DoD's $75.9M Paladin Fire Control System contract awarded to BAE Systems without competition

Contract Overview

Contract Amount: $75,938,480 ($75.9M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2014-09-17

End Date: 2023-05-06

Contract Duration: 3,153 days

Daily Burn Rate: $24.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CONTRACT W56HZV-14-C-0238 IS FOR THE PROCUREMENT OF THE PALADIN FIRE CONTROL SYSTEMS (PFCS) CAPABILITY ALONG WITH THE ASSOCIATED SPARES AND TRAINING.

Place of Performance

Location: YORK, YORK County, PENNSYLVANIA, 17408

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $75.9 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: CONTRACT W56HZV-14-C-0238 IS FOR THE PROCUREMENT OF THE PALADIN FIRE CONTROL SYSTEMS (PFCS) CAPABILITY ALONG WITH THE ASSOCIATED SPARES AND TRAINING. Key points: 1. Contract awarded for critical fire control systems, spares, and training. 2. Sole-source award raises questions about price discovery and potential cost efficiencies. 3. Long contract duration (over 8 years) suggests a sustained need for the capability. 4. Firm Fixed Price contract type shifts cost risk to the contractor. 5. No small business set-aside indicates a focus on specialized capabilities. 6. High value suggests significant investment in armored vehicle modernization.

Value Assessment

Rating: questionable

The total award amount of $75.9 million for the Paladin Fire Control Systems (PFCS) capability, spares, and training is substantial. Without a competitive bidding process, it is difficult to benchmark the value for money. The firm-fixed-price contract type is generally favorable for the government in managing cost overruns, but the absence of competition means the government may not have secured the lowest possible price. Further analysis would require comparing this contract's unit costs for PFCS components and training to similar systems or previous procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that BAE Systems Land & Armaments L.P. was the only bidder considered. Sole-source procurements typically occur when a unique capability is required, or when only one vendor can provide the necessary goods or services. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from multiple sources.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing bids, there is less assurance that the price reflects the best value achievable in the market.

Public Impact

The primary beneficiaries are the U.S. Army units equipped with the Paladin self-propelled howitzer system, enhancing their combat effectiveness. The contract delivers essential fire control systems, critical spare parts for maintenance, and necessary training for system operation and upkeep. The geographic impact is primarily within military installations where the Paladin systems are deployed and maintained. Workforce implications include specialized roles for BAE Systems personnel in manufacturing, logistics, and training, as well as for military personnel operating and maintaining the systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Long contract duration could mask inefficiencies if not closely monitored.
Lack of transparency in the sole-source justification requires scrutiny.
Potential for vendor lock-in due to specialized nature of the system.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Procurement of critical defense systems ensures operational readiness.
BAE Systems is a known entity in defense contracting, suggesting some level of established performance.
Associated spares and training ensure long-term system viability and user proficiency.

Sector Analysis

The defense sector, particularly within armored vehicle systems, is characterized by high R&D costs, long product lifecycles, and significant government investment. Contracts for complex systems like fire control often involve specialized expertise and proprietary technology, leading to fewer potential bidders. The market for such systems is dominated by a few large defense contractors. Benchmarking this contract would involve comparing the cost of similar fire control systems for other armored platforms or previous iterations of the Paladin system.

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. The nature of advanced defense systems like fire control often requires specialized manufacturing capabilities typically held by larger prime contractors. This suggests that small businesses are unlikely to be direct prime contractors on this specific award, though they may participate as lower-tier subcontractors if BAE Systems opts to utilize them.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures, potentially involving the Defense Contract Management Agency (DCMA) for contract administration. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver the specified systems and services within the agreed-upon price. Transparency is limited due to the sole-source nature of the award, but contract award details are publicly available.

Related Government Programs

Paladin Integrated Management System
M109 Howitzer Modernization
Advanced Field Artillery Tactical Data System (AFATDS)
Combat Vehicle Systems Integration

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.9 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. CONTRACT W56HZV-14-C-0238 IS FOR THE PROCUREMENT OF THE PALADIN FIRE CONTROL SYSTEMS (PFCS) CAPABILITY ALONG WITH THE ASSOCIATED SPARES AND TRAINING.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $75.9 million.

What is the period of performance?

Start: 2014-09-17. End: 2023-05-06.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. The specific justification for this sole-source determination is not detailed in the abbreviated data. Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations, such as the existence of only one responsible source, urgent and compelling needs, or when the acquisition is for a follow-on product or service from a previous contract where competition is not feasible or economical. Without further documentation, such as a Justification and Approval (J&A) document, the precise reasons remain unknown. This lack of competition raises concerns about whether the government received the best possible pricing and considered all available market solutions.

How does the total contract value of $75.9 million compare to similar fire control system procurements?

Direct comparison of the $75.9 million total award value for the Paladin Fire Control Systems (PFCS) is challenging without access to detailed cost breakdowns and specific system configurations. The Paladin system is a component of the M109 self-propelled howitzer, a major piece of military hardware. The value reflects not just the core fire control technology but also associated spares and training, which can significantly increase the overall contract cost. To benchmark effectively, one would need to compare the per-unit cost of the PFCS, the cost of associated spares, and the training package against similar systems procured by the DoD or other allied nations for comparable platforms. Given the sole-source nature, this comparison is crucial for assessing value for money.

What are the key performance indicators (KPIs) or metrics used to assess the success of this contract?

The provided data does not specify the key performance indicators (KPIs) or metrics used to assess the success of this contract. However, for a contract of this nature, typical performance metrics would likely include on-time delivery of systems and spares, adherence to quality standards for the fire control systems, effectiveness and completion rates of training programs, and potentially system reliability and maintainability once fielded. For a firm-fixed-price contract, meeting the defined scope, schedule, and cost targets are primary indicators of success. Post-delivery performance and user feedback from military units operating the Paladin system would also be critical qualitative measures.

What is BAE Systems Land & Armaments L.P.'s track record with similar defense contracts?

BAE Systems Land & Armaments L.P. is a major defense contractor with a significant history of producing and supporting armored vehicle systems and components for the U.S. military and international customers. They are known for their involvement in various vehicle platforms, including artillery systems. While specific details on their performance for this exact Paladin Fire Control System contract are not in the provided data, their general track record suggests they possess the technical expertise and manufacturing capacity required for such complex defense procurements. Past performance evaluations and contract awards databases would provide a more granular view of their reliability, quality, and adherence to contract terms on similar projects.

How has historical spending on the Paladin system evolved over time?

The provided data pertains to a single definitive contract (W56HZV-14-C-0238) awarded in 2014 with an end date in 2023, totaling $75.9 million. This contract represents a specific procurement effort for the PFCS capability, spares, and training. To understand historical spending patterns on the Paladin system, one would need to examine multiple contracts awarded over different fiscal years, potentially including research and development, initial procurement, upgrades, sustainment, and related components. Analyzing the cumulative spending across various contracts over the lifespan of the Paladin system would reveal trends in investment, modernization efforts, and sustainment costs.

Industry Classification

NAICS: Public Administration › Justice, Public Order, and Safety Activities › Fire Protection

Product/Service Code: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV14R0171

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $75,938,480

Exercised Options: $75,938,480

Current Obligation: $75,938,480

Subaward Activity

Number of Subawards: 39

Total Subaward Amount: $53,205,797

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline