DoD awards $260M sole-source contract for UCA long lead materials and services to Kongsberg Defence & Aerospace

Contract Overview

Contract Amount: $260,407,347 ($260.4M)

Contractor: Kongsberg Defence & Aerospace AS

Awarding Agency: Department of Defense

Start Date: 2024-11-04

End Date: 2028-03-21

Contract Duration: 1,233 days

Daily Burn Rate: $211.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UCA LONG LEAD MATERIALS AND SERVICES

Place of Performance

Location: JOHNSTOWN, CAMBRIA County, PENNSYLVANIA, 15901

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $260.4 million to KONGSBERG DEFENCE & AEROSPACE AS for work described as: UCA LONG LEAD MATERIALS AND SERVICES Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and limited market exploration. 2. The contract's duration of over three years suggests a significant, long-term need for these specialized materials. 3. Fixed-price contract type aims to mitigate cost escalation risks for the government. 4. Awarded by the Department of the Navy, indicating a critical role in naval defense capabilities. 5. The significant value of the award warrants close scrutiny of performance and delivery timelines. 6. Lack of competition may limit opportunities for innovation and cost savings through alternative suppliers.

Value Assessment

Rating: questionable

The contract value of $260.4 million for long lead materials and services is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The sole-source nature means the government did not explore potentially lower-cost alternatives or negotiate based on multiple offers. While a firm-fixed-price contract offers some cost certainty, the absence of competition prevents a robust assessment of value for money at this stage.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Kongsberg Defence & Aerospace AS, was solicited. The justification for this approach is not detailed in the provided data, but it typically implies unique capabilities, proprietary technology, or urgent needs where competition is not feasible. The lack of multiple bidders means there was no price discovery through a competitive process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing offers, there is less assurance that the negotiated price represents the best possible value.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other Department of Defense branches requiring advanced armored vehicle components. Services delivered include the provision of long lead materials essential for the production of UCA (likely meaning Unmanned Combat Aircraft or similar advanced platforms). The geographic impact is primarily within the defense industrial base, supporting specialized manufacturing and supply chains. Workforce implications include supporting highly skilled manufacturing and engineering roles within Kongsberg Defence & Aerospace and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Lack of transparency in the justification for sole-source procurement.
Long contract duration could introduce risks if requirements change or technology evolves rapidly.
Dependence on a single supplier for critical long-lead materials.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Award to an established defense contractor suggests a level of confidence in their capabilities.
Contract supports critical defense modernization efforts.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on components for armored vehicles or advanced military platforms. The market for such specialized, long-lead materials is often concentrated among a few key global suppliers due to high barriers to entry, including technological expertise, manufacturing capabilities, and security clearances. Comparable spending benchmarks are difficult to establish without knowing the exact nature of the UCA components, but significant investments are typical for advanced military hardware.

Small Business Impact

The data indicates that small business participation (sb) is false, and there is no indication of a small business set-aside (ss). This suggests that the prime contract is not specifically targeted towards small businesses. Subcontracting opportunities for small businesses may exist within Kongsberg Defence & Aerospace's supply chain, but this is not detailed in the award information. The overall impact on the small business ecosystem for this specific contract appears minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight will likely be managed by the Department of the Navy contracting officers and program managers responsible for the UCA program. Accountability measures are inherent in the firm-fixed-price contract terms, requiring delivery of specified materials. Transparency is limited due to the sole-source nature and lack of public detail regarding the justification. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Armored Vehicle Manufacturing
Defense Procurement
Long Lead Time Materials
Naval Systems
Aerospace Components

Risk Flags

Sole-source award
Lack of competitive bidding
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $260.4 million to KONGSBERG DEFENCE & AEROSPACE AS. UCA LONG LEAD MATERIALS AND SERVICES

Who is the contractor on this award?

The obligated recipient is KONGSBERG DEFENCE & AEROSPACE AS.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $260.4 million.

What is the period of performance?

Start: 2024-11-04. End: 2028-03-21.

