle components requires careful consideration of the specific components, quantities, and contract type. Without detailed specifications, a direct comparison is challenging. However, large-scale component manufacturing for major defense platforms can easily run into tens or hundreds of millions of dollars. For instance, contracts for engines, armor plating, weapon systems, or complex electronic suites for vehicles like the Abrams tank or Bradley Fighting Vehicle often exceed this amount. Given that this contract is for 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' and awarded on a sole-source basis, it suggests a specialized or critical set of components. If this were a competitive award for a widely available component, $119.4 million might be considered high. However, for unique, proprietary, or high-technology components essential for a specific platform's performance and survivability, this value could be within a reasonable range, albeit one that warrants scrutiny due to the lack of competition.

What are the primary risks associated with a sole-source award for critical military vehicle components?

The primary risks associated with a sole-source award for critical military vehicle components are multifaceted. Firstly, there is a significant risk of 'cost-plus' pricing, where the government may end up paying more than necessary due to the absence of competitive pressure to offer the lowest price. This can lead to inefficient use of taxpayer funds. Secondly, sole-source awards can stifle innovation. Without the incentive of winning a competitive bid, the sole contractor may have less motivation to invest in process improvements or develop more cost-effective solutions. Thirdly, there's a risk of vendor lock-in and supply chain vulnerability. The government becomes dependent on a single supplier, which can be problematic if that supplier experiences production issues, financial difficulties, or decides to exit the market. This dependence can also limit the government's flexibility in adapting to new technologies or changing requirements. Finally, sole-source awards can create a perception of favoritism or lack of transparency, potentially eroding public trust.

What is the historical spending pattern for 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' by the Department of the Army?

Historical spending patterns for 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' by the Department of the Army are substantial and fluctuate based on modernization cycles, operational tempo, and geopolitical factors. The Army consistently invests billions of dollars annually in this category to maintain and upgrade its armored fleet, which includes main battle tanks (like the M1 Abrams), infantry fighting vehicles (like the Bradley), and various support vehicles. Spending is often concentrated around major platform upgrades, new vehicle procurements, and the sustainment of existing fleets. Contracts in this domain are frequently awarded to large, established defense contractors through both competitive and sole-source mechanisms, reflecting the specialized nature and high cost of these systems. Analysis of historical data from sources like FPDS or USAspending.gov would reveal significant, multi-year spending trends, often showing peaks during periods of active conflict or major program introductions, and potentially lower but steady spending during sustainment phases.

How does the contract's fixed-price type influence cost control and risk for the government?

The 'FIRM FIXED PRICE' (FFP) contract type is generally favorable for the government in terms of cost control and risk transfer. Under an FFP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This means the contractor assumes the primary risk for any cost overruns. For the government, this provides a high degree of cost certainty, making budgeting and financial planning more predictable. It incentivizes the contractor to manage their costs efficiently to maximize profit. However, the effectiveness of an FFP contract in controlling costs is heavily dependent on the accuracy of the initial cost estimates and the thoroughness of the technical specifications. If the initial estimates are flawed or the scope of work is poorly defined, the contractor might still face challenges, or the government might have secured a suboptimal price. In a sole-source scenario, the government's negotiation leverage is crucial to ensure the FFP is fair and reasonable.

Industry Classification

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

Product/Service Code: HARDWARE AND ABRASIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $119,421,046

Exercised Options: $119,421,046

Current Obligation: $119,421,046

Timeline