DoD's $32.5M M1MP Propellant Contract with BAE Systems: Full and Open Competition

Contract Overview

Contract Amount: $32,528,639 ($32.5M)

Contractor: BAE Systems Ordnance Systems Inc

Awarding Agency: Department of Defense

Start Date: 2012-03-28

End Date: 2019-07-07

Contract Duration: 2,657 days

Daily Burn Rate: $12.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION OF M1MP PROPELLANT

Place of Performance

Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $32.5 million to BAE SYSTEMS ORDNANCE SYSTEMS INC for work described as: PRODUCTION OF M1MP PROPELLANT Key points: 1. The contract awarded to BAE Systems Ordnance Systems Inc. for M1MP propellant represents a significant investment in defense manufacturing. 2. Competition was conducted under a full and open basis, suggesting a robust market for this specialized product. 3. The firm-fixed-price contract structure aims to control costs and transfer risk to the contractor. 4. The sector is Ammunition (except Small Arms) Manufacturing, a critical component of national defense.

Value Assessment

Rating: good

The contract's value of $32.5M over its period of performance appears reasonable for specialized propellant production. Benchmarking against similar large-scale ammunition component contracts would provide further context on pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple capable vendors had the opportunity to bid. This competitive process is expected to drive price discovery and ensure fair market value for the government.

Taxpayer Impact: The competitive award process likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition scenario.

Public Impact

Ensures supply of critical propellant for military operations. Supports a key defense manufacturing capability within the US. The contract's duration and value highlight the ongoing need for this specific munition component.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation in long-term contracts.
Dependence on a single supplier for a critical component.
Geopolitical factors impacting raw material availability and cost.

Positive Signals

Awarded through full and open competition.
Firm-fixed-price contract type.
Long-term contract provides supply chain stability.

Sector Analysis

The Ammunition (except Small Arms) Manufacturing sector is vital for national security, requiring specialized facilities and expertise. Spending in this area is often driven by strategic defense needs and readiness requirements.

Small Business Impact

This contract was awarded to a large business (BAE Systems). There is no specific indication of small business participation or subcontracting goals within the provided data, suggesting limited direct impact on small businesses for this prime contract.

Oversight & Accountability

The Department of the Army, under the Department of Defense, managed this contract. Oversight would typically involve monitoring performance, quality control, and adherence to contract terms to ensure taxpayer funds are used effectively.

Related Government Programs

Ammunition (except Small Arms) Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Long-term contract duration.
Sole prime contractor identified.
Specialized manufacturing requirements.
Potential for raw material price fluctuations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.5 million to BAE SYSTEMS ORDNANCE SYSTEMS INC. PRODUCTION OF M1MP PROPELLANT

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS ORDNANCE SYSTEMS INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $32.5 million.

What is the period of performance?

Start: 2012-03-28. End: 2019-07-07.

What is the specific M1MP propellant used for, and what is its strategic importance?

The M1MP propellant is a key component in certain types of ammunition, likely for artillery or large-caliber weapon systems. Its strategic importance lies in ensuring the readiness and operational capability of these critical defense assets. Reliable access to this propellant is essential for maintaining military effectiveness and responding to national security threats.

What are the primary risks associated with the long-term production of specialized propellants like M1MP?

Primary risks include potential price volatility of raw materials, environmental and safety regulations impacting production, and the specialized nature of the manufacturing process which can limit the number of qualified suppliers. Additionally, shifts in military requirements or the development of alternative technologies could reduce future demand, posing a risk to long-term investment.

How effectively does the firm-fixed-price contract structure mitigate cost overruns for this type of defense procurement?

The firm-fixed-price (FFP) structure is designed to provide the government with cost certainty by placing the responsibility for cost control on the contractor. For M1MP propellant, an FFP contract is effective in mitigating cost overruns as long as the initial price is well-negotiated and the scope of work is clearly defined. However, unforeseen production challenges or material cost spikes could still strain the contractor.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: STATE RT 114, RADFORD, VA, 24141

Business Categories: Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $32,528,639

Exercised Options: $32,528,639

Current Obligation: $32,528,639

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J11D0013

IDV Type: IDC

Timeline