DoD awards $58.5M for M109 Family of Vehicles sustainment, with no competition

Contract Overview

Contract Amount: $58,453,085 ($58.5M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2019-02-01

End Date: 2025-05-27

Contract Duration: 2,307 days

Daily Burn Rate: $25.3K/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 FIELD SERVICE REPRESENTATIVE 50,824 LABOR HOURS ON TWO WORK DIRECTIVES.

Place of Performance

Location: YORK, YORK County, PENNSYLVANIA, 17408

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $58.5 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 FIELD SERVICE REPRESENTATIVE 50,824 LABOR HOURS ON TWO WORK DIRECTIVES. Key points: 1. Contract awarded on a sole-source basis, raising concerns about price discovery and potential overpayment. 2. Significant portion of contract value allocated to labor hours, indicating a focus on personnel services. 3. Long performance period suggests a need for sustained support for critical military hardware. 4. Contractor has a history of performing similar services for defense systems. 5. Lack of competition limits opportunities for other vendors and potentially reduces innovation. 6. The contract's value is substantial, requiring careful oversight to ensure efficient use of taxpayer funds.

Value Assessment

Rating: questionable

The contract's value of $58.5 million for sustainment services is significant. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-fixed-fee structure, while common for complex services, can lead to cost overruns if not managed diligently. The allocation of over 50,000 labor hours suggests a substantial personnel component, the cost-effectiveness of which is hard to assess without competitive data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, BAE Systems Land & Armaments L.P., was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple proposals and evaluations. The lack of competition means there was no direct comparison of pricing or technical approaches from different companies, potentially leading to less favorable terms for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, the government lacks assurance that it received the best possible price for these critical sustainment services.

Public Impact

The primary beneficiaries are the U.S. Army units operating the M109 Family of Vehicles, ensuring their operational readiness. Services delivered include field support and sustainment for a key piece of armored artillery equipment. Geographic impact is likely global, wherever M109 vehicles are deployed or stationed. Workforce implications include the employment of skilled technicians and engineers by BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may result in higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize cost increases if not rigorously managed.
Long contract duration increases the risk of scope creep or evolving requirements not being optimally priced.
Dependence on a single contractor for critical sustainment could pose a risk if performance issues arise.

Positive Signals

Contractor is an established entity with experience in defense systems sustainment.
The contract addresses a clear need for ongoing support of essential military equipment.
The fixed-fee component provides some cost certainty compared to pure cost-reimbursement contracts.

Sector Analysis

This contract falls within the defense industrial base, specifically supporting armored vehicle manufacturing and sustainment. The market for military vehicle support is often characterized by specialized expertise and long-term relationships between contractors and the government. Spending in this sector is driven by defense budgets and the operational needs of the armed forces. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of specific vehicle platforms and sustainment requirements.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a set-aside provision. However, the prime contractor, BAE Systems, may engage small businesses as subcontractors, though this is not specified in the provided data. The absence of a small business set-aside means opportunities for smaller, specialized firms to compete directly for this work were not pursued.

Oversight & Accountability

Oversight is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for contract administration. Accountability measures would be embedded within the contract terms, including performance standards and reporting requirements. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to this contract.

Related Government Programs

M109 Paladin Self-Propelled Howitzer
U.S. Army Field Artillery Systems
Defense Logistics Agency (DLA) Support Contracts
Military Vehicle Maintenance and Repair Services

Risk Flags

Sole-source award
Cost-plus contract type
Long performance period
Critical system sustainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $58.5 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 FIELD SERVICE REPRESENTATIVE 50,824 LABOR HOURS ON TWO WORK DIRECTIVES.

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 $58.5 million.

What is the period of performance?

Start: 2019-02-01. End: 2025-05-27.

What is the track record of BAE Systems Land & Armaments L.P. in providing sustainment services for military vehicles?

BAE Systems Land & Armaments L.P. is a major defense contractor with extensive experience in the design, manufacturing, and sustainment of military vehicles, including armored platforms. They have a long history of supporting various U.S. military programs, often involving complex logistical and maintenance services. Their portfolio includes work on other artillery systems and armored personnel carriers. While specific performance metrics for this particular task order are not detailed here, the company's overall presence in the defense sector suggests a capacity to handle such requirements. However, the effectiveness and value-for-money of their services, especially in sole-source situations, warrant ongoing scrutiny.

How does the $58.5 million contract value compare to historical spending on M109 Family of Vehicles sustainment?

Without access to historical spending data specifically for M109 Family of Vehicles sustainment, a direct comparison is challenging. However, $58.5 million over approximately 2.5 years (February 2019 to May 2025) represents a significant annual expenditure averaging around $23.4 million. This figure should be evaluated in the context of the number of vehicles supported, their operational tempo, and the complexity of the required sustainment services. Given the M109's long service life and ongoing role, sustained annual investments in its upkeep are expected, but the lack of competition for this specific award makes it difficult to determine if this amount represents optimal value compared to potential competitive bids.

What are the primary risks associated with a sole-source award for critical military sustainment?

The primary risks associated with a sole-source award for critical military sustainment include: 1) Inflated Pricing: Without competitive pressure, the contractor may charge higher prices than would be achievable in a competitive environment. 2) Reduced Innovation: The lack of competition can disincentivize the contractor from seeking innovative or more cost-effective solutions. 3) Performance Issues: If the sole-source contractor underperforms, the government has limited immediate alternatives for corrective action without potentially disrupting essential services. 4) Lack of Transparency: Sole-source awards can obscure the true market value of the services, making it harder for oversight bodies to assess efficiency. 5) Contractor Lock-in: The government may become overly reliant on a single provider, making future transitions difficult and costly.

How effective is the Cost Plus Fixed Fee (CPFF) contract type in ensuring value for money in sustainment services?

The Cost Plus Fixed Fee (CPFF) contract type aims to balance risk between the government and the contractor. The contractor is reimbursed for allowable costs plus a fixed fee, representing profit. This structure can be effective when the scope of work is not precisely defined or is subject to change, as is often the case with complex sustainment services. It provides the contractor with an incentive to control costs, as the fee remains constant regardless of the final cost incurred. However, if cost-reimbursement elements are not tightly controlled, or if the fixed fee itself is excessively high, it can still lead to suboptimal value for money. Rigorous oversight and clear definition of allowable costs are crucial for CPFF contracts to achieve efficiency.

What are the potential implications of the 50,824 labor hours for the contract's overall cost and performance?

The allocation of 50,824 labor hours represents a significant component of the contract's total value, suggesting that direct personnel effort is the primary driver of cost. This figure implies a substantial need for skilled technicians, engineers, and field representatives to perform maintenance, repair, and support functions for the M109 Family of Vehicles. The efficiency and productivity of these labor hours are critical to the contract's success and cost-effectiveness. If these hours are utilized efficiently, they can ensure high readiness rates for the vehicles. Conversely, inefficiencies, overstaffing, or prolonged task durations could significantly inflate costs beyond what is necessary, especially under a cost-plus structure.

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: $58,453,085

Exercised Options: $58,453,085

Current Obligation: $58,453,085

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $10,842,135

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