Department of Defense awards $24.3M for MK38 MOD 2 Machine Gun Systems to BAE Systems

Contract Overview

Contract Amount: $24,257,531 ($24.3M)

Contractor: BAE Systems Land & Armaments L.P.

Awarding Agency: Department of Defense

Start Date: 2012-09-07

End Date: 2014-05-04

Contract Duration: 604 days

Daily Burn Rate: $40.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK38 MOD 2 MACHINE GUN SYSTEM

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40214

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $24.3 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: MK38 MOD 2 MACHINE GUN SYSTEM Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. Sole-source award suggests potential limitations in competitive pricing. 3. Contract duration of 604 days provides a defined period for delivery and performance. 4. Awarded by the Department of the Navy, indicating a specific military application. 5. The contract falls under the 'Small Arms, Ordnance, and Ordnance Accessories Manufacturing' NAICS code. 6. No small business set-aside was applied to this contract.

Value Assessment

Rating: fair

The contract value of $24.3 million for machine gun systems appears to be a standard procurement for military hardware. Without specific details on the number of units or system configurations, a direct value-for-money assessment is challenging. However, as a sole-source award, there is a risk that the pricing may not reflect the most competitive market rates. Benchmarking against similar sole-source procurements for comparable weapon systems would be necessary for a more definitive valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source is available or when a compelling justification exists for not seeking competition. The lack of competition means that the Department of the Navy did not solicit bids from multiple vendors, potentially limiting price discovery and the opportunity for other qualified companies to secure the contract.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding processes.

Public Impact

The primary beneficiaries are the U.S. Navy personnel who will operate and maintain the MK38 MOD 2 Machine Gun Systems. The contract delivers essential defensive armament for naval vessels, enhancing force protection and operational capabilities. The geographic impact is primarily within the United States, where the contractor, BAE Systems, will perform the work. This procurement supports specialized manufacturing jobs within the defense industrial base, specifically in ordnance manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of transparency in the justification for sole-source procurement.
Potential for higher costs to taxpayers due to absence of competition.

Positive Signals

Award to an established defense contractor with a track record.
Firm-fixed-price contract provides cost certainty for the government.
Specific system (MK38 MOD 2) indicates a known requirement and capability.

Sector Analysis

The defense sector, particularly the segment focused on ordnance and weapon systems manufacturing, is characterized by high barriers to entry and significant technological expertise. BAE Systems is a major global defense contractor. This contract for the MK38 MOD 2 system fits within the broader category of naval armament procurement, which is a critical component of national defense spending. Comparable spending benchmarks would involve analyzing other procurements of similar weapon platforms or upgrades for naval platforms.

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. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless BAE Systems voluntarily engages small businesses in its supply chain for this specific contract. Further investigation into BAE Systems' subcontracting plans would be needed to assess broader small business implications.

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 structure, which holds the contractor responsible for delivering the specified goods within the agreed-upon cost. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Surface Warfare
Ordnance and Armaments
Defense Procurement
Weapon System Acquisition

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of detailed performance metrics in summary data hinders full assessment.
Contract awarded in 2012, historical data may require careful interpretation for current relevance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.3 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. MK38 MOD 2 MACHINE GUN SYSTEM

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 $24.3 million.

What is the period of performance?

Start: 2012-09-07. End: 2014-05-04.

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under circumstances such as only one responsible source being available, or when a national security emergency or urgent need prevents competition. Without the official justification document (e.g., a Justification and Approval - J&A), it is impossible to ascertain the precise reasons. This lack of transparency is a common concern with sole-source contracts, as it limits the public's ability to understand why competitive processes were bypassed. Further research into the Federal Business Opportunities (now SAM.gov) archives for this specific award ID (if available) might reveal the justification.

How does the unit cost of the MK38 MOD 2 Machine Gun System under this contract compare to previous procurements or similar systems from other vendors?

The provided data does not contain sufficient detail to perform a unit cost comparison. The total award amount is $24,257,531, and the number of units is listed as '1' (no). This '1' likely refers to the number of contract actions or line items, not the quantity of systems. To compare unit costs, we would need to know the exact quantity of MK38 MOD 2 systems procured under this contract and their associated costs. Additionally, comparing to previous procurements requires historical data for the same system, and comparing to similar systems from other vendors necessitates identifying functionally equivalent weapon platforms and their respective contract values and quantities. Without this granular data, a meaningful cost comparison is not feasible.

What is BAE Systems' track record with the MK38 MOD 2 Machine Gun System and similar defense contracts?

BAE Systems Land & Armaments L.P. is a major defense contractor with extensive experience in producing and supporting various weapon systems, including those for naval applications. The MK38 MOD 2 is a derivative of the M242 Bushmaster chain gun, a widely used autocannon. BAE Systems has a history of manufacturing and upgrading such systems for military use. Their track record with this specific system and similar defense contracts would generally be considered robust, given their position in the industry. However, a comprehensive assessment would involve reviewing past performance evaluations, any contract disputes, delivery performance, and quality control records specifically related to the MK38 MOD 2 and comparable naval armament contracts.

What are the key performance metrics or delivery milestones associated with this $24.3 million contract?

The provided data indicates a contract duration of 604 days (approximately 20 months) from the award date (2012-09-07) to the estimated completion date (2014-05-04). While the contract type is Firm Fixed Price (FFP), which implies a defined scope and price, the specific performance metrics and delivery milestones are not detailed in the summary data. These would typically be outlined in the contract's statement of work (SOW) or delivery schedules. Key performance indicators could include on-time delivery of systems, meeting technical specifications, functionality testing, and potentially training or support services. The FFP nature suggests the contractor bears the risk of cost overruns if they fail to meet these milestones within budget.

How does the total spending on the MK38 MOD 2 Machine Gun System by the Department of Defense compare to other major weapon system procurements?

The total spending of $24.3 million for this specific contract is relatively modest when compared to major defense procurement programs, such as fighter jet development (e.g., F-35 program, which runs into hundreds of billions), aircraft carrier construction, or ballistic missile defense systems. The MK38 MOD 2 is a component system, often mounted on smaller naval vessels or used in land-based applications, rather than a standalone, large-scale platform. To provide a comparative context, one would need to aggregate all spending on the MK38 MOD 2 across all contracts and compare this total to the lifecycle costs of other major weapon systems. However, as a single contract award, $24.3 million represents a specific procurement action rather than the overall program cost.

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: N0017409R0038

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 163 ROCHESTER DR STE 1, LOUISVILLE, KY, 03

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $24,257,531

Exercised Options: $24,257,531

Current Obligation: $24,257,531

Subaward Activity

Number of Subawards: 51

Total Subaward Amount: $15,917,958

Contract Characteristics

Cost or Pricing Data: YES

Timeline