Department of the Navy awards $6.1M contract for MK 110 SPARES, a sole-source acquisition

Contract Overview

Contract Amount: $6,098,499 ($6.1M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2024-05-29

End Date: 2026-11-29

Contract Duration: 914 days

Daily Burn Rate: $6.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK 110 SPARES

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40214

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $6.1 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: MK 110 SPARES Key points: 1. Contract awarded as a sole-source action, raising questions about potential price efficiencies. 2. The contract duration of 914 days suggests a sustained need for these spare parts. 3. Delivery order type indicates a specific, immediate requirement within a larger framework. 4. The fixed-price contract type shifts risk to the contractor for cost overruns. 5. Awarded to BAE SYSTEMS LAND & ARMAMENTS L.P., a known entity in defense manufacturing. 6. The contract is for spare parts related to small arms and ordnance manufacturing.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the MK 110 system and its components. The $6.1 million award for spare parts over approximately two and a half years appears reasonable for specialized defense equipment. However, the lack of competition means there's no direct market comparison to assess if this represents the best possible price. Further analysis would require understanding the unit costs of the spares and comparing them to historical Navy procurement data for similar items or to commercial equivalents if applicable.

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 used when a specific part or system is proprietary to a single manufacturer, or when there's a critical need for compatibility with existing equipment. The lack of competition limits the government's ability to leverage market forces to drive down prices and may result in higher costs than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without a competitive process, there is less assurance that the price reflects the lowest possible cost for these essential spare parts.

Public Impact

The Department of the Navy benefits from the availability of critical spare parts for the MK 110 system. This contract ensures the operational readiness and maintenance of naval assets equipped with the MK 110. The services delivered are the provision of specialized spare parts, crucial for defense capabilities. The geographic impact is primarily within the Department of the Navy's operational theaters and maintenance facilities. Workforce implications may include continued employment for personnel involved in the manufacturing and supply chain of these parts at BAE SYSTEMS.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the sole-source justification requires careful review to ensure necessity.
Dependence on a single supplier can create supply chain risks if the contractor faces production issues.

Positive Signals

Award to an established defense contractor (BAE SYSTEMS) suggests familiarity with requirements and quality.
Fixed-price contract type provides cost certainty for the government once awarded.
Contract duration indicates a planned and sustained need, suggesting strategic procurement.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on ordnance and weapon systems manufacturing. The market for such specialized spare parts is often characterized by limited suppliers due to high technical barriers to entry, proprietary technology, and stringent quality control requirements. Comparable spending benchmarks are difficult to establish without knowing the specific components of the MK 110 system, but defense procurement for weapon system spares typically involves significant investment due to the critical nature and specialized manufacturing processes involved.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large defense contractor like BAE SYSTEMS suggests that the primary contract will likely be fulfilled by the prime. This may limit opportunities for small businesses to participate directly in this specific procurement, although they might be part of BAE's broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature of the award; however, contract award details are typically made public. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Spare Parts Procurement
Naval Ordnance and Weapon Systems
BAE SYSTEMS Defense Contracts
Sole-Source Defense Acquisitions
MK 110 Gun System Support

Risk Flags

Sole-source award requires careful justification and oversight to ensure fair pricing.
Potential for higher costs due to lack of competition.
Dependence on a single supplier introduces supply chain risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.1 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. MK 110 SPARES

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 $6.1 million.

What is the period of performance?

Start: 2024-05-29. End: 2026-11-29.

What is the specific justification for the sole-source award of this contract?

The provided data indicates the contract was awarded as 'NOT COMPETED' and is sole-source. While the specific justification is not detailed in the abbreviated data, common reasons for sole-source awards in defense procurement include: proprietary nature of the technology (only one source can produce it), lack of adequate competition (insufficient number of capable sources), or urgent and compelling need where competition is not feasible. For the MK 110 SPARES, it is highly probable that BAE SYSTEMS LAND & ARMAMENTS L.P. is the original equipment manufacturer (OEM) or holds the intellectual property rights for the necessary spare parts, making them the only viable source. A formal Justification for Other Than Full and Open Competition (JOFOC) would typically be required and documented internally by the Department of the Navy.

How does the $6.1 million contract value compare to historical spending on MK 110 spare parts?

Without access to historical spending data specifically for MK 110 spare parts, a direct comparison is not possible. The $6.1 million award is for a period of 914 days (approximately 2.5 years), ending in November 2026. To assess if this value is reasonable, one would need to analyze the quantity and type of spare parts procured, their unit costs, and compare these to previous procurements of similar items. Factors such as inflation, changes in system configuration, and increased operational tempo could influence spending levels over time. The sole-source nature of this award further complicates benchmarking, as there's no competitive baseline.

What are the primary risks associated with this sole-source contract for the Department of the Navy?

The primary risks associated with this sole-source contract are related to cost and supply chain. Firstly, the lack of competition means the Department of the Navy may be paying a higher price than could be achieved through a competitive bidding process. Without market pressure, the contractor has less incentive to offer the lowest possible price. Secondly, there is a potential for supply chain disruption. Relying on a single supplier, BAE SYSTEMS LAND & ARMAMENTS L.P., makes the Navy vulnerable if the contractor experiences production issues, financial instability, or decides to discontinue the product line. This dependence necessitates strong contract management and potentially long-term strategic partnerships.

What is the expected performance period and delivery schedule for these spare parts?

The contract has a start date of May 29, 2024, and an end date of November 29, 2026. This provides a performance period of approximately 914 days, or about two and a half years. The contract type is a 'DELIVERY ORDER,' which implies that specific quantities of spare parts will be ordered and delivered according to a schedule outlined within the larger contract framework or subsequent task orders. While the overall period of performance is defined, the exact delivery schedule for individual spare parts would be dictated by the Navy's requirements as they arise during this period.

What is BAE SYSTEMS LAND & ARMAMENTS L.P.'s track record with the Department of the Navy for similar contracts?

BAE SYSTEMS LAND & ARMAMENTS L.P. is a major defense contractor with a significant and long-standing relationship with the Department of the Navy and the broader U.S. military. They are known for producing a wide range of land systems, naval guns, and ordnance. Their track record typically includes numerous contracts for weapon systems, ammunition, and associated support services, including spare parts. Given their established presence and expertise in this domain, it is probable they have a history of delivering on similar contracts, though the specifics of their performance on MK 110 spare parts would require a deeper dive into contract performance databases and historical reviews.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002423R5317

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

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

Business Categories: Category Business, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations

Financial Breakdown

Contract Ceiling: $6,098,499

Exercised Options: $6,098,499

Current Obligation: $6,098,499

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $131,774

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002423G5317

IDV Type: BOA

Timeline