DoD awards $74.6M for M1114 MCTAGS Kits to BAE Systems, a sole-source contract

Contract Overview

Contract Amount: $74,583,237 ($74.6M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2010-03-02

End Date: 2011-01-31

Contract Duration: 335 days

Daily Burn Rate: $222.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LVSR FUNDING - M1114 MCTAGS KITS

Place of Performance

Location: SANTA CLARA, SANTA CLARA County, CALIFORNIA, 95050

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $74.6 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: LVSR FUNDING - M1114 MCTAGS KITS Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. The contract duration of 335 days suggests a focused, short-term need. 3. Awarded as Firm Fixed Price, indicating clear cost expectations for the government. 4. The specific product, M1114 MCTAGS Kits, points to a specialized military equipment need. 5. The contract value of $74.6M is significant for this niche product category. 6. The absence of small business set-aside suggests the prime contractor is a large entity.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for M1114 MCTAGS Kits. The firm fixed-price nature provides some cost certainty, but the lack of competition prevents a true assessment of value for money. The awarded amount of $74.6M for a 335-day duration needs further scrutiny to understand if it aligns with market rates for similar specialized military components, especially given the sole-source nature which can inflate prices.

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 Land & Armaments L.P., was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors vying for the contract. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to lower prices. Without a competitive process, there's less assurance that the government secured the best possible price for these specialized kits.

Public Impact

The primary beneficiaries are the U.S. Army units requiring M1114 MCTAGS Kits for armored vehicle protection. The services delivered involve the manufacturing and supply of critical military hardware. The geographic impact is likely concentrated where these armored vehicles are deployed or maintained. Workforce implications include employment at BAE Systems and its supply chain, particularly in manufacturing and defense logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for contractor lock-in due to specialized nature of the product.
No indication of small business participation or subcontracting opportunities.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
BAE Systems is a known defense contractor with established manufacturing capabilities.
Contract addresses a specific, likely critical, military equipment need.

Sector Analysis

The defense industrial base, specifically the segment focused on armored vehicle components and upgrades. The market for such specialized military equipment is often characterized by limited suppliers and significant barriers to entry due to technical expertise and security clearances. Spending in this sector is driven by military modernization programs and operational readiness requirements. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for similar vehicle kits or upgrades within the Department of Defense.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the prime contractor, BAE Systems, is a large entity capable of fulfilling the entire requirement. The absence of small business involvement in this specific award means no direct benefit to the small business ecosystem through this particular contract, though BAE Systems may engage small businesses in its broader supply chain.

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 holds the contractor responsible for delivering the specified goods within the agreed-upon price. Transparency is limited due to the sole-source nature of the award, with justifications for such awards typically being internal to the agency. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

M1 Abrams Tank Component Manufacturing
Armored Vehicle Upgrade Programs
Department of Defense Tactical Vehicle Procurement
BAE Systems Defense Contracts
Military Kit Procurement

Risk Flags

Sole Source Justification
Potential for Overpricing
Lack of Competition
Limited Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.6 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. LVSR FUNDING - M1114 MCTAGS KITS

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 Navy).

What is the total obligated amount?

The obligated amount is $74.6 million.

What is the period of performance?

Start: 2010-03-02. End: 2011-01-31.

What is the specific function and importance of the M1114 MCTAGS Kits?

The M1114 MCTAGS (Mine Clearing and Counter-Ambush Gear System) Kits are designed to enhance the survivability of Mine-Resistant Ambush Protected (MRAP) vehicles, specifically variants like the M1114. These kits typically include enhanced armor plating, blast-deflecting underbody modifications, and potentially other protective measures to safeguard occupants against improvised explosive devices (IEDs) and ambushes. Their importance lies in protecting military personnel in high-threat environments, reducing casualties, and ensuring operational continuity. The procurement of these kits directly supports force protection strategies in theaters of operation where such threats are prevalent.

What is the justification for awarding this contract on a sole-source basis?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For specialized military equipment like the M1114 MCTAGS Kits, this could be due to unique technical requirements, proprietary technology, existing integration with specific vehicle platforms, or a lack of other qualified manufacturers. The Department of the Navy would have had to document a compelling reason, such as urgent need or the unavailability of alternatives, to bypass the Federal Acquisition Regulation's requirement for full and open competition. Without access to the specific justification documentation, the precise reason remains speculative but likely centers on technical specificity or contractor capability.

How does the Firm Fixed Price (FFP) contract type benefit the government in this scenario?

A Firm Fixed Price (FFP) contract is generally advantageous for the government when the scope of work is well-defined and the risks of cost overruns are manageable. In this case, it means BAE Systems is obligated to deliver the M1114 MCTAGS Kits for the agreed-upon price of $74.6 million, regardless of their actual costs. This shifts the risk of cost increases to the contractor. For the government, it provides budget certainty and simplifies financial management. However, the benefit is maximized when the FFP is established through robust competition; in a sole-source situation, the FFP might be set at a higher baseline price than would have been achieved competitively.

What is BAE Systems Land & Armaments L.P.'s track record with similar defense contracts?

BAE Systems Land & Armaments L.P. is a major defense contractor with extensive experience in manufacturing armored vehicles, weapon systems, and related components. They are a key supplier for numerous U.S. military programs, including upgrades and sustainment for platforms like the M1 Abrams tank and various armored personnel carriers. Their track record includes delivering complex systems under various contract types, often involving significant value. While specific performance details for every contract are not publicly available, their position as a prime contractor for substantial defense awards indicates a history of meeting technical specifications and delivery schedules, though like any large contractor, they may have faced performance challenges on specific programs.

Are there any historical spending patterns for M1114 MCTAGS Kits or similar items?

Analyzing historical spending patterns for highly specific items like M1114 MCTAGS Kits can be challenging without direct access to detailed procurement databases. However, general trends in defense spending indicate a consistent need for vehicle survivability enhancements, especially in the post-9/11 era, driven by counter-insurgency operations and the proliferation of IED threats. Contracts for such kits often fluctuate based on operational tempo, vehicle fleet modernization cycles, and evolving threat assessments. The $74.6 million awarded in 2010 for a 335-day period suggests a significant, potentially urgent, requirement at that time. Broader spending on MRAP vehicles and their associated protection systems has been substantial over the past two decades.

What are the potential risks associated with a sole-source award of this magnitude?

The primary risk of a sole-source award of this magnitude ($74.6 million) is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not be securing the most cost-effective solution. Another risk is reduced innovation, as the sole provider may have less incentive to improve efficiency or offer cost-saving alternatives. Furthermore, sole-source contracts can sometimes indicate a lack of market readiness or a reliance on a single supplier, creating a potential vulnerability if that supplier faces production issues or decides to exit the market. Ensuring robust oversight and fair pricing negotiations becomes critical in such scenarios.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: M6785408R6022

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 2890 DE LA CRUZ BLVD, SANTA CLARA, CA, 17

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership

Financial Breakdown

Contract Ceiling: $74,583,237

Exercised Options: $74,583,237

Current Obligation: $74,583,237

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M6785409D5026

IDV Type: IDC

Timeline