DoD Awards BAE Systems $675M for Paladin Howitzers and Ammunition Carriers
Contract Overview
Contract Amount: $674,868,392 ($674.9M)
Contractor: BAE Systems Land & Armaments L.P.
Awarding Agency: Department of Defense
Start Date: 2013-10-30
End Date: 2018-12-31
Contract Duration: 1,888 days
Daily Burn Rate: $357.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: THIS AWARD IS FOR THE PALADIN INTEGRATED MANAGEMENT (PIM) LOW RATE INITIAL PRODUCTION (LRIP) EFFORT. THE BASE AWARD IS FOR 19 SELF PROPELLED HOWITZERS (SPH) AND 18 CARRIER AMMUNITION TRACKED (CAT) VEHICLES. THE BASE AWARD ALSO INCLUDES SPH/CAT THRESHOLD 2 ARMOR KITS AND BASIC ISSUE ITEMS (BII)SPARES.
Place of Performance
Location: YORK, YORK County, PENNSYLVANIA, 17408
Plain-Language Summary
Department of Defense obligated $674.9 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: THIS AWARD IS FOR THE PALADIN INTEGRATED MANAGEMENT (PIM) LOW RATE INITIAL PRODUCTION (LRIP) EFFORT. THE BASE AWARD IS FOR 19 SELF PROPELLED HOWITZERS (SPH) AND 18 CARRIER AMMUNITION TRACKED (CAT) VEHICLES. THE BASE AWARD ALSO INCLUDES SPH/CAT THRESHOLD 2 ARMOR KITS AND BASIC ISS… Key points: 1. Significant investment in armored vehicle production for the Army. 2. Sole-source award to BAE Systems raises questions about competition. 3. Potential risks associated with fixed-price incentive contracts. 4. Focus on critical defense manufacturing capabilities.
Value Assessment
Rating: questionable
The $675 million award for 19 Self-Propelled Howitzers and 18 Carrier Ammunition Tracked vehicles, along with associated kits and spares, appears substantial. Without comparable contract data for similar armored vehicle procurements, a precise pricing assessment is difficult, but the scale suggests a significant expenditure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to BAE Systems. This lack of competition limits price discovery and potentially leads to higher costs for the government compared to a competitive bidding process.
Taxpayer Impact: The sole-source nature of this large contract means taxpayers may not be receiving the best possible price due to the absence of competitive pressure.
Public Impact
Enhances U.S. Army's artillery and logistical support capabilities. Supports domestic defense manufacturing jobs. Procurement of advanced armored vehicle technology. Potential for long-term sustainment and upgrade contracts. Impacts readiness of armored formations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price discovery.
- Fixed-price incentive contract type can lead to cost overruns.
- Lack of small business participation noted.
Positive Signals
- Acquisition of critical defense equipment.
- Supports established defense contractor.
- Long-term contract duration provides stability.
Sector Analysis
This award falls within the defense sector, specifically military armored vehicle manufacturing. Spending in this sector is driven by national security needs and technological advancements. Benchmarks for similar large-scale armored vehicle procurements are often in the hundreds of millions to billions of dollars.
Small Business Impact
The data indicates that small business participation was not a factor in this award (ss: false, sb: false). This suggests that the prime contractor, BAE Systems, is handling the entire scope of work, potentially missing opportunities to leverage small business capabilities.
Oversight & Accountability
The contract is managed by the Department of the Army, a component of the Department of Defense. Oversight would typically involve program management reviews, contract performance monitoring, and audits to ensure compliance and cost control, especially given the sole-source and incentive contract structure.
Related Government Programs
- Military Armored Vehicle, Tank, and Tank Component Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award
- Fixed-price incentive contract type
- Lack of small business participation
- Long contract duration with potential for scope creep
Tags
military-armored-vehicle-tank-and-tank-c, department-of-defense, pa, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $674.9 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. THIS AWARD IS FOR THE PALADIN INTEGRATED MANAGEMENT (PIM) LOW RATE INITIAL PRODUCTION (LRIP) EFFORT. THE BASE AWARD IS FOR 19 SELF PROPELLED HOWITZERS (SPH) AND 18 CARRIER AMMUNITION TRACKED (CAT) VEHICLES. THE BASE AWARD ALSO INCLUDES SPH/CAT THRESHOLD 2 ARMOR KITS AND BASIC ISSUE ITEMS (BII)SPARES.
