DoD's $29.6M contract for counter-cruise missile tech shows R&D focus, but limited competition raises cost concerns

Contract Overview

Contract Amount: $29,558,935 ($29.6M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2020-06-18

End Date: 2025-12-31

Contract Duration: 2,022 days

Daily Burn Rate: $14.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: COUNTER CRUISE MISSILE EXPERIMENTATION: HYPERVELOCITY PROJECTILE (HVP) ALL-UP-ROUND (AUR) EXPERIMENT

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55421

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $29.6 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: COUNTER CRUISE MISSILE EXPERIMENTATION: HYPERVELOCITY PROJECTILE (HVP) ALL-UP-ROUND (AUR) EXPERIMENT Key points: 1. Contract focuses on advanced research and development for critical defense capabilities. 2. Sole-source award limits competitive pressure, potentially impacting price efficiency. 3. Long contract duration (over 5 years) requires ongoing performance monitoring. 4. The specific technology (HVP AUR) is vital for future missile defense systems. 5. Contractor has a significant presence in defense manufacturing, suggesting relevant expertise. 6. Limited public data on comparable contracts makes value assessment challenging.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source R&D contract is difficult without comparable sole-source awards for similar advanced projectile development. The Cost Plus Fixed Fee (CPFF) contract type allows for cost reimbursement plus a fixed fee, which can lead to higher costs if contractor efficiencies are not rigorously managed. Given the specialized nature of the work and the lack of competition, it's crucial to scrutinize the contractor's cost proposals and performance metrics to ensure reasonable value for taxpayer funds. The contract's base year value of $14.6M suggests a substantial investment in this specific technology.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, BAE Systems Land & Armaments L.P., was solicited. This approach is typically justified when a unique capability or proprietary technology is involved, or in cases of urgent need where only one source can reasonably meet the requirement. However, the absence of competition means there was no opportunity for price discovery through a bidding process, which can often lead to higher prices compared to competitively awarded contracts.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible pricing, potentially resulting in higher costs for taxpayers. Without competitive bids, there's less assurance that the price reflects the most economical option available.

Public Impact

The Department of Defense benefits from advancements in counter-cruise missile technology, enhancing national security. The contract supports the development of the Hypervelocity Projectile (HVP) All-Up-Round (AUR), a key component for future defense systems. Work is likely concentrated within BAE Systems' facilities, potentially impacting the Minnesota region's defense industrial base. This R&D effort could lead to the creation of specialized defense manufacturing jobs and require highly skilled personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to inflated costs.
CPFF contract type can incentivize cost overruns if not closely monitored.
Long-term nature of the contract requires sustained oversight to ensure performance and value.
Lack of transparency in sole-source justifications can obscure true necessity.

Positive Signals

Contractor (BAE Systems) is a major defense manufacturer with relevant expertise.
Focus on critical R&D for national security (counter-cruise missile technology).
Potential for significant technological advancement in missile defense capabilities.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical sciences and engineering. The market for advanced defense technologies, particularly missile defense systems, is highly specialized and dominated by a few large defense contractors. Spending in this area is driven by evolving geopolitical threats and the need for technological superiority. Comparable spending benchmarks are difficult to establish due to the unique nature of R&D and the proprietary aspects often involved.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, BAE Systems, is a large defense corporation. While large prime contractors are often required to subcontract portions of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a set-aside suggests that the primary focus was on securing specialized capabilities from a large, established firm rather than promoting small business participation.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force, given the 'sa' field. The Cost Plus Fixed Fee (CPFF) structure necessitates robust financial oversight to monitor costs and ensure the fixed fee is earned appropriately. Accountability measures would typically involve performance reviews, milestone tracking, and adherence to technical specifications. Transparency may be limited due to the sole-source nature and the classified or sensitive aspects of defense R&D.

Related Government Programs

Missile Defense Systems
Advanced Weaponry Research
Department of Defense Research and Development Programs
Counter-Missile Technology Initiatives

Risk Flags

Sole-source award
Cost-reimbursable contract type (CPFF)
Long contract duration
Specialized R&D focus

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.6 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. COUNTER CRUISE MISSILE EXPERIMENTATION: HYPERVELOCITY PROJECTILE (HVP) ALL-UP-ROUND (AUR) EXPERIMENT

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 Air Force).

What is the total obligated amount?

The obligated amount is $29.6 million.

What is the period of performance?

Start: 2020-06-18. End: 2025-12-31.

What is the track record of BAE Systems Land & Armaments L.P. in delivering similar research and development contracts for the Department of Defense?

BAE Systems Land & Armaments L.P. has a substantial track record with the Department of Defense, often securing large contracts for weapon systems, armored vehicles, and related technologies. Their involvement in R&D is significant, contributing to various advanced programs. While specific details on past HVP-related R&D projects are not provided here, the company's extensive experience in defense manufacturing and systems integration suggests a strong capability to undertake complex research initiatives. Performance on previous contracts would need to be reviewed for specific metrics on timeliness, budget adherence, and technical success, but their position as a major defense contractor implies a history of engagement with DoD R&D requirements.

How does the pricing structure (Cost Plus Fixed Fee) compare to other R&D contracts for similar technologies?

The Cost Plus Fixed Fee (CPFF) structure is common in R&D contracts where the scope of work can be uncertain or evolve. It allows the contractor to recover allowable costs plus a predetermined fixed fee, providing an incentive for cost control as the fee remains constant regardless of final costs. However, compared to fixed-price contracts, CPFF can carry higher risk for the government if costs escalate significantly. For similar advanced R&D in defense, CPFF is often preferred over fixed-price when technical uncertainties are high. Benchmarking requires comparing the fixed fee percentage and the total cost basis against other sole-source or limited-competition R&D efforts in comparable technological domains.

What are the primary risks associated with this sole-source contract, and how are they being mitigated?

The primary risk with this sole-source contract is the lack of competitive pressure, which could lead to suboptimal pricing and potentially less innovation. Another risk is cost overrun, inherent in CPFF contracts, especially in complex R&D. Mitigation strategies typically involve rigorous government oversight of contractor costs, detailed performance metrics, regular technical reviews, and strong contract management. The government must ensure that BAE Systems is performing efficiently and that the fixed fee is justified by the scope and complexity. The long duration also poses a risk if requirements change or if the technology becomes obsolete, necessitating careful management and potential contract modifications.

What is the expected effectiveness of the Hypervelocity Projectile (HVP) All-Up-Round (AUR) in countering modern cruise missiles?

The Hypervelocity Projectile (HVP) is designed to be fired from various platforms, including naval guns and potentially future directed energy systems, at extremely high velocities. Its effectiveness against modern cruise missiles stems from its kinetic energy and high speed, which can overcome advanced countermeasures and provide a rapid engagement capability. The 'All-Up-Round' (AUR) designation implies a self-contained unit ready for firing. Experimentation under this contract aims to validate and refine the HVP's performance characteristics, including its lethality, accuracy, and integration with existing or future defense systems, specifically targeting the threat posed by increasingly sophisticated cruise missiles.

What are the historical spending patterns for counter-cruise missile technology research and development within the Department of Defense?

Historical spending on counter-cruise missile technology within the DoD has been substantial and generally increasing, reflecting the growing threat from various state and non-state actors. Major programs often involve radar systems, interceptor missiles, electronic warfare, and directed energy research. Funding fluctuates based on perceived threats, technological advancements, and strategic priorities. While specific figures for HVP AUR experimentation aren't detailed here, overall investment in missile defense, including cruise missile defense, represents a significant portion of the defense budget, often spanning multiple research, development, testing, and evaluation (RDT&E) accounts across different services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

Address: 4800 E RIVER RD, MINNEAPOLIS, MN, 55421

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: $31,704,251

Exercised Options: $29,977,639

Current Obligation: $29,558,935

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $2,252,477

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline