DoD's $33.3M order for weapon stations awarded without competition, raising value concerns

Contract Overview

Contract Amount: $33,338,499 ($33.3M)

Contractor: Kongsberg Defence & Aerospace AS

Awarding Agency: Department of Defense

Start Date: 2019-07-16

End Date: 2022-08-01

Contract Duration: 1,112 days

Daily Burn Rate: $30.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER FOR LOW PROFILE (LP) 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 $33.3 million to KONGSBERG DEFENCE & AEROSPACE AS for work described as: DELIVERY ORDER FOR LOW PROFILE (LP) COMMON REMOTELY OPERATED WEAPON STATION (CROWS) SYSTEMS. Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The duration of the delivery order (over 3 years) suggests a long-term need for these systems. 3. The firm-fixed-price contract type shifts some risk to the contractor, but the lack of competition is a primary concern. 4. The specific weapon system (LP CROWS) indicates a need for advanced, remotely operated capabilities. 5. The award to a single foreign-owned company warrants scrutiny regarding domestic industrial base implications. 6. The absence of small business participation is noted, with no set-aside or subcontracting reported.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source award is challenging due to the lack of competitive bids. The $33.3 million price tag for LP CROWS systems over three years requires careful examination against any available historical pricing or similar system procurements. Without competition, it's difficult to ascertain if the government secured the best possible price and value. The firm-fixed-price nature provides some cost certainty, but the overall value proposition is weakened by the non-competitive award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. The Department of the Army identified a specific need for the Low Profile (LP) Common Remotely Operated Weapon Station (CROWS) systems and determined that only one source, Kongsberg Defence & Aerospace AS, could fulfill this requirement. The lack of competition means there were no other bidders to compare against, potentially leading to a higher price than if multiple companies had vied for the contract.

Taxpayer Impact: Taxpayers may have paid a premium for these weapon systems due to the absence of competitive bidding. The sole-source nature limits the government's ability to leverage market forces to drive down costs, potentially resulting in less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of the Army, which receives advanced weapon station technology. The contract delivers Low Profile (LP) Common Remotely Operated Weapon Station (CROWS) systems, enhancing soldier protection and operational effectiveness. The geographic impact is primarily within the Department of Defense's operational theaters, though the contractor is based internationally. Workforce implications are likely concentrated at the contractor's facilities, with potential indirect impacts on military personnel operating the systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially inflates costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
No small business participation or subcontracting opportunities reported.
Contract duration of over three years without competitive re-evaluation.
Reliance on a single, foreign-owned supplier for critical defense equipment.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Delivery of advanced weapon systems (LP CROWS) to meet specific military requirements.
Contract awarded to a known entity with presumed expertise in the required technology.

Sector Analysis

The defense sector, particularly the segment focused on weapon systems and vehicle-mounted armaments, is characterized by high technological sophistication and significant government investment. The market for remotely operated weapon stations is specialized, with a limited number of prime contractors capable of producing such advanced systems. This contract fits within the broader category of defense procurement for tactical equipment, where sole-source awards can occur due to unique capabilities or existing system integration requirements. Comparable spending benchmarks are difficult to establish without competitive data, but the overall defense spending on similar platforms runs into billions annually.

Small Business Impact

This contract did not include any small business set-aside provisions, nor were there any indications of subcontracting to small businesses. The award was made directly to Kongsberg Defence & Aerospace AS, a large, foreign-owned entity. This lack of small business involvement means that opportunities for small businesses to contribute to this specific defense procurement were missed, potentially impacting the small business defense industrial base ecosystem.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and program management offices. Accountability measures are typically embedded in contract clauses related to delivery schedules, quality standards, and performance. Transparency is limited due to the sole-source nature of the award, with justifications for such awards usually available through specific government contracting portals. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Common Remotely Operated Weapon Station (CROWS) Program
Department of the Army Weapon Systems Procurement
Remote Weapon Systems
Defense Procurement - Ordnance and Accessories

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Foreign supplier dependency
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.3 million to KONGSBERG DEFENCE & AEROSPACE AS. DELIVERY ORDER FOR LOW PROFILE (LP) 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 $33.3 million.

What is the period of performance?

Start: 2019-07-16. End: 2022-08-01.

What is the specific justification provided by the Department of the Army for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. Typically, sole-source justifications for defense contracts are based on factors such as unique technical capabilities, urgent and compelling needs where only one source can reasonably fulfill the requirement, or if the acquisition is a follow-on to a previously competed contract where only one source possesses the necessary expertise or proprietary data. Without access to the specific justification document (often found in contract award notices or justifications for other than full and open competition), the precise reasons remain undisclosed in this summary. However, the nature of specialized weapon systems like the LP CROWS often leads to such justifications due to limited manufacturers possessing the required technology and integration capabilities.

How does the unit cost of these LP CROWS systems compare to similar systems procured competitively by the DoD?

Direct comparison of unit costs is not feasible with the provided data, as this award was sole-source and no competitive pricing information is available. To perform such a comparison, one would need to identify other competitively awarded contracts for similar remotely operated weapon stations, noting their specific capabilities, quantities, and contract types. Factors such as system upgrades, integration with existing platforms, and the specific threat environment addressed by each system can significantly influence pricing. Benchmarking would require detailed analysis of contract line item numbers (CLINs) and associated pricing data from multiple competitive awards to establish a reliable market rate for comparable systems.

What are the potential risks associated with relying on a single foreign supplier for critical defense equipment like the LP CROWS?

Relying on a single foreign supplier for critical defense equipment introduces several significant risks. Firstly, there's a geopolitical risk; changes in international relations or trade policies could disrupt supply chains or lead to increased costs. Secondly, there's a dependency risk, where the U.S. military's operational readiness could be compromised if the supplier faces production issues, financial instability, or decides to cease supplying the equipment. Thirdly, there's a potential for intellectual property risks and a lack of long-term sustainment if the foreign supplier's technology evolves in a direction not aligned with U.S. defense needs. Finally, it can hinder the development and growth of the domestic defense industrial base, reducing U.S. self-sufficiency in critical technologies.

What is the track record of Kongsberg Defence & Aerospace AS in supplying similar weapon systems to the U.S. military or other allied nations?

Kongsberg Defence & Aerospace AS is a well-established defense contractor with a significant track record in developing and supplying advanced weapon systems, including remotely operated weapon stations. They are known globally for their PROTECTOR Remote Weapon Station, which is widely used by numerous countries, including the United States. The 'LP' designation likely refers to a specific variant or upgrade of their CROWS systems. Their extensive experience and the widespread adoption of their systems by various militaries suggest a proven capability and reliability in delivering such technology. However, specific performance metrics or past issues related to U.S. contracts would require deeper investigation into historical contract data and performance reviews.

How does the total contract value of $33.3 million for these systems align with historical spending patterns for similar defense procurements?

The total contract value of $33.3 million over approximately three years for LP CROWS systems represents a substantial investment. To assess alignment with historical spending, one would need to analyze past procurements of similar remote weapon stations by the Department of the Army or other branches. This would involve looking at the number of systems procured, the timeframe, and the unit costs from previous contracts, especially those that were competitively awarded. Without this comparative data, it's difficult to definitively state whether $33.3 million is high, low, or average. However, given the specialized nature and advanced technology of CROWS, such figures are not uncommon in major defense acquisitions, particularly when considering multi-year delivery orders.

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: $33,338,499

Exercised Options: $33,338,499

Current Obligation: $33,338,499

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN18D0135

IDV Type: IDC

Timeline