DoD's $34.4M Stryker CROWS parts contract awarded to Kongsberg Defence & Aerospace AS without competition

Contract Overview

Contract Amount: $34,446,191 ($34.4M)

Contractor: Kongsberg Defence & Aerospace AS

Awarding Agency: Department of Defense

Start Date: 2021-09-10

End Date: 2022-08-27

Contract Duration: 351 days

Daily Burn Rate: $98.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER FOR COMMON REMOTELY OPERATED WEAPON STATION (CROWS) SPARE PARTS AND SYSTEMS FOR STRYKER.

Place of Performance

Location: JOHNSTOWN, CAMBRIA County, PENNSYLVANIA, 15904

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $34.4 million to KONGSBERG DEFENCE & AEROSPACE AS for work described as: DELIVERY ORDER FOR COMMON REMOTELY OPERATED WEAPON STATION (CROWS) SPARE PARTS AND SYSTEMS FOR STRYKER. Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract value of $34.4 million for spare parts and systems indicates significant investment in Stryker vehicle sustainment. 3. Awarded to Kongsberg Defence & Aerospace AS, a single source for these specialized components, limiting competitive pressure. 4. The firm-fixed-price contract type aims to control costs, but the lack of competition may undermine this. 5. Delivery order issued under a larger contract, suggesting a pre-existing relationship or framework agreement. 6. The duration of 351 days for this delivery order points to a substantial need for these parts. 7. The contract is for spare parts and systems, crucial for maintaining the operational readiness of Stryker vehicles.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized components. Without competitive bids, it's difficult to ascertain if the $34.4 million represents a fair market price for the CROWS spare parts and systems. The firm-fixed-price structure offers some cost control, but the absence of competition means the government cannot leverage market forces to secure the best possible pricing. Further analysis would require access to historical pricing data for similar components or internal cost estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Kongsberg Defence & Aerospace AS, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they limit the government's ability to explore a wider range of pricing and technical solutions. The lack of competition here means taxpayers did not benefit from potential cost savings that could arise from a more open bidding environment.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium for these specialized parts, as there was no market pressure to drive down prices. This award highlights the importance of robust justification for sole-source procurements to ensure fiscal responsibility.

Public Impact

The primary beneficiaries are the U.S. Army units operating Stryker combat vehicles, ensuring their continued operational readiness. The contract delivers essential spare parts and systems for the Common Remotely Operated Weapon Station (CROWS), a critical component for vehicle defense. The geographic impact is national, supporting Army operations across various deployments and training exercises. Workforce implications are indirect, primarily supporting the manufacturing and supply chain for defense equipment, potentially including specialized roles within Kongsberg.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive award.
Reliance on a single supplier for critical weapon system components could pose supply chain risks.
The specific nature of 'spare parts and systems' for CROWS may indicate proprietary technology or limited market alternatives.

Positive Signals

Firm-fixed-price contract type provides cost certainty once awarded.
Award supports the sustainment of a key military platform (Stryker), ensuring operational readiness.
The contractor, Kongsberg Defence & Aerospace AS, is likely an established supplier with relevant expertise.

Sector Analysis

The defense industrial base for weapon systems and components is highly specialized. This contract falls within the 'Small Arms, Ordnance, and Ordnance Accessories Manufacturing' sector, which is characterized by high barriers to entry, significant R&D investment, and often, a limited number of qualified suppliers. The market for components like the CROWS system is driven by government procurement, with contracts often awarded through competitive processes or, as in this case, sole-source agreements for specialized or proprietary systems. Benchmarking spending in this niche requires comparing it to similar sustainment contracts for other armored vehicle weapon systems.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to Kongsberg Defence & Aerospace AS, a large international corporation, suggests that the primary focus was on securing the necessary components from the original equipment manufacturer or a sole authorized provider. This approach may limit opportunities for small businesses that could potentially supply components or services if the contract were competed more broadly.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The firm-fixed-price nature of the award provides a degree of cost accountability. Transparency is limited due to the sole-source nature of the award. Inspector General (IG) jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance or closeout.

Related Government Programs

Stryker Brigade Combat Team (SBCT) equipment sustainment
Common Remotely Operated Weapon Station (CROWS) program
Department of Defense weapon system spare parts procurement
Armored vehicle component manufacturing contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (despite FFP)
Supply chain dependency on a single vendor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.4 million to KONGSBERG DEFENCE & AEROSPACE AS. DELIVERY ORDER FOR COMMON REMOTELY OPERATED WEAPON STATION (CROWS) SPARE PARTS AND SYSTEMS FOR STRYKER.

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 $34.4 million.

What is the period of performance?

Start: 2021-09-10. End: 2022-08-27.

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

Kongsberg Defence & Aerospace AS is a well-established defense contractor with a significant history of supplying advanced weapon systems and components to military forces worldwide, including the U.S. Department of Defense. They are known as a primary developer and manufacturer of the Common Remotely Operated Weapon Station (CROWS). Their track record with the DoD includes numerous contracts for the production, sustainment, and upgrade of CROWS systems and related components for various U.S. military branches. This includes providing spare parts, integration services, and potentially training. The sole-source award for this specific delivery order suggests a continuation of this established relationship and reliance on their specialized expertise and proprietary knowledge of the CROWS system, indicating a level of trust and proven performance in delivering these critical capabilities.

How does the $34.4 million contract value compare to similar sustainment contracts for armored vehicle weapon systems?

Direct comparison of this $34.4 million contract for CROWS spare parts and systems to other armored vehicle weapon system sustainment contracts is challenging without more specific data on the scope and nature of those other contracts. However, the value is substantial, reflecting the complexity and criticality of the CROWS system for the Stryker platform. Sustainment contracts for advanced weapon systems can range from millions to hundreds of millions of dollars, depending on the system's technological sophistication, the number of units in operation, and the duration of the contract. Given that CROWS is a key component for enhancing the lethality and survivability of Stryker vehicles, a multi-million dollar allocation for spare parts and systems is not unusual. The sole-source nature, however, prevents a definitive value-for-money assessment against potential market alternatives.

What are the primary risks associated with awarding a sole-source contract for critical weapon system components?

The primary risks associated with awarding a sole-source contract for critical weapon system components like CROWS spare parts include: 1. **Higher Costs:** Without competition, the government may pay a premium compared to what could be achieved through a competitive bidding process. The sole provider faces less pressure to offer the lowest possible price. 2. **Reduced Innovation:** A lack of competition can stifle innovation, as the sole contractor may have less incentive to invest in developing more cost-effective or technologically superior solutions. 3. **Supply Chain Vulnerability:** Over-reliance on a single supplier can create significant supply chain risks. Disruptions at the contractor's facility, geopolitical issues, or financial instability could severely impact the availability of critical parts. 4. **Limited Oversight Effectiveness:** While oversight mechanisms exist, the absence of competing proposals means there's less external validation of technical specifications, performance claims, and pricing structures. 5. **Potential for Complacency:** The contractor might become complacent regarding quality or responsiveness due to the guaranteed business.

What is the historical spending pattern for CROWS spare parts and systems by the Department of the Army?

Historical spending patterns for CROWS spare parts and systems by the Department of the Army indicate a consistent need for sustainment and upgrades to maintain operational readiness of Stryker vehicles. While specific aggregate figures for 'spare parts and systems' across all years are not provided in the data, the issuance of multiple delivery orders, including this $34.4 million one, suggests a sustained investment. The Army has procured CROWS systems and associated support over many years, often through contracts with Kongsberg Defence & Aerospace AS. Spending fluctuates based on operational tempo, fleet size, modernization efforts, and the lifecycle of the equipment. Analyzing past contract awards, including their values, competition levels, and durations, would reveal trends in demand and the government's approach to procuring these critical components.

How does the firm-fixed-price contract type mitigate risks in this sole-source scenario?

The firm-fixed-price (FFP) contract type aims to mitigate risks primarily related to cost overruns for the government. In an FFP contract, the price is set and is not subject to adjustment based on the contractor's cost experience. This means Kongsberg Defence & Aerospace AS assumes the risk of cost increases during performance. For the government, this provides budget certainty, as the total cost is known upfront. However, in a sole-source scenario, the 'firm' price might be set at a higher baseline than it would be in a competitive environment. While FFP is generally preferred for its cost control, its effectiveness in ensuring true value-for-money is diminished when competition is absent, as the initial price negotiation lacks market-driven benchmarks.

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: $34,446,191

Exercised Options: $34,446,191

Current Obligation: $34,446,191

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