DoD awards $64M for combat vehicles, with BAE Systems as sole contractor

Contract Overview

Contract Amount: $64,067,489 ($64.1M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 1997-02-06

End Date: 2005-12-31

Contract Duration: 3,250 days

Daily Burn Rate: $19.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199712!2100!0879!AE07 !USA TANK-AUTOMOTIVE & ARMAMENTS !DAAE0795CX030 !A!*!P00034 !19970206!19980930!085302958!085302958!824825459!N!80212!UNITED DEFENSE !2830 DE LA CRUZ BLVD !SANTA CLARA !CA!95050!69084!085!06!SANTA CLARA !SANTA CLARA !CALIFORNIA!0001!+000002099853!N!N!000000000000!2350!COMBAT ASSAULT & TACTICAL VEH, TRACKED !A4A!COMBAT VEHICLES !1000!NOT DISCERNABLE OR CLASSIFIED !8711!3!*!*!C!B!N!Z!D !U!U!1!001!N!1G!A!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: SAN JOSE, SANTA CLARA County, CALIFORNIA, 95119

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $64.1 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: 199712!2100!0879!AE07 !USA TANK-AUTOMOTIVE & ARMAMENTS !DAAE0795CX030 !A!*!P00034 !19970206!19980930!085302958!085302958!824825459!N!80212!UNITED DEFENSE !2830 DE LA CRUZ BLVD !SANTA CLARA !CA!95050!69084!085!06!SANTA CLARA !SANTA … Key points: 1. Contract awarded to a single entity suggests limited competition, potentially impacting price. 2. The cost-plus-fixed-fee structure may incentivize spending, requiring close oversight. 3. Long contract duration (over 8 years) indicates a significant, ongoing need for these vehicles. 4. The specific vehicle type (tracked combat assault) points to a specialized defense requirement. 5. Awarded by the Tank-Automotive & Armaments Command, highlighting a focus on ground vehicle procurement. 6. The contract's value is substantial, representing a significant investment in military hardware.

Value Assessment

Rating: fair

The total award of $64,067,489 for combat vehicles appears to be a significant investment. Without specific benchmarks for comparable tracked combat assault vehicles, it's difficult to definitively assess value for money. The cost-plus-fixed-fee (CPFF) contract type, while allowing for flexibility, can lead to higher costs if not managed diligently. The contractor, BAE Systems, is a major defense manufacturer, suggesting they possess the capabilities, but the lack of competition raises questions about whether the best possible price was achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was considered. This typically occurs when a specific capability or technology is only available from a single source, or in cases of urgent need. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors. This raises concerns about whether the government secured the most advantageous terms possible.

Taxpayer Impact: For taxpayers, a sole-source award means there was no competitive pressure to ensure the lowest possible price for these combat vehicles. This could result in a higher overall expenditure compared to a competitively bid contract.

Public Impact

The primary beneficiaries are the U.S. Army ground forces requiring advanced tracked combat vehicles. The contract delivers critical military hardware essential for national defense operations. The geographic impact is national, supporting defense readiness across various theaters. Workforce implications include employment at BAE Systems facilities and their supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially reduces value for money.
Cost-plus-fixed-fee contract type may lead to cost overruns if not closely monitored.
Long contract duration could mask inefficiencies or changing requirements over time.
Lack of transparency in the sole-source justification requires scrutiny.
Potential for contractor lock-in due to specialized nature of the vehicles.

Positive Signals

Award to a major defense contractor like BAE Systems suggests established capability and experience.
The contract addresses a clear and critical defense need for combat vehicles.
The fixed fee component provides some cost certainty for the government.
The contract duration indicates a long-term commitment to equipping forces.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on armored vehicle manufacturing. The market for such specialized military hardware is dominated by a few large defense contractors. Spending in this area is driven by military modernization programs and readiness requirements. Comparable spending benchmarks would typically involve other large-scale vehicle procurement contracts within the Department of Defense, often running into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans in the provided data. As this was a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless BAE Systems voluntarily includes them in its supply chain. Further investigation into BAE Systems' subcontracting practices would be needed to assess any indirect benefits to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures, likely involving the Defense Contract Management Agency (DCMA) for performance monitoring. The cost-plus-fixed-fee nature necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal DoD review and potentially Inspector General audits.

