DoD awards $43.7M contract to BAE Systems for M113 armored personnel carrier upgrades

Contract Overview

Contract Amount: $43,678,995 ($43.7M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2011-12-21

End Date: 2016-03-31

Contract Duration: 1,562 days

Daily Burn Rate: $28.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TO PROCURE SUPPLIES AND SERVICES TO BE PROVIDED TO THE BRAZILIAN ARMED FORCES FOR THE UPGRADE OF M113AO ARMORED PERSONNEL CARRIERS TO THE M113A2MK1 ARMORED PERSONNEL CARRIERS.

Place of Performance

Location: SAN JOSE, SANTA CLARA County, CALIFORNIA, 95119

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $43.7 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: TO PROCURE SUPPLIES AND SERVICES TO BE PROVIDED TO THE BRAZILIAN ARMED FORCES FOR THE UPGRADE OF M113AO ARMORED PERSONNEL CARRIERS TO THE M113A2MK1 ARMORED PERSONNEL CARRIERS. Key points: 1. Contract awarded to a single, established defense contractor, suggesting a specialized need or limited market. 2. The firm fixed-price contract type aims to control costs for the upgrade project. 3. Project duration of over 4 years indicates a substantial undertaking for the Brazilian Armed Forces. 4. The contract falls under the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' NAICS code. 5. No small business set-aside was utilized for this procurement. 6. The contract was awarded as 'not available for competition'.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without comparable upgrade projects for the M113AO to M113A2MK1 variant. The firm fixed-price structure suggests an attempt to cap costs, but the overall value for money depends on the successful execution and the long-term operational benefits derived from the upgraded vehicles. Further analysis would require understanding the scope of work and the unit cost of the upgrades.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed and was awarded as 'not available for competition'. This indicates that the Department of the Army likely determined that only BAE Systems Land & Armaments L.P. could fulfill the requirement, possibly due to proprietary technology, unique capabilities, or specific integration needs related to the M113 upgrade. The lack of competition limits price discovery and may result in a higher cost than if multiple vendors had bid.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, potentially leading to a higher overall expenditure for these vehicle upgrades.

Public Impact

The Brazilian Armed Forces are the primary beneficiaries, receiving upgraded M113 armored personnel carriers. The services delivered involve the modernization of existing military hardware, enhancing operational capabilities. The geographic impact is primarily within Brazil, where the upgraded vehicles will be deployed. Workforce implications may include specialized technical roles for the upgrade and maintenance of the armored vehicles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition could lead to inflated costs.
Potential for cost overruns if the scope of work expands beyond initial estimates.
Dependence on a single contractor for critical military hardware upgrades.

Positive Signals

Firm fixed-price contract type helps to establish cost certainty.
Award to an established defense contractor may indicate a high likelihood of successful technical execution.
Upgrade of aging equipment enhances military readiness and capability.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on armored vehicle modernization. The market for such specialized military hardware upgrades is typically dominated by a few large defense contractors with the requisite expertise and security clearances. Spending in this area is driven by geopolitical factors, military modernization programs, and the need to maintain aging fleets of equipment. Comparable spending benchmarks would involve other major defense procurement contracts for vehicle upgrades or new platform development.

Small Business Impact

This contract did not include a small business set-aside, nor is there information indicating subcontracting opportunities for small businesses. The nature of specialized military vehicle manufacturing and upgrades often involves large, prime contractors who may have established supply chains that do not prioritize small business participation. This procurement does not appear to directly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting oversight mechanisms, potentially involving the Defense Contract Management Agency (DCMA). Accountability measures would be tied to the contract terms and performance milestones. Transparency is generally limited for defense procurements, especially those involving sole-source awards, with detailed information often classified or restricted.

Related Government Programs

M113 Armored Personnel Carrier
Military Vehicle Modernization Programs
Defense Contractor Services
Foreign Military Sales (if applicable, though not explicitly stated)

Risk Flags

Sole-source award
Potential for cost overruns
Limited transparency in defense procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.7 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. TO PROCURE SUPPLIES AND SERVICES TO BE PROVIDED TO THE BRAZILIAN ARMED FORCES FOR THE UPGRADE OF M113AO ARMORED PERSONNEL CARRIERS TO THE M113A2MK1 ARMORED PERSONNEL CARRIERS.

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 $43.7 million.

What is the period of performance?

Start: 2011-12-21. End: 2016-03-31.

What is the specific scope of work for upgrading the M113AO to the M113A2MK1 variant?

The provided data indicates the contract is 'TO PROCURE SUPPLIES AND SERVICES TO BE PROVIDED TO THE BRAZILIAN ARMED FORCES FOR THE UPGRADE OF M113AO ARMORED PERSONNEL CARRIERS TO THE M113A2MK1 ARMORED PERSONNEL CARRIERS.' While the exact technical specifications and scope of work are not detailed in the summary data, typical upgrades for the M113 platform can include enhancements to armor protection, powertrain, suspension, armament, and the integration of modern communication and fire control systems. The M113A2MK1 designation suggests a specific, likely incremental, upgrade path. A detailed statement of work (SOW) within the contract documents would outline the precise modifications, parts, and services required.

How does the $43.7 million contract value compare to other M113 upgrade programs?

Direct comparison of the $43.7 million contract value to other M113 upgrade programs is difficult without specific data on the scope and scale of those other programs. The value is influenced by factors such as the number of vehicles being upgraded, the complexity of the upgrades (e.g., powertrain, armor, electronics), and the specific variant being modernized. For instance, a program involving a complete overhaul with new engines and advanced protection systems would naturally cost more than a simpler modernization. This contract's value should be assessed against the number of units and the depth of the upgrade specified in the contract's statement of work.

What are the key risks associated with a sole-source contract for military vehicle upgrades?

The primary risk associated with a sole-source contract for military vehicle upgrades is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the contractor may have less incentive to offer the most cost-effective solution. Other risks include a potential decrease in innovation if the contractor is not pushed by competition, and a higher dependency on the single supplier for critical components or expertise. Furthermore, if the contractor faces production issues or delays, there are limited alternative options for the procuring agency, potentially impacting program timelines and readiness.

What is BAE Systems Land & Armaments L.P.'s track record with M113 upgrades or similar military vehicle programs?

BAE Systems is a major global defense contractor with extensive experience in armored vehicle manufacturing and modernization. They have been involved in various upgrades and production of M113 variants and other armored personnel carriers for numerous military forces worldwide. Their track record typically includes delivering complex systems, though like any large defense firm, they may have faced challenges in specific programs related to cost, schedule, or technical performance. Given their established presence in the defense sector, it is likely they possess the necessary technical capabilities and manufacturing capacity for this M113 upgrade contract.

What are the historical spending patterns for M113 upgrades by the Department of Defense or allied nations?

Historical spending on M113 upgrades by the Department of Defense and allied nations has varied significantly over the decades, reflecting the platform's longevity and evolving military requirements. The M113 has undergone numerous incremental upgrades (e.g., M113A1, M113A2, M113A3) and modernization programs globally. Spending can range from tens of thousands of dollars per vehicle for basic service life extensions to hundreds of thousands or even millions for comprehensive upgrades involving new engines, armor packages, and digital systems. The total expenditure across all M113-related procurements globally runs into billions of dollars over the platform's lifespan, with individual contracts varying widely in value based on scope and quantity.

What are the implications of this contract being awarded to a foreign entity (BAE Systems is a multinational company) for the Brazilian Armed Forces?

Awarding this contract to BAE Systems, a multinational company with significant operations in the US, has several implications for the Brazilian Armed Forces. It ensures access to potentially advanced technology and manufacturing expertise that may not be readily available domestically. However, it also means that a portion of the defense spending is directed outside of Brazil, potentially impacting the growth of the local defense industrial base. Depending on the contract's terms, there might be requirements for technology transfer, local industrial participation, or training to mitigate these effects and build domestic capacity for future sustainment and upgrades.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

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: 1205 COLEMAN AVE, SANTA CLARA, CA, 95050

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

Financial Breakdown

Contract Ceiling: $43,678,995

Exercised Options: $43,678,995

Current Obligation: $43,678,995

Subaward Activity

Number of Subawards: 45

Total Subaward Amount: $16,309,720

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline