DoD awards $80M for MK 41 VLS Modules to BAE Systems, facing limited competition
Contract Overview
Contract Amount: $79,968,763 ($80.0M)
Contractor: BAE Systems Land & Armaments L.P.
Awarding Agency: Department of Defense
Start Date: 2011-06-03
End Date: 2015-09-30
Contract Duration: 1,580 days
Daily Burn Rate: $50.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: MK 41 VERTICAL LAUNCHING SYSTEM (VLS) MECHANICAL MODULES AND RELATED EQUIPMENT AND SERVICES.
Place of Performance
Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55421
Plain-Language Summary
Department of Defense obligated $80.0 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: MK 41 VERTICAL LAUNCHING SYSTEM (VLS) MECHANICAL MODULES AND RELATED EQUIPMENT AND SERVICES. Key points: 1. Significant award for critical naval defense hardware. 2. Sole-source award to BAE Systems, limiting competitive pricing. 3. High value contract with potential for cost overruns. 4. Focus on defense sector, specifically naval systems. 5. No small business participation noted.
Value Assessment
Rating: fair
The contract value of $79.97M for MK 41 VLS modules and services appears substantial. Benchmarking against similar naval equipment contracts is difficult without more specific cost breakdowns, but the lack of competition suggests potential for higher-than-market pricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, indicating a lack of competitive bidding. This method can lead to higher prices as there is no market pressure to reduce costs, and it limits opportunities for other qualified vendors to participate.
Taxpayer Impact: Taxpayer funds are directed to a single vendor without competitive validation, potentially leading to less efficient use of resources compared to a competed contract.
Public Impact
Ensures continued operational readiness of U.S. Navy vessels equipped with the MK 41 VLS. Supports a key component of naval defense capabilities. Impacts the defense industrial base, specifically naval shipbuilding and maintenance.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition.
- Lack of small business participation.
- Potential for cost creep in long-term contracts.
Positive Signals
- Essential defense system procurement.
- Award to established defense contractor.
Sector Analysis
This contract falls within the defense sector, specifically focusing on ordnance and accessories manufacturing for naval applications. Spending benchmarks for such specialized military hardware are often opaque due to national security considerations, but the value indicates a significant investment in naval modernization.
Small Business Impact
The data indicates no small business participation in this contract. This suggests that the prime contractor, BAE Systems, is likely handling the entire scope of work or subcontracting to other large businesses, bypassing opportunities for small business engagement.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure fair pricing and efficient execution. Regular performance reviews and cost audits would be crucial to mitigate risks associated with limited competition.
Related Government Programs
- Other Ordnance and Accessories Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award limits price competition.
- Lack of transparency in cost justification.
- Potential for cost overruns due to lack of competition.
- No small business involvement.
Tags
other-ordnance-and-accessories-manufactu, department-of-defense, mn, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $80.0 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. MK 41 VERTICAL LAUNCHING SYSTEM (VLS) MECHANICAL MODULES AND RELATED EQUIPMENT AND SERVICES.
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 $80.0 million.
What is the period of performance?
Start: 2011-06-03. End: 2015-09-30.
What is the justification for the sole-source award, and were alternative competitive strategies considered?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one vendor can fulfill the requirement. For the MK 41 VLS, it's possible BAE Systems holds specific patents or has unique integration expertise. However, without a detailed justification, it's difficult to assess if competitive strategies were adequately explored or if this represents a missed opportunity for cost savings.
How does the unit cost of the MK 41 VLS modules compare to industry benchmarks or historical pricing?
Benchmarking the unit cost is challenging without specific cost breakdowns and detailed specifications for the modules. Given the sole-source nature, direct comparison to market rates is difficult. Historical pricing data for similar components, if available and adjusted for inflation and technological advancements, would be the primary method for assessment. A thorough cost analysis by the DoD is essential to validate the pricing.
What is the long-term strategic value and potential obsolescence risk associated with the MK 41 VLS system?
The MK 41 VLS is a cornerstone of modern naval warfare, providing vertical launch capabilities for a wide array of missiles. Its strategic value is immense, ensuring fleet readiness and power projection. However, like all complex systems, there's a long-term risk of obsolescence as technology evolves. Continuous upgrades and potential future replacements need to be factored into the DoD's long-term defense planning and investment strategy.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Other Ordnance and Accessories Manufacturing
Product/Service Code: GUIDED MISSLES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002410R5351
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, 55421
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $81,310,725
Exercised Options: $79,968,763
Current Obligation: $79,968,763
Subaward Activity
Number of Subawards: 26
Total Subaward Amount: $478,811,304
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2011-06-03
Current End Date: 2015-09-30
Potential End Date: 2017-02-01 00:00:00
Last Modified: 2015-11-24
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