Naval Sea Systems Command awarded $300M for 5.54mm gun mounts, with BAE Systems as the prime contractor

Contract Overview

Contract Amount: $299,939,079 ($299.9M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 1999-02-17

End Date: 2011-07-12

Contract Duration: 4,528 days

Daily Burn Rate: $66.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 199908!1700!1837!BZ005!NAVAL SEA SYSTEMS COMMAND !N0002499C5206 !A!*!* !19990217!20030602!006481543!824825459!175406842!N!44114!UNITED DEFENSE INDUSTRIES, INC!4800 E RIVER RD !MINNEAPOLIS !MN!55421!43000!053!27!MINNEAPOLIS !HENNEPIN !MINNESOTA !0001!+000000540000!N!N!000000000000!1020!GUNS, OVER 125 MM THROUGH 150 MM !A5 !WEAPONS !2EBJ!MK45 MOD-O 5.54 GUN MOUNT !3489!1!*!*!*!B!A!*!D !N!J!1!001!N!1A!A!Y!F!* !* !N!C!*!Z!Z!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55421

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $299.9 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: 199908!1700!1837!BZ005!NAVAL SEA SYSTEMS COMMAND !N0002499C5206 !A!*!* !19990217!20030602!006481543!824825459!175406842!N!44114!UNITED DEFENSE INDUSTRIES, INC!4800 E RIVER RD !MINNEAPOLIS !MN!55421!43000!053!27!MINNEAPOLIS !HENNEP… Key points: 1. Contract awarded for large caliber gun mounts, indicating significant investment in naval armament. 2. The contract's duration of over 12 years suggests a long-term sustainment or production requirement. 3. Fixed-price contract type implies that cost overruns are primarily the contractor's responsibility. 4. The significant dollar value points to a major defense procurement program. 5. The prime contractor, BAE Systems, is a major player in the defense industry, suggesting established capabilities. 6. The contract was not competed, raising questions about potential cost efficiencies and market engagement.

Value Assessment

Rating: fair

The total contract value of approximately $300 million for MK45 Mod-O 5.54mm gun mounts over a period of more than 12 years appears substantial. Benchmarking this against similar naval gun system procurements is challenging without more specific technical details and market comparisons. However, the lack of competition suggests that a thorough price analysis may not have been conducted, potentially impacting the overall value for money achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or when urgent needs arise. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution is selected.

Taxpayer Impact: A sole-source award means taxpayers may not have benefited from competitive pricing, potentially leading to higher costs than if multiple bids had been solicited.

Public Impact

The primary beneficiaries are the U.S. Navy, receiving advanced gun mount systems for naval platforms. The contract supports the production and potential sustainment of critical weapon systems for naval operations. The geographic impact is primarily centered around the contractor's facilities in Minneapolis, Minnesota, and potentially other subcontractors. This contract likely supports a specialized workforce within the defense manufacturing sector, particularly in areas related to heavy ordnance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to higher prices than a competed contract.
Long contract duration could introduce risks related to technological obsolescence or changing defense needs.
Sole-source awards can reduce transparency in pricing and cost justification.

Positive Signals

Award to a major defense contractor like BAE Systems suggests a high likelihood of technical capability and program execution.
The fixed-price nature of the contract shifts some financial risk to the contractor.
The substantial funding indicates a commitment to a critical naval capability.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on the procurement of naval weaponry. The market for large caliber naval gun systems is typically dominated by a few large defense contractors due to the specialized nature of the technology, high development costs, and stringent qualification requirements. Spending in this area is driven by naval modernization programs and the need to maintain a robust defense capability.

Small Business Impact

Information regarding small business participation, including set-asides or subcontracting plans, is not explicitly detailed in the provided data. Given the nature of large-scale defense procurement for specialized weapon systems, prime contractors often have established supply chains that may or may not prioritize small business engagement. Further investigation would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver the specified goods within the agreed-upon price. Transparency may be limited due to the sole-source nature of the award.

Related Government Programs

Naval Gun Systems Procurement
Ordnance Manufacturing
Defense Weapon Systems
Naval Surface Warfare Programs

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $299.9 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. 199908!1700!1837!BZ005!NAVAL SEA SYSTEMS COMMAND !N0002499C5206 !A!*!* !19990217!20030602!006481543!824825459!175406842!N!44114!UNITED DEFENSE INDUSTRIES, INC!4800 E RIVER RD !MINNEAPOLIS !MN!55421!43000!053!27!MINNEAPOLIS !HENNEPIN !MINNESOTA !0001!+000000540000!N!N!000000000000!1020!GUNS, OVER 125 MM THROUGH 150 MM !A5 !WEAPONS !2EBJ!MK45 MOD-O 5.54 GUN MOUNT !3489!1!*!*!*!B!A!*!D !N!J!1!0

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 $299.9 million.

What is the period of performance?

Start: 1999-02-17. End: 2011-07-12.

What is the specific technical capability and intended operational role of the MK45 Mod-O 5.54mm gun mount?

The MK45 Mod-O 5.54mm gun mount is a naval artillery system designed for surface combatants. Its primary role is to provide direct fire support against shore targets, engage surface threats, and potentially perform anti-air defense functions. The '5.54mm' designation likely refers to the caliber of the gun, indicating a large-bore cannon. The 'Mod-O' suggests it is an early or baseline version of the MK45 system. These systems are crucial for naval power projection and fleet defense, offering significant firepower from a shipboard platform. The specific performance characteristics, such as range, rate of fire, and projectile types, would define its tactical utility in various naval engagements and operational scenarios.

How does the awarded price of approximately $300 million compare to similar naval gun system procurements, considering the contract duration?

Comparing the $300 million award for the MK45 Mod-O 5.54mm gun mount over a 12+ year period requires careful consideration of several factors. Naval gun systems vary significantly in complexity, capability, and quantity. A direct price-per-unit comparison is difficult without knowing the number of units procured and their specific configurations. However, large naval weapon systems often involve substantial R&D, complex integration, and long production runs, making multi-million dollar contracts common. The extended duration suggests a mix of production, potential upgrades, and sustainment. Without access to detailed cost breakdowns or data on comparable sole-source awards for similar systems, it's challenging to definitively benchmark the value. However, the lack of competition inherently limits the ability to ascertain if the price reflects optimal market value.

What are the primary risks associated with a sole-source award for a major defense system like this gun mount?

The primary risks associated with a sole-source award for a major defense system include potential overpricing due to the absence of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in cost justification. Taxpayers may end up paying more than they would in a competitive environment. Furthermore, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single supplier, which can create long-term dependencies and vulnerabilities. There's also a risk that the government might not be getting the best available technology or solution if alternatives were not explored.

What is the track record of BAE Systems Land & Armaments L.P. in delivering large naval weapon systems?

BAE Systems Land & Armaments L.P. (and its predecessor companies) has a long and established track record in the defense industry, including significant experience with naval weapon systems. They are known for producing a wide range of armaments, including artillery, missile launchers, and fire control systems for naval platforms. The company has been involved in numerous large-scale defense contracts with the U.S. Department of Defense and allied nations. Their portfolio often includes complex systems requiring advanced engineering, manufacturing, and integration capabilities. While specific performance details for every contract are not publicly available, BAE Systems is generally recognized as a major, capable supplier in the defense sector, often participating in critical shipbuilding and armament programs.

How has historical spending on naval gun systems evolved, and does this contract align with those trends?

Historical spending on naval gun systems has generally followed trends in naval modernization and geopolitical security needs. In periods of heightened naval expansion or perceived threats, spending on offensive and defensive weapon systems, including large caliber guns, tends to increase. Conversely, during periods of defense budget contraction or shifts towards different warfare domains (e.g., cyber, unmanned systems), spending might stabilize or decrease. The procurement of systems like the MK45 gun mount reflects a continued investment in traditional naval firepower, suggesting that these systems remain relevant for current naval strategies. This contract, valued at approximately $300 million, aligns with the significant capital investments typically required for major naval armament programs, indicating a sustained focus on maintaining and upgrading the Navy's gunnery capabilities.

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 E RIVER RD, 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