Navy awards $11.6M contract for BEARING SUPPORT STRUCTURES to BAE SYSTEMS, highlighting shipbuilding needs

Contract Overview

Contract Amount: $11,565,267 ($11.6M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2024-02-02

End Date: 2026-10-03

Contract Duration: 974 days

Daily Burn Rate: $11.9K/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: MINNEAPOLIS, ANOKA County, MINNESOTA, 55421

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $11.6 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: BEARING SUPPORT STRUCTURE Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces potential for cost fluctuations. 3. The contract duration of 974 days indicates a medium-term commitment for these critical components. 4. BAE SYSTEMS, a major defense contractor, secured this award, reflecting its established position in the sector. 5. The award is a delivery order under a larger contract, suggesting it's part of an ongoing program. 6. The North American Industry Classification System (NAICS) code 336611 points to shipbuilding and repair activities.

Value Assessment

Rating: good

Benchmarking the exact value of this specific delivery order is challenging without knowing the parent contract's scope and pricing. However, BAE SYSTEMS is a large, established defense contractor, and pricing for specialized components like bearing support structures can be significant. The FPEPA clause suggests an acknowledgment of potential material cost increases, which is common in long-term shipbuilding projects. Further analysis would require comparing the unit costs or overall value against similar components procured by the Navy or other defense branches.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but this method generally fosters a competitive environment, which can lead to better pricing and innovation. The Navy's decision to use full and open competition suggests confidence in the market's ability to supply the required bearing support structures.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best value for the government, potentially leading to lower overall costs for these essential shipbuilding components.

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 specialized bearing support structures essential for ship operations. The geographic impact is primarily within the United States, supporting domestic defense industrial base activities. Workforce implications include employment opportunities within BAE SYSTEMS and its supply chain, particularly in manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost overruns if material prices increase significantly.
Reliance on a single large contractor like BAE SYSTEMS could limit future competition for related components.
The specific performance requirements and quality control for these critical structures need continuous monitoring.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
BAE SYSTEMS has a strong track record in defense manufacturing, suggesting reliability.
The contract supports essential naval shipbuilding, contributing to national security readiness.

Sector Analysis

The shipbuilding and repair industry (NAICS 336611) is a critical sector within the U.S. defense industrial base, characterized by high capital investment, specialized labor, and long production cycles. This contract for bearing support structures fits within the broader context of naval vessel construction and maintenance. Spending in this sector is often driven by defense appropriations and strategic shipbuilding plans. Comparable spending benchmarks would involve analyzing the total value of shipbuilding contracts awarded by the Department of Defense annually.

Small Business Impact

The data indicates this contract was awarded to BAE SYSTEMS LAND & ARMAMENTS L.P. and does not specify any small business set-aside provisions (ss: false, sb: false). Therefore, this particular award does not directly benefit small businesses through a set-aside. However, as a large prime contractor, BAE SYSTEMS may engage small businesses as subcontractors, contributing to the broader small business ecosystem within the defense supply chain. The extent of subcontracting to small businesses would require further investigation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules and specifications. Transparency is facilitated through contract databases like SAM.gov, where award details are published. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Shipbuilding Programs
Defense Procurement
Ship Component Manufacturing
BAE Systems Contracts
Department of the Navy Acquisitions

Risk Flags

Potential for cost escalation due to FPEPA clause.
Market concentration in defense shipbuilding.
Dependence on a single large contractor for critical components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.6 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 $11.6 million.

What is the period of performance?

Start: 2024-02-02. End: 2026-10-03.

What is BAE Systems' track record with the Department of the Navy for similar components?

BAE Systems Land & Armaments L.P. is a significant defense contractor with a substantial history of awards from the Department of Defense, including the Navy. While specific data on 'bearing support structures' is not detailed here, the company routinely secures contracts for major naval platforms, weapon systems, and vehicle components. Their extensive experience suggests a capacity to meet the technical and performance requirements for such parts. A deeper dive into historical contract awards for naval shipbuilding and repair would reveal the frequency and value of their past deliveries of similar components, providing a clearer picture of their established performance in this specific niche.

How does the $11.6 million value compare to similar bearing support structure contracts?

Directly comparing the $11.6 million value of this delivery order for bearing support structures to similar contracts is challenging without more granular data on the specific type, quantity, and complexity of the structures. However, this amount suggests a significant procurement, likely for a substantial number of units or highly specialized components for a naval vessel program. For context, major shipbuilding components can range from hundreds of thousands to millions of dollars each, depending on their size, material, and engineering requirements. Benchmarking against other Navy contracts for propulsion, hull, or combat system components awarded to various shipbuilders or component manufacturers would provide a broader perspective on the relative scale of this award.

What are the primary risks associated with a Fixed Price with Economic Price Adjustment (FPEPA) contract for shipbuilding components?

The primary risks with an FPEPA contract for shipbuilding components like bearing support structures revolve around cost volatility and potential budget overruns. While the fixed price component provides a baseline, the economic price adjustment allows for increases based on fluctuations in material costs (e.g., metals, specialized alloys) and labor rates. This can lead to the government paying more than initially anticipated if market prices rise significantly over the contract's duration. For the contractor, the risk is mitigated by the adjustment clause, but they still bear the risk of managing production efficiently. Effective oversight is crucial to ensure that price adjustments are justified and accurately reflect market conditions.

How does this contract contribute to the overall readiness and modernization of the U.S. Navy fleet?

This contract is crucial for maintaining and enhancing the U.S. Navy's fleet readiness and modernization efforts by ensuring the supply of essential components for shipbuilding and repair. Bearing support structures are fundamental to the operational integrity of various ship systems, including propulsion and mechanical assemblies. By securing these components through a competitive process with a reputable contractor like BAE Systems, the Navy can proceed with constructing new vessels or overhauling existing ones. Consistent availability of such critical parts directly impacts the Navy's ability to deploy and sustain its operational capabilities, supporting its strategic mission.

What is the historical spending trend for bearing support structures or similar naval components?

Historical spending on bearing support structures and similar naval components is intrinsically linked to the Navy's shipbuilding and maintenance budgets, which fluctuate based on defense priorities, geopolitical events, and congressional appropriations. Over the past decade, the Navy has consistently allocated billions of dollars annually towards shipbuilding and conversion, with significant portions dedicated to components like those covered by this contract. Spending trends are influenced by the number of new vessels being commissioned, the service life extensions of existing ships, and modernization programs. Analyzing aggregated spending data for NAICS code 336611 (Ship Building and Repairing) and related sub-sectors would provide a broader view of the historical investment in such critical components.

What are the implications of awarding this contract to BAE Systems in terms of market concentration?

Awarding this contract to BAE Systems, a major defense industrial conglomerate, contributes to the ongoing trend of market concentration within the defense sector. While BAE Systems possesses the scale, expertise, and infrastructure to handle complex naval contracts, its significant role means that a substantial portion of defense spending, particularly in shipbuilding, flows to a limited number of large prime contractors. This can raise concerns about reduced competition for future contracts, potentially impacting price discovery and innovation. However, the initial award was made through 'full and open competition,' suggesting that the market, at that stage, allowed for multiple bidders, including potentially smaller or more specialized firms.

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: $11,565,267

Exercised Options: $11,565,267

Current Obligation: $11,565,267

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $5,912,234

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