Navy awards $16.5M contract for BEARING SUPPORT STRUCTURES to BAE SYSTEMS, highlighting shipbuilding needs

Contract Overview

Contract Amount: $16,493,047 ($16.5M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2023-01-18

End Date: 2026-08-04

Contract Duration: 1,294 days

Daily Burn Rate: $12.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: BEARING SUPPORT STRUCTURE

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40214

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $16.5 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: BEARING SUPPORT STRUCTURE Key points: 1. Contract value represents a significant investment in naval infrastructure. 2. Sole awardee suggests a specialized capability or limited market for this specific component. 3. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces potential for cost escalation. 4. Long contract duration indicates a sustained need for these structures. 5. Awarded by the Department of the Navy, underscoring its role in fleet readiness. 6. The contract falls under the Ship Building and Repairing NAICS code, placing it within a critical industrial sector.

Value Assessment

Rating: fair

Benchmarking the value of this specific 'BEARING SUPPORT STRUCTURE' is challenging without detailed specifications and comparable market data. The FPEPA pricing structure introduces a degree of uncertainty regarding the final cost. However, the contract value of $16.5 million for a multi-year duration suggests a substantial procurement, potentially reflecting specialized materials or complex manufacturing processes required for naval applications. Further analysis would require comparing unit costs against similar components in shipbuilding or defense contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple capable vendors had the opportunity to bid. The fact that BAE SYSTEMS LAND & ARMAMENTS L.P. was the sole awardee suggests that while competition was open, BAE SYSTEMS likely offered the most advantageous proposal based on technical merit, price, or a combination thereof. This level of competition is generally positive for price discovery, though the specific outcome might point to a niche market or unique capabilities.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages a wider range of offers, potentially leading to more competitive pricing and better value for the government. The selection of a single awardee, however, warrants scrutiny to ensure the competitive process truly yielded the best possible outcome.

Public Impact

The primary beneficiaries are the U.S. Navy and its shipbuilding programs, ensuring the availability of critical components for naval vessels. Services delivered include the manufacturing and supply of bearing support structures essential for ship operations and maintenance. The geographic impact is centered around the contractor's facilities and potentially the shipyards where these structures will be installed. Workforce implications include employment opportunities at BAE SYSTEMS and its supply chain, particularly in manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Fixed Price with Economic Price Adjustment (FPEPA) clause introduces risk of cost overruns due to fluctuating material or labor costs.
Sole awardee status, despite full and open competition, may indicate limited market capacity or a highly specialized requirement that restricts broader participation.
The long contract duration (over 3 years) increases exposure to potential changes in technology or operational needs that could render the procured items less optimal over time.

Positive Signals

Awarded through full and open competition, suggesting a robust and fair bidding process.
BAE SYSTEMS is a well-established defense contractor with a track record in shipbuilding and related components.
The contract supports critical naval infrastructure, contributing to national security and defense readiness.
The fixed-price component of the contract provides some cost certainty, with adjustments managed through the economic price adjustment clause.

Sector Analysis

This contract falls within the broader defense industrial base, specifically the shipbuilding and repair sector. This sector is characterized by high barriers to entry, significant capital investment, and long production cycles. The market is often dominated by a few large, specialized contractors due to the complexity and scale of naval shipbuilding. Spending in this area is directly tied to defense budgets and strategic priorities for fleet modernization and maintenance. Comparable spending benchmarks would involve analyzing other contracts for ship components, structural elements, and specialized manufacturing within the defense sector.

Small Business Impact

There is no indication from the provided data that this contract includes a small business set-aside. Given the nature of the product (bearing support structures for naval vessels) and the prime contractor (BAE SYSTEMS), it is likely that any small business involvement would be through subcontracting opportunities. The extent of small business participation will depend on BAE SYSTEMS' subcontracting plan and the availability of qualified small businesses capable of supplying components or services for this specialized manufacturing process.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules, quality standards, and payment milestones. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Naval Ship Production
Defense Industrial Base
Shipbuilding and Repair
Naval Vessel Components
Defense Manufacturing

Risk Flags

Potential for cost escalation due to FPEPA clause
Long contract duration may increase risk of obsolescence or changing requirements
Sole awardee status warrants review to ensure optimal value despite open competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.5 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. BEARING SUPPORT STRUCTURE

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 $16.5 million.

What is the period of performance?

Start: 2023-01-18. End: 2026-08-04.

What is the historical spending pattern for similar 'BEARING SUPPORT STRUCTURE' contracts by the Department of the Navy?

Analyzing historical spending for 'BEARING SUPPORT STRUCTURE' contracts requires access to detailed procurement data beyond this single award. Typically, the Department of the Navy procures such components as part of larger shipbuilding or repair contracts. Without specific contract line item numbers (CLINs) or detailed product descriptions, it's difficult to isolate spending solely on these structures. However, general trends in naval shipbuilding budgets, which have seen fluctuations based on defense priorities and fleet modernization needs, would indirectly influence spending on components like bearing support structures. Examining past awards for major naval platforms (e.g., aircraft carriers, destroyers, submarines) and their associated structural components could provide a broader context for the scale of investment in such items over time.

How does the pricing of this contract compare to market rates for similar components in the commercial shipbuilding sector?

Directly comparing the pricing of this naval 'BEARING SUPPORT STRUCTURE' contract to commercial market rates is challenging due to several factors. Naval components often require higher specifications for durability, performance under extreme conditions, and adherence to stringent military standards, which can increase manufacturing costs. Furthermore, the FPEPA clause introduces variability. However, a general comparison can be made by looking at the cost per unit or per pound for large structural steel or specialized metal fabrications in the commercial sector. If BAE SYSTEMS' pricing, even with potential escalations, is significantly higher than comparable commercial fabrications, it could indicate premium pricing due to military specifications, limited competition, or the contractor's overhead structure. Conversely, if it aligns with or is only slightly above commercial rates, it might suggest efficient production or competitive bidding.

What are the specific risks associated with the 'Economic Price Adjustment' clause in this contract?

The primary risk associated with the Economic Price Adjustment (EPA) clause in this contract is the potential for cost escalation beyond the initially anticipated budget. EPAs are designed to account for fluctuations in the cost of labor, materials, or other economic factors. While they protect the contractor from unforeseen cost increases, they introduce uncertainty for the government regarding the final contract price. For this specific contract, the risk lies in how significantly material costs (e.g., specialized metals) or labor rates might increase over the nearly four-year performance period. If these economic factors rise sharply, the total expenditure could exceed the initial $16.5 million award amount, potentially impacting future budget allocations. Effective oversight would involve monitoring the indices used for adjustment and ensuring that increases are justified and within agreed-upon parameters.

What is BAE SYSTEMS' track record with similar naval component manufacturing contracts?

BAE SYSTEMS LAND & ARMAMENTS L.P. has a substantial and well-documented track record in manufacturing complex systems and components for the U.S. military, including naval applications. As a major defense contractor, they are involved in various aspects of shipbuilding, vehicle manufacturing, and ordnance production. Their experience likely includes the fabrication of structural components, support systems, and specialized equipment for naval vessels. Historical performance data, available through sources like the Federal Procurement Data System (FPDS) and contractor performance assessment reporting tools, would provide specific insights into their on-time delivery, quality adherence, and cost management on previous, similar contracts. Generally, BAE SYSTEMS is considered a capable and experienced supplier within the defense industrial base.

How does the duration of this contract (1294 days) impact the overall value and risk for the Navy?

The contract duration of 1294 days (approximately 3.5 years) for BEARING SUPPORT STRUCTURES suggests a long-term, sustained need for these components, likely tied to a specific shipbuilding program or a significant maintenance/overhaul cycle. From a value perspective, a longer duration can sometimes lead to better unit pricing through economies of scale and production planning for the contractor. However, it also increases the risk of obsolescence if technology or naval requirements evolve rapidly. For the Navy, a long duration necessitates careful management to ensure the structures remain relevant and meet performance standards throughout their lifecycle. The FPEPA clause also amplifies the financial risk over this extended period, as cumulative price adjustments could become substantial. Effective program management and regular reviews are crucial to mitigate these risks.

What is the significance of the NAICS code 336611 (Ship Building and Repairing) in understanding this contract?

The North American Industry Classification System (NAICS) code 336611, 'Ship Building and Repairing,' is highly significant as it precisely categorizes the industry sector to which this contract belongs. This code indicates that the procurement is directly related to the construction, conversion, repair, or alteration of ships and other marine vessels. For 'BEARING SUPPORT STRUCTURES,' this implies they are integral components designed for use in naval shipbuilding or repair projects. Understanding this NAICS code helps contextualize the contract within the broader defense industrial base, highlighting the specialized nature of the work, the typical scale of operations, and the regulatory environment associated with shipbuilding. It also aids in identifying potential competitors and understanding market dynamics within this specific industrial segment.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0016722R0015

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

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

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

Financial Breakdown

Contract Ceiling: $16,493,047

Exercised Options: $16,493,047

Current Obligation: $16,493,047

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $6,517,807

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0016723D0004

IDV Type: IDC

Timeline