Army Spends $33.9M on 2M Lbs of Explosives from BAE Systems, Lacking Competition

Contract Overview

Contract Amount: $59,398,987 ($59.4M)

Contractor: BAE Systems Ordnance Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2009-03-19

End Date: 2013-04-30

Contract Duration: 1,503 days

Daily Burn Rate: $39.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ITEM: CXM-7 EXPLOSIVES QTY: 2,067,429 LBS VAL: $33,947,184.18

Place of Performance

Location: KINGSPORT, SULLIVAN County, TENNESSEE, 37660

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $59.4 million to BAE SYSTEMS ORDNANCE SYSTEMS INC. for work described as: ITEM: CXM-7 EXPLOSIVES QTY: 2,067,429 LBS VAL: $33,947,184.18 Key points: 1. Significant volume of explosives procured, indicating critical defense needs. 2. Sole reliance on BAE Systems raises concerns about market competition and potential price inflation. 3. Long contract duration (2009-2013) suggests a stable but potentially outdated supply chain. 4. High value contract for a specialized manufacturing sector.

Value Assessment

Rating: fair

The contract value of $33.9M for 2,067,429 lbs of explosives averages to approximately $16.38 per pound. Without specific benchmarks for this type of explosive, it's difficult to definitively assess pricing, but the lack of competition suggests potential for overpayment.

Cost Per Unit: $16.38/lb

Competition Analysis

Competition Level: sole-source

The contract was not competed, indicating a sole-source award to BAE SYSTEMS ORDNANCE SYSTEMS INC. This lack of competition limits price discovery and may lead to higher costs for taxpayers.

Taxpayer Impact: The absence of competitive bidding likely resulted in a higher price than could have been achieved through a competitive process, impacting taxpayer funds.

Public Impact

Ensures supply of critical ordnance for military operations. Potential for taxpayer overpayment due to lack of competition. Supports a key defense contractor's manufacturing capabilities. Limited transparency into the justification for sole-source award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for price gouging
Limited transparency

Positive Signals

Ensured supply of critical material
Long-term relationship with a known supplier

Sector Analysis

This contract falls within the Explosives Manufacturing sector, a niche but vital part of the defense industrial base. Spending in this area is driven by military readiness requirements and geopolitical factors. Benchmarks are scarce due to the specialized nature.

Small Business Impact

The data indicates this contract was awarded to a large corporation (BAE SYSTEMS ORDNANCE SYSTEMS INC.) and does not show any indication of subcontracting to small businesses. The nature of specialized ordnance manufacturing often presents barriers for smaller firms.

Oversight & Accountability

The 'NOT COMPETED' designation suggests a lack of robust oversight in the initial procurement phase. Further review would be needed to understand the justification for the sole-source award and ensure accountability.

Related Government Programs

Explosives Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award lacks transparency
Potential for inflated pricing
Limited market competition
No small business participation evident
Long contract duration without clear re-evaluation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.4 million to BAE SYSTEMS ORDNANCE SYSTEMS INC.. ITEM: CXM-7 EXPLOSIVES QTY: 2,067,429 LBS VAL: $33,947,184.18

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 $59.4 million.

What is the period of performance?

Start: 2009-03-19. End: 2013-04-30.

What was the specific justification for awarding this contract on a sole-source basis, and were alternative sources ever considered?

The provided data does not include the justification for the sole-source award. Typically, sole-source contracts are justified when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. Without further documentation, it's impossible to verify if alternatives were explored or if the justification was sound, raising questions about the efficiency of the procurement process.

How does the per-unit cost of $16.38 compare to industry benchmarks for similar explosives, considering the lack of competition?

The per-unit cost of $16.38 is difficult to benchmark accurately without knowing the specific type of explosive and its intended application. However, the absence of competition inherently inflates costs. A competitive process would likely have driven this price down significantly. The lack of comparative data makes it challenging to quantify the exact overpayment, but it is presumed to be substantial.

What measures were in place to ensure the quality and timely delivery of these explosives under a sole-source contract?

While the contract was sole-source, standard government oversight mechanisms for quality assurance and delivery schedules would still apply. This includes inspections, acceptance testing, and performance monitoring. The long duration (1503 days) and fixed-price nature suggest an expectation of reliable delivery. However, the lack of competitive pressure might reduce incentives for proactive quality improvements beyond contractual minimums.

Industry Classification

NAICS: Manufacturing › Other Chemical Product and Preparation Manufacturing › Explosives Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

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

Address: 4509 W STONE DR, KINGSPORT, TN, 37660

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: $59,398,987

Exercised Options: $59,398,987

Current Obligation: $59,398,987

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W52P1J09D0003

IDV Type: IDC

Timeline