DoD awards $2.87M for MK38 Production & Spares to BAE Systems, a sole-source contract
Contract Overview
Contract Amount: $28,697,931 ($28.7M)
Contractor: BAE Systems Land & Armaments L.P.
Awarding Agency: Department of Defense
Start Date: 2014-09-30
End Date: 2016-03-30
Contract Duration: 547 days
Daily Burn Rate: $52.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: MK38 FY 14 PRODUCTION AND SPARES
Place of Performance
Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40214
State: Kentucky Government Spending
Plain-Language Summary
Department of Defense obligated $28.7 million to BAE SYSTEMS LAND & ARMAMENTS L.P. for work described as: MK38 FY 14 PRODUCTION AND SPARES Key points: 1. Contract awarded to a single vendor, raising questions about price competition. 2. The firm-fixed-price structure aims to control costs, but without competition, true value is uncertain. 3. Focus on production and spares suggests ongoing operational needs for this ordnance system. 4. Small business participation is not indicated on this contract.
Value Assessment
Rating: questionable
The contract value of $2.87M for MK38 production and spares is difficult to assess without competitive benchmarks. The sole-source nature limits the ability to determine if the price reflects fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive procurement.
Taxpayer Impact: The lack of competition may result in taxpayers paying more than necessary for these MK38 production and spares.
Public Impact
Military readiness may be impacted if the MK38 system is critical and spares are needed urgently. Taxpayers may be overpaying due to the absence of competitive bidding. The Department of the Navy's procurement strategy for this item warrants further scrutiny.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Potential for overpayment
Positive Signals
- Firm fixed price contract type
- Clear delivery timeline
Sector Analysis
This contract falls within the Defense sector, specifically related to ordnance manufacturing. Spending benchmarks for similar sole-source ordnance contracts are often higher due to specialized requirements and limited suppliers.
Small Business Impact
This contract does not indicate any specific provisions or awards to small businesses. The sole-source nature may have precluded opportunities for small business participation.
Oversight & Accountability
The sole-source award necessitates robust oversight from the Department of the Navy to ensure the contractor is delivering on time and at a reasonable cost, despite the lack of competition.
Related Government Programs
- Small Arms, Ordnance, and Ordnance Accessories Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award lacks competitive pricing pressure.
- Potential for taxpayer overpayment due to lack of competition.
- Limited transparency into the necessity of sole-source justification.
- No indication of small business participation.
Tags
small-arms-ordnance-and-ordnance-accesso, department-of-defense, ky, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $28.7 million to BAE SYSTEMS LAND & ARMAMENTS L.P.. MK38 FY 14 PRODUCTION AND 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 $28.7 million.
What is the period of performance?
Start: 2014-09-30. End: 2016-03-30.
What is the justification for awarding this contract on a sole-source basis?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or a lack of viable alternative sources. Without further documentation, it's unclear why this specific contract was not competed, potentially limiting BAE Systems' incentive to offer the most competitive pricing.
What is the risk of cost overruns or inefficiencies in this sole-source contract?
The primary risk is cost overrun due to the absence of competitive pressure. BAE Systems may not have the same incentive to minimize costs as they would in a competed environment. Oversight is crucial to mitigate this risk.
How effective is this procurement strategy in meeting the Navy's long-term ordnance needs?
While this contract addresses immediate production and spares, a sole-source strategy is not ideal for long-term cost-effectiveness or fostering innovation. The Navy should explore options for future competition or strategic sourcing to ensure sustained value.
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: N0017413R0048
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, 40214
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: $28,697,931
Exercised Options: $28,697,931
Current Obligation: $28,697,931
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $169,443
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2014-09-30
Current End Date: 2016-03-30
Potential End Date: 2016-03-30 00:00:00
Last Modified: 2015-11-12
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