DoD's $16.8M MK45 Overhaul Contract Awarded to BAE Systems Lacks Competition
Contract Overview
Contract Amount: $16,794,139 ($16.8M)
Contractor: BAE Systems Land & Armaments L.P.
Awarding Agency: Department of Defense
Start Date: 2009-09-30
End Date: 2012-12-31
Contract Duration: 1,188 days
Daily Burn Rate: $14.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: OVERHAUL OF MK45
Place of Performance
Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40214
State: Kentucky Government Spending
Plain-Language Summary
Department of Defense obligated $16.8 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: OVERHAUL OF MK45 Key points: 1. The contract for the MK45 overhaul was awarded to BAE Systems Land & Armaments L.P. for $16.8 million. 2. This award was not competed, raising questions about potential price discovery and value for taxpayer money. 3. The engineering services sector is broad, but specialized defense equipment overhauls often involve limited competition. 4. The lack of competition presents a risk of inflated costs and potentially suboptimal technical solutions.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee structure for engineering services, especially without competition, makes direct pricing assessment difficult. Benchmarking against similar specialized defense equipment overhauls is challenging due to proprietary data and unique requirements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award. This limits price discovery mechanisms, as there was no competitive bidding process to drive down costs or explore alternative solutions.
Taxpayer Impact: Without competitive bidding, taxpayers may have paid a premium for these engineering services, as the government did not benefit from market forces to ensure the lowest possible price.
Public Impact
Taxpayers may have overpaid due to the absence of competitive bidding. The Department of Defense relies on specialized contractors for critical equipment maintenance, impacting readiness. Lack of transparency in sole-source awards can erode public trust in government procurement.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Lack of competition
Positive Signals
- Specific contract for overhaul of MK45 system
- Awarded to established defense contractor
Sector Analysis
This contract falls within the Engineering Services sector, specifically supporting defense systems. Spending in this area is critical for maintaining military readiness but can be prone to higher costs when competition is limited.
Small Business Impact
The contract was awarded to BAE Systems Land & Armaments L.P., a large defense contractor. There is no indication that small businesses were involved in this specific sole-source award, limiting their opportunities.
Oversight & Accountability
The Department of Defense's Contract Management Agency oversaw this award. However, the sole-source nature of the contract raises questions about the effectiveness of oversight in ensuring competitive pricing and best value.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition
- Sole-source award
- Cost-plus contract type
- Potential for cost overruns
- Limited price discovery
Tags
engineering-services, department-of-defense, ky, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $16.8 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. OVERHAUL OF MK45
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 (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $16.8 million.
What is the period of performance?
Start: 2009-09-30. End: 2012-12-31.
What was the justification for awarding this contract on a sole-source basis, and were alternative solutions or contractors considered?
The provided data states the contract was 'NOT COMPETED'. A sole-source justification would typically be required by federal acquisition regulations, outlining why only one source could fulfill the requirement. Without this justification, it's impossible to assess if alternatives were truly unavailable or if the process favored a specific contractor, potentially impacting value for money.
How does the Cost Plus Fixed Fee (CPFF) structure impact cost control and risk for this specific MK45 overhaul, especially given the lack of competition?
CPFF contracts can incentivize contractors to increase costs to maximize their fixed fee profit margin, especially when the 'cost' portion is not tightly controlled. In a sole-source scenario, this risk is amplified as there's no competitive pressure to minimize costs. Oversight is crucial to scrutinize allowable costs and ensure the fixed fee remains reasonable for the scope of work.
What is the long-term strategic implication of relying on sole-source contracts for critical defense system overhauls like the MK45?
Over-reliance on sole-source contracts can stifle innovation, reduce competition, and potentially lead to higher long-term costs for maintaining critical defense systems. It may also limit the government's ability to leverage new technologies or more efficient methods developed by other potential providers, impacting overall modernization and readiness.
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: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: BAE Systems PLC (UEI: 217304393)
Address: 163 ROCHESTER DR STE 1, LOUISVILLE, KY, 40214
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $16,971,836
Exercised Options: $16,971,836
Current Obligation: $16,794,139
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0002407G5438
IDV Type: IDC
Timeline
Start Date: 2009-09-30
Current End Date: 2012-12-31
Potential End Date: 2012-12-31 00:00:00
Last Modified: 2016-09-21
More Contracts from BAE Systems Land & Armaments L.P.
- Letter Contract for Early Procurement Material to Support the M109a7/M992a3 Vehicle Production — $2.9B (Department of Defense)
- Early Order Material in Support of the Future Purchase of 197 Ampvs and Facility Capacity Expansion Efforts to Increase the Ampv Production Rate to 197 Vehicles PER Year. Supports Ukraine Efforts — $2.5B (Department of Defense)
- 200612!007793!2100!w56hzv!tacom - Warren !w56hzv05g0005 !A!N! !N!0009 ! !20060726!20081231!834476079!824825459!217304393!n!bae Systems Land & Armaments I!1100 Bairs RD !york !pa!17404!87048!133!42!york !york !penn !+000192628556!n!n!000000000000!2350!combat Assault & Tactical VEH, Tracked !a4a!combat Vehicles !000 !NOT Discernable !336992!E! !4! ! ! ! ! !99990909!B! ! !A! !d!n!j!1!001!n!1g!z!y!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!y! ! ! ! ! ! !0001! ! — $1.6B (Department of Defense)
- 200112!001338!2100!AE07 !tacom - Warren !daae0701cm016 !A!N!*!N! !20010502!20041231!834476079!824825459!175406842!n!united Defense, L P !1100 Bairs Road !york !pa!17405!87048!133!42!york !york !penn !+000228044944!n!y!000681605313!2350!combat Assault & Tactical VEH, Tracked !a4a!combat Vehicles !1000!NOT Discernable or Classified !336992!*!*!3! ! ! !*!*!*!B!*!*!A! !D !n!j!1!001!n!1g!a!y!f! ! !N!C!N! ! ! !a!a!a!a!000!a!b!n! ! ! ! ! ! !0001! — $1.3B (Department of Defense)
- System Technical Support for Bradley Family of Vehicles, M113, M109, M992 Family of Vehicles, M9 ACE, Mlrs — $1.3B (Department of Defense)
View all BAE Systems Land & Armaments L.P. federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)