DoD awards $48.5M for 562,624 lbs of explosives to BAE Systems, raising questions on competition

Contract Overview

Contract Amount: $48,508,945 ($48.5M)

Contractor: BAE Systems Ordnance Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2013-06-06

End Date: 2019-09-30

Contract Duration: 2,307 days

Daily Burn Rate: $21.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION AND SUPPLY OF 562,624 POUNDS OF COMP B EXPLOSIVES.

Place of Performance

Location: KINGSPORT, SULLIVAN County, TENNESSEE, 37660

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $48.5 million to BAE SYSTEMS ORDNANCE SYSTEMS INC. for work described as: PRODUCTION AND SUPPLY OF 562,624 POUNDS OF COMP B EXPLOSIVES. Key points: 1. Significant contract value for a specialized defense product. 2. Sole supplier BAE Systems dominates explosives manufacturing. 3. Potential for price escalation due to lack of competition. 4. Sector: Defense manufacturing, critical for national security.

Value Assessment

Rating: fair

The contract value of $48.5M for explosives appears substantial. Without competitive bids, it's difficult to assess if this price is optimal compared to potential market rates for similar quantities and types of explosives.

Cost Per Unit: $86.22 per pound

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning no other vendors were considered. This significantly limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for these essential explosives.

Public Impact

Ensures supply of critical explosives for military operations. Potential for higher costs impacts overall defense budget allocation. Reliance on a single supplier could pose supply chain risks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Long contract duration

Positive Signals

Ensures critical supply
Experienced contractor

Sector Analysis

This contract falls within the defense manufacturing sector, specifically explosives. Spending in this area is driven by national security needs, and often involves specialized, high-cost production with limited market participants.

Small Business Impact

The data indicates no small business participation in this contract. The nature of explosives manufacturing often requires specialized facilities and certifications, which may be barriers for smaller companies.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure fair pricing and prevent potential overspending. Robust oversight is needed to justify the lack of competition.

Related Government Programs

Explosives Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Supply chain dependency
Long contract duration without re-competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.5 million to BAE SYSTEMS ORDNANCE SYSTEMS INC.. PRODUCTION AND SUPPLY OF 562,624 POUNDS OF COMP B EXPLOSIVES.

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 $48.5 million.

What is the period of performance?

Start: 2013-06-06. End: 2019-09-30.

What is the justification for awarding this contract as sole-source, given the critical nature of explosives?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. For explosives, this could be due to unique manufacturing capabilities, proprietary technology, or specific security clearances. However, the government should still conduct market research to confirm the absence of viable alternatives and negotiate the best possible price.

How does the lack of competition impact the long-term cost-effectiveness of this explosives procurement?

A lack of competition inherently removes the downward pressure on pricing that multiple bidders would create. This can lead to higher unit costs over the contract's duration. Without competitive benchmarking, it's difficult to ascertain if the government is receiving fair market value, potentially leading to increased overall expenditure for the Department of Defense.

What are the potential risks associated with relying on a single supplier for such a critical defense material?

Sole-source reliance creates significant supply chain vulnerability. Disruptions at the supplier's facility, geopolitical events, or unforeseen production issues could severely impact the military's ability to acquire essential explosives. This dependency also reduces the government's leverage in price negotiations and contract modifications.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

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: $54,264,588

Exercised Options: $48,508,945

Current Obligation: $48,508,945

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W52P1J12D0037

IDV Type: IDC

Timeline