DoD awarded $50.2M to BAE Systems for naval guns, with no competition

Contract Overview

Contract Amount: $50,232,571 ($50.2M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2012-08-07

End Date: 2018-05-31

Contract Duration: 2,123 days

Daily Burn Rate: $23.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF MK 110 NAVAL GUNS IN SUPPORT OF THE U.S. COAST GUARD MARITIME NATIONAL SECURITY CUTTER WMSL-753 AND U.S. COAST GUARD TRAINING PROGRAM.

Place of Performance

Location: MINNEAPOLIS, ANOKA County, MINNESOTA, 55421

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $50.2 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: PROCUREMENT OF MK 110 NAVAL GUNS IN SUPPORT OF THE U.S. COAST GUARD MARITIME NATIONAL SECURITY CUTTER WMSL-753 AND U.S. COAST GUARD TRAINING PROGRAM. Key points: 1. The contract value of $50.2 million for naval guns represents a significant investment in maritime security capabilities. 2. The sole-source nature of this award raises questions about potential price inflation and the absence of competitive pressure. 3. The duration of the contract (2123 days) suggests a long-term need for these specific ordnance systems. 4. The procurement supports critical U.S. Coast Guard assets, highlighting the importance of reliable weapon systems for national security. 5. The lack of small business involvement indicates this contract primarily engages large defense contractors.

Value Assessment

Rating: questionable

Benchmarking the value of this specific procurement is challenging due to the limited public data on comparable sole-source naval gun acquisitions. However, the absence of competition inherently limits the ability to assess if the $50.2 million price reflects the best possible value for taxpayers. Without competitive bids, it's difficult to determine if BAE Systems' pricing is aligned with market rates or if a more cost-effective solution could have been secured through an open bidding process. The fixed-price nature of the contract offers some cost certainty, but the overall value proposition is weakened by the lack of competitive discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, BAE Systems Land & Armaments L.P., was solicited. This approach is typically justified when a specific capability is only available from a single source or when urgent needs preclude a competitive process. The lack of competition means that taxpayers did not benefit from the price discovery mechanisms that typically occur in a multi-bidder environment, potentially leading to higher costs than if multiple firms had competed.

Taxpayer Impact: The sole-source award means taxpayers may have paid a premium for these naval guns, as there was no competitive pressure to drive down prices. This limits the government's ability to secure the most cost-effective solution.

Public Impact

The U.S. Coast Guard benefits directly through the acquisition of essential weapon systems for its Maritime National Security Cutters (WMSL-753). This procurement enhances the operational capabilities of the Coast Guard in maritime law enforcement, homeland security, and national defense missions. The contract supports the Coast Guard's training programs by providing the necessary ordnance for personnel familiarization and proficiency. The geographic impact is primarily national, focusing on the operational readiness of Coast Guard assets deployed globally and domestically.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Potential for vendor lock-in if alternative systems are not considered.
Limited opportunities for other manufacturers to supply critical defense components.

Positive Signals

Ensures delivery of specific, potentially unique, naval gun systems required by the Coast Guard.
Fixed-price contract provides cost certainty for the government.
Supports a critical national security mission for the U.S. Coast Guard.

Sector Analysis

The defense industry, particularly the ordnance manufacturing sector, is characterized by high barriers to entry, significant R&D investment, and a concentrated supplier base. This contract falls within the 'Other Ordnance and Accessories Manufacturing' sub-sector. The market for naval gun systems is typically dominated by a few large, established defense contractors. The $50.2 million awarded is a substantial sum for a specialized component, reflecting the complexity and critical nature of such systems. Comparable spending benchmarks are difficult to ascertain publicly due to the proprietary nature of defense contracts and the specialized requirements of naval platforms.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to BAE Systems, a large defense contractor, suggests that the primary focus was on acquiring a specific, complex system rather than fostering small business participation. This procurement does not appear to directly benefit the small business ecosystem within the defense industrial base.

Oversight & Accountability

Oversight for this Department of Defense contract would typically fall under the purview of the Department of the Navy's contracting command and potentially the Department of Defense's Inspector General. Accountability measures are inherent in the contract terms, particularly the fixed-price structure. Transparency is limited due to the sole-source nature of the award and the general classification of defense procurements. Specific oversight mechanisms related to performance and delivery would be detailed within the contract's clauses.

Related Government Programs

U.S. Coast Guard Maritime National Security Cutters (WMSL)
Naval Ordnance Procurement
Defense Article Manufacturing
Maritime Security Equipment

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.2 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. PROCUREMENT OF MK 110 NAVAL GUNS IN SUPPORT OF THE U.S. COAST GUARD MARITIME NATIONAL SECURITY CUTTER WMSL-753 AND U.S. COAST GUARD TRAINING PROGRAM.

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 $50.2 million.

What is the period of performance?

Start: 2012-08-07. End: 2018-05-31.

What is the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis to BAE Systems?

The provided data indicates the contract was 'NOT COMPETED,' suggesting a sole-source award. While the specific justification is not detailed in the summary data, common reasons for sole-source procurements in defense include the unique capability of a specific system, the unavailability of alternatives, urgent and compelling needs that preclude competition, or when only one responsible source is capable of providing the required product or service. For naval gun systems, it's plausible that BAE Systems possessed proprietary technology or the sole manufacturing rights for the specific MK 110 naval gun required by the U.S. Coast Guard's WMSL-753 program, making competition infeasible or impractical.

How does the $50.2 million contract value compare to other procurements of similar naval gun systems?

Direct comparisons for the procurement of MK 110 naval guns are difficult to establish with publicly available data, especially given this was a sole-source award. The value of $50.2 million is substantial and reflects the specialized nature and critical function of naval ordnance. However, without knowing the exact quantity of guns procured, associated support, training, and integration costs, a precise benchmark is elusive. Generally, large caliber naval gun systems can range from several million to tens of millions of dollars per unit, depending on sophistication, caliber, and integration requirements. The fixed-price nature of this contract suggests a defined scope, but the lack of competition prevents a definitive assessment of whether this price represents optimal value compared to a competitive market.

What are the primary risks associated with a sole-source procurement of this magnitude?

The primary risks associated with a sole-source procurement of this magnitude include potential overpricing due to the absence of competitive pressure, reduced incentive for the contractor to innovate or offer cost efficiencies, and a lack of transparency in the pricing structure. Taxpayers may bear a higher cost than if the contract had been competed. Furthermore, there's a risk of vendor lock-in, where the government becomes dependent on a single supplier for critical components, potentially limiting future options or increasing long-term sustainment costs. Ensuring the contractor's performance and quality standards are met without competitive benchmarks also requires robust government oversight.

What is the expected performance period and delivery timeline for the MK 110 naval guns under this contract?

The contract data indicates a duration of 2123 days, which translates to approximately 5.8 years. The start date was August 7, 2012, and the end date was May 31, 2018. This extended period suggests that the procurement likely encompassed not just the delivery of the naval guns themselves but potentially also associated manufacturing, testing, integration, and possibly initial support or training activities. The long duration is typical for complex defense systems where production, quality assurance, and delivery schedules are carefully managed over several years to meet program requirements.

What is BAE Systems' track record with providing ordnance and weapon systems to the U.S. military?

BAE Systems Land & Armaments L.P. is a major defense contractor with a significant track record in providing a wide array of ordnance, weapon systems, and armored vehicles to the U.S. military and allied nations. They are known for producing various artillery systems, naval guns, and munitions. Their involvement in supplying critical components for naval platforms like the U.S. Coast Guard's National Security Cutters aligns with their established capabilities in naval armament. While specific performance details for this particular contract are not detailed in the summary, BAE Systems generally operates within the highly regulated defense sector, subject to stringent performance and quality standards.

How does this procurement fit into the broader context of U.S. Coast Guard modernization and maritime security efforts?

This procurement of MK 110 naval guns is integral to the U.S. Coast Guard's efforts to modernize its fleet and enhance its maritime security capabilities. The National Security Cutter (WMSL) program represents a significant investment in the Coast Guard's ability to conduct extended offshore operations, including homeland security patrols, drug interdiction, search and rescue, and law enforcement in remote areas. Equipping these cutters with advanced weapon systems like the MK 110 is crucial for their effectiveness in deterring threats, protecting U.S. interests, and maintaining a presence in critical maritime domains. This contract directly supports the operational readiness and mission effectiveness of these high-value assets.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Other Ordnance and Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002410R5444

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 4800 E RIVER RD, MINNEAPOLIS, MN, 55421

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $55,629,080

Exercised Options: $55,468,918

Current Obligation: $50,232,571

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $357,314

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline