DoD's $40.4M contract for CROWS systems awarded to Kongsberg Defence & Aerospace AS without competition

Contract Overview

Contract Amount: $40,440,160 ($40.4M)

Contractor: Kongsberg Defence & Aerospace AS

Awarding Agency: Department of Defense

Start Date: 2018-09-25

End Date: 2020-07-08

Contract Duration: 652 days

Daily Burn Rate: $62.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER FOR COMMON REMOTELY OPERATED WEAPON STATION (CROWS) SYSTEMS

Place of Performance

Location: JOHNSTOWN, CAMBRIA County, PENNSYLVANIA, 15904

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $40.4 million to KONGSBERG DEFENCE & AEROSPACE AS for work described as: DELIVERY ORDER FOR COMMON REMOTELY OPERATED WEAPON STATION (CROWS) SYSTEMS Key points: 1. The contract value represents a significant investment in advanced weapon station technology. 2. Sole-source award raises questions about potential price inflation and limited market engagement. 3. The duration of the contract (652 days) suggests a substantial operational requirement. 4. Delivery to Pennsylvania indicates a specific logistical or operational hub for these systems. 5. The fixed-price contract type aims to control costs but relies heavily on initial negotiation. 6. Lack of competition may limit opportunities for innovation and cost reduction from alternative suppliers.

Value Assessment

Rating: questionable

Benchmarking the value of this specific delivery order is challenging due to the sole-source nature and lack of detailed cost breakdowns. However, the total award of over $40 million for remotely operated weapon stations indicates a substantial procurement. Without competitive bids, it's difficult to ascertain if this represents fair market value or if taxpayers could have secured a better price through a more open bidding process. The fixed-price contract type suggests an attempt to cap costs, but the absence of competition means the initial price negotiation is critical.

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 considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. The lack of competition means there was no direct price comparison or incentive for vendors to offer their best pricing.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also limits the government's ability to explore a wider range of solutions and potentially more cost-effective options available in the market.

Public Impact

The primary beneficiaries are the U.S. Army units requiring advanced remotely operated weapon systems for enhanced situational awareness and firepower. The contract delivers Common Remotely Operated Weapon Stations (CROWS), which are crucial for modern combat operations. The geographic impact is centered on delivery to Pennsylvania, likely indicating a key operational base or training facility. Workforce implications may include specialized training for operators and maintainers of these sophisticated systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Lack of competition may stifle innovation from other potential suppliers.
Reliance on a single supplier could create long-term dependency and potential supply chain risks.

Positive Signals

Fixed-price contract type provides cost certainty once negotiated.
Awarding to an established supplier may ensure timely delivery of critical systems.
CROWS systems are advanced technology, potentially enhancing soldier safety and mission effectiveness.

Sector Analysis

The defense sector, specifically focusing on weapon systems manufacturing, is characterized by high technological barriers to entry and significant R&D investment. Kongsberg Defence & Aerospace AS is a known entity in this specialized market. This contract fits within the broader category of defense procurement for advanced combat support systems, where specialized capabilities often lead to limited competition.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' flag is also false, suggesting no specific small business subcontracting goals were mandated within this particular award. This means the primary contractor, Kongsberg Defence & Aerospace AS, is not obligated to prioritize small businesses for subcontracting opportunities under this specific delivery order, potentially limiting the direct economic benefit to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Given it's a sole-source award, scrutiny might be higher to ensure the necessity and fair pricing. Transparency is limited due to the lack of competitive bidding. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Army Combat Systems
Weapon Systems Procurement
Remote Weapon Stations
Defense Logistics Agency
Tactical Vehicle Systems

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.4 million to KONGSBERG DEFENCE & AEROSPACE AS. DELIVERY ORDER FOR COMMON REMOTELY OPERATED WEAPON STATION (CROWS) SYSTEMS

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 Army).

What is the total obligated amount?

The obligated amount is $40.4 million.

What is the period of performance?

Start: 2018-09-25. End: 2020-07-08.

What is the track record of Kongsberg Defence & Aerospace AS with the U.S. Department of Defense, particularly concerning CROWS systems?

Kongsberg Defence & Aerospace AS has a significant history of supplying CROWS systems and related technologies to various military branches globally, including the U.S. Department of Defense. They are recognized as a primary developer and manufacturer of these systems. Their track record includes numerous contracts for the integration and delivery of CROWS onto different vehicle platforms. While specific performance metrics for past contracts are not detailed here, their continued selection for such systems suggests a level of established capability and product reliability that meets DoD requirements. However, the sole-source nature of this particular award means that direct comparisons of their pricing and performance against competitors for this specific requirement are not publicly available.

How does the $40.4 million value of this delivery order compare to historical spending on CROWS systems by the Department of the Army?

The $40.4 million value of this specific delivery order represents a substantial, but not unprecedented, investment in CROWS systems. The Department of the Army has historically awarded numerous contracts for CROWS, often in larger program-level agreements that encompass multiple delivery orders over several years. For instance, previous indefinite-delivery/indefinite-quantity (IDIQ) contracts have had ceiling values in the hundreds of millions of dollars. This $40.4 million order is likely one component of a larger, ongoing effort to equip forces with these systems. Without access to the specific contract vehicle and its total value, it's difficult to place this single order in precise historical context relative to annual spending, but it aligns with the typical scale of procurements for such advanced weapon platforms.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with a sole-source award of this magnitude ($40.4 million) include potential overpayment due to the lack of competitive pricing pressure, reduced incentive for the contractor to innovate or offer cost efficiencies, and the risk of vendor lock-in. Without competition, the government relies heavily on the contractor's proposed pricing and the agency's negotiation skills to ensure value for money. There's also a risk that alternative, potentially superior or more cost-effective, solutions from other vendors are not explored. Furthermore, a sole-source award can set a precedent that may be difficult to deviate from in future procurements, potentially limiting long-term strategic sourcing options and increasing dependency on a single supplier.

What is the expected program effectiveness or impact of delivering these CROWS systems?

The delivery of Common Remotely Operated Weapon Stations (CROWS) is expected to significantly enhance the effectiveness of the units receiving them. CROWS systems allow soldiers to operate weapon systems from under armor, increasing their safety and survivability in combat. They also provide improved targeting accuracy, faster engagement times, and enhanced situational awareness through integrated optics and fire control systems. This leads to more effective mission accomplishment, reduced collateral damage due to precision, and potentially lower casualty rates. The systems are designed for integration onto various vehicle platforms, offering tactical flexibility.

Are there any specific performance metrics or Key Performance Indicators (KPIs) associated with this contract that indicate success?

The provided data does not include specific performance metrics or Key Performance Indicators (KPIs) tied to this delivery order. Typically, such details would be outlined in the contract's statement of work (SOW) or performance work statement (PWS). For a contract of this nature, common KPIs might include on-time delivery rates, system reliability (e.g., Mean Time Between Failures - MTBF), operational availability, adherence to technical specifications, and successful integration with existing platforms. Without these specific contractual clauses, assessing the program's success beyond the delivery of the hardware itself is challenging. The fixed-price nature suggests that meeting the defined scope and specifications is the primary performance expectation.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Kongsberg Gruppen ASA

Address: KIRKEGARDSVEIEN 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: $40,440,160

Exercised Options: $40,440,160

Current Obligation: $40,440,160

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN18D0135

IDV Type: IDC

Timeline