DoD awards $88.8M for Assault Amphibious Vehicles, a sole-source contract with BAE Systems

Contract Overview

Contract Amount: $88,835,493 ($88.8M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2018-05-31

End Date: 2020-09-23

Contract Duration: 846 days

Daily Burn Rate: $105.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ASSAULT AMPHIBIOUS VEHICLE - PERSONNEL

Place of Performance

Location: YORK, YORK County, PENNSYLVANIA, 17408

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $88.8 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: ASSAULT AMPHIBIOUS VEHICLE - PERSONNEL Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Firm Fixed Price contract type suggests cost certainty for the government. 3. Contract duration of 846 days indicates a significant, ongoing need. 4. The contract falls under Military Armored Vehicle manufacturing, a specialized sector. 5. Performance is managed by the Defense Contract Management Agency. 6. No small business set-aside was utilized for this procurement.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. The firm fixed price structure provides some cost control, but without comparison to other potential suppliers or historical pricing for similar vehicles, assessing true value-for-money is difficult. The total award amount of $88.8 million for 846 days of work suggests a substantial investment in specialized military hardware.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, BAE Systems Land & Armaments L.P., was solicited. This significantly limits the opportunity for price discovery through competition. While sole-source awards can be justified for unique capabilities or existing systems, they typically result in higher prices compared to competitively awarded contracts.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the government did not benefit from multiple offers driving down costs.

Public Impact

The primary beneficiaries are the U.S. Marine Corps, receiving critical personnel transport capabilities. The contract supports the production and sustainment of Assault Amphibious Vehicles. Geographic impact is primarily centered around BAE Systems' manufacturing facilities. Workforce implications include skilled labor in defense manufacturing and engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns if not closely managed due to lack of competition.

Positive Signals

Firm Fixed Price contract provides cost certainty.
Award to an established defense contractor with experience in this platform.
Contract duration indicates a sustained commitment to a critical capability.

Sector Analysis

The defense industrial base for armored vehicle manufacturing is highly specialized and consolidated. This contract for Assault Amphibious Vehicles fits within the broader category of military vehicle production, a sector characterized by long production cycles, high R&D costs, and significant government oversight. Comparable spending benchmarks are difficult to establish without detailed specifications and quantities, but major platforms often represent multi-billion dollar programs over their lifecycle.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for them based on the provided data. The award to a large prime contractor like BAE Systems suggests that the primary manufacturing and assembly will be handled in-house or by their established large-business partners, potentially limiting direct benefits to the small business defense ecosystem for this specific procurement.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed price nature of the contract provides a degree of accountability for cost control. Transparency regarding the justification for the sole-source award and ongoing performance metrics would be key areas for public scrutiny.

Related Government Programs

Amphibious Assault Vehicles
Marine Corps Ground Vehicles
Defense Contract Awards
Military Vehicle Manufacturing

Risk Flags

Sole-source award may lead to higher costs.
Lack of competitive bidding limits price discovery.
Potential for vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $88.8 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. ASSAULT AMPHIBIOUS VEHICLE - PERSONNEL

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 $88.8 million.

What is the period of performance?

Start: 2018-05-31. End: 2020-09-23.

What is the specific justification for awarding this contract on a sole-source basis to BAE Systems?

The provided data indicates the contract was 'NOT COMPETED'. A formal justification for a sole-source award is typically required under federal acquisition regulations (FAR). Common justifications include that only one responsible source can provide the required supplies or services, or that the agency is seeking or intending to obtain a sole source justification. For defense systems like the Assault Amphibious Vehicle, this could be due to unique technical requirements, proprietary technology, the need for commonality with existing fleets, or the contractor being the sole entity capable of producing the specific variant or upgrade. Without the official Justification for Other Than Full and Open Competition (JOFOC), the precise reason remains speculative but would likely center on the specialized nature of the vehicle and BAE Systems' established role as the prime contractor or sole developer.

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 as it shifts the risk of cost overruns to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides budget certainty for the government and incentivizes the contractor to manage their expenses efficiently. For a sole-source award, the FFP structure is particularly important for controlling costs, as there is no competitive pressure to drive down the initial price. However, the government must still ensure the price negotiated is fair and reasonable, often through cost and price analysis, even without competing offers.

What are the potential risks associated with a sole-source award for military hardware?

Sole-source awards for military hardware carry several inherent risks. The most significant is the potential for inflated pricing due to the lack of competition; without competing bids, the contractor may not feel pressured to offer the lowest possible price. There's also a risk of reduced innovation, as the contractor may have less incentive to develop cost-saving efficiencies or cutting-edge solutions when their position is guaranteed. Furthermore, sole-source contracts can sometimes lead to vendor lock-in, making it difficult and costly to switch suppliers in the future. Effective oversight and rigorous negotiation are crucial to mitigate these risks.

What is the significance of the contract duration (846 days) in relation to the total award amount ($88.8M)?

A contract duration of 846 days (approximately 2.3 years) for an $88.8 million award suggests a substantial, long-term commitment to the production or sustainment of Assault Amphibious Vehicles. This duration implies a significant number of vehicles or major components are being procured, or that the work involves complex manufacturing processes, integration, testing, and potentially field support. The average annual spending under this contract would be roughly $38.6 million ($88.8M / 2.3 years), which is a considerable investment for specialized military equipment. This extended period also allows for more predictable planning and resource allocation for both the government and the contractor.

How does this contract fit into the broader context of the Assault Amphibious Vehicle program?

This contract likely represents a specific procurement action within the larger, ongoing Assault Amphibious Vehicle (AAV) program, which has been a cornerstone of Marine Corps amphibious assault capabilities for decades. The AAV platform has undergone various upgrades and sustainment efforts. This particular award could be for the production of new vehicles, modernization of existing fleets, or procurement of critical spare parts and support services. Given the age of the original AAV design, such contracts are essential for maintaining operational readiness while the Marine Corps potentially transitions to newer platforms like the Amphibious Combat Vehicle (ACV).

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: M6785417R0004

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 1100 BAIRS RD, YORK, PA, 17408

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $88,835,493

Exercised Options: $88,835,493

Current Obligation: $88,835,493

Subaward Activity

Number of Subawards: 155

Total Subaward Amount: $22,302,288

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline