DoD awards $171.5M for missile parts, with BAE Systems as sole contractor

Contract Overview

Contract Amount: $171,525,701 ($171.5M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2010-06-16

End Date: 2015-03-31

Contract Duration: 1,749 days

Daily Burn Rate: $98.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK-14 MOD 2 CANISTERS W/NEW PHS&T

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55421

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $171.5 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: MK-14 MOD 2 CANISTERS W/NEW PHS&T Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery. 2. Long contract duration of nearly five years suggests a stable, long-term need. 3. The contract is for specialized parts, indicating a niche manufacturing requirement. 4. No small business set-aside was included, potentially limiting broader participation. 5. The award value is substantial, requiring careful oversight of performance and cost.

Value Assessment

Rating: questionable

Benchmarking the value for this specific contract is challenging due to its sole-source nature and specialized components. Without competitive bids, it's difficult to ascertain if the $171.5 million represents optimal value for money. The fixed-price contract type offers some cost certainty, but the absence of competition means the government relies heavily on the contractor's pricing integrity. Further analysis would require comparing the unit costs of similar components or historical pricing for this specific item, which is not readily available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, BAE Systems Land & Armaments L.P., was solicited. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition means there was no opportunity for other companies to bid, potentially leading to higher prices than if the contract had been competed.

Taxpayer Impact: The sole-source award limits the government's ability to leverage competition to secure the best possible pricing for taxpayers. This necessitates a higher degree of scrutiny on the contractor's proposed costs and the justification for the sole-source procurement.

Public Impact

The Department of the Navy benefits from the acquisition of critical missile components. This contract supports the manufacturing of specialized parts for guided missiles. The geographic impact is primarily centered around BAE Systems' facilities in Minnesota. The contract supports jobs within the defense manufacturing sector, specifically in specialized parts production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing opportunities.
Long contract duration may obscure potential cost efficiencies over time.
Lack of small business participation noted.

Positive Signals

Firm fixed-price contract provides cost certainty.
BAE Systems is an established defense contractor with relevant expertise.
Contract addresses a specific, likely critical, defense need.

Sector Analysis

This contract falls within the Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing sector. This is a specialized segment of the broader aerospace and defense industry, characterized by high technical requirements and often long production cycles. The market is typically dominated by a few large, established defense contractors. Spending in this sector is driven by defense procurement needs and technological advancements in missile systems.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This means that the primary contract was awarded directly to a large business, and opportunities for small businesses to participate in fulfilling this specific requirement may be limited unless BAE Systems voluntarily engages them as subcontractors. The absence of a set-aside suggests that the procurement was not specifically aimed at fostering small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a firm fixed-price contract, the primary oversight focus would be on ensuring delivery of the specified parts according to contract terms and quality standards. Transparency is generally maintained through contract databases, but detailed performance metrics and cost breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Guided Missile Parts Manufacturing
Defense Ammunition and Ordnance Manufacturing
Aerospace Parts Manufacturing
Naval Weapons Systems Procurement

Risk Flags

Sole Source Justification
Lack of Competition
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $171.5 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. MK-14 MOD 2 CANISTERS W/NEW PHS&T

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 Navy).

What is the total obligated amount?

The obligated amount is $171.5 million.

What is the period of performance?

Start: 2010-06-16. End: 2015-03-31.

What is the specific nature of the MK-14 MOD 2 CANISTERS and their function?

The MK-14 MOD 2 CANISTERS, along with their associated PHS&T (Packaging, Handling, Storage, and Transportation) components, are specialized parts likely used in conjunction with missile systems. While the exact function is not detailed in the provided data, 'CANISTERS' often refer to containers or housings for ordnance, propellants, or other critical missile sub-components. The 'MOD 2' designation suggests a second iteration or modification of a previous design. Their role is crucial for the safe storage, handling, and deployment of missile-related materials, ensuring operational readiness and safety within the Department of the Navy's arsenal.

Can the value of this contract be benchmarked against similar procurements?

Benchmarking the value of this $171.5 million contract is challenging due to its sole-source nature and the specificity of the 'MK-14 MOD 2 CANISTERS W/NEW PHS&T'. Publicly available data often lacks the granular detail on specialized defense components to find direct comparisons. Without competitive bids, establishing a fair market price is difficult. While the contract is firm fixed-price, indicating a set cost, the absence of competition means the government did not benefit from price discovery through multiple offers. Therefore, a direct, reliable benchmark against similar contracts is not feasible with the given information.

What are the primary risks associated with a sole-source contract of this magnitude?

The primary risks associated with a sole-source contract of this magnitude ($171.5 million) include potential overpricing due to the lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a potential over-reliance on a single supplier. Without competitive pressure, the government may pay more than necessary. Furthermore, if BAE Systems faces production issues or financial instability, it could significantly disrupt the supply chain for these critical missile parts. The long duration (nearly five years) exacerbates these risks by extending the period of non-competitive engagement.

How does the contract's duration impact its overall value and risk profile?

The contract's duration of approximately 1749 days (nearly five years) significantly impacts its value and risk profile. On the one hand, a long duration can provide stability and predictability for both the government and the contractor, ensuring a consistent supply of critical components and allowing the contractor to plan production efficiently. This can sometimes lead to economies of scale. However, a long duration also extends the period of sole-source reliance, increasing the risk of paying above-market prices over time and reducing the government's flexibility to adapt to changing technological needs or market conditions. It also locks in the current pricing structure for an extended period.

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

BAE Systems Land & Armaments L.P. is a major defense contractor with a substantial and long-standing track record of supplying various systems and components to the Department of Defense. They are known for producing a wide range of military hardware, including armored vehicles, artillery systems, and munitions. Their history with the DoD includes numerous large contracts across different branches, indicating significant experience in meeting defense requirements. While specific performance details for every contract are not always public, their continued role as a prime contractor suggests a generally reliable performance history and established capabilities in defense manufacturing.

Are there any historical spending patterns for these specific parts or similar items?

Historical spending patterns for 'MK-14 MOD 2 CANISTERS W/NEW PHS&T' are not readily available in the provided data. However, BAE Systems Land & Armaments L.P. has likely received funding for similar or predecessor components over the years, given the nature of defense procurement and product evolution. Analyzing broader spending trends within the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' NAICS code (336419) could provide context. This would involve looking at aggregate DoD spending in this category over time to identify general increases or decreases in demand and pricing, though it wouldn't pinpoint specific historical costs for this exact item.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002410R5349

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 4800 E RIVER RD, MINNEAPOLIS, MN, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $171,841,109

Exercised Options: $171,525,701

Current Obligation: $171,525,701

Contract Characteristics

Consolidated Contract: Yes

Cost or Pricing Data: YES

Timeline