DoD awards $61.6M for OMFV Phase 2 Concept Design, BAE Systems secures definitive contract

Contract Overview

Contract Amount: $61,594,310 ($61.6M)

Contractor: BAE Systems Land and Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2021-07-23

End Date: 2022-12-31

Contract Duration: 526 days

Daily Burn Rate: $117.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: OMFV PHASE 2 CONCEPT DESIGN EFFORT

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48312

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $61.6 million to BAE SYSTEMS LAND AND ARMAMENTS L.P. for work described as: OMFV PHASE 2 CONCEPT DESIGN EFFORT Key points: 1. Contract awarded via full and open competition, indicating a broad search for qualified bidders. 2. The definitive contract type suggests a commitment to a specific scope of work. 3. Fixed-price contract structure shifts some cost risk to the contractor. 4. The contract duration of 526 days allows for a substantial design and concept development period. 5. Awarded to a single contractor, BAE Systems, for specialized military vehicle manufacturing. 6. The contract value represents a significant investment in future armored vehicle technology.

Value Assessment

Rating: good

The contract value of $61.6 million for a concept design effort appears reasonable given the complexity of military vehicle development. Benchmarking against similar concept design contracts for major defense platforms would provide further context, but the fixed-price nature suggests a degree of cost certainty. The award to a single, established defense contractor like BAE Systems is typical for such specialized work, implying they possess the necessary expertise and infrastructure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The solicitation likely attracted multiple bidders given the strategic importance of the Optionally Manned Fighting Vehicle (OMFV) program. The presence of multiple bidders generally fosters competitive pricing and encourages innovative solutions, leading to better value for the government.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it aims to secure the best possible technical solution and price by leveraging the widest possible market. This approach helps prevent cost overruns and ensures that taxpayer funds are used efficiently.

Public Impact

The primary beneficiaries are the U.S. Army, which will receive advanced concept designs for a next-generation fighting vehicle. This contract supports the development of advanced military hardware, enhancing national defense capabilities. The project is likely to have implications for the defense manufacturing workforce, particularly in specialized engineering and design roles. Geographic impact may be concentrated around BAE Systems' design and engineering facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during the concept design phase.
Dependence on a single contractor for critical design elements could limit future flexibility.
The long-term success of the OMFV program hinges on the effectiveness of this initial concept design.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Fixed-price contract structure provides cost predictability.
Contractor, BAE Systems, has extensive experience in military vehicle development.
The contract supports a critical modernization effort for the U.S. Army.

Sector Analysis

This contract falls within the defense industrial base, specifically the manufacturing of military armored vehicles. The OMFV program is a significant initiative aimed at replacing aging platforms and incorporating advanced technologies. The market for such specialized defense systems is characterized by high barriers to entry, significant R&D investment, and close relationships between contractors and government agencies. Comparable spending benchmarks would involve other major defense platform development contracts.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. Given the nature of advanced military vehicle design, prime contractors like BAE Systems typically handle the core engineering and integration. However, opportunities may exist for small businesses to participate as subcontractors for specialized components or services, though this is not explicitly detailed in the provided information.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army contracting and program management offices. The definitive contract structure implies clear deliverables and milestones that will be monitored. Transparency is generally maintained through contract award announcements and reporting requirements. The Inspector General's office may conduct audits or investigations if specific concerns regarding performance or financial integrity arise.

Related Government Programs

Ground Combat Vehicle (GCV) Program
Bradley Fighting Vehicle Modernization
Future Combat Systems (FCS)
Armored Multi-Purpose Vehicle (AMPV)

Risk Flags

Potential for cost growth in subsequent phases
Technical feasibility of advanced technologies
Alignment with evolving military requirements
Programmatic stability and funding continuity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.6 million to BAE SYSTEMS LAND AND ARMAMENTS L.P.. OMFV PHASE 2 CONCEPT DESIGN EFFORT

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS LAND AND 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 $61.6 million.

What is the period of performance?

Start: 2021-07-23. End: 2022-12-31.

What is the track record of BAE Systems in delivering complex military vehicle design contracts?

BAE Systems Land and Armaments L.P. has a substantial and well-established track record in developing and manufacturing a wide array of military vehicles for the U.S. and allied nations. They are known for programs such as the Bradley Fighting Vehicle, M109 Paladin artillery system, and various armored personnel carriers. Their experience spans design, engineering, prototyping, and full-rate production. This extensive history suggests a deep understanding of military requirements, advanced manufacturing techniques, and program management necessary for complex projects like the OMFV concept design. Their past performance on similar large-scale defense contracts indicates a capacity to handle the technical and logistical challenges inherent in developing next-generation combat systems.

How does the $61.6 million contract value compare to similar concept design efforts for major defense platforms?

The $61.6 million allocated for the OMFV Phase 2 concept design effort appears to be within a reasonable range when compared to similar early-stage development contracts for major defense platforms. Concept design phases are critical for defining requirements, exploring technological solutions, and mitigating risks before full-scale development. These efforts often involve extensive research, simulation, and preliminary engineering. For instance, concept design phases for aircraft, ships, or other complex ground vehicles can range from tens to hundreds of millions of dollars, depending on the program's scope, technological ambition, and the number of competing designs. The value here reflects the complexity and strategic importance of developing a next-generation fighting vehicle.

What are the primary risks associated with this specific contract award?

The primary risks associated with this contract revolve around the inherent uncertainties of early-stage concept development for a highly complex system like the OMFV. Technical risks include the possibility that envisioned technologies may not be mature enough or may prove too costly to implement, potentially leading to design changes or program delays. Programmatic risks involve potential shifts in military requirements or budget constraints that could impact the program's future phases. Contractor-related risks, while mitigated by BAE Systems' experience, could include performance issues or unforeseen cost growth, although the fixed-price nature of this contract aims to limit the latter. Finally, integration risks are significant, as ensuring interoperability with existing and future battlefield systems is crucial.

What is the expected effectiveness of this concept design effort in achieving the OMFV program's goals?

This concept design effort is expected to be highly effective in laying the foundational groundwork for the OMFV program's success. By engaging a capable contractor like BAE Systems through a competitive process, the Army aims to explore innovative design approaches and mature critical technologies. The output of this phase—detailed concept designs—will enable a more informed down-selection process for the subsequent engineering and manufacturing development (EMD) phase. Effective concept designs should clearly define the vehicle's capabilities, performance parameters, and cost targets, thereby reducing uncertainty and risk for later stages. The success hinges on the clarity of requirements provided to the contractor and the rigor of the design validation process.

How does historical spending on similar military vehicle development programs inform the assessment of this contract?

Historical spending on military vehicle development programs, such as the Ground Combat Vehicle (GCV) initiative or the Armored Multi-Purpose Vehicle (AMPV), provides valuable context. These past programs often encountered significant cost overruns and schedule delays due to technical challenges, changing requirements, and acquisition strategy issues. The OMFV program aims to learn from these experiences, potentially employing different acquisition approaches and emphasizing modularity and affordability. The $61.6 million for concept design is a relatively modest investment compared to the total lifecycle costs of fielding a new combat vehicle, which can easily run into billions. Understanding the cost trajectories of previous programs highlights the importance of rigorous concept validation and risk management in this current contract.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: W56HZV20R0142

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 34201 VAN DYKE AVE, STERLING HEIGHTS, MI, 48312

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: $61,594,310

Exercised Options: $61,594,310

Current Obligation: $61,594,310

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $17,594,105

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline