DoD's $73M MRAP sustainment contract awarded to BAE Systems, lacking competition

Contract Overview

Contract Amount: $73,098,650 ($73.1M)

Contractor: BAE Systems Tactical Vehicle Systems LP

Awarding Agency: Department of Defense

Start Date: 2008-09-25

End Date: 2011-01-30

Contract Duration: 857 days

Daily Burn Rate: $85.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MINE RESISTANT AMBUSH PROTECTED (MRAP) SUSTAINMENT SPARE PARTS (WINCH; AXLES; ENGINE, DIESEL; TRANSMISSION; GENERATOR)

Place of Performance

Location: SEALY, COLORADO County, TEXAS, 77474

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $73.1 million to BAE SYSTEMS TACTICAL VEHICLE SYSTEMS LP for work described as: MINE RESISTANT AMBUSH PROTECTED (MRAP) SUSTAINMENT SPARE PARTS (WINCH; AXLES; ENGINE, DIESEL; TRANSMISSION; GENERATOR) Key points: 1. Contract awarded on a sole-source basis, raising concerns about price discovery and potential overpayment. 2. Significant duration of the contract (857 days) suggests a long-term need for these critical sustainment parts. 3. The award to a single vendor may limit opportunities for innovation and cost reduction through competitive bidding. 4. Focus on sustainment parts indicates a need to maintain existing military vehicle fleets. 5. The contract's value, while substantial, needs benchmarking against similar sustainment contracts for value assessment. 6. Lack of small business involvement noted, as the contract was not set aside.

Value Assessment

Rating: questionable

The contract's value of $73 million for sustainment spare parts for MRAP vehicles is substantial. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The sole-source nature raises questions about whether the government achieved the best possible value. Further analysis would require comparing the unit prices of specific parts to industry benchmarks or historical pricing for similar components.

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. This indicates that only one vendor, BAE Systems Tactical Vehicle Systems LP, was considered for this requirement. The lack of competition means there was no opportunity for other qualified suppliers to bid, potentially leading to higher prices than if the contract had been open to multiple bidders.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, which typically drives down costs and encourages more favorable pricing structures.

Public Impact

Benefits military personnel by ensuring the operational readiness of Mine Resistant Ambush Protected (MRAP) vehicles. Provides critical spare parts including winches, axles, diesel engines, transmissions, and generators. Supports the sustainment of a significant portion of the U.S. military's tactical vehicle fleet. Impacts the defense manufacturing and logistics sectors, particularly in Texas where the contractor is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Lack of transparency in the sole-source justification could obscure potential inefficiencies.
Long contract duration without competition may entrench the incumbent supplier.
No small business set-aside indicates limited opportunities for smaller defense contractors in this specific award.
Specific part details are not publicly available, hindering granular value analysis.

Positive Signals

Ensures availability of critical sustainment parts for essential military vehicles.
Contract awarded to a known entity (BAE Systems) with established capabilities in tactical vehicle systems.
Firm Fixed Price contract type provides cost certainty for the government.
Contract duration aligns with the expected operational life and maintenance needs of MRAP vehicles.

Sector Analysis

This contract falls within the broader defense manufacturing and logistics sector, specifically focusing on vehicle parts and sustainment. The market for military vehicle spare parts is often characterized by specialized requirements and long-term support needs. While specific market size data for MRAP sustainment parts is not readily available, the overall defense logistics market is substantial. This contract represents a significant portion of spending dedicated to maintaining the operational readiness of a key military asset.

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. This means that opportunities for small businesses to participate in fulfilling this specific contract are likely limited. The absence of a small business set-aside or subcontracting plan may reduce the direct economic impact on the small business defense industrial base for this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations, managed by the Defense Logistics Agency. Accountability measures are inherent in the Firm Fixed Price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature of the award, but contract award data is generally available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

MRAP Vehicle Program
Tactical Vehicle Sustainment
Defense Logistics Agency Procurement
Military Vehicle Parts Manufacturing
Sole-Source Defense Contracts

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.1 million to BAE SYSTEMS TACTICAL VEHICLE SYSTEMS LP. MINE RESISTANT AMBUSH PROTECTED (MRAP) SUSTAINMENT SPARE PARTS (WINCH; AXLES; ENGINE, DIESEL; TRANSMISSION; GENERATOR)

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 (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $73.1 million.