Related Government Programs

Armored Vehicle Procurement
Combat Vehicle Modernization
Tactical Vehicle Systems
Defense Logistics Agency Contracts
Ground Vehicle Systems
Department of Defense Major Weapon Systems

Risk Flags

Sole-source award raises concerns about price competition.
Cost-plus-fixed-fee contract requires stringent oversight to manage costs.
Contract duration extends over multiple fiscal years, increasing exposure to budget fluctuations.
Lack of detailed performance metrics in the provided data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $64.1 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. 199712!2100!0879!AE07 !USA TANK-AUTOMOTIVE & ARMAMENTS !DAAE0795CX030 !A!*!P00034 !19970206!19980930!085302958!085302958!824825459!N!80212!UNITED DEFENSE !2830 DE LA CRUZ BLVD !SANTA CLARA !CA!95050!69084!085!06!SANTA CLARA !SANTA CLARA !CALIFORNIA!0001!+000002099853!N!N!000000000000!2350!COMBAT ASSAULT & TACTICAL VEH, TRACKED !A4A!COMBAT VEHICLES !1000!NOT DISCERNABLE OR CLASSIFIED !8711!3!*!*!C!B!N!Z!D !U!U!1!0

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $64.1 million.

What is the period of performance?

Start: 1997-02-06. End: 2005-12-31.

What is the track record of BAE Systems Land & Armaments L.P. with similar sole-source defense contracts?

BAE Systems Land & Armaments L.P. (now part of BAE Systems Inc.) has a long history of securing large defense contracts, including those awarded through sole-source or limited competition. As a major global defense contractor, they are frequently involved in the production of armored vehicles, artillery systems, and other military hardware. Their track record often involves complex, multi-year programs requiring significant engineering, manufacturing, and logistical capabilities. While specific data on their sole-source awards for similar vehicles isn't detailed here, their overall portfolio indicates extensive experience in fulfilling substantial government requirements. However, the nature of sole-source awards means that direct comparisons of pricing and efficiency against competitive bids are inherently difficult.

How does the $64 million award compare to historical spending on tracked combat assault vehicles?

The $64 million award represents a significant, but not unprecedented, investment in a specific type of military hardware. Historical spending on tracked combat assault vehicles can vary widely based on the specific platform, quantity, and technological advancements. Major programs for vehicles like the M1 Abrams tank or Bradley Fighting Vehicle have historically involved multi-billion dollar procurements over their lifecycles. This $64 million contract likely represents a specific production run, upgrade, or sustainment effort for a particular variant of tracked combat assault vehicle. Without knowing the exact model and quantity procured, a precise historical comparison is challenging, but it falls within the range of substantial, yet focused, defense procurement actions.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for combat vehicles?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than could be achieved through bidding. The government may not be getting the best value for its money. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing some cost control via the fixed fee, can incentivize the contractor to incur costs, as a portion of their profit is tied to the total cost. This requires robust government oversight to scrutinize costs, prevent unnecessary expenditures, and ensure the contractor remains efficient. Scope creep and contractor performance issues are also inherent risks in long-term, complex defense contracts.

What is the expected program effectiveness given the contract details?

The expected program effectiveness hinges on BAE Systems' ability to deliver the specified tracked combat assault vehicles according to requirements and on time. The sole-source award suggests a perceived necessity for BAE's specific capabilities or technology, implying that their involvement is crucial for meeting the program's objectives. The CPFF contract type, if managed effectively by the DoD, should allow for the necessary resources to be allocated to ensure successful production and delivery. However, the lack of competition means that the government's leverage to enforce stringent performance metrics or demand cost reductions is limited compared to a competitive scenario. Ultimately, effectiveness will depend on diligent program management and oversight by the awarding agency.

How has spending on combat vehicles by the Department of Defense evolved over the past decade?

Spending on combat vehicles by the Department of Defense (DoD) has fluctuated over the past decade, influenced by geopolitical events, evolving military strategies, and budget constraints. Following periods of intense conflict in Iraq and Afghanistan, there was a focus on modernizing existing fleets and developing next-generation platforms. More recently, shifts towards great power competition have spurred investment in advanced capabilities, including armored vehicles with enhanced protection, lethality, and networked warfare systems. While specific figures for 'combat vehicles' can vary depending on categorization (e.g., including wheeled vs. tracked, direct fire vs. support), overall DoD spending on ground combat systems remains a significant portion of the defense budget, reflecting their continued importance in modern warfare.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: BAE Systems PLC

Address: 2830 DE LA CRUZ BLVD, SANTA CLARA, CA, 95050

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline