DoD awards $95.4M for AMPV HMS MP Gen 2 Radio System integration to BAE Systems

Contract Overview

Contract Amount: $95,418,283 ($95.4M)

Contractor: BAE Systems Land and Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2022-01-04

End Date: 2027-08-30

Contract Duration: 2,064 days

Daily Burn Rate: $46.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TASK ORDER W56HZV-22-F-0007 IS ISSUED TO AWARD WD# FOV-P-21- F0007-001 TO FUND THE INTEGRATION OF THE HMS MP GEN 2 RADIO SYSTEM FOR THE AMPV.

Place of Performance

Location: STERLING HEIGHTS, MACOMB County, MICHIGAN, 48312

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $95.4 million to BAE SYSTEMS LAND AND ARMAMENTS L.P. for work described as: TASK ORDER W56HZV-22-F-0007 IS ISSUED TO AWARD WD# FOV-P-21- F0007-001 TO FUND THE INTEGRATION OF THE HMS MP GEN 2 RADIO SYSTEM FOR THE AMPV. Key points: 1. Contract focuses on integrating a specific radio system into the Armored Multi-Purpose Vehicle (AMPV). 2. The award is a delivery order under a larger contract, indicating a phased approach to procurement. 3. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 4. The duration of the contract extends over five years, suggesting a long-term integration and support requirement. 5. The lack of competition raises questions about potential price efficiencies and the availability of alternative solutions. 6. The engineering services NAICS code (541330) suggests a focus on technical design and development.

Value Assessment

Rating: questionable

The contract value of $95.4 million for integrating a radio system into vehicles appears substantial. Without comparable contract data for similar radio system integrations on military platforms, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk for cost control, as the contractor is reimbursed for allowable costs plus a fixed fee, which may not always align with the most economical approach. Further analysis would be needed to compare the fixed fee percentage and the estimated cost basis against industry standards for similar engineering services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a delivery order under a sole-source basis, meaning it was not competed among multiple vendors. This approach is often used when a specific vendor possesses unique capabilities, intellectual property, or when the requirement is a follow-on to previous work where competition was previously established. The lack of open competition limits the government's ability to solicit and evaluate a range of technical solutions and pricing structures, potentially leading to higher costs than if multiple bids were considered.

Taxpayer Impact: Taxpayers may not benefit from the most competitive pricing due to the absence of a bidding process. This could result in a higher overall expenditure for the radio system integration compared to a fully competed contract.

Public Impact

The primary beneficiaries are the U.S. Army, specifically units operating the Armored Multi-Purpose Vehicle (AMPV). The contract delivers the integration of the HMS MP Gen 2 Radio System, enhancing communication capabilities for the AMPV. The geographic impact is likely concentrated at military bases and operational areas where AMPVs are deployed. Workforce implications may include specialized engineering and technical roles at BAE Systems and potentially at Army depots involved in integration and testing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can incentivize cost increases if not rigorously managed.
Long contract duration (over 5 years) increases exposure to potential scope creep or evolving requirements.
Lack of detailed performance metrics in the provided data makes it hard to assess efficiency.
The specific radio system (HMS MP Gen 2) may have limited interoperability or vendor support options.

Positive Signals

Award to an established defense contractor (BAE Systems) suggests familiarity with military requirements.
Integration of advanced radio systems is crucial for modern military communication and situational awareness.
The AMPV platform is a key component of Army modernization efforts, indicating strategic importance.
Delivery order structure allows for phased funding and execution, potentially managing risk.

Sector Analysis

The defense sector is characterized by complex, high-value procurements for advanced military hardware and services. This contract falls within the engineering services sub-sector, specifically related to defense systems integration. The market for military vehicle electronics and communication systems is dominated by a few large prime contractors and specialized subcontractors. Spending benchmarks for similar integration projects can vary widely based on the complexity of the systems and the platform. The total addressable market for defense electronics and communication systems is in the tens of billions of dollars annually.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, BAE Systems, the direct impact on small business set-asides is minimal. However, BAE Systems may engage small businesses as subcontractors for specialized components or services. The extent of small business participation would depend on BAE's subcontracting plan, which is not detailed here. Without a competitive bidding process, opportunities for small businesses to directly compete for this specific task order are limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a delivery order under a larger contract, existing oversight mechanisms for the parent contract would likely apply. Transparency is moderate, as contract awards are publicly reported, but detailed cost breakdowns and performance metrics are often proprietary or classified. The Inspector General (IG) for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Armored Multi-Purpose Vehicle (AMPV) Program
Tactical Wheeled Vehicle Modernization
Military Communications Systems
Defense Engineering Services
BAE Systems Land and Armaments Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of detailed performance metrics
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $95.4 million to BAE SYSTEMS LAND AND ARMAMENTS L.P.. TASK ORDER W56HZV-22-F-0007 IS ISSUED TO AWARD WD# FOV-P-21- F0007-001 TO FUND THE INTEGRATION OF THE HMS MP GEN 2 RADIO SYSTEM FOR THE AMPV.

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 $95.4 million.

What is the period of performance?

Start: 2022-01-04. End: 2027-08-30.

What is the track record of BAE Systems Land and Armaments L.P. in delivering similar radio system integration projects for the Department of Defense?

BAE Systems Land and Armaments L.P. has a significant track record in providing complex systems integration and technology solutions for various military platforms. They are a major defense contractor involved in the development, production, and sustainment of armored vehicles, including the AMPV program itself. Their experience encompasses integrating advanced electronics, communication systems, and weapon platforms into military vehicles. While specific details on past HMS MP Gen 2 integrations are not publicly available, BAE's extensive portfolio suggests a strong capability in handling such complex technical requirements. Performance history on prior contracts, including delivery timeliness, cost control, and technical success rates, would be available through government contract databases and performance reporting systems, which are crucial for a comprehensive assessment.

How does the Cost Plus Fixed Fee (CPFF) contract structure compare to other pricing arrangements for similar defense engineering services in terms of cost efficiency?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs plus a predetermined fixed fee, representing profit. This structure is often used when the scope of work is not precisely defined or involves significant uncertainty, such as research and development or complex system integration. Compared to Fixed Price contracts, CPFF offers less cost certainty for the government, as the final cost is not capped. However, it can be more efficient than pure Cost Plus contracts (where the fee is a percentage of cost) as it incentivizes the contractor to control costs to protect their fixed profit margin. For engineering services where technical challenges are high, CPFF can be appropriate, but it requires robust government oversight to manage costs effectively and prevent overruns. Other arrangements like Firm-Fixed-Price (FFP) or Cost Plus Incentive Fee (CPIF) might offer better cost control under different circumstances.

What are the primary risks associated with the sole-source award of this delivery order, and how might they be mitigated?

The primary risk of a sole-source award is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not achieve the most cost-effective solution. Another risk is the potential for complacency from the contractor, assuming less urgency to innovate or optimize performance. Mitigation strategies include rigorous negotiation of the fixed fee and estimated costs, establishing clear performance metrics and milestones, and conducting thorough market research to ensure the proposed pricing is reasonable. The government should also maintain strong oversight to ensure the contractor meets all technical and delivery requirements. Furthermore, for future procurements, the agency should explore opportunities to introduce competition, perhaps by breaking down the requirement or developing alternative solutions.

What is the historical spending pattern for integrating radio systems into the AMPV or similar armored vehicles within the Department of Defense?

Historical spending on integrating radio systems into the AMPV and similar armored vehicles within the Department of Defense can be substantial, reflecting the complexity and criticality of modern battlefield communications. While specific figures for AMPV radio integration prior to this award are not detailed here, the overall modernization of tactical communication systems across the Army involves billions of dollars. Programs like the Joint Battle Command-Platform (JBC-P) and various vehicular radio upgrades have seen significant investment. The AMPV program itself is a multi-billion dollar initiative, and communication system integration is a key sub-component. Spending patterns are influenced by evolving threats, technological advancements, and the need for enhanced situational awareness and interoperability across different units and domains. This $95.4 million award represents a significant investment in a specific platform's communication upgrade.

How does the integration of the HMS MP Gen 2 Radio System contribute to the overall mission effectiveness and modernization goals of the Armored Multi-Purpose Vehicle (AMPV)?

The integration of the HMS MP Gen 2 Radio System is critical for enhancing the mission effectiveness and supporting the modernization goals of the Armored Multi-Purpose Vehicle (AMPV). Modern military operations rely heavily on seamless, secure, and real-time communication for command and control, situational awareness, and data sharing. The HMS MP Gen 2 system likely offers advanced capabilities such as improved bandwidth, encryption, network integration, and potentially reduced size, weight, and power (SWaP) compared to legacy systems. For the AMPV, which is designed to replace the Vietnam-era M113, incorporating state-of-the-art communication is essential to ensure it can operate effectively within the networked battlefield of today and the future. This upgrade directly supports the Army's broader modernization objectives by ensuring its new platforms are equipped with the necessary communication infrastructure to achieve information superiority.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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: 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: $95,418,283

Exercised Options: $95,418,283

Current Obligation: $95,418,283

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $3,385,568

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV21D0018

IDV Type: IDC

Timeline