DoD awards $61.8M contract for armored vehicle components to BAE Systems, with limited competition

Contract Overview

Contract Amount: $61,812,231 ($61.8M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2006-09-28

End Date: 2008-12-31

Contract Duration: 825 days

Daily Burn Rate: $74.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: SANTA CLARA, SANTA CLARA County, CALIFORNIA, 95050, UNITED STATES OF AMERICA

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $61.8 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: Key points: 1. The contract value represents a significant investment in military hardware modernization. 2. Limited competition suggests potential for higher costs and reduced innovation. 3. The firm fixed-price contract type shifts cost risk to the contractor. 4. The contract duration of over two years indicates a substantial, ongoing need. 5. The award to a single, large defense contractor raises questions about small business participation. 6. The specific components manufactured are critical for the operational readiness of armored vehicles.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific component details and market data. However, a $61.8 million award for armored vehicle components suggests a significant procurement. The lack of competition, as indicated by the 'NOT COMPETED' status, raises concerns about whether the government secured the best possible price. Comparing this to similar sole-source or limited-competition awards for specialized military hardware would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning BAE SYSTEMS LAND & ARMAMENTS L.P. was the only bidder considered. This approach is typically used when a unique capability or proprietary technology is required, or when only one source is available. The lack of a competitive bidding process means that the government did not explore alternative suppliers or pricing structures, potentially leading to a less favorable outcome in terms of cost and innovation.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to drive down prices, potentially resulting in higher costs for taxpayers. It also bypasses opportunities to foster a broader industrial base through competitive contracts.

Public Impact

The primary beneficiaries are the U.S. Army and Marine Corps, receiving critical components for their armored vehicle fleet. This contract supports the manufacturing of essential parts for military vehicles, ensuring operational readiness. The geographic impact is concentrated in California, where BAE Systems' facility is located, supporting local jobs and the defense industrial base. The contract directly impacts the defense manufacturing workforce employed by BAE Systems and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may stifle innovation and reduce opportunities for other capable suppliers.
Absence of small business set-aside raises concerns about broader economic impact and subcontracting opportunities.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Award to an established defense contractor like BAE Systems suggests a high level of technical capability and experience.
Contract duration indicates a sustained need for these critical components, supporting long-term defense readiness.

Sector Analysis

The defense industrial base, specifically the manufacturing of armored vehicles and their components, is a highly specialized sector. This contract falls within the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' industry. The market is characterized by high barriers to entry due to technological complexity, stringent quality requirements, and long development cycles. Spending in this sector is driven by military modernization programs and geopolitical demands. Comparable spending benchmarks would involve analyzing other large-scale procurements for similar vehicle systems or major component sub-assemblies.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. The award to a large prime contractor like BAE Systems suggests that subcontracting opportunities may exist for small businesses within the defense supply chain. However, without specific subcontracting plans or goals mandated by the contract, the extent of small business involvement is uncertain. The lack of a set-aside means that the primary contract was not specifically reserved for small business competition.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring BAE Systems to deliver specified components within the agreed-upon price. Transparency is limited due to the sole-source nature of the award. The Inspector General of the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Armored Vehicle Procurement
Defense Manufacturing
Military Component Supply Chain
BAE Systems Contracts
Department of the Navy Procurements

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.8 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. See the official description on USAspending.

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 $61.8 million.

What is the period of performance?

Start: 2006-09-28. End: 2008-12-31.

What is the historical spending pattern for armored vehicle components awarded to BAE Systems by the Department of Defense?

Analyzing historical spending requires access to a comprehensive database of federal contracts. Without that specific data, it's difficult to provide a precise historical spending pattern. However, BAE Systems is a major defense contractor with a long history of supplying armored vehicles and components to the U.S. military. Their involvement in similar contracts would likely span several years and potentially billions of dollars in cumulative awards. Trends in their spending would be influenced by military modernization cycles, specific platform upgrades (e.g., Abrams tanks, Bradley Fighting Vehicles), and overall defense budget allocations. A detailed analysis would involve querying contract databases for all awards to BAE Systems within the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' NAICS code over a defined period.

How does the per-unit cost of these armored vehicle components compare to industry benchmarks or similar government contracts?

Determining a precise per-unit cost benchmark is challenging without knowing the exact components being procured under this $61.8 million contract and their specifications. The 'NOT COMPETED' status further complicates benchmarking, as competitive awards typically yield more transparent pricing data. To assess value, one would need to identify comparable components procured through competitive means or consult industry cost-estimating resources. Factors such as material costs, labor, manufacturing complexity, and required quality assurance processes significantly influence per-unit pricing. If these components are highly specialized or proprietary, their cost may naturally be higher than more standardized parts. A thorough analysis would involve comparing the unit price against similar items purchased by the DoD or other allied nations, adjusting for any differences in specifications or volume.

What are the specific risks associated with a sole-source award for critical military hardware components?

The primary risk of a sole-source award for critical military hardware components is the lack of price competition, which can lead to inflated costs for the government and taxpayers. Without competing bids, there is less incentive for the contractor to offer the most competitive pricing. Another significant risk is reduced innovation; a sole-source environment may not encourage the contractor to explore more efficient manufacturing processes or alternative materials. Furthermore, it limits the government's options if the sole-source provider experiences production issues, quality control problems, or financial instability, potentially jeopardizing the supply chain for essential military equipment. Dependence on a single supplier also creates a strategic vulnerability.

What is the track record of BAE SYSTEMS LAND & ARMAMENTS L.P. in delivering complex military vehicle components on time and within budget?

BAE SYSTEMS LAND & ARMAMENTS L.P. is a well-established and significant player in the defense industry, with a long history of producing armored vehicles and related components. Their track record generally includes the successful delivery of complex systems to various military branches. However, like many large defense contractors, they may have experienced instances of contract delays or cost overruns on specific programs, which are not uncommon in the defense sector due to the inherent complexities of military hardware development and production. A comprehensive assessment of their track record would involve reviewing past performance evaluations, contract completion data, and any reported issues or disputes on similar contracts. The firm fixed-price nature of this particular contract suggests a commitment to delivering within a set budget, shifting cost risk to the contractor.

What are the potential performance implications of awarding this contract without competition?

Awarding this contract without competition could have several performance implications. On the positive side, it ensures that a known entity with established capabilities, BAE Systems, is responsible for delivering critical components, potentially leading to a smoother and more predictable production process, especially if they are the sole manufacturer of these specific parts. However, the lack of competition removes the pressure to innovate or improve efficiency that often arises in a competitive environment. This could mean that the components are produced using older methods or that opportunities for performance enhancements are missed. Furthermore, without competitive benchmarking, it's harder to ascertain if the performance standards achieved represent the best possible outcome for the investment.

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

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, 95050

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline