DoD Awards $640M Contract for Vehicle Prototypes to BAE Systems, Raising Competition Concerns
Contract Overview
Contract Amount: $639,669,954 ($639.7M)
Contractor: BAE Systems Land & Armaments L.P.
Awarding Agency: Department of Defense
Start Date: 2009-08-14
End Date: 2019-04-30
Contract Duration: 3,546 days
Daily Burn Rate: $180.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: PALADIN INTEGRATED MANAGEMENT (PIM); FIVE (5) SPH AND TWO FAASV PROTOTYPES.
Place of Performance
Location: YORK, YORK County, PENNSYLVANIA, 17408
Plain-Language Summary
Department of Defense obligated $639.7 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: PALADIN INTEGRATED MANAGEMENT (PIM); FIVE (5) SPH AND TWO FAASV PROTOTYPES. Key points: 1. Significant investment in advanced vehicle prototypes ($640M). 2. Sole awardee, BAE Systems, highlights potential lack of competition. 3. Contract type (Cost Plus Fixed Fee) may incentivize cost overruns. 4. Long contract duration (nearly 10 years) warrants close monitoring.
Value Assessment
Rating: questionable
The $640M award for vehicle prototypes is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar defense contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there was no market pressure to offer the best price.
Taxpayer Impact: The lack of competition on this large contract likely resulted in a higher cost to taxpayers than if multiple vendors had vied for the work.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. Limited visibility into the technological advancements and their cost-effectiveness. Potential for follow-on contracts without competition, further impacting costs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost Plus Fixed Fee contract type
- Long contract duration
- No small business participation noted
Positive Signals
- Award to established defense contractor
- Development of critical vehicle prototypes
Sector Analysis
This contract falls within the defense sector, specifically motor vehicle body manufacturing. Defense spending benchmarks for prototype development can vary widely, but a $640M sole-source award warrants scrutiny.
Small Business Impact
The provided data does not indicate any specific provisions or participation from small businesses in this contract. Further investigation may be needed to determine if small businesses were excluded or had opportunities.
Oversight & Accountability
The sole-source nature of this large contract necessitates robust oversight from the Department of Defense to ensure cost control and performance. Accountability for cost overruns and adherence to prototype specifications is crucial.
Related Government Programs
- Motor Vehicle Body Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award lacks competitive pressure.
- Cost Plus Fixed Fee can lead to cost overruns.
- Long contract duration increases risk exposure.
- No mention of small business participation.
- Potential for lack of transparency in pricing.
Tags
motor-vehicle-body-manufacturing, department-of-defense, pa, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $639.7 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. PALADIN INTEGRATED MANAGEMENT (PIM); FIVE (5) SPH AND TWO FAASV PROTOTYPES.
Who is the contractor on this award?
The obligated recipient is BAE SYSTEMS LAND & ARMAMENTS L.P..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $639.7 million.
What is the period of performance?
Start: 2009-08-14. End: 2019-04-30.
What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or a lack of viable alternatives. Without a competitive process, it's challenging to verify these claims. Agencies must document the rationale thoroughly and explore options for future competition or phased approaches to foster market competition and ensure better value.
How will the Cost Plus Fixed Fee structure be managed to mitigate risks of cost overruns and ensure efficient use of funds?
Managing a Cost Plus Fixed Fee (CPFF) contract requires stringent oversight. The government must closely monitor incurred costs, ensure they are reasonable and allocable, and verify that the contractor is making efficient progress towards the fixed fee objectives. Regular audits, performance reviews, and clear communication channels are essential to control costs and ensure the contractor remains incentivized to deliver within budget.
What are the key performance indicators (KPIs) for these prototypes, and how will their effectiveness and value be measured post-delivery?
Key performance indicators should be clearly defined in the contract, focusing on technical capabilities, operational readiness, and integration potential. Post-delivery, effectiveness will be measured through rigorous testing, field evaluations, and user feedback. Value assessment will involve comparing the prototypes' performance against requirements and their potential for future procurement or upgrades, considering the total lifecycle cost.
Industry Classification
NAICS: Manufacturing › Motor Vehicle Body and Trailer Manufacturing › Motor Vehicle Body Manufacturing
Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W56HZV09R0226
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: BAE Systems PLC
Address: 1100 BAIRS RD, YORK, PA, 17408
Business Categories: Category Business, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations
Financial Breakdown
Contract Ceiling: $639,669,954
Exercised Options: $639,669,954
Current Obligation: $639,669,954
Actual Outlays: $339,491
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2009-08-14
Current End Date: 2019-04-30
Potential End Date: 2019-04-30 00:00:00
Last Modified: 2025-04-22
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