DoD's $46M Munitions Handling Contract Awarded to BAE Systems Shows Fair Competition

Contract Overview

Contract Amount: $45,964,571 ($46.0M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2018-01-01

End Date: 2022-09-30

Contract Duration: 1,733 days

Daily Burn Rate: $26.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MUNITION HANDLING AND MANAGEMENT SERVICE

Place of Performance

Location: EWA BEACH, HONOLULU County, HAWAII, 96706

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $46.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: MUNITION HANDLING AND MANAGEMENT SERVICE Key points: 1. Contract value of $45.96M over nearly five years suggests a significant investment in munitions logistics. 2. Full and open competition indicates a robust bidding process, potentially leading to better pricing. 3. The contract's firm-fixed-price nature shifts cost risk to the contractor, a positive sign for the government. 4. Awarded to BAE Systems, a major defense contractor, this service falls within established industry norms. 5. The 'Other Warehousing and Storage' NAICS code suggests a broad scope of logistical support. 6. The contract duration of 1733 days (approx. 4.75 years) allows for stable service provision.

Value Assessment

Rating: good

The contract's firm-fixed-price structure is generally favorable for the government, as it caps costs. Benchmarking against similar munitions handling contracts is difficult without more specific service details, but the overall value of $45.96M for nearly five years of service appears within a reasonable range for a large-scale defense logistics operation. The absence of extensive modifications or change orders, if applicable, would further support its value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders were likely considered. This level of competition is ideal for ensuring that the government receives competitive pricing and that the most capable contractor is selected. The specific number of bidders is not provided, but the designation implies a broad solicitation.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and encouraging a wider pool of potential service providers.

Public Impact

The Department of the Navy benefits from secure and efficient handling of its munitions. Services include warehousing, management, and potentially transportation of munitions, ensuring operational readiness. The contract's primary geographic impact is in Hawaii, supporting naval operations in the Pacific. This contract supports a specialized workforce skilled in handling hazardous materials and complex logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for contractor lock-in due to specialized nature of munitions handling.
Reliance on a single large contractor could limit future flexibility or innovation.
Geographic concentration in Hawaii may present logistical challenges for rapid response elsewhere.

Positive Signals

Firm-fixed-price contract structure limits cost overruns for the government.
Full and open competition suggests a competitive award process.
Long-term contract provides stability for critical munitions support services.
BAE Systems is a well-established defense contractor with relevant experience.

Sector Analysis

This contract falls within the Defense Logistics and Support Services sector, a critical component of national security. The market for specialized munitions handling is dominated by a few large defense contractors capable of meeting stringent safety and security requirements. Spending in this area is driven by military readiness needs and the lifecycle management of ordnance. Comparable spending benchmarks would typically be found within other large-scale logistics contracts for the Department of Defense.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. This suggests that the primary award went to a large defense contractor, BAE Systems. While large contracts can sometimes include subcontracting opportunities, the absence of explicit set-aside language means direct small business participation may be limited unless BAE Systems voluntarily engages them.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which penalizes contractor cost overruns. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance metrics and oversight activities are not detailed here. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) Operations
Naval Supply Systems Command (NAVSUP) Contracts
Munitions Stockpile Management Programs
Department of Defense Warehousing and Storage Services
Base Operations Support Contracts

Risk Flags

Potential for cost creep if scope is not tightly managed.
Reliance on a single large contractor for critical services.
Geographic concentration poses specific logistical and disaster recovery risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.0 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. MUNITION HANDLING AND MANAGEMENT SERVICE

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $46.0 million.

What is the period of performance?

Start: 2018-01-01. End: 2022-09-30.

What is BAE Systems' track record with similar munitions handling contracts?

BAE Systems is a major defense contractor with extensive experience in logistics, sustainment, and specialized services, including those related to munitions. While specific details on prior munitions handling contracts are not provided in this data snippet, the company's broad portfolio suggests a strong capability. They are known to manage complex supply chains and hazardous material handling for various military branches. A deeper dive into their contract history with the Department of Defense and other agencies would reveal the scale and scope of their past performance in this specific niche, including any performance issues or commendations.

How does the $45.96M contract value compare to similar munitions handling services?

The $45.96M contract value over approximately 4.75 years represents an average annual value of roughly $9.67M. This figure needs to be contextualized by the specific services rendered (e.g., storage, maintenance, transportation, security) and the volume/type of munitions handled. Without detailed service level agreements or scope of work, direct comparison is challenging. However, for a significant operational theater like Hawaii, supporting naval munitions, this annual spend appears consistent with the high costs associated with specialized, secure, and compliant logistics for hazardous materials within the defense sector. Larger, more complex contracts could easily exceed this value.

What are the primary risks associated with this munitions handling contract?

Key risks include safety and security breaches related to hazardous munitions, potential environmental incidents, contractor performance failures impacting operational readiness, and cost overruns if the firm-fixed-price structure is undermined by extensive change orders or unforeseen circumstances. Geopolitical shifts or changes in military requirements could also necessitate contract modifications. Furthermore, reliance on a single contractor for such a critical function introduces supply chain vulnerability. The geographic concentration in Hawaii also presents risks related to natural disasters or localized disruptions.

How effective is the firm-fixed-price (FFP) contract type in managing munitions handling costs?

The firm-fixed-price contract type is generally effective for managing costs in services where the scope of work is well-defined and risks can be reasonably anticipated, such as munitions handling. It shifts the primary cost-control responsibility to the contractor, incentivizing efficiency and predictability. For the government, it provides budget certainty. However, its effectiveness can be diminished if the initial scope is poorly defined, leading to numerous change orders that can increase the overall cost and administrative burden. For munitions, where safety and regulatory compliance are paramount, ensuring the FFP adequately covers all necessary protocols is crucial.

What is the historical spending trend for munitions handling services by the Department of the Navy?

Historical spending data for munitions handling services by the Department of the Navy is not directly available from the provided contract details. However, overall defense spending on logistics, maintenance, and supply chain management for munitions is substantial and generally stable, fluctuating with geopolitical conditions and military readiness levels. The Navy, as a major branch, consistently invests significant resources in ensuring the safe and effective management of its ordnance. Trends would likely show a sustained need for these services, with potential increases during periods of heightened global tension or operational tempo, and adjustments based on modernization programs and inventory management strategies.

What are the implications of awarding this contract under 'Full and Open Competition'?

Awarding under 'Full and Open Competition' signifies that the solicitation was broadly advertised, allowing any responsible source to submit an offer. This process is designed to maximize competition, leading to potentially better pricing, higher quality services, and innovative solutions. It implies that the Navy assessed the market and determined that multiple capable contractors could fulfill the requirement. This approach is generally favored by the government as it promotes fairness, transparency, and the best use of taxpayer funds by leveraging market dynamics to secure the most advantageous contract.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › Other Warehousing and Storage

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0060417R3009

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 520 GAITHER ROAD, ROCKVILLE, MD, 20850

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

Financial Breakdown

Contract Ceiling: $45,964,571

Exercised Options: $45,964,571

Current Obligation: $45,964,571

Actual Outlays: $2,544,038

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $1,948,742

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline