Navy's $31.5M contract for MK45 gun system overhaul awarded to BAE Systems, highlighting engineering services

Contract Overview

Contract Amount: $31,542,451 ($31.5M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2008-09-29

End Date: 2011-06-30

Contract Duration: 1,004 days

Daily Burn Rate: $31.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: OVERHAUL OF MK45 5"/54 ALL MODS

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40214

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $31.5 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: OVERHAUL OF MK45 5"/54 ALL MODS Key points: 1. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. Focus on engineering services for a critical naval weapon system. 3. Duration of the contract suggests a significant scope of work. 4. Firm Fixed Price contract type aims to control costs for the government. 5. No small business set-aside indicates potential for large prime contractor involvement.

Value Assessment

Rating: fair

The contract value of $31.5 million for engineering services related to the MK45 5"/54 gun system overhaul appears to be within a reasonable range for specialized defense engineering. However, without direct comparable contracts for similar overhauls or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm fixed-price nature provides cost certainty, but the lack of competition could have led to a higher price than a competed contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary technical expertise, proprietary knowledge, or unique capabilities required for the specific service. The lack of competition means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down costs. The government's ability to negotiate the best possible price was limited.

Public Impact

The primary beneficiaries are the U.S. Navy's fleet, ensuring the operational readiness of the MK45 gun systems. Services delivered include the overhaul and modernization of critical naval armament components. The contract's performance is likely centered around naval bases and shipyards where maintenance and repair activities occur. The contract supports specialized engineering and technical roles within BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive benchmarking and potential cost savings.
Lack of transparency in the sole-source justification could obscure potential alternatives.
Long contract duration without clear performance metrics could pose execution risks.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
BAE Systems is a known entity in defense contracting, suggesting established capabilities.
Focus on a critical weapon system ensures continued naval operational effectiveness.

Sector Analysis

The defense sector, particularly naval armament systems, requires highly specialized engineering and maintenance. The MK45 5"/54 gun system is a standard component on many Navy vessels, making its upkeep crucial for fleet readiness. Spending in this area is driven by the need for modernization, sustainment, and upgrades to ensure technological superiority and operational effectiveness. Comparable spending benchmarks would typically involve other major defense platform sustainment contracts.

Small Business Impact

The contract was not set aside for small businesses, and the prime contractor is BAE Systems Land & Armaments L.P., a large defense corporation. This suggests that subcontracting opportunities for small businesses may exist, but the primary awardee is a major player. The extent of small business participation would depend on BAE Systems' subcontracting plan and the availability of specialized small businesses capable of supporting this complex overhaul.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be defined by the contract terms, including performance standards and delivery schedules. Transparency is often limited in sole-source procurements, but contract awards are generally reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Gun Systems Modernization
Defense Engineering Services
Weapon System Maintenance and Overhaul
Department of the Navy Procurement

Risk Flags

Sole-source award
Potential for cost overruns due to lack of competition
Long contract duration requires careful monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.5 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. OVERHAUL OF MK45 5"/54 ALL MODS

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS LAND & ARMAMENTS L.P..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $31.5 million.

What is the period of performance?

Start: 2008-09-29. End: 2011-06-30.

What is BAE Systems Land & Armaments L.P.'s track record with the Department of the Navy for similar weapon system overhauls?

BAE Systems Land & Armaments L.P. has a significant history of contracting with the Department of the Navy, particularly in areas related to naval guns and combat systems. They are a primary contractor for various naval platforms and weapon systems, including upgrades and sustainment for the MK45 gun mount. Their experience typically includes design, engineering, manufacturing, and lifecycle support for these critical defense assets. Analyzing past performance on similar sole-source or competed contracts for the MK45 or comparable systems would provide insight into their ability to deliver on time, within budget, and to required specifications. This specific contract's value and duration, while substantial, are consistent with the scope of major overhauls for complex military hardware.

How does the $31.5 million contract value compare to other overhauls of the MK45 5"/54 gun system?

Direct comparison of the $31.5 million contract value for this specific overhaul of the MK45 5"/54 gun system is challenging without access to detailed historical contract data for identical services. However, the value appears substantial, reflecting the complexity and scope of overhauling a major naval weapon system. Factors influencing this cost include the extent of modernization required, the number of units to be overhauled, the specific engineering challenges, and the firm fixed-price nature of the contract, which shifts risk to the contractor. Without competitive bidding, it's difficult to ascertain if this represents optimal value. Broader benchmarks for major defense equipment overhauls suggest that costs can range significantly based on the system's age, technological obsolescence, and the desired upgrade path.

What are the primary risks associated with a sole-source award for this type of defense engineering service?

The primary risk associated with a sole-source award for defense engineering services like the MK45 gun system overhaul is the potential for inflated pricing due to the lack of competitive pressure. Without multiple bidders vying for the contract, the government may not achieve the most cost-effective outcome. Another risk is reduced innovation, as the sole provider may have less incentive to develop novel or more efficient solutions. Furthermore, sole-source awards can sometimes indicate a lack of readily available alternative providers, potentially creating long-term dependency and limiting future sourcing flexibility. Ensuring robust oversight and negotiation is critical to mitigate these risks.

What is the expected impact of this contract on the operational readiness of the Navy's fleet?

This contract is expected to have a positive impact on the operational readiness of the Navy's fleet by ensuring the continued functionality and modernization of the MK45 5"/54 gun systems. These systems are crucial for surface combatants, providing direct fire support and self-defense capabilities. Overhauling and upgrading these systems helps to maintain their reliability, address obsolescence, and potentially enhance their performance. By investing in the sustainment of this key weapon platform, the Navy aims to prolong its service life and ensure it remains a capable asset in current and future operational environments, thereby directly contributing to fleet readiness.

How has federal spending on engineering services for naval weapon systems evolved over the past five years?

Federal spending on engineering services for naval weapon systems has generally remained robust, driven by the ongoing need to maintain, modernize, and upgrade aging fleets and complex weapon platforms. While specific figures fluctuate annually based on budget allocations, strategic priorities, and the lifecycle of major defense programs, the Department of the Navy consistently invests billions in sustainment and upgrade contracts. This includes significant outlays for engineering, technical support, and modernization efforts for systems like naval guns, missile systems, and combat management systems. Trends often show an increasing emphasis on incorporating new technologies, cybersecurity, and ensuring interoperability across different platforms, which necessitates substantial engineering service investments.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: WEAPONS

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 (UEI: 217304393)

Address: 163 ROCHESTER DR STE 1, LOUISVILLE, KY, 03

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $31,542,452

Exercised Options: $31,542,452

Current Obligation: $31,542,451

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002407G5438

IDV Type: IDC

Timeline