DoD Awards $325M to BAE Systems for Bradley ECP R&D, Lacking Competition

Contract Overview

Contract Amount: $324,894,838 ($324.9M)

Contractor: BAE Systems Land and Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2012-09-14

End Date: 2019-02-15

Contract Duration: 2,345 days

Daily Burn Rate: $138.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: R&D

Official Description: ENGINEERING DESIGN, LOGISTICS, TEST, AND EVALUATION SUPPORT (R&D PHASE) OF THE BRADLEY ECP EFFORT.

Place of Performance

Location: TROY, OAKLAND County, MICHIGAN, 48084

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $324.9 million to BAE SYSTEMS LAND AND ARMAMENTS L.P. for work described as: ENGINEERING DESIGN, LOGISTICS, TEST, AND EVALUATION SUPPORT (R&D PHASE) OF THE BRADLEY ECP EFFORT. Key points: 1. Significant R&D investment in Bradley Fighting Vehicle upgrades. 2. Sole awardee BAE Systems suggests potential lack of market competition. 3. Cost-plus incentive fee contract type carries inherent cost escalation risks. 4. Engineering services sector sees substantial government expenditure.

Value Assessment

Rating: questionable

The $325M award for R&D support is substantial. Without competitive bidding, it's difficult to assess if this price reflects fair market value for engineering design, logistics, and test services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition for a contract of this magnitude raises concerns about taxpayer value and the potential for inflated costs.

Public Impact

Taxpayers may be overpaying for critical defense engineering services due to the absence of competition. The Bradley ECP program's success hinges on effective R&D, but the procurement method raises questions about optimal resource allocation. Future Bradley upgrades could be impacted if competitive R&D pathways are not explored.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of transparency in price justification

Positive Signals

Supports critical defense modernization effort

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), which is crucial for defense modernization. Spending benchmarks for R&D support in this sector can vary widely, but a $325M sole-source award warrants scrutiny.

Small Business Impact

The contract was awarded to BAE Systems Land and Armaments L.P., a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award, missing an opportunity for small business participation.

Oversight & Accountability

The contract type (Cost Plus Incentive Fee) requires careful oversight to ensure BAE Systems meets performance targets efficiently and avoids unnecessary cost overruns. The Department of the Army's oversight will be critical.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competition
Potential for cost overruns (CPIF)
Limited small business participation
Unclear price justification
Long-term competitive landscape impact

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $324.9 million to BAE SYSTEMS LAND AND ARMAMENTS L.P.. ENGINEERING DESIGN, LOGISTICS, TEST, AND EVALUATION SUPPORT (R&D PHASE) OF THE BRADLEY ECP EFFORT.

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS LAND AND 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 $324.9 million.

What is the period of performance?

Start: 2012-09-14. End: 2019-02-15.

What was the justification for awarding this significant R&D contract on a sole-source basis, and how was the price determined to be fair and reasonable?

The justification for a sole-source award typically involves factors like unique capabilities, urgent need, or lack of viable alternatives. Without access to the specific justification documentation, it's impossible to definitively state the reasons. However, the contracting agency must have determined that BAE Systems possessed unique qualifications or that competition was not feasible or would not result in best value. Price reasonableness would then be assessed through various methods, such as historical pricing, cost analysis, or comparison to similar services, though the absence of competition inherently limits robust price discovery.

What are the primary risks associated with the Cost Plus Incentive Fee (CPIF) contract type for this R&D effort, and how are they being mitigated?

The primary risks with CPIF contracts are that the contractor may not achieve the target cost or performance goals, leading to higher final costs for the government. Incentive fees can sometimes encourage cost-cutting that might compromise quality or lead to scope creep if not carefully managed. Mitigation strategies include robust government oversight, clearly defined performance metrics and targets, realistic cost estimates, and strong negotiation of the incentive structure to align contractor and government interests effectively.

How does this sole-source award impact the long-term competitive landscape for Bradley Fighting Vehicle upgrades and related engineering services?

A sole-source award, especially for a significant portion of a major program like the Bradley ECP, can potentially stifle competition in the long run. It may signal to other potential contractors that opportunities are limited or that incumbent relationships are difficult to overcome. This could reduce future market interest and innovation, potentially leading to higher costs and less advanced solutions for subsequent upgrade phases or related engineering services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV12R0134

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

Address: 2855 COOLIDGE HWY STE 300, TROY, MI, 48084

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: $324,894,838

Exercised Options: $324,894,838

Current Obligation: $324,894,838

Subaward Activity

Number of Subawards: 169

Total Subaward Amount: $76,942,192

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline