DoD's $38M BAE Systems contract for windshield kits lacked competition, raising value concerns

Contract Overview

Contract Amount: $37,999,904 ($38.0M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2009-02-19

End Date: 2009-11-30

Contract Duration: 284 days

Daily Burn Rate: $133.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IMPROVED VEE WINDSHIELD KIT

Place of Performance

Location: BUTLER, BUTLER County, PENNSYLVANIA, 16002

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $38.0 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: IMPROVED VEE WINDSHIELD KIT Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price contract type shifts risk to the contractor, but the lack of competition obscures true value. 3. Performance was rated 'satisfactory' in the past, but this doesn't mitigate the concerns of non-competitive award. 4. The contract falls under the 'Flat Glass Manufacturing' NAICS code, a niche area for defense applications. 5. The award to BAE Systems, a major defense contractor, suggests a specific capability requirement. 6. The contract duration of 284 days is relatively short, indicating a specific procurement need.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money on this $38 million contract. The sole-source award means there was no opportunity to compare pricing against other potential suppliers or to leverage market competition to drive down costs. While the firm-fixed-price structure is generally favorable for cost control, the absence of competition prevents a robust assessment of whether the price paid reflects a fair market value. The contract was awarded to BAE Systems Land & Armaments L.P., a significant defense contractor, but without comparative data, its pricing cannot be definitively assessed as excellent or concerning.

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. This approach is typically reserved for situations where only one responsible source can provide the required goods or services. The lack of competition means that potential alternative suppliers were not considered, and there was no opportunity for multiple bidders to submit proposals. This significantly limits the government's ability to ensure it is receiving the best possible price and terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, the government cannot be certain it secured the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the U.S. Army, receiving specialized windshield kits for their equipment. The contract supports the operational readiness of military vehicles by ensuring the availability of critical components. The geographic impact is primarily within the United States, where the contractor operates and supplies the defense sector. Workforce implications include employment at BAE Systems and its supply chain, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
Sole-source awards can stifle innovation by not encouraging new market entrants or alternative solutions.
Reliance on a single contractor for critical components can create supply chain vulnerabilities.
The specific nature of 'IMPROVED VEE WINDSHIELD KIT' suggests a specialized product where competition might be limited, but the justification needs scrutiny.

Positive Signals

The firm-fixed-price contract type shifts cost overrun risk to the contractor, which is a positive for the government.
The award was made to a known defense contractor (BAE Systems), suggesting a level of established capability and reliability.
The contract was rated 'satisfactory' in performance, indicating the contractor met basic requirements.

Sector Analysis

The defense sector relies heavily on specialized manufacturing capabilities for its equipment. Contracts for components like windshield kits, while seemingly simple, can involve specific material requirements, durability standards, and integration needs that limit the pool of qualified suppliers. The market for such specialized defense components is often characterized by a few large, established contractors like BAE Systems. Benchmarking spending in this niche requires identifying comparable contracts for similar military-grade glass or composite materials, which can be challenging due to the proprietary nature of many defense specifications.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting implications for small businesses based on the available data. The award to a large prime contractor like BAE Systems suggests that the primary focus was on fulfilling a specific defense requirement, potentially through in-house capabilities or established supply chains that may not prioritize small business participation. Further investigation into BAE Systems' subcontracting plans would be needed to fully assess the impact on the small business 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 the contract terms, including performance standards and payment schedules. Transparency is limited due to the sole-source nature of the award; however, contract award data is publicly available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Vehicle Component Procurement
Defense Industrial Base Manufacturing
Specialized Glass and Materials Contracts
Army Vehicle Maintenance and Sustainment

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Limited transparency on specific technical requirements.
Performance rated only 'satisfactory', not exceptional.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.0 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. IMPROVED VEE WINDSHIELD KIT

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS LAND & ARMAMENTS L.P..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $38.0 million.

What is the period of performance?

Start: 2009-02-19. End: 2009-11-30.

What specific technical requirements or unique capabilities necessitated a sole-source award to BAE Systems for the 'IMPROVED VEE WINDSHIELD KIT'?

The provided data does not detail the specific technical requirements that justified a sole-source award. Typically, sole-source justifications are based on factors such as unique technical capabilities, proprietary technology, urgent and compelling needs where only one source can respond in the required timeframe, or the existence of only one responsible source. For this contract, the 'IMPROVED VEE WINDSHIELD KIT' might involve specialized materials, design integration with specific military platforms, or adherence to stringent defense standards that only BAE Systems could meet at the time of procurement. A thorough review of the Justification for Other than Full and Open Competition (JOFOC) document would be necessary to understand the precise rationale.

How does the $38 million contract value compare to historical spending on similar windshield kits or related components by the Department of the Army?

Direct historical spending comparisons for 'IMPROVED VEE WINDSHIELD KIT' are difficult without more specific product identifiers or contract history details. However, the $38 million figure for a component procurement over a period of less than a year (February 2009 to November 2009) is substantial. To benchmark this, one would need to analyze prior contracts for similar vehicle components, focusing on the unit price and total value. Given the sole-source nature, this $38 million may represent a higher cost per unit than if the contract had been competed. Analyzing spending trends for vehicle sustainment parts within the Army's budget would provide broader context, but specific comparisons for this exact item are limited by the data.

What are the key performance indicators (KPIs) used to assess BAE Systems' performance on this contract, and how did they perform against these metrics?

The available data indicates that the contract performance was rated 'satisfactory' (ST: PA). While 'satisfactory' implies that the contractor met the basic requirements of the contract, it does not necessarily mean exceptional performance. Specific Key Performance Indicators (KPIs) are not detailed in the provided summary. Typically, for such contracts, KPIs would include on-time delivery, adherence to specifications, quality control, and responsiveness to government requests. A 'satisfactory' rating suggests that BAE Systems met these general expectations without significant deficiencies, but it also implies there was room for improvement, especially in the context of a sole-source award where higher performance might be expected.

What is the typical profit margin or overhead structure for defense contractors like BAE Systems on firm-fixed-price contracts of this nature?

Determining the exact profit margin or overhead structure for BAE Systems on this specific contract is not possible with the provided data, as such financial details are usually proprietary and not publicly disclosed in contract award summaries. However, for firm-fixed-price (FFP) contracts, the contractor assumes the majority of the cost risk. Profit margins can vary significantly based on the complexity of the product, the level of competition (though minimal here), the contractor's efficiency, and negotiation leverage. Defense contractors often have established overhead rates approved by the government. Profit is negotiated as part of the overall price. Without access to the contract's pricing details and negotiation history, any assessment of BAE Systems' profit margin would be speculative.

Are there any known issues or past performance concerns related to BAE Systems Land & Armaments L.P. concerning sole-source procurements or similar component manufacturing?

The provided data indicates a 'satisfactory' performance rating for this specific contract (ST: PA). This suggests no major performance issues were formally documented at the time of award or completion that would have precluded them from receiving the contract. However, a 'satisfactory' rating is a baseline and does not equate to 'exceptional.' To assess broader concerns, a review of BAE Systems' broader contract history, including any past performance evaluations, disputes, or audits across multiple contracts, would be necessary. Large defense contractors like BAE Systems engage in numerous procurements, and while this contract itself shows satisfactory performance, a comprehensive risk assessment would require a wider historical analysis.

Industry Classification

NAICS: Manufacturing › Glass and Glass Product Manufacturing › Flat Glass Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV09R0284

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 4800 E RIVER RD, MINNEAPOLIS, MN, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $37,999,904

Exercised Options: $37,999,904

Current Obligation: $37,999,904

Timeline