DoD awards $132.8M for M109 Family of Vehicles sustainment, a sole-source contract with BAE Systems

Contract Overview

Contract Amount: $132,777,000 ($132.8M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2019-01-28

End Date: 2025-08-31

Contract Duration: 2,407 days

Daily Burn Rate: $55.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SYSTEM TECHNICAL SUPPORT (STS) AND SUSTAINMENT SYSTEM TECHNICAL SUPPORT (SSTS) SERVICES IN SUPPORT OF THE M109 FAMILY OF VEHICLES (FOV). THIS TASK ORDER IS FOR RECURRING WORK DIRECTIVES FOR PROGRAM MANAGEMENT, ENGINEERING, AND LOGISTICS SUPPORT

Place of Performance

Location: YORK, YORK County, PENNSYLVANIA, 17408

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $132.8 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: SYSTEM TECHNICAL SUPPORT (STS) AND SUSTAINMENT SYSTEM TECHNICAL SUPPORT (SSTS) SERVICES IN SUPPORT OF THE M109 FAMILY OF VEHICLES (FOV). THIS TASK ORDER IS FOR RECURRING WORK DIRECTIVES FOR PROGRAM MANAGEMENT, ENGINEERING, AND LOGISTICS SUPPORT Key points: 1. Contract focuses on program management, engineering, and logistics support for a critical armored vehicle platform. 2. The contract's cost-plus-fixed-fee structure requires careful monitoring of contractor expenses to ensure value. 3. Sole-source award raises questions about potential price inflation and lack of competitive pressure. 4. Long duration (2007-2025) suggests a sustained need for these specialized support services. 5. Performance is tied to the M109 Family of Vehicles, a key component of Army ground forces. 6. The contract's value represents a significant investment in maintaining aging but essential military hardware.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized technical support focus. The cost-plus-fixed-fee (CPFF) pricing structure means that while direct costs are reimbursed, the fixed fee provides a profit incentive. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or if there's an opportunity for cost savings through competition. The long duration and recurring nature of the work suggest a consistent need, but the absence of competition limits transparency on overall value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, proprietary knowledge, or when urgency dictates a rapid award. The lack of competition means that potential cost savings that could arise from a competitive bidding process are unlikely to be realized, and it limits the government's ability to explore alternative solutions or pricing structures.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive pressure. Without competing the requirement, there is less assurance that the government is receiving the best possible price for the sustainment and support services provided.

Public Impact

The primary beneficiaries are the U.S. Army units operating the M109 Family of Vehicles, ensuring their operational readiness. Services delivered include essential program management, engineering expertise, and logistics support critical for maintaining complex military equipment. The geographic impact is primarily within the U.S. Army's operational theaters, supporting global deployment capabilities. Workforce implications include the employment of specialized engineers, logisticians, and program managers within BAE Systems and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract requires diligent oversight to manage contractor expenses and prevent cost overruns.
Long contract duration could lead to complacency or reduced incentive for innovation if not actively managed.
Reliance on a single contractor for critical sustainment services poses a risk if performance issues arise.

Positive Signals

BAE Systems is a known entity with established expertise in armored vehicle sustainment, suggesting a high likelihood of competent performance.
The contract addresses a critical need for maintaining the M109 Family of Vehicles, ensuring Army operational capability.
The fixed fee component of the CPFF contract provides some level of cost predictability for the government.
Long-term relationship may foster efficiencies and deep understanding of the M109 system's unique requirements.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on military vehicle manufacturing and sustainment. The market for military vehicle support services is characterized by long-term relationships between defense contractors and the government, often involving specialized knowledge and proprietary systems. Spending in this area is driven by the need to maintain aging fleets and adapt to evolving battlefield requirements. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of vehicle sustainment, but overall defense spending on equipment maintenance and support runs into billions annually.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, nor is there explicit information regarding subcontracting goals for small businesses. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless BAE Systems actively pursues small business subcontractors for specialized support. Further analysis would be needed to determine the extent of small business participation through subcontracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting and program management offices responsible for the M109 Family of Vehicles. Accountability measures are embedded within the contract's performance work statement and reporting requirements. Transparency is limited due to the sole-source nature, but contract modifications and performance reviews would be subject to internal government review and potentially Inspector General oversight if performance or cost issues arise.

Related Government Programs

M109 Paladin Self-Propelled Howitzer
Army Ground Vehicle Modernization Programs
Defense Logistics Agency (DLA) Support Services
Tactical Wheeled Vehicle Sustainment

Risk Flags

Sole-source award limits competition.
Cost-plus-fixed-fee requires diligent oversight.
Aging vehicle platform may present sustainment challenges.
Long contract duration increases reliance on incumbent.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $132.8 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. SYSTEM TECHNICAL SUPPORT (STS) AND SUSTAINMENT SYSTEM TECHNICAL SUPPORT (SSTS) SERVICES IN SUPPORT OF THE M109 FAMILY OF VEHICLES (FOV). THIS TASK ORDER IS FOR RECURRING WORK DIRECTIVES FOR PROGRAM MANAGEMENT, ENGINEERING, AND LOGISTICS SUPPORT

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 $132.8 million.

What is the period of performance?

Start: 2019-01-28. End: 2025-08-31.

What is the historical spending trend for M109 Family of Vehicles sustainment services under BAE Systems?

The provided data indicates a total award value of $132,777,001.13 for this specific task order, spanning from January 28, 2019, to August 31, 2025. This represents recurring work directives. To understand the historical trend, one would need to examine prior contracts or task orders for similar sustainment services for the M109 FOV, potentially preceding this specific award. Analyzing spending patterns over multiple years would reveal if this $132.8 million represents an increase, decrease, or stable level of investment in M109 sustainment. Without access to historical contract databases or previous award details for this specific service area, a comprehensive trend analysis is not possible based solely on the current data.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar defense sustainment services?

The Cost-Plus-Fixed-Fee (CPFF) contract type, used here, reimburses the contractor for allowable costs incurred plus a predetermined fixed fee representing profit. This structure is common for complex R&D or services where cost estimation is difficult. Compared to Firm-Fixed-Price (FFP), CPFF offers less cost certainty for the government but allows for flexibility when scope is uncertain. Cost-Reimbursement contracts (like Cost-Plus-Incentive-Fee or Cost-Plus-Award-Fee) can offer more cost control through performance incentives. For sustainment services, FFP might be preferred if requirements are very stable and well-defined, offering maximum cost certainty. However, for evolving technical support like this, CPFF provides a balance, allowing for necessary adjustments while incentivizing profit through the fixed fee.

What are the key performance indicators (KPIs) used to evaluate BAE Systems' performance under this contract?

While the specific Key Performance Indicators (KPIs) are not detailed in the provided summary data, typical KPIs for defense sustainment contracts like this would likely include metrics related to response times for technical support requests, system uptime and availability, turnaround time for repairs or parts, engineering support effectiveness (e.g., resolution of design issues), logistics support efficiency (e.g., parts availability, delivery timeliness), and overall program management effectiveness. The contract's Performance Work Statement (PWS) would outline these specific metrics, along with acceptable performance levels and any associated award fees or penalties. Government quality assurance representatives would monitor these KPIs throughout the contract duration.

What is the potential impact of this sole-source award on future competition for M109 sustainment?

A sole-source award, especially for a long duration, can significantly impact future competition. It may deter potential competitors from investing in the specialized knowledge and facilities required for M109 sustainment, as they perceive limited opportunities. This can lead to a de facto monopoly for the incumbent contractor, BAE Systems. When the contract eventually expires, the government might face a situation where only BAE Systems can realistically provide the required services, potentially leading to further sole-source extensions or significantly higher prices in a future competition due to the lack of established alternatives. Proactive market research and efforts to foster competition, even during the contract term, are crucial to mitigate this risk.

Are there any known risks associated with the M109 Family of Vehicles that this contract aims to mitigate?

The M109 Family of Vehicles (FOV) is a legacy platform that has undergone various upgrades but is aging. Key risks associated with such platforms include obsolescence of components, increasing maintenance costs due to wear and tear, and potential degradation of operational readiness if not properly sustained. This contract directly addresses these risks by providing dedicated program management, engineering, and logistics support. The engineering support likely focuses on addressing obsolescence issues, developing workarounds, or recommending upgrades, while logistics support ensures the availability of parts and timely maintenance. Effective sustainment is crucial to mitigate the risk of reduced combat effectiveness and increased operational costs associated with aging military hardware.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

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: $132,777,000

Exercised Options: $132,777,000

Current Obligation: $132,777,000

Actual Outlays: $925,683

Subaward Activity

Number of Subawards: 51

Total Subaward Amount: $6,059,550

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV19D0040

IDV Type: IDC

Timeline