Department of Defense awarded BAE Systems $37.2M for military vehicle components, with limited competition

Contract Overview

Contract Amount: $37,198,321 ($37.2M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2012-11-19

End Date: 2014-03-13

Contract Duration: 479 days

Daily Burn Rate: $77.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RAMP PART NUMBER: 12538529

Place of Performance

Location: ANNISTON, CALHOUN County, ALABAMA, 36207

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $37.2 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: RAMP PART NUMBER: 12538529 Key points: 1. Contract awarded for military vehicle components, indicating a need for specialized manufacturing capabilities. 2. The award to BAE Systems suggests a reliance on established defense contractors for critical equipment. 3. Limited competition raises questions about potential price overruns and the best value achieved. 4. The contract duration of 479 days points to a medium-term need for these components. 5. Geographic location of performance in Alabama may have local economic implications. 6. The firm fixed-price contract type aims to control costs, but the limited competition could undermine this.

Value Assessment

Rating: fair

Benchmarking the value for this specific contract is challenging due to the limited competition and the specialized nature of military vehicle components. The raw dollar amount of $37.2 million for a 479-day period needs to be assessed against the complexity and quantity of components delivered. Without comparable sole-source or limited-competition awards for similar components, it's difficult to definitively state if the pricing represents good value for money. However, the lack of robust competition inherently introduces a risk that the price may not be as competitive as it could have been under a broader solicitation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not competed on a full and open basis. The data indicates it was awarded under a limited competition scenario, suggesting that not all potential offerors were solicited or allowed to bid. The specific reasons for this limited competition are not detailed, but it typically occurs when only a few sources are capable of meeting the requirements, or for other specific justifications outlined in federal acquisition regulations. The limited number of bidders likely resulted in less price pressure compared to a full and open competition.

Taxpayer Impact: Taxpayers may have paid a higher price due to the restricted number of companies vying for this contract. Limited competition can reduce the government's ability to secure the most cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Army, receiving critical components for military vehicles. Services delivered include the manufacturing and supply of specialized vehicle parts, ensuring operational readiness. Geographic impact is concentrated in Alabama, where BAE Systems' facility is located, potentially supporting local jobs and the regional economy. Workforce implications include employment opportunities at BAE Systems and its supply chain partners in Alabama.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have led to a higher price than a fully competed contract.
Lack of transparency in the limited competition process makes it difficult to assess the full value.
Reliance on a single contractor for specialized components can create supply chain vulnerabilities.

Positive Signals

Firm fixed-price contract type helps to establish cost certainty for the government.
BAE Systems is a known entity in defense contracting, suggesting a degree of reliability.
Performance is located within the U.S., supporting domestic manufacturing.

Sector Analysis

The defense industrial base, particularly the manufacturing of armored vehicles and their components, is a critical sector for national security. This contract falls within the broader category of military vehicle manufacturing, which is characterized by high technological requirements, stringent quality standards, and often long production cycles. The market is dominated by a few large, specialized defense contractors. Spending in this sector is driven by military modernization programs and readiness requirements. Comparable spending benchmarks would typically involve other contracts for similar vehicle platforms or component systems, often awarded through competitive or sole-source processes.

Small Business Impact

There is no indication that this contract included a small business set-aside. The awardee, BAE Systems Land & Armaments L.P., is a large defense contractor. This suggests that small businesses were likely not direct recipients of this prime contract. However, BAE Systems may engage small businesses as subcontractors, which would be a positive outcome for the small business ecosystem. The extent of subcontracting to small businesses would need further investigation to determine the overall impact.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations. The Army Contracting Command would be responsible for administering the contract. Accountability measures are inherent in the firm fixed-price structure, which places the cost risk on the contractor. Transparency is limited due to the nature of the limited competition award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Armored Vehicle Manufacturing
Defense Contractor Services
Department of the Army Procurement
Specialized Component Manufacturing

Risk Flags

Limited Competition
Potential for Overpricing
Lack of Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.2 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. RAMP PART NUMBER: 12538529

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 $37.2 million.

What is the period of performance?

Start: 2012-11-19. End: 2014-03-13.

What is BAE Systems Land & Armaments L.P.'s track record with the Department of Defense for similar military vehicle components?

BAE Systems Land & Armaments L.P. is a significant defense contractor with a substantial history of providing military vehicles and components to the Department of Defense. They are known for producing various armored vehicles, including tanks and personnel carriers. Their track record typically involves large-scale production contracts, often awarded through competitive processes, but also through sole-source or limited-source justifications when specific capabilities or existing platforms are involved. Analyzing their past performance on similar contracts would involve reviewing contract awards, delivery histories, and any reported performance issues or successes. Given their established presence, it's likely they have fulfilled numerous orders for components related to armored platforms, contributing to the operational readiness of U.S. military forces.

How does the $37.2 million award compare to other contracts for military vehicle components awarded by the Department of Defense?

Comparing the $37.2 million award requires context regarding the specific components, quantity, and duration. Military vehicle components can range from relatively simple parts to highly complex systems like engines, turrets, or advanced armor. Contracts for such components can vary significantly in value. For instance, a contract for a large quantity of basic parts might be in the millions, while a contract for a new, advanced component system for a next-generation vehicle could easily reach hundreds of millions or even billions. The $37.2 million for a 479-day period suggests a medium-sized award for a specific set of components, likely for an existing vehicle platform rather than a new development. Without knowing the exact nature of the components, a precise comparison is difficult, but it appears to be a substantial, yet not exceptionally large, award within the defense sector.

What are the primary risks associated with awarding a contract of this nature through limited competition?

The primary risks associated with awarding a contract through limited competition include potential price inflation, reduced innovation, and a diminished incentive for the contractor to achieve optimal performance. When fewer bidders are involved, the government has less leverage to negotiate the lowest possible price. This can lead to taxpayers paying more than necessary. Furthermore, limited competition may discourage potential offerors who were not solicited from developing innovative solutions, as they are not part of the bidding process. The contractor, knowing they face less competition, might also have a reduced incentive to push for maximum efficiency or quality beyond the contract's minimum requirements. This can also create a perception of unfairness and potentially lead to protests from excluded bidders.

What is the expected program effectiveness or outcome of receiving these military vehicle components?

The expected program effectiveness and outcome of receiving these military vehicle components is the sustained operational readiness and capability of the U.S. Army's armored vehicle fleet. These components are critical for maintaining, repairing, and potentially upgrading existing military vehicles, ensuring they are combat-ready. By securing these parts, the Army can avoid mission delays, reduce downtime for essential equipment, and maintain the technological edge required in defense operations. The successful delivery of these components directly supports the Army's ability to deploy and operate its armored assets effectively, contributing to national security objectives. The specific effectiveness is tied to the reliability and quality of the components provided by BAE Systems.

How does historical spending on military vehicle components by the Department of the Army compare to this specific award?

Historical spending by the Department of the Army on military vehicle components is substantial, reflecting the ongoing need to maintain and modernize a large fleet of armored vehicles. The Army consistently allocates significant portions of its budget to procurement and sustainment, which includes a wide array of components. Annual spending on vehicle components can range from hundreds of millions to billions of dollars, depending on the specific platforms being supported and the level of modernization efforts. This $37.2 million award represents a single contract within that larger spending picture. While it is a significant sum for one contract, it is likely a fraction of the Army's total annual expenditure on vehicle parts and sustainment, fitting into a broader strategy of ensuring fleet readiness and capability.

Industry Classification

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

Product/Service Code: HARDWARE AND ABRASIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W911N213R0006

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 1801 ELECTRONICS DR, ANNISTON, AL, 03

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: $37,198,321

Exercised Options: $37,198,321

Current Obligation: $37,198,321

Subaward Activity

Number of Subawards: 71

Total Subaward Amount: $27,340,798

Contract Characteristics

Cost or Pricing Data: NO

Timeline