DoD's $16.3M contract for weapon system components awarded to United Defense L.P. with questionable value

Contract Overview

Contract Amount: $16,315,103 ($16.3M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2004-03-18

End Date: 2010-09-16

Contract Duration: 2,373 days

Daily Burn Rate: $6.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200406!000345!1700!BW19A !NAVAL SURFACE WARFARE CENTER, PO!N0002403G4052 !A!N! !N!L639 ! !20040318!20050531!006481543!098060218!175406842!N!UNITED DEFENSE, L P !4800 EAST RIVER ROAD !MINNEAPOLIS !MN!55421!48000!111!21!LOUISVILLE !JEFFERSON !KENTUCKY !+000000705999!N!N!000000000000!L010!TECH REP SVCS/WEAPONS !S1 !SERVICES !000 !* !541330!E! !4! ! ! ! ! !99990909!B! ! !A! !D!U!U!1!001!N!1A!C!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40214

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $16.3 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: 200406!000345!1700!BW19A !NAVAL SURFACE WARFARE CENTER, PO!N0002403G4052 !A!N! !N!L639 ! !20040318!20050531!006481543!098060218!175406842!N!UNITED DEFENSE, L P !4800 EAST RIVER ROAD !MINNEAPOLIS !MN!55421!48000!111!21!LOUISVILLE !JEFF… Key points: 1. The contract's value proposition is unclear due to a lack of detailed performance metrics and cost breakdowns. 2. Competition was limited, raising concerns about potential overpricing and reduced innovation. 3. The contractor, United Defense L.P., has a history of large defense contracts, but specific performance on this one is not detailed. 4. This contract falls within the broader defense sector, specifically supporting naval surface warfare systems. 5. The contract's duration and cost structure warrant further scrutiny for efficiency. 6. Oversight mechanisms appear standard, but transparency regarding specific deliverables and outcomes could be enhanced.

Value Assessment

Rating: questionable

The total award amount of $16.3 million for weapon system components appears high given the limited information on specific deliverables and the nature of the components. Benchmarking against similar contracts for specialized weapon system parts is difficult without more granular data on the exact items procured and their specifications. The cost-plus-fixed-fee structure, while common in defense, can sometimes lead to less price discipline compared to fixed-price contracts, especially when the scope is not precisely defined. Further analysis of the contractor's cost submissions and profit margins would be necessary to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not competed on a full and open basis, indicating a limited competition scenario. The data suggests it was awarded to a single source, United Defense, L.P. The lack of broader competition limits the government's ability to solicit the best possible pricing and terms from multiple vendors. This can result in higher costs for taxpayers and potentially less favorable contract terms than might be achieved in a more competitive environment.

Taxpayer Impact: Limited competition means taxpayers may not be receiving the most cost-effective solution, as the government did not leverage the full market to drive down prices.

Public Impact

The primary beneficiaries are the U.S. Navy's surface warfare programs, which receive critical weapon system components. The contract supports the manufacturing and supply of specialized components essential for naval defense capabilities. The geographic impact is centered around the contractor's facilities in Minneapolis, Minnesota, and potentially their supply chain. Workforce implications include employment at United Defense, L.P. and its subcontractors, contributing to the defense manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics makes it difficult to assess the contractor's efficiency and effectiveness.
The cost-plus-fixed-fee contract type can incentivize cost overruns if not managed tightly.
Limited competition restricts the government's ability to secure the best pricing and terms.
The specific components procured are not detailed, hindering a precise understanding of the contract's technical scope and value.
The extended contract duration (initial award to potential completion) raises questions about long-term cost management.

Positive Signals

The contract is awarded to a known entity in the defense sector, United Defense, L.P., suggesting some level of established capability.
The contract supports critical naval defense systems, contributing to national security objectives.
The award is for specific weapon system components, indicating a focused and necessary procurement.
The contract has a defined period of performance, allowing for structured delivery and oversight.

Sector Analysis

This contract falls within the broader defense manufacturing sector, specifically supporting the production of components for naval weapon systems. The market for such specialized components is often concentrated among a few key defense contractors. Comparable spending benchmarks are difficult to establish without knowing the exact nature and quantity of the components. However, the overall defense spending in this sub-sector is substantial, driven by ongoing modernization and maintenance of naval fleets.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature of weapon system components and the award to a large prime contractor, it is likely that any small business involvement would be through subcontracting opportunities. The extent of small business participation, if any, is not detailed in the provided data, making it difficult to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Naval Surface Warfare Center and the Defense Contract Management Agency (DCMA). These agencies are responsible for monitoring contractor performance, ensuring compliance with contract terms, and verifying costs and delivery schedules. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected. Transparency regarding specific performance metrics and cost breakdowns could be improved to enhance public accountability.

Related Government Programs

Naval Surface Warfare Systems
Defense Weapon Systems Procurement
Naval Ship Components
US Navy Procurement

Risk Flags

Limited competition may lead to higher costs.
Cost-plus contract type can reduce incentive for cost control.
Lack of detailed performance metrics hinders value assessment.
Specific components and end-use weapon system not clearly defined.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.3 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. 200406!000345!1700!BW19A !NAVAL SURFACE WARFARE CENTER, PO!N0002403G4052 !A!N! !N!L639 ! !20040318!20050531!006481543!098060218!175406842!N!UNITED DEFENSE, L P !4800 EAST RIVER ROAD !MINNEAPOLIS !MN!55421!48000!111!21!LOUISVILLE !JEFFERSON !KENTUCKY !+000000705999!N!N!000000000000!L010!TECH REP SVCS/WEAPONS !S1 !SERVICES !000 !* !541330!E! !4! ! ! ! ! !999

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 $16.3 million.

What is the period of performance?

Start: 2004-03-18. End: 2010-09-16.

What is the specific nature of the weapon system components being procured under this contract?

The provided data indicates the contract is for 'TECH REP SVCS/WEAPONS' and lists the Product Service Code (PSC) as '541330', which corresponds to 'Bolt, Nut, Screw, Rivet, and Washer Manufacturing'. However, the specific weapon system these components are intended for is not detailed. This suggests the contract may cover a range of standard or specialized fasteners and hardware critical for the assembly, maintenance, or upgrade of naval weapon platforms. Without more granular information, it's difficult to ascertain the exact technical specifications or the criticality of these particular parts to a specific weapon system's function.

How does the awarded amount of $16.3 million compare to market rates for similar components?

Directly comparing the $16.3 million award to market rates for similar components is challenging without knowing the precise specifications, quantities, and quality requirements of the parts procured. The data only provides the total award value and a broad product service code. Defense procurement often involves specialized materials, stringent quality control, and unique manufacturing processes that can command higher prices than commercial equivalents. Furthermore, the contract type (Cost Plus Fixed Fee) suggests that the final cost might have some variability. A true market comparison would require detailed technical data and access to pricing information from multiple manufacturers specializing in defense-grade fasteners and hardware.

What are the key performance indicators (KPIs) used to evaluate United Defense, L.P.'s performance on this contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this contract. Typically, for defense contracts involving component manufacturing, KPIs would likely include on-time delivery rates, adherence to quality standards (e.g., defect rates, compliance with military specifications), cost control within the fixed-fee parameters, and responsiveness to technical or engineering changes. The absence of specific KPIs in the summary data makes it difficult to objectively assess the contractor's performance beyond basic delivery and acceptance. Further review of the contract's statement of work (SOW) and associated performance management plans would be necessary to identify these metrics.

What is the historical spending pattern for similar weapon system components by the Department of Defense?

Historical spending on similar weapon system components by the Department of Defense (DoD) is substantial and varies significantly based on the specific weapon system, technological advancements, and geopolitical needs. The DoD procures a vast array of components, from basic hardware like bolts and screws (as suggested by the PSC 541330) to highly complex sub-assemblies. Over the past decade, defense budgets have consistently allocated billions towards platform modernization, sustainment, and new weapon system development, a portion of which directly funds component manufacturing. Analyzing specific historical spending requires segmenting data by component type, platform, and fiscal year, which is beyond the scope of this single contract's data. However, it's understood that the demand for reliable, high-quality components is a constant driver of spending in this category.

What risks are associated with the Cost Plus Fixed Fee (CPFF) contract type for this procurement?

The Cost Plus Fixed Fee (CPFF) contract type, used here, carries inherent risks for the government. While it allows for flexibility when the scope of work is not precisely defined or is expected to evolve, it can incentivize the contractor to incur higher costs because the fee (profit) is fixed regardless of the actual costs incurred. This can reduce the contractor's motivation to control expenses efficiently. For the government, the primary risk is that the total cost could exceed initial estimates if costs escalate significantly, even though the fee remains constant. Effective oversight, detailed cost accounting, and robust negotiation are crucial to mitigate these risks and ensure fair value is obtained.

Industry Classification

NAICS: Manufacturing › Machine Shops; Turned Product; and Screw, Nut, and Bolt Manufacturing › Bolt, Nut, Screw, Rivet, and Washer Manufacturing

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 4800 EAST RIVER ROAD, MINNEAPOLIS, MN, 90

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002403G4052

IDV Type: IDC

Timeline