What specific UCA platform or system is this contract intended to support, and what are the critical long-lead materials being procured?

The provided data does not specify the exact UCA platform or the precise nature of the 'long lead materials and services.' UCA typically refers to Unmanned Combat Aircraft or similar advanced autonomous systems. The 'long lead' designation implies components that require extensive manufacturing time, specialized tooling, or complex supply chains, such as advanced composites, specialized alloys, complex electronic sub-assemblies, or unique propulsion system parts. Without further details, it's challenging to pinpoint the exact materials, but they are critical for the timely production and fielding of a significant defense asset. The value of $260.4 million suggests these are high-value, technologically advanced components.

What is the justification for awarding this substantial contract on a sole-source basis, and were any alternative sources considered?

The provided data states the contract type is 'NOT COMPETED,' indicating a sole-source award. The specific justification for this sole-source determination is not included. Common reasons for sole-source awards in defense procurement include the existence of unique capabilities or proprietary technology held by only one contractor, urgent and compelling needs where competition is impractical, or situations where only one source can reasonably fulfill the requirement. Without the official justification document (e.g., a Justification and Approval - J&A), it is impossible to verify if alternative sources were considered or why they were deemed unsuitable. This lack of competition raises concerns about potential price inflation and limits the government's ability to leverage market forces for better value.

How does the $260.4 million contract value compare to historical spending on similar long-lead materials or components for defense systems?

Direct comparison of the $260.4 million contract value for 'UCA LONG LEAD MATERIALS AND SERVICES' to historical spending is difficult without knowing the specific components and the platform they support. However, as a sole-source award of this magnitude, it represents a significant investment. Historically, long-lead components for major defense platforms (like aircraft, ships, or advanced ground vehicles) often constitute a substantial portion of the overall program cost. Awards in the hundreds of millions for specialized materials are not uncommon for cutting-edge military hardware, but the lack of competition here makes a precise value benchmark challenging. Further analysis would require access to data on similar sole-source awards for comparable systems or detailed cost breakdowns.

What are the potential risks associated with a sole-source award of this size and duration (ending March 2028)?

The primary risks associated with a sole-source award of this size ($260.4M) and duration (over 3 years) include: 1) **Price:** Without competition, the contractor may not be incentivized to offer the lowest possible price, potentially leading to cost overruns for the government. 2) **Performance:** While the contractor is established, the lack of competitive pressure might reduce the urgency to meet or exceed performance expectations. 3) **Innovation:** The government misses out on potential innovations or efficiencies that alternative suppliers might offer. 4) **Supply Chain Dependency:** The DoD becomes heavily reliant on a single supplier for critical components, increasing vulnerability if the supplier faces production issues, financial instability, or geopolitical challenges. 5) **Scope Creep:** Sole-source contracts can sometimes be more susceptible to scope creep if not managed tightly.

What oversight mechanisms are in place to ensure the effective use of funds and successful delivery of materials under this contract?

Oversight for this contract will primarily be conducted by the Department of the Navy's contracting and program management teams. Key mechanisms include: 1) **Contract Surveillance:** Regular monitoring of the contractor's progress against the schedule and technical requirements. 2) **Financial Audits:** Potential audits of the contractor's costs, especially if the contract includes cost-reimbursement elements (though this is firm-fixed-price, audits can still occur for specific aspects). 3) **Quality Assurance:** Government quality assurance representatives will likely inspect materials and processes to ensure they meet specifications. 4) **Performance Reporting:** The contractor is typically required to submit regular performance reports. 5) **Contract Modifications:** Any changes to the contract scope, schedule, or price would require formal modification and justification, subject to review. The firm-fixed-price nature simplifies some aspects by capping the government's financial liability, shifting risk to the contractor.

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: M6785425R0021

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: KIRKEGAARDSVEIEN 45, KONGSBERG

Business Categories: Category Business, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $282,820,227

Exercised Options: $260,407,347

Current Obligation: $260,407,347

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline