DoD Awards $463M for 20 M88A2 Hercules Vehicles to BAE Systems, Lacking Competition
Contract Overview
Contract Amount: $462,952,866 ($463.0M)
Contractor: BAE Systems Land & Armaments L.P.
Awarding Agency: Department of Defense
Start Date: 2017-09-29
End Date: 2025-01-30
Contract Duration: 2,680 days
Daily Burn Rate: $172.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: FY17 M88A2 HERCULES VEHICLE PRODUCTION CONTRACT FOR 20 EA VEHICLES.
Place of Performance
Location: YORK, YORK County, PENNSYLVANIA, 17408
Plain-Language Summary
Department of Defense obligated $463.0 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: FY17 M88A2 HERCULES VEHICLE PRODUCTION CONTRACT FOR 20 EA VEHICLES. Key points: 1. The contract for M88A2 Hercules vehicle production represents a significant investment in armored vehicle capabilities. 2. BAE Systems, the sole awardee, is a major defense contractor with extensive experience in this sector. 3. The lack of competition raises concerns about potential price inflation and limited market exploration. 4. The sector for military armored vehicles is characterized by high barriers to entry and specialized production requirements.
Value Assessment
Rating: questionable
The total award amount is $462,952,866.37 for 20 vehicles. This equates to approximately $23.15 million per vehicle. Without specific benchmark data for this specialized vehicle, it is difficult to definitively assess pricing, but the lack of competition suggests potential for higher-than-market prices.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This method limits price discovery and potentially leads to higher costs for taxpayers as there is no competitive pressure to drive down prices or encourage innovation from other potential suppliers.
Taxpayer Impact: The absence of competition in this significant defense contract may result in taxpayers paying a premium for these vehicles, as market forces are not being leveraged to ensure the best possible price.
Public Impact
Taxpayers may be overpaying for essential military equipment due to the lack of competitive bidding. The reliance on a single supplier could create long-term dependencies and limit future procurement options. This contract highlights a potential area for improved acquisition strategies within the Department of Defense to foster competition. The production of these specialized vehicles is critical for maintaining military operational readiness.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Sole-source award
- High contract value
Positive Signals
- Essential military equipment
- Experienced contractor
Sector Analysis
The defense sector for armored vehicle manufacturing is highly specialized, with significant R&D and production costs. Spending benchmarks are often driven by specific program requirements and limited supplier bases, making direct comparisons challenging.
Small Business Impact
This contract was awarded directly to BAE Systems, a large defense contractor. There is no indication of subcontracting opportunities for small businesses in the provided data, suggesting limited direct impact or benefit to the small business sector from this specific award.
Oversight & Accountability
The Department of Defense is responsible for overseeing this contract. The lack of competition suggests that oversight may need to focus on ensuring fair pricing and performance from the sole-source provider, potentially through robust auditing and negotiation processes.
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 limits price competition.
- Potential for inflated costs due to lack of bidders.
- Dependency on a single contractor for critical equipment.
- Limited transparency into the necessity of sole-source procurement.
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 $463.0 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. FY17 M88A2 HERCULES VEHICLE PRODUCTION CONTRACT FOR 20 EA VEHICLES.
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 $463.0 million.
What is the period of performance?
Start: 2017-09-29. End: 2025-01-30.
What is the justification for awarding this contract on a sole-source basis, and what steps are being taken to ensure fair pricing?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that only one contractor can meet. For this contract, the specific rationale is not detailed. To ensure fair pricing, the Department of Defense would likely conduct detailed cost analyses, review the contractor's cost proposals, and potentially engage in rigorous negotiations. Independent government cost estimates and market research, even for sole-source, are crucial.
What are the long-term risks associated with relying on a single supplier for critical military hardware like the M88A2 Hercules?
Long-term risks include potential price escalation over time as competition is absent, reduced innovation due to lack of market pressure, and supply chain vulnerabilities if the sole supplier faces production issues or goes out of business. It can also lead to a loss of organic government capability to produce or maintain such systems, increasing dependence on the contractor.
How does the lack of competition in this contract impact the overall effectiveness and cost-efficiency of the military's armored vehicle procurement strategy?
The lack of competition directly reduces cost-efficiency by eliminating the downward price pressure that competitive bidding provides. This can lead to higher acquisition costs for the M88A2 vehicles. In terms of effectiveness, while the chosen contractor is capable, the absence of competition might stifle innovation in vehicle design or production methods, potentially impacting the long-term modernization and cost-effectiveness of the military's armored fleet.
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: W56HZV16R0229
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Ball Corporation
Address: 1100 BAIRS RD, YORK, PA, 17408
Business Categories: Category Business, Foreign Owned, 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: $462,952,866
Exercised Options: $462,952,866
Current Obligation: $462,952,866
Subaward Activity
Number of Subawards: 610
Total Subaward Amount: $312,764,470
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2017-09-29
Current End Date: 2025-01-30
Potential End Date: 2025-01-30 00:00:00
Last Modified: 2026-01-27
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