DoD's $151.7M BAE Systems contract for armored vehicle kits lacked competition, raising value concerns

Contract Overview

Contract Amount: $151,701,416 ($151.7M)

Contractor: BAE Systems Tactical Vehicle Systems LP

Awarding Agency: Department of Defense

Start Date: 2007-03-01

End Date: 2013-09-04

Contract Duration: 2,379 days

Daily Burn Rate: $63.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 197 LOW SIGNATURE ARMORED CAB KITS FOR TROOP SURGE IN IRAQ

Place of Performance

Location: SEALY, COLORADO County, TEXAS, 77474

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $151.7 million to BAE SYSTEMS TACTICAL VEHICLE SYSTEMS LP for work described as: 197 LOW SIGNATURE ARMORED CAB KITS FOR TROOP SURGE IN IRAQ Key points: 1. The contract's value proposition is questionable due to the absence of competitive bidding. 2. Sole-source procurement limits price discovery and potentially inflates costs. 3. The extended duration of the contract (over 6 years) warrants scrutiny of ongoing cost-effectiveness. 4. Performance context is limited, as the contract is for kits rather than fully assembled vehicles. 5. The award to BAE Systems places this spending within the defense vehicle manufacturing sector. 6. The lack of competition is a significant risk indicator for taxpayer value.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of the 'LOW SIGNATURE ARMORED CAB KITS'. Without competitive bids, it's difficult to ascertain if the $151.7 million price reflects fair market value. The contract was awarded for a significant quantity (197 kits) over a long period, suggesting that a competitive process could have potentially yielded lower per-unit costs or better terms. The absence of comparable contract data for similar kits further complicates a direct value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The data indicates 'NOT COMPETED' and a single awardee, BAE Systems Tactical Vehicle Systems LP. This approach bypasses the standard procurement process designed to solicit offers from multiple potential suppliers. Consequently, there were no competing bids to evaluate, and the government did not benefit from the price discovery mechanisms inherent in a competitive environment.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no pressure from competing offers to drive down costs. This can lead to higher overall spending for the same goods or services.

Public Impact

The primary beneficiaries are U.S. Army troops requiring enhanced protection in combat zones, specifically in Iraq during a troop surge. The contract delivers essential armored cab kits to upgrade existing troop transport vehicles, improving survivability. The geographic impact is primarily focused on supporting military operations in Iraq. Workforce implications are likely within BAE Systems' manufacturing facilities, contributing to employment in the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency and accountability in spending.
The long contract duration without competition raises concerns about sustained value for money.
Specific details on the 'low signature' technology's effectiveness are not publicly detailed.
The contract's focus on kits rather than complete vehicles might obscure the total cost of troop protection solutions.

Positive Signals

The contract addresses a critical need for troop protection during a surge in operations.
The awardee, BAE Systems, is a known entity in defense vehicle manufacturing.
The contract specifies a Firm Fixed Price, which can help control costs once negotiated.
The contract was awarded to a domestic manufacturer, supporting U.S. industry.

Sector Analysis

This contract falls within the broader defense industrial base, specifically the manufacturing of specialized vehicle components. The market for armored vehicle protection systems is significant, driven by ongoing global security concerns and the need to protect military personnel. Comparable spending benchmarks would typically involve other contracts for vehicle armor, kits, or related modifications. The size of this award ($151.7 million) indicates a substantial procurement for a specific operational need.

Small Business Impact

The data indicates this contract was not competed and does not specify any small business set-aside or subcontracting requirements. Therefore, the direct impact on small businesses through this specific award appears minimal. Without a competitive process, there was no opportunity to include provisions for small business participation. The prime contractor, BAE Systems, would typically manage its own supply chain, and any small business involvement would be at their discretion rather than mandated by this contract's structure.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures. As a sole-source award, scrutiny might be heightened to ensure the necessity and pricing are justified. Accountability measures would involve performance monitoring against contract requirements. Transparency is limited due to the non-competitive nature, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Mine-Resistant Ambush Protected (MRAP) Vehicles
Tactical Wheeled Vehicles
Armored Personnel Carriers
Military Vehicle Modernization Programs
Department of Defense Vehicle Procurement

Risk Flags

Sole Source Award
Lack of Competition
High Per-Unit Cost Potential
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $151.7 million to BAE SYSTEMS TACTICAL VEHICLE SYSTEMS LP. 197 LOW SIGNATURE ARMORED CAB KITS FOR TROOP SURGE IN IRAQ

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS TACTICAL VEHICLE SYSTEMS LP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $151.7 million.

What is the period of performance?

Start: 2007-03-01. End: 2013-09-04.

What is the specific nature of the 'LOW SIGNATURE ARMORED CAB KITS' and their intended operational benefit?

The 'LOW SIGNATURE ARMORED CAB KITS' are designed to enhance the survivability of troop transport vehicles by providing ballistic protection and potentially reducing the vehicle's radar and infrared signatures. This is crucial in asymmetric warfare environments where threats can come from various sources, including improvised explosive devices (IEDs) and direct fire. The 'low signature' aspect suggests a focus on stealth capabilities, making the vehicles harder to detect by enemy sensors. The kits likely include specialized armor plating, reinforced cab structures, and potentially materials or designs to minimize electronic or thermal detection. Their primary benefit is to increase the safety of soldiers occupying the vehicles during missions, especially during high-risk operations like patrols or troop transport in contested areas such as Iraq during the surge period.

Why was this contract awarded on a sole-source basis instead of being competed?

The provided data explicitly states the contract was 'NOT COMPETED' and awarded on a sole-source basis. While the specific justification for this decision is not detailed in the abbreviated data, common reasons for sole-source awards include unique capabilities possessed by only one contractor, urgent and compelling needs where a competitive process would cause unacceptable delays, or when the cost of competition would outweigh the benefits. Given the context of a troop surge in Iraq, an urgent need for enhanced protection might have been a factor. However, without further documentation, it's impossible to definitively state the exact rationale. This lack of competition is a key area for scrutiny regarding potential value for money.

How does the $151.7 million cost compare to similar armored vehicle kit procurements?

Direct comparison of the $151.7 million cost for 197 'LOW SIGNATURE ARMORED CAB KITS' is difficult without access to detailed contract databases and specific technical specifications of comparable items. The average cost per kit is approximately $770,000 ($151.7M / 197). This figure needs to be contextualized by the specific threat environment, the level of protection offered (e.g., STANAG levels), the 'low signature' technology's complexity, and the duration of the contract (over 6 years). Sole-source contracts often lack the price transparency of competitive ones, making external benchmarking challenging. However, the high per-unit cost suggests a sophisticated and potentially expensive system, warranting a thorough review of its necessity and value, especially if similar protection could be achieved through more competitive means.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

The primary risk associated with a sole-source contract of this magnitude ($151.7 million) and duration (over 6 years) is the potential for inflated costs and reduced innovation. Without competitive pressure, the contractor may have less incentive to offer the most cost-effective solution or to improve efficiency over time. Taxpayers may end up paying a premium for the goods or services. Furthermore, sole-source awards can limit transparency, making it harder to assess whether the government is receiving fair value. There's also a risk that the government becomes overly reliant on a single supplier, potentially creating long-term dependencies and limiting future procurement options. Ensuring robust oversight and justification for the sole-source decision is critical to mitigate these risks.

What is BAE Systems Tactical Vehicle Systems LP's track record with similar Department of Defense contracts?

BAE Systems Tactical Vehicle Systems LP is a significant defense contractor with a substantial history of supplying vehicles and related systems to the U.S. military. They are known for producing various armored vehicles, including the Armored Multi-Purpose Wheeled Vehicle (AMPV) and variants of the Bradley Fighting Vehicle. Their track record includes numerous contracts for vehicle production, upgrades, and components. While specific details on their performance for this particular 'LOW SIGNATURE ARMORED CAB KITS' contract are not provided, BAE Systems generally has extensive experience in this domain. However, like any large contractor, they have likely faced scrutiny on pricing and performance across their portfolio of contracts over the years. Their established presence suggests capability but also underscores the importance of competitive processes to ensure value.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Parts Manufacturing › All Other Motor Vehicle Parts Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV07R0301

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 5000 INTERSTATE HWY 10 W, SEALY, TX, 10

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $151,701,416

Exercised Options: $151,701,416

Current Obligation: $151,701,416

Contract Characteristics

Cost or Pricing Data: YES

Timeline