Navy awards $266.6M contract for MK48 torpedo production to Science Applications International Corporation

Contract Overview

Contract Amount: $266,594,085 ($266.6M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of Defense

Start Date: 2016-09-29

End Date: 2026-09-30

Contract Duration: 3,653 days

Daily Burn Rate: $73.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK48 MOD 7 AB/TC SECTION PRODUCTION PROCUREMENT

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $266.6 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: MK48 MOD 7 AB/TC SECTION PRODUCTION PROCUREMENT Key points: 1. Contract value represents a significant investment in naval defense capabilities. 2. Competition dynamics for this specialized defense procurement are crucial for ensuring fair pricing. 3. Performance risk is moderate given the established nature of the MK48 torpedo system. 4. This contract supports the long-term readiness of the U.S. Navy's submarine fleet. 5. The award falls within the broader category of defense systems manufacturing. 6. The firm fixed-price structure aims to control costs for the government.

Value Assessment

Rating: good

The contract value of $266.6 million over its duration appears reasonable for the procurement of advanced torpedo systems. Benchmarking against similar defense contracts for weapon systems suggests that pricing is competitive, especially considering the specialized nature and technological sophistication of the MK48 torpedo. The firm fixed-price (FFP) contract type is generally favorable for the government in managing cost certainty. However, a detailed cost breakdown and comparison with historical unit costs would provide a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of two bidders suggests a degree of competition, which is generally positive for price discovery and innovation. However, the specific number of bidders can be low for highly specialized defense procurements, potentially limiting the full benefits of competition. Further analysis of the bidding process and the capabilities of the competing firms would clarify the extent of competitive pressure.

Taxpayer Impact: Full and open competition, even with a limited number of bidders, is beneficial for taxpayers as it encourages competitive pricing and potentially leads to better value for money compared to sole-source awards.

Public Impact

The primary beneficiaries are the U.S. Navy submarine fleet, enhancing their anti-submarine warfare (ASW) and anti-surface warfare (ASuW) capabilities. The contract delivers essential components and production for the MK48 Mod 7 torpedo, a critical weapon system. The geographic impact is primarily national, supporting defense industrial base capabilities, with potential for indirect economic benefits in Virginia where the contractor is based. Workforce implications include skilled manufacturing, engineering, and technical jobs within Science Applications International Corporation and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if production complexities are underestimated.
Risk of schedule delays due to supply chain disruptions for specialized components.
Ensuring consistent quality control for a critical weapon system is paramount.
Dependence on a single prime contractor for a vital defense asset.

Positive Signals

Firm fixed-price contract structure provides cost certainty.
Full and open competition, even with limited bidders, fosters some price discipline.
Science Applications International Corporation has a track record in defense contracting.
The MK48 torpedo system is a mature and well-understood platform.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing of advanced weapon systems. The market for torpedoes is highly specialized, dominated by a few key defense contractors. Spending in this area is driven by national security requirements and naval modernization programs. Comparable spending benchmarks would involve other major defense procurement contracts for complex weapon systems, where unit costs can range from hundreds of thousands to millions of dollars per system.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor is it explicitly stated that small businesses will be significantly involved as subcontractors. The prime contractor, Science Applications International Corporation, is a large defense firm. The impact on the small business ecosystem will depend on subcontracting opportunities, which are not detailed in the provided data. Large prime contractors often engage small businesses for specialized components or services, but this is not guaranteed.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods. Transparency is generally limited for defense procurements due to national security considerations. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

MK48 Torpedo Program
Naval Weapons Systems Procurement
Department of Defense Major Defense Acquisition Programs
Submarine Force Modernization
Defense Manufacturing Contracts

Risk Flags

Potential for supply chain disruptions
Risk of schedule delays
Quality control challenges for critical defense systems
Limited competition may impact price optimization

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $266.6 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. MK48 MOD 7 AB/TC SECTION PRODUCTION PROCUREMENT

Who is the contractor on this award?

The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $266.6 million.

What is the period of performance?

Start: 2016-09-29. End: 2026-09-30.

What is the historical spending trend for the MK48 torpedo program under Science Applications International Corporation?

Historical spending data for the MK48 torpedo program under Science Applications International Corporation (SAIC) would reveal the cumulative investment over time. Analyzing past contract awards, including modifications and task orders, would illustrate the program's lifecycle costs and SAIC's role in its sustainment and production. For instance, if previous contracts were also large-scale production runs, it indicates a consistent demand and a stable relationship. Conversely, fluctuating spending could suggest changes in procurement quantities, technological upgrades, or shifts in program priorities. Without specific historical data, it's difficult to pinpoint exact trends, but the current $266.6 million award suggests a significant, ongoing commitment to the program.

How does the per-unit cost of the MK48 torpedo under this contract compare to previous procurements or similar systems?

Determining the per-unit cost requires knowing the total number of torpedoes procured under this $266.6 million contract. If, for example, the contract is for 100 torpedoes, the per-unit cost would be approximately $2.67 million. This figure can then be compared to historical per-unit costs from previous MK48 procurements or to the costs of similar torpedo systems from other nations or manufacturers. Factors like inflation, technological advancements (e.g., upgrades to the Mod 7 variant), and economies of scale achieved through full and open competition influence per-unit pricing. A higher per-unit cost than historical data might indicate increased complexity or inflation, while a lower cost could signal improved efficiency or competitive pressure.

What are the key performance metrics and risk indicators associated with this MK48 torpedo production contract?

Key performance metrics for this contract would likely include on-time delivery of torpedoes, adherence to quality specifications (e.g., reliability, accuracy, safety standards), and meeting production rate targets. Risk indicators could encompass potential supply chain vulnerabilities for critical components, the complexity of integrating new technologies into the torpedo, the contractor's historical performance on similar complex defense manufacturing programs, and the potential for cost growth despite the firm fixed-price structure (e.g., through change orders or unforeseen technical challenges). The Department of the Navy would typically monitor these metrics and risks through regular program reviews, technical assessments, and contractor performance evaluations.

What is the expected impact of this contract on the overall readiness and capability of the U.S. Navy's submarine fleet?

This contract is crucial for maintaining and enhancing the operational readiness of the U.S. Navy's submarine fleet. The MK48 torpedo is a primary offensive weapon system for submarines, used for both anti-submarine warfare (ASW) and anti-surface warfare (ASuW). By ensuring a steady supply of modern MK48 Mod 7 torpedoes, the Navy can equip its submarines with reliable and effective munitions, enabling them to perform critical missions such as intelligence gathering, power projection, and sea control. The timely delivery of these torpedoes directly supports the fleet's ability to counter potential threats and maintain strategic deterrence, thus bolstering overall naval capability.

How does the competition level (2 bidders) for this contract potentially affect pricing and innovation compared to a sole-source or multi-bidder scenario?

Having two bidders for this specialized defense contract represents a moderate level of competition. While better than a sole-source award, it may not exert the same downward price pressure or drive the same level of innovation as a scenario with numerous competitors. With only two bidders, there's a risk that the companies may have limited incentive to drastically undercut each other if they perceive the market as stable or if barriers to entry are high. However, it still provides a basis for price comparison and encourages each bidder to present their best offer. A multi-bidder scenario (e.g., 3-5 bidders) would likely intensify competition further, potentially leading to lower prices and more innovative solutions as companies vie more aggressively for the contract.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002415R6401

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12010 SUNSET HILLS RD, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $360,684,606

Exercised Options: $284,709,716

Current Obligation: $266,594,085

Actual Outlays: $9,045,151

Subaward Activity

Number of Subawards: 96

Total Subaward Amount: $488,191,722

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline