DoD awards $37.7M for 18 M777A2 Howitzers to BAE Systems, a sole-source procurement

Contract Overview

Contract Amount: $37,710,000 ($37.7M)

Contractor: BAE Systems GCS International Limited

Awarding Agency: Department of Defense

Start Date: 2018-09-12

End Date: 2022-11-30

Contract Duration: 1,540 days

Daily Burn Rate: $24.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 18 EACH M777A2 LW155 HOWITZERS FOR THE US GOVERNMENT

Plain-Language Summary

Department of Defense obligated $37.7 million to BAE SYSTEMS GCS INTERNATIONAL LIMITED for work described as: 18 EACH M777A2 LW155 HOWITZERS FOR THE US GOVERNMENT Key points: 1. Significant investment in artillery systems for the U.S. Army. 2. Sole-source award to BAE Systems raises questions about price discovery. 3. Potential for higher costs due to lack of competitive bidding. 4. Focus on defense manufacturing sector, specifically ordnance production.

Value Assessment

Rating: fair

The per-unit cost of approximately $2.1 million per howitzer appears high. Without competitive bids, it's difficult to assess if this price is reasonable compared to potential market alternatives or previous procurements.

Cost Per Unit: $2,095,000

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to BAE Systems. This limits price discovery and potentially leads to higher costs for the government as there was no market pressure to offer competitive pricing.

Taxpayer Impact: Taxpayers may be paying a premium for these howitzers due to the absence of competition, potentially diverting funds from other critical defense needs.

Public Impact

Enhances U.S. Army's artillery capabilities with modern howitzer systems. Supports a key defense contractor, BAE Systems, in ordnance manufacturing. Procurement of heavy weaponry directly impacts national defense readiness. Funds allocated to a specific segment of the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
High per-unit cost

Positive Signals

Acquisition of critical military hardware
Supports established defense contractor

Sector Analysis

This procurement falls within the defense sector, specifically the manufacturing of ordnance and heavy artillery. Spending benchmarks in this area are highly variable, influenced by technological advancements, geopolitical factors, and specific system requirements.

Small Business Impact

The contract was awarded to BAE Systems, a large defense contractor. There is no indication that small businesses were involved as prime contractors or significant subcontractors in this specific award, which is common for large, specialized defense equipment procurements.

Oversight & Accountability

The Department of the Army is responsible for overseeing this contract. The lack of competition suggests that oversight may focus more on contract execution and delivery rather than price negotiation, potentially requiring robust internal review to ensure value.

Related Government Programs

Small Arms, Ordnance, and Ordnance Accessories Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award limits competitive pricing.
High per-unit cost requires further justification.
Lack of transparency in procurement process.
Potential for taxpayer overpayment due to non-competitive nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.7 million to BAE SYSTEMS GCS INTERNATIONAL LIMITED. 18 EACH M777A2 LW155 HOWITZERS FOR THE US GOVERNMENT

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS GCS INTERNATIONAL LIMITED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.7 million.

What is the period of performance?

Start: 2018-09-12. End: 2022-11-30.

What justification was provided for the sole-source award of the M777A2 howitzers, and were alternative solutions or competitors ever considered?

The provided data indicates the contract was 'NOT COMPETED,' implying a sole-source justification was likely made, possibly citing unique capabilities, existing systems compatibility, or urgent need. Without further documentation, the specific rationale and whether alternatives were explored remain unclear. This lack of transparency hinders a full assessment of procurement efficiency.

How does the per-unit cost of these M777A2 howitzers compare to similar artillery systems procured competitively by other nations or the U.S. in the past?

Benchmarking the $2.1 million per-unit cost against competitively procured systems is crucial for assessing value. If similar, less complex, or older generation howitzers were acquired at significantly lower prices through competition, it would highlight potential overspending. Conversely, if this price aligns with or is lower than comparable advanced systems, the fair value might be better supported.

What is the long-term strategic value and operational effectiveness of acquiring these specific M777A2 howitzers, considering potential obsolescence or evolving battlefield needs?

The M777A2 is a modern, towed howitzer known for its range and mobility. Its strategic value lies in enhancing conventional fires capability. However, the long-term effectiveness depends on integration with evolving C4ISR systems, ammunition advancements, and the changing nature of warfare, including the rise of drone technology and counter-battery capabilities.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W15QKN18R0159

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: MICHAELSON ROAD, BARROW-IN-FURNESS

Business Categories: Category Business, International Organization, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $37,710,000

Exercised Options: $37,710,000

Current Obligation: $37,710,000

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $115,055

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline