Department of Defense awards $43.8M contract for ammunition manufacturing to BAE Systems

Contract Overview

Contract Amount: $43,813,617 ($43.8M)

Contractor: BAE Systems Ordnance Systems Inc

Awarding Agency: Department of Defense

Start Date: 2014-11-14

End Date: 2024-12-31

Contract Duration: 3,700 days

Daily Burn Rate: $11.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF EC PRODUCTS, AND AA2 CARPET ROLL PROPELLANT

Place of Performance

Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $43.8 million to BAE SYSTEMS ORDNANCE SYSTEMS INC for work described as: PROCUREMENT OF EC PRODUCTS, AND AA2 CARPET ROLL PROPELLANT Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration is substantial, spanning over 10 years, indicating a long-term need. 3. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 4. The specific product code is for Ammunition (except Small Arms) Manufacturing. 5. The awardee, BAE Systems, is a significant defense contractor. 6. The contract is a Delivery Order under a larger contract vehicle. 7. No small business set-aside was utilized for this procurement.

Value Assessment

Rating: good

The contract value of $43.8 million over approximately 10 years suggests a moderate annual spend. Without specific benchmarks for 'PROCUREMENT OF EC PRODUCTS, AND AA2 CARPET ROLL PROPELLANT', it's difficult to definitively assess value for money. However, the firm fixed-price nature of the contract provides cost certainty for the government. The contract is a delivery order, implying it's part of a broader agreement, making direct comparison challenging without understanding the parent contract's terms and competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The number of bidders is not specified, but this method generally promotes price discovery and allows the government to select the best value offer. The open competition suggests a healthy market for these types of ammunition products.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, driving down prices and ensuring the government receives competitive offers.

Public Impact

The primary beneficiary is the Department of the Army, which will receive essential ammunition products. The contract ensures the supply of specific ammunition types critical for military operations. The geographic impact is primarily within the United States, where BAE Systems operates and potentially where the ammunition will be utilized or stored. Workforce implications include employment opportunities at BAE Systems' manufacturing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to complacency or reduced innovation if not actively managed.
Reliance on a single large contractor for critical ammunition components may pose supply chain risks.
Lack of small business participation might limit opportunities for smaller, specialized firms in this sector.

Positive Signals

Firm Fixed Price contract structure provides cost predictability for the government.
Award to an established defense contractor like BAE Systems suggests a level of confidence in their capabilities.
Full and open competition indicates a robust market and potential for competitive pricing.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on ammunition production. The market for defense-related ammunition is characterized by long-term government contracts, high barriers to entry due to specialized technology and security requirements, and a limited number of large, established players. Spending in this area is driven by military readiness requirements and geopolitical factors. Comparable spending benchmarks would typically involve other large-scale ammunition procurements by various military branches.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no small business participation (sb: false). This suggests that the procurement was likely awarded to a large prime contractor, BAE Systems. While this may not directly impact small businesses as subcontractors, it means that opportunities for small business set-asides within this specific procurement were not pursued. The broader impact on the small business ecosystem depends on whether BAE Systems engages small businesses for subcontracting roles, which is not detailed in this award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which holds the contractor responsible for meeting specifications and delivery schedules within the agreed price. Transparency is facilitated by the contract award being made under full and open competition, with details often available through public contract databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Ammunition Procurement
BAE Systems Ordnance Systems Contracts
Defense Manufacturing Contracts
Firm Fixed Price Defense Contracts
Ammunition Supply Chain Management

Risk Flags

Long contract duration
Potential for supply chain disruption
Reliance on a single large contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.8 million to BAE SYSTEMS ORDNANCE SYSTEMS INC. PROCUREMENT OF EC PRODUCTS, AND AA2 CARPET ROLL 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 $43.8 million.

What is the period of performance?

Start: 2014-11-14. End: 2024-12-31.

What is the historical spending pattern for this specific product or service by the Department of Defense?

Analyzing historical spending for 'PROCUREMENT OF EC PRODUCTS, AND AA2 CARPET ROLL PROPELLANT' requires access to detailed procurement databases beyond this single award. However, the current award of $43.8 million over approximately 10 years suggests an average annual spend of around $4.38 million. This figure can be compared to previous contract awards for similar or identical items to identify trends in volume, pricing, and contractor performance. A consistent or increasing spend might indicate sustained demand, while a fluctuating pattern could reflect changes in military requirements, budget allocations, or market competition. Without prior data, it's difficult to establish a definitive historical pattern, but this award represents a significant commitment for the specified period.

How does the awarded price compare to similar ammunition procurements from other defense contractors or agencies?

Benchmarking the awarded price of $43.8 million for 'PROCUREMENT OF EC PRODUCTS, AND AA2 CARPET ROLL PROPELLANT' against similar ammunition procurements is challenging without specific details on the exact type, quantity, and specifications of the ammunition. Ammunition costs vary significantly based on caliber, explosive fill, guidance systems, and production volume. However, given that this is a firm fixed-price contract awarded through full and open competition to BAE Systems, a major defense contractor, the price is likely competitive within the established market for such specialized defense articles. A comprehensive comparison would involve analyzing unit costs for comparable items procured by the Army, Navy, Air Force, or Marine Corps from various suppliers over similar timeframes.

What are the key performance indicators (KPIs) and performance standards outlined in this contract?

The provided data does not detail the specific Key Performance Indicators (KPIs) or performance standards for this contract. However, for ammunition procurement contracts, typical performance standards would likely include adherence to strict quality control measures, meeting precise technical specifications (e.g., dimensions, material composition, explosive yield), on-time delivery schedules, and compliance with safety regulations during manufacturing and transport. The firm fixed-price nature implies that BAE Systems is contractually obligated to meet these standards to avoid penalties or contract termination. The government would likely have inspection and acceptance clauses to verify compliance before payment.

What is the track record of BAE Systems Ordnance Systems Inc. in fulfilling similar defense contracts?

BAE Systems Ordnance Systems Inc. is a significant entity within the defense industrial base, known for producing a wide range of ordnance and munitions. Their track record in fulfilling similar defense contracts is generally extensive, often involving large-scale, long-term agreements with various branches of the U.S. military and allied nations. They are typically involved in the manufacturing of propellants, explosives, and complete munitions. While specific performance metrics for past contracts are not detailed here, their continued success in securing substantial government contracts suggests a history of meeting quality, delivery, and cost requirements, though like any large contractor, they may have faced specific challenges or reviews on individual programs.

What are the potential risks associated with the long duration (over 10 years) of this contract?

The extended duration of this contract, spanning from 2014 to 2024 (approximately 10 years), presents several potential risks. Firstly, there's the risk of technological obsolescence; ammunition technology can evolve, and a long-term contract might lock the government into using older systems if not managed proactively. Secondly, market conditions and raw material costs can fluctuate significantly over a decade, potentially impacting the contractor's profitability or leading to requests for price adjustments if not adequately addressed in the contract's terms. Thirdly, long contracts can sometimes lead to reduced urgency or innovation from the contractor if oversight is not rigorous. Finally, changes in geopolitical landscapes or military strategy could alter the demand for these specific ammunition types, making the long-term commitment less optimal.

How does the 'Ammunition (except Small Arms) Manufacturing' classification impact the contract's scope and oversight?

The Product Service Code (PSC) 'ND' for Ammunition (except Small Arms) Manufacturing signifies that this contract is for the production of ordnance items that are not small arms ammunition (e.g., artillery shells, mortar rounds, bombs, missiles). This classification implies a high degree of regulatory oversight due to the hazardous nature of the materials involved. Manufacturing processes must adhere to stringent safety, environmental, and quality control standards set by agencies like the Department of Defense, OSHA, and the EPA. Oversight would likely involve regular inspections of manufacturing facilities, rigorous testing of produced lots, and strict protocols for transportation and storage to ensure safety and reliability.

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: BAE Systems PLC

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: $43,813,617

Exercised Options: $43,813,617

Current Obligation: $43,813,617

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