Army Awards $79M for Abrams Systems and Spares, Sole-Source to Kongsberg Defence & Aerospace

Contract Overview

Contract Amount: $79,004,319 ($79.0M)

Contractor: Kongsberg Defence & Aerospace AS

Awarding Agency: Department of Defense

Start Date: 2018-12-28

End Date: 2021-10-01

Contract Duration: 1,008 days

Daily Burn Rate: $78.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER FOR ABRAMS SYSTEMS AND SPARES.

Place of Performance

Location: JOHNSTOWN, CAMBRIA County, PENNSYLVANIA, 15904

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $79.0 million to KONGSBERG DEFENCE & AEROSPACE AS for work described as: DELIVERY ORDER FOR ABRAMS SYSTEMS AND SPARES. Key points: 1. Significant investment in Abrams tank components highlights ongoing modernization and maintenance needs. 2. Sole-source award raises questions about price discovery and potential for competitive pricing. 3. Focus on critical defense systems underscores national security priorities. 4. The contract's duration and value suggest a substantial, long-term requirement.

Value Assessment

Rating: questionable

The contract value of $79M for Abrams systems and spares is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market alternatives. Benchmarking against similar sole-source awards for specialized defense components would be necessary.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This limits price discovery and may result in higher costs for taxpayers compared to a fully competed procurement. The justification for sole-source is critical to understanding the necessity.

Taxpayer Impact: The lack of competition in this significant defense contract raises concerns about potential overspending and the efficient use of taxpayer funds.

Public Impact

Ensures continued operational readiness of Abrams main battle tanks. Supports the U.S. Army's armored vehicle fleet maintenance and upgrade programs. Potential impact on the defense industrial base, particularly for specialized component suppliers. Highlights the government's reliance on specific contractors for critical defense equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price negotiation.
Lack of transparency in pricing due to non-competitive nature.
Potential for cost overruns without market checks.
Dependence on a single supplier for critical components.

Positive Signals

Ensures availability of critical Abrams systems and spares.
Supports U.S. Army readiness and modernization efforts.
Contract awarded to a known entity in defense manufacturing.

Sector Analysis

This contract falls within the Defense sector, specifically related to armored vehicle components. Spending benchmarks for similar sole-source procurements of specialized military hardware are often high due to unique specifications and limited suppliers.

Small Business Impact

The data indicates this contract was not awarded to small businesses (sb: false). There is no direct indication of subcontracting opportunities for small businesses within this award, which could be a missed opportunity for broader economic participation.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent potential waste. Accountability would involve reviewing the justification for sole-source and tracking performance against contract requirements.

Related Government Programs

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

Risk Flags

Sole-source award lacks competitive pricing.
Potential for inflated costs due to lack of market pressure.
Limited transparency regarding the necessity of sole-source.
Risk of vendor lock-in for critical defense components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $79.0 million to KONGSBERG DEFENCE & AEROSPACE AS. DELIVERY ORDER FOR ABRAMS SYSTEMS AND SPARES.

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 $79.0 million.

What is the period of performance?

Start: 2018-12-28. End: 2021-10-01.

What is the specific justification for awarding this contract on a sole-source basis, and have alternative sourcing options been thoroughly explored?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Thorough exploration of alternatives is crucial to ensure the government isn't foregoing potential cost savings or better performance from a competitive market. Without this justification, the award appears suboptimal.

How does the per-unit cost of these Abrams systems and spares compare to industry benchmarks or previous competitive contracts for similar items?

Benchmarking the per-unit cost is essential for assessing value, especially in sole-source contracts. Comparing these costs against historical data from competitive procurements or against prices offered by other manufacturers for comparable components can reveal potential overpricing. This analysis is critical for taxpayer accountability.

What measures are in place to ensure the effectiveness and timely delivery of these critical Abrams systems and spares, given the sole-source nature of the contract?

Effectiveness and timely delivery in sole-source contracts rely heavily on robust contract management, clear performance metrics, and strong government oversight. Regular progress reviews, quality assurance checks, and defined penalties for non-performance are vital. The government must actively manage the contractor relationship to ensure objectives are met.

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 (UEI: 518910914)

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: $79,004,319

Exercised Options: $79,004,319

Current Obligation: $79,004,319

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN18D0135

IDV Type: IDC

Timeline