What is the period of performance?

Start: 2008-09-25. End: 2011-01-30.

What is the track record of BAE Systems Tactical Vehicle Systems LP in providing sustainment parts for military vehicles?

BAE Systems Tactical Vehicle Systems LP is a major defense contractor with extensive experience in designing, manufacturing, and supporting military vehicles, including the MRAP family. They have a long history of providing complex systems and sustainment services to various branches of the U.S. military. Their track record includes delivering vehicles and components under numerous contracts, often involving large dollar values and long durations. While specific performance metrics for this particular contract are not detailed here, BAE Systems is generally recognized for its capabilities in this domain. However, the sole-source nature of this award means that direct comparison with competitors' performance on similar contracts is not possible, and scrutiny of their pricing and delivery under this specific contract would be warranted.

How does the value of this contract compare to similar sustainment contracts for military vehicles?

Benchmarking this $73 million contract for MRAP sustainment parts against similar contracts is challenging without more specific data on the types and quantities of parts procured, as well as the contract duration and specific pricing structures. However, sustainment contracts for major vehicle platforms can range from tens to hundreds of millions of dollars over their lifecycle. The fact that this contract covers a period of approximately 2.5 years (857 days) suggests a significant ongoing need. Given the sole-source award, it is difficult to ascertain if the pricing is competitive. A thorough comparison would require access to unit pricing for key components and an analysis of the total cost of ownership over the vehicle's life, considering factors like obsolescence and repair versus replacement costs.

What are the primary risks associated with a sole-source award for critical military spare parts?

The primary risks associated with a sole-source award for critical military spare parts include inflated pricing due to a lack of competitive pressure, potential for reduced quality or service if the contractor faces no market threat, and a lack of incentive for innovation. Taxpayers may bear higher costs without the assurance that the government received the best possible value. Furthermore, reliance on a single supplier can create vulnerabilities in the supply chain, especially if the contractor experiences production issues or faces financial instability. For critical components like those for MRAP vehicles, ensuring a robust and competitive supply chain is paramount for maintaining operational readiness, and sole-source awards can undermine this objective.

What is the expected program effectiveness or outcome of this contract?

The expected outcome of this contract is the sustained operational readiness of Mine Resistant Ambush Protected (MRAP) vehicles. By providing essential spare parts such as winches, axles, engines, transmissions, and generators, the contract ensures that these vehicles can be maintained, repaired, and kept in service. Effective sustainment is crucial for military operations, as it directly impacts the availability of critical assets in the field. The program's effectiveness will be measured by the timely delivery of quality parts, the reduction in vehicle downtime due to part shortages, and the overall contribution to the operational capability of the MRAP fleet. The sole-source nature, however, introduces a risk that the cost-effectiveness of achieving this outcome might be suboptimal.

How has historical spending on MRAP sustainment evolved, and does this contract align with those patterns?

Historical spending on MRAP sustainment has been significant, driven by the large-scale procurement and deployment of these vehicles in response to operational needs. The MRAP program itself saw substantial investment in the late 2000s and early 2010s. Sustainment spending typically follows procurement, focusing on spare parts, maintenance, and upgrades to ensure long-term operational capability. This $73 million contract, awarded in 2008 and ending in 2011, aligns with the period when MRAP vehicles were actively deployed and required extensive support. Without historical data on specific sustainment part expenditures for MRAPs, it's difficult to say if this contract's value is an anomaly or part of a consistent spending pattern. However, the need for such a contract underscores the ongoing costs associated with maintaining a large fleet of specialized vehicles.

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

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, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $73,098,650

Exercised Options: $73,098,650

Current Obligation: $73,098,650

Timeline