DoD Awards BAE Systems $35.2M for MK45 Gun System Overhaul, Sole-Sourced
Contract Overview
Contract Amount: $35,238,591 ($35.2M)
Contractor: BAE Systems Land & Armaments L.P.
Awarding Agency: Department of Defense
Start Date: 2010-08-12
End Date: 2014-05-30
Contract Duration: 1,387 days
Daily Burn Rate: $25.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
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 $35.2 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: OVERHAUL OF MK45 5"/54 ALL MODS Key points: 1. Significant contract value for a critical defense system. 2. Sole-source award limits competitive pricing and innovation. 3. Potential for cost overruns due to Cost Plus Fixed Fee structure. 4. Engineering services sector, crucial for maintaining military readiness.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee contract type can lead to higher costs than fixed-price contracts, especially without strong oversight. The lack of competition further raises concerns about whether the $35.2M price represents the best value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there is no competitive pressure to drive down the price.
Taxpayer Impact: The lack of competition in this sole-source award means taxpayers may be paying a premium for the overhaul of the MK45 gun system.
Public Impact
Ensures continued operational readiness of naval gun systems. Supports a major defense contractor and its supply chain. Potential for taxpayer funds to be used inefficiently due to sole-source award.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Lack of competition
- Long contract duration
Positive Signals
- Maintains critical defense capability
- Supports established contractor with relevant expertise
Sector Analysis
This contract falls within the Engineering Services sector, specifically supporting defense systems. Spending in this area is critical for maintaining military hardware, but often involves complex, specialized work where competition can be limited.
Small Business Impact
The data indicates this contract was awarded to BAE Systems Land & Armaments L.P. and was not competed, nor does it mention small business participation. It is unlikely that small businesses were significantly involved in this specific sole-source award.
Oversight & Accountability
The contract was managed by the Defense Contract Management Agency. However, the sole-source nature and Cost Plus Fixed Fee structure necessitate robust oversight to ensure cost control and prevent potential waste.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition.
- Cost Plus Fixed Fee contract type can inflate costs.
- Potential for lack of transparency in cost build-up.
- Long contract duration increases risk exposure.
- No mention of small business subcontracting goals.
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 $35.2 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 (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $35.2 million.
What is the period of performance?
Start: 2010-08-12. End: 2014-05-30.
What specific technical challenges or unique capabilities justified a sole-source award for the MK45 gun system overhaul?
Sole-source awards are typically justified by unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. For the MK45 gun system, this could involve specialized knowledge of the system's intricacies, unique tooling, or specific integration requirements that only BAE Systems possesses due to its role in the system's original development or sustainment.
How will the Cost Plus Fixed Fee structure be monitored to ensure cost efficiency and prevent contractor overcharging?
Effective oversight of a Cost Plus Fixed Fee contract requires rigorous tracking of all allowable costs incurred by the contractor. The Defense Contract Management Agency must meticulously audit expenditures, verify the necessity and reasonableness of costs, and ensure the contractor is not exceeding the agreed-upon fixed fee. Performance metrics and regular progress reviews are essential to ensure the contractor remains focused on efficient execution.
What is the long-term strategy for ensuring competitive pricing for future overhauls or upgrades of the MK45 gun system?
To foster future competition, the Department of Defense could explore strategies such as breaking down future overhauls into smaller, more manageable components that could be competed separately. Additionally, encouraging the development of alternative sustainment capabilities within the industrial base or requiring technology transfer could pave the way for more competitive bidding processes in the future.
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: $35,238,591
Exercised Options: $35,238,591
Current Obligation: $35,238,591
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: 2010-08-12
Current End Date: 2014-05-30
Potential End Date: 2014-05-30 00:00:00
Last Modified: 2017-08-10
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