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 $674.9 million.
What is the period of performance?
Start: 2013-10-30. End: 2018-12-31.
What is the justification for awarding this contract sole-source, and what steps were taken to ensure fair and reasonable pricing without competition?
The justification for a sole-source award typically involves factors like unique capabilities, urgent need, or lack of viable alternatives. Without specific documentation, it's presumed the Army determined BAE Systems was the only source capable of meeting the requirements. However, rigorous price analysis, including benchmarking against historical data and independent cost estimates, should have been conducted to ensure fair and reasonable pricing.
What are the specific risks associated with the 'Fixed Price Incentive' (FPI) contract type for this large-scale armored vehicle procurement?
FPI contracts share cost risks between the government and contractor. While intended to incentivize efficiency, they can lead to cost overruns if the target cost is not well-defined or if unforeseen issues arise. The government may end up paying more than initially planned if the contractor exceeds cost targets, requiring careful monitoring of performance and cost projections.
How does the acquisition of these Paladin Integrated Management systems align with current and future Army modernization strategies and operational needs?
The Paladin Integrated Management system, including Self-Propelled Howitzers and Carrier Ammunition Tracked vehicles, directly supports the Army's need for mobile, protected, and lethal indirect fire support. This modernization effort likely aims to replace aging platforms and enhance the survivability and effectiveness of artillery units in contested environments, aligning with strategic goals for multi-domain operations.
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 COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W56HZV12R0463
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Compagnie DE Developpement DE L'eau S.A.
Address: 1100 BAIRS RD, YORK, PA, 17408
Business Categories: Category Business, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations
Financial Breakdown
Contract Ceiling: $841,177,470
Exercised Options: $674,868,392
Current Obligation: $674,868,392
Subaward Activity
Number of Subawards: 950
Total Subaward Amount: $230,202,701
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2013-10-30
Current End Date: 2018-12-31
Potential End Date: 2018-12-31 12:12:00
Last Modified: 2025-02-18
More Contracts from BAE Systems Land & Armaments L.P.
- Letter Contract for Early Procurement Material to Support the M109a7/M992a3 Vehicle Production — $2.9B (Department of Defense)
- Early Order Material in Support of the Future Purchase of 197 Ampvs and Facility Capacity Expansion Efforts to Increase the Ampv Production Rate to 197 Vehicles PER Year. Supports Ukraine Efforts — $2.5B (Department of Defense)
- 200612!007793!2100!w56hzv!tacom - Warren !w56hzv05g0005 !A!N! !N!0009 ! !20060726!20081231!834476079!824825459!217304393!n!bae Systems Land & Armaments I!1100 Bairs RD !york !pa!17404!87048!133!42!york !york !penn !+000192628556!n!n!000000000000!2350!combat Assault & Tactical VEH, Tracked !a4a!combat Vehicles !000 !NOT Discernable !336992!E! !4! ! ! ! ! !99990909!B! ! !A! !d!n!j!1!001!n!1g!z!y!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!y! ! ! ! ! ! !0001! ! — $1.6B (Department of Defense)
- 200112!001338!2100!AE07 !tacom - Warren !daae0701cm016 !A!N!*!N! !20010502!20041231!834476079!824825459!175406842!n!united Defense, L P !1100 Bairs Road !york !pa!17405!87048!133!42!york !york !penn !+000228044944!n!y!000681605313!2350!combat Assault & Tactical VEH, Tracked !a4a!combat Vehicles !1000!NOT Discernable or Classified !336992!*!*!3! ! ! !*!*!*!B!*!*!A! !D !n!j!1!001!n!1g!a!y!f! ! !N!C!N! ! ! !a!a!a!a!000!a!b!n! ! ! ! ! ! !0001! — $1.3B (Department of Defense)
- System Technical Support for Bradley Family of Vehicles, M113, M109, M992 Family of Vehicles, M9 ACE, Mlrs — $1.3B (Department of Defense)
View all BAE Systems Land & Armaments L.P. federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)