Naval Sea Systems Command awards $795M contract for missile launchers, with BAE Systems as prime contractor

Contract Overview

Contract Amount: $79,486,699 ($79.5M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2004-03-08

End Date: 2010-10-31

Contract Duration: 2,428 days

Daily Burn Rate: $32.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200406!041914!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002404C5454 !A!N! !N! ! !20040308!20071231!006481543!098060218!175406842!N!UNITED DEFENSE, L P !4800 EAST RIVER ROAD !MINNEAPOLIS !MN!55421!00100!013!46!ABERDEEN !BROWN !S DAKOTA !+000014867447!N!N!000000000000!1440!LAUNCHERS, GUIDED MISSILE !A2 !MISSILE AND SPACE SYSTEMS !180 !DDG 51 !336414!E! !3! ! ! ! ! !99990909!B! ! !B! !D!N!J!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! !Y! ! !0001! !

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55421

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $79.5 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: 200406!041914!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002404C5454 !A!N! !N! ! !20040308!20071231!006481543!098060218!175406842!N!UNITED DEFENSE, L P !4800 EAST RIVER ROAD !MINNEAPOLIS !MN!55421!00100!013!46!ABERDEEN !BROW… Key points: 1. Contract awarded for Guided Missile Launchers, indicating a significant investment in naval defense capabilities. 2. The contract's firm fixed-price nature suggests a defined scope and budget, potentially mitigating cost overruns. 3. A long performance period of over 8 years (from award to final completion) implies a complex, multi-year project. 4. The prime contractor, BAE Systems, is a major defense industry player, suggesting established capabilities. 5. The contract falls under the 'Guided Missile and Space Systems' NAICS code, placing it within a specialized defense sector. 6. The contract was not competed, raising questions about potential cost efficiencies and market competition.

Value Assessment

Rating: fair

The total award amount of $794,866,990 for Guided Missile Launchers appears substantial. Without specific benchmarks for comparable missile launcher systems or detailed cost breakdowns, it is difficult to definitively assess value for money. The firm fixed-price contract type provides some cost certainty, but the lack of competition makes it harder to gauge if the price reflects optimal market rates. Further analysis would require comparing this contract to similar procurements for comparable systems and understanding the specific technical requirements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The data does not provide details on why the contract was sole-sourced, such as a lack of available sources or a national security imperative. The absence of a competitive bidding process means that the government did not benefit from multiple vendors proposing solutions and prices, which could lead to less favorable pricing and potentially limit innovation.

Taxpayer Impact: For taxpayers, a sole-source award means there was no opportunity to leverage competition to drive down costs. This could result in a higher price paid for the missile launchers than might have been achieved in a competitive environment.

Public Impact

The primary beneficiaries are the U.S. Navy, receiving advanced missile launcher systems essential for national defense. The contract delivers critical components for naval vessels, specifically the DDG 51 class destroyers. The contract supports the defense industrial base, particularly in the area of missile and space systems manufacturing. Work is likely to impact a specialized workforce within the defense manufacturing sector, requiring skilled engineers and technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced incentive for cost efficiency.
The long contract duration could introduce risks related to technological obsolescence or changing defense needs.
Sole-source awards can limit opportunities for smaller or newer companies to enter the defense supply chain.

Positive Signals

The firm fixed-price contract provides budget certainty for this significant defense procurement.
The award to a major defense contractor like BAE Systems suggests a high level of technical capability and experience.
The contract addresses a critical need for naval defense systems, contributing to national security.

Sector Analysis

This contract falls within the Defense sector, specifically the 'Guided Missile and Space Systems' industry. This is a highly specialized and capital-intensive segment of the defense industrial base. The market is typically dominated by a few large, established prime contractors due to the complexity, high R&D costs, and stringent security requirements. Spending in this area is driven by national security priorities and technological advancements in missile defense and offensive capabilities.

Small Business Impact

The data indicates that small business participation was not a primary focus for this contract, as it was not competed and the prime contractor is a large entity. There is no explicit mention of small business set-asides or subcontracting goals. This suggests that opportunities for small businesses may be limited to lower-tier supply chain roles, rather than prime contracting or major subcontracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which ensures contractors meet performance and quality standards. The firm fixed-price nature of the contract provides a degree of financial oversight by locking in costs. Transparency is generally limited for sole-source defense contracts, with details often classified or restricted due to national security concerns.

Related Government Programs

Naval Ship Systems
Missile Systems Procurement
Defense Industrial Base
Naval Weapons Systems
DDG 51 Destroyer Program

Risk Flags

Sole-source award
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $79.5 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. 200406!041914!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002404C5454 !A!N! !N! ! !20040308!20071231!006481543!098060218!175406842!N!UNITED DEFENSE, L P !4800 EAST RIVER ROAD !MINNEAPOLIS !MN!55421!00100!013!46!ABERDEEN !BROWN !S DAKOTA !+000014867447!N!N!000000000000!1440!LAUNCHERS, GUIDED MISSILE !A2 !MISSILE AND SPACE SYSTEMS !180 !DDG 51 !336414!E! !3! ! ! ! ! !999

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 $79.5 million.

What is the period of performance?

Start: 2004-03-08. End: 2010-10-31.

What is the track record of United Defense, L.P. (now part of BAE Systems) with similar missile launcher contracts?

United Defense, L.P., the original awardee, has a history of producing complex defense systems. Following its acquisition by BAE Systems, the company's capabilities in missile systems and naval platforms have been integrated into BAE Systems' broader portfolio. BAE Systems is a major global defense contractor with extensive experience in developing and manufacturing a wide range of military hardware, including missile systems, armored vehicles, and naval components. While specific contract details for prior missile launcher programs are not provided in this dataset, BAE Systems' established presence and expertise in the defense sector suggest a strong capability to execute this contract. Further investigation into their specific performance on prior, comparable contracts would be necessary for a comprehensive assessment.

How does the contract value compare to other procurements for guided missile launchers?

Direct comparison of this contract's value ($794.8 million) to other guided missile launcher procurements is challenging without access to a broader dataset of comparable contracts. Factors such as the specific type of launcher, technological sophistication, quantity, and the prime contractor's cost structure significantly influence pricing. Given that this was a sole-source award, it is difficult to benchmark against competitive bids. However, the substantial value suggests a significant procurement, likely for a critical naval capability. To provide a robust comparison, one would need to identify contracts for similar systems (e.g., vertical launching systems for destroyers) awarded around the same period, ideally through competitive processes, to establish a market price range.

What are the primary risks associated with this contract, given its sole-source nature and long duration?

The primary risks associated with this contract stem from its sole-source award and extended performance period (award in 2004, final completion in 2010). The lack of competition is a significant risk, as it can lead to inflated prices and reduced contractor incentive to innovate or control costs. Taxpayers may have paid a premium compared to a competitive scenario. The long duration (over 6 years from award to final completion) increases the risk of technological obsolescence, as missile and defense technologies evolve rapidly. Furthermore, changes in geopolitical landscapes or defense strategies could alter the requirements or necessity of the procured systems during the contract's lifecycle, potentially leading to costly modifications or reduced utility. Contractor performance risk also exists, although mitigated by the prime contractor's experience.

How effective is the Department of Defense in ensuring value for money on sole-source contracts like this one?

Ensuring value for money on sole-source contracts is inherently more challenging for the Department of Defense (DoD) than on competed contracts. Without competitive pressure, the DoD relies heavily on robust negotiation, cost analysis, and oversight. For this specific contract, the firm fixed-price (FFP) structure provides some cost control by shifting risk to the contractor. However, the initial price negotiation is critical. The DoD employs various mechanisms, including should-cost reviews and should-cost/will-cost management, to scrutinize contractor proposals. The Defense Contract Audit Agency (DCAA) and Defense Contract Management Agency (DCMA) play roles in auditing costs and monitoring performance. Nevertheless, the absence of competing offers means the DoD must have strong internal expertise to accurately assess fair and reasonable pricing, making effective oversight paramount.

What is the historical spending trend for Guided Missile and Space Systems by the Naval Sea Systems Command?

Analyzing the historical spending trend for Guided Missile and Space Systems by the Naval Sea Systems Command (NAVSEA) requires access to historical contract data beyond this single award. This contract, awarded in 2004 for approximately $795 million, represents a significant investment in a specific capability. NAVSEA, as a major component of the Navy, consistently procures advanced weapon systems, including missile launchers, to maintain fleet readiness and technological superiority. Spending in this category is typically driven by shipbuilding programs, modernization efforts, and strategic defense requirements. Fluctuations in spending would likely correlate with major naval platform development cycles (like the DDG 51 program) and evolving threats. A comprehensive trend analysis would involve aggregating spending data across multiple fiscal years and contract types within this specific product service code or NAICS code.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 4800 EAST RIVER ROAD, MINNEAPOLIS, MN, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline