DoD Awards BAE Systems $688M for MK90 Grain Production, Ending Feb 2027

Contract Overview

Contract Amount: $687,940,601 ($687.9M)

Contractor: BAE Systems Ordnance Systems Inc

Awarding Agency: Department of Defense

Start Date: 2014-04-30

End Date: 2027-02-19

Contract Duration: 4,678 days

Daily Burn Rate: $147.1K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AWARD FOR PRODUCTION OF MK90 GRAIN

Place of Performance

Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $687.9 million to BAE SYSTEMS ORDNANCE SYSTEMS INC for work described as: AWARD FOR PRODUCTION OF MK90 GRAIN Key points: 1. Significant contract value of $688 million for ammunition manufacturing. 2. BAE Systems is the sole awardee, raising questions about competition. 3. Risk of price escalation due to fixed-price contract and long duration. 4. Spending falls within the 'Ammunition (except Small Arms) Manufacturing' sector.

Value Assessment

Rating: fair

The $688 million award for MK90 Grain production is substantial. Without comparable contract data, assessing its value against similar ammunition production contracts is difficult. The firm fixed-price structure aims to control costs, but the long duration presents potential risks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting multiple bids were considered. However, the data indicates a single awardee (BAE Systems), which warrants further investigation into the competitive landscape and pricing discovery process.

Taxpayer Impact: Taxpayer funds are committed to a large-scale defense procurement. The effectiveness of the competition and contract management will determine the ultimate value for taxpayers.

Public Impact

Ensures continued supply of critical ammunition components for the U.S. Army. Supports defense industrial base and potential job creation within BAE Systems. Long-term contract may lead to predictable production schedules and costs. Potential for cost overruns if market conditions change significantly over the contract period.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (approx. 13 years)
Single awardee despite full and open competition
Firm fixed price with potential for market volatility

Positive Signals

Awarded under full and open competition
Addresses critical defense need
Long-term production commitment

Sector Analysis

This contract falls under the Ammunition (except Small Arms) Manufacturing sector, a critical component of the defense industrial base. Spending benchmarks for this specific niche are difficult to ascertain publicly, but large-scale production contracts are typical for major defense suppliers.

Small Business Impact

The awardee, BAE Systems Ordnance Systems Inc., is a large defense contractor. There is no indication in the provided data that small businesses were significantly involved in this specific award, suggesting limited direct impact on the small business sector.

Oversight & Accountability

Oversight will be crucial given the contract's significant value and long duration. The Department of the Army's contracting and program management teams will need to monitor performance, costs, and adherence to terms to ensure accountability and prevent waste.

Related Government Programs

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

Risk Flags

Potential for cost overruns due to long-term fixed-price contract.
Limited visibility into the true level of competition.
Lack of small business participation.
Contract duration may outpace technological relevance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $687.9 million to BAE SYSTEMS ORDNANCE SYSTEMS INC. AWARD FOR PRODUCTION OF MK90 GRAIN

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 $687.9 million.

What is the period of performance?

Start: 2014-04-30. End: 2027-02-19.

What was the competitive landscape during the bidding process, and why did only one entity, BAE Systems, receive the award despite 'full and open competition'?

While the award states 'full and open competition,' the single awardee suggests that only BAE Systems met the stringent technical, performance, or capacity requirements for producing the MK90 Grain. Further details on the solicitation's evaluation criteria and the number of proposals received would clarify the extent of actual competition and potential barriers to entry for other firms.

What are the specific risks associated with a firm fixed-price contract spanning nearly 13 years for ammunition production?

A firm fixed-price contract for such an extended period carries risks of price escalation if raw material costs or labor rates increase significantly beyond initial projections. Conversely, if costs decrease, the government might be overpaying. The long duration also limits flexibility to incorporate technological advancements or changing military requirements without costly contract modifications.

How does the $688 million award for MK90 Grain production align with the Department of the Army's overall ammunition procurement strategy and budget?

This award represents a substantial, long-term investment in a specific ammunition component. Its alignment with the Army's strategy depends on the strategic importance of the MK90 Grain, its planned deployment rates, and how this expenditure fits within the broader defense budget. Understanding the lifecycle cost and operational necessity of this munition is key to assessing its budgetary effectiveness.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

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: $1,137,940,601

Exercised Options: $687,940,601

Current Obligation: $687,940,601

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W52P1J11D0013

IDV Type: IDC

Timeline