DoD's $556M MRAP contract to BAE Systems shows strong competition and delivery order execution

Contract Overview

Contract Amount: $555,879,126 ($555.9M)

Contractor: BAE Systems Tactical Vehicle Systems LP

Awarding Agency: Department of Defense

Start Date: 2007-12-18

End Date: 2012-12-31

Contract Duration: 1,840 days

Daily Burn Rate: $302.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CATEGORY I MRAP

Place of Performance

Location: SEALY, COLORADO County, TEXAS, 77474

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $555.9 million to BAE SYSTEMS TACTICAL VEHICLE SYSTEMS LP for work described as: CATEGORY I MRAP Key points: 1. The contract demonstrates effective execution through multiple delivery orders, indicating a well-managed acquisition. 2. A high number of bidders suggests a competitive market for armored vehicle manufacturing. 3. The firm-fixed-price structure likely incentivizes cost control for the contractor. 4. This spending falls within the broader category of military vehicle manufacturing, a significant defense sector. 5. The contract's duration and value position it as a substantial investment in tactical vehicle modernization.

Value Assessment

Rating: good

The total award of over $555 million for MRAP vehicles suggests a significant investment. While specific per-unit cost benchmarks are not provided, the firm-fixed-price contract type generally aims for predictable costs. Comparing this to other large-scale vehicle procurements would be necessary for a full value assessment, but the scale indicates a substantial commitment to equipping forces with advanced protection.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were eligible to bid. The presence of 10 bidders signifies a robust and competitive marketplace for this type of specialized military equipment. This level of competition is generally favorable for price discovery and potentially achieving better value for the government.

Taxpayer Impact: The extensive competition for this contract suggests that taxpayer dollars were likely used efficiently, as multiple companies vied to offer the best terms and pricing.

Public Impact

The primary beneficiaries are U.S. military personnel who receive enhanced protection through MRAP vehicles. The contract delivers critical armored vehicles essential for troop mobility and survivability in combat zones. The primary geographic impact is on military bases and operational theaters where these vehicles are deployed. This contract supports jobs within the defense manufacturing sector, particularly in Texas where BAE Systems has operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if initial pricing assumptions were inaccurate, despite fixed-price structure.
Long-term sustainment and maintenance costs for these complex vehicles are not detailed in this award.
Dependence on a single primary contractor for a large volume of critical equipment.

Positive Signals

Successful execution of multiple delivery orders indicates reliable contractor performance.
Firm-fixed-price contract type provides cost certainty for the government.
Full and open competition suggests a healthy market and potential for competitive pricing.

Sector Analysis

The defense sector, specifically military vehicle manufacturing, is characterized by high R&D costs, stringent quality requirements, and long production cycles. This contract for MRAP vehicles fits within the broader market for tactical wheeled vehicles, which is a critical component of military readiness. Comparable spending benchmarks would involve analyzing other large-scale armored vehicle procurements by the DoD and allied nations.

Small Business Impact

While this contract was awarded to a large prime contractor, there are often opportunities for small businesses to participate as subcontractors in the defense supply chain. The specific subcontracting plan details are not available here, but large prime contracts typically include provisions for small business participation to meet federal goals.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms and delivery schedules. Transparency is facilitated through contract award databases, though detailed performance metrics may be internal.

Related Government Programs

Mine-Resistant Ambush Protected Vehicles
Tactical Wheeled Vehicles
Department of Defense Vehicle Procurement
BAE Systems Defense Contracts

Risk Flags

Potential for long-term sustainment costs not fully captured in initial award.
Dependence on specific manufacturing capabilities for specialized armored vehicles.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $555.9 million to BAE SYSTEMS TACTICAL VEHICLE SYSTEMS LP. CATEGORY I MRAP

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS TACTICAL VEHICLE SYSTEMS LP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $555.9 million.

What is the period of performance?

Start: 2007-12-18. End: 2012-12-31.

What is the historical spending trend for MRAP vehicles under this contract vehicle?

The provided data reflects a single award totaling $555,879,126.29 for the CATEGORY I MRAP, with a start date of 2007-12-18 and an end date of 2012-12-31. This indicates a significant period of procurement activity. To understand historical trends, one would need to examine prior awards for similar MRAP categories or related armored vehicle programs, as well as subsequent procurements that may have followed this contract's completion. Analyzing annual spending within the 2007-2012 timeframe would reveal the pace of delivery and expenditure over the contract's life.

How does the per-unit cost of these MRAP vehicles compare to similar vehicles procured by other agencies or nations?

The provided data does not include per-unit cost information, making direct comparison difficult. The total award amount of $555,879,126.29 for an unspecified number of CATEGORY I MRAP vehicles prevents a calculation of unit price. To benchmark, one would need to identify the quantity of vehicles procured under this contract and then compare that unit price to publicly available data for similar MRAP variants or other armored personnel carriers acquired by different branches of the U.S. military, allied nations, or even civilian agencies using armored vehicles. Factors like specific configurations, technological features, and volume discounts heavily influence per-unit costs.

What are the key performance indicators (KPIs) used to assess the success of this contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this contract. However, typical KPIs for such a defense procurement would likely include on-time delivery rates, adherence to technical specifications and quality standards, vehicle reliability and performance in operational environments, and potentially cost performance against the firm-fixed-price baseline. The fact that the contract was executed through multiple delivery orders suggests that tracking the successful completion and delivery of each order against its schedule and specifications would be a primary measure of success.

What is BAE Systems' track record with similar large-scale defense vehicle contracts?

BAE Systems has a well-established and extensive track record in producing large-scale defense vehicles, including armored personnel carriers, combat vehicles, and artillery systems, for the U.S. military and international partners. Their portfolio includes programs like the Bradley Fighting Vehicle, M109 Paladin, and various Stryker variants. This extensive experience suggests a high level of technical expertise, manufacturing capability, and program management proficiency necessary for fulfilling complex contracts like the MRAP Category I. Their history indicates a capacity to handle significant production volumes and meet stringent military requirements.

Are there any identified risks associated with the long-term sustainment and maintenance of these MRAP vehicles?

While the initial procurement contract focuses on delivery, the long-term sustainment and maintenance of complex military vehicles like MRAPs inherently carry risks. These can include the availability and cost of spare parts, the need for specialized technical support and training, potential obsolescence of components over time, and the overall lifecycle cost of maintaining operational readiness. Without specific sustainment contracts or plans detailed in this award, it's assumed that separate agreements or organic military capabilities would address these needs. The complexity and operational tempo of MRAP usage can also lead to higher-than-anticipated maintenance requirements.

Industry Classification

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

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Offers Received: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 5000 INTERSTATE HWY 10 W, SEALY, TX, 77474

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $555,879,126

Exercised Options: $555,879,126

Current Obligation: $555,879,126

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785407D5030

IDV Type: IDC

Timeline