DoD awards $7.4M for hammer mill construction at Radford Army Ammunition Plant

Contract Overview

Contract Amount: $7,412,768 ($7.4M)

Contractor: BAE Systems Ordnance Systems Inc

Awarding Agency: Department of Defense

Start Date: 2023-06-29

End Date: 2026-09-30

Contract Duration: 1,189 days

Daily Burn Rate: $6.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THIS TASK ORDER IS TO FUND THE CONSTRUCTION OF A NEW HAMMER MILL FOR SHEETED CELLULOSE AT RFAAP.

Place of Performance

Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $7.4 million to BAE SYSTEMS ORDNANCE SYSTEMS INC for work described as: THIS TASK ORDER IS TO FUND THE CONSTRUCTION OF A NEW HAMMER MILL FOR SHEETED CELLULOSE AT RFAAP. Key points: 1. Contract awarded for essential facility upgrade at a key defense manufacturing site. 2. Competition was full and open, suggesting a potentially competitive bidding process. 3. The contract type is Cost Plus Fixed Fee, which can introduce cost overrun risks. 4. Performance period extends over three years, indicating a significant construction timeline. 5. The facility is located in Virginia, a state with a notable defense industrial base. 6. This task order supports critical infrastructure for ordnance systems production.

Value Assessment

Rating: fair

The awarded amount of $7.4 million for a new hammer mill appears to be a significant investment for a single piece of equipment, even for a specialized facility. Benchmarking this cost against similar industrial equipment procurements or construction projects for specialized manufacturing facilities would be necessary for a definitive value assessment. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex projects, carries inherent risks of cost escalation beyond the initial estimate if not meticulously managed. Without specific details on the mill's specifications and the scope of associated construction, a precise value-for-money judgment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This method generally fosters a competitive environment, which can lead to better pricing and innovation. The number of bidders is not specified, but the use of full and open competition suggests that the Army sought to maximize the pool of potential offerors to ensure a robust selection process.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it increases the likelihood of obtaining the best value through a competitive bidding process, potentially driving down costs.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Radford Army Ammunition Plant (RFAAP), which will receive upgraded manufacturing capabilities. The service delivered is the construction of a new hammer mill essential for processing sheeted cellulose, a key component in ordnance production. The geographic impact is localized to RFAAP in Radford, Virginia, but the improved production capacity has national defense implications. Workforce implications may include demand for skilled construction labor during the build phase and potentially for operators and maintenance personnel once the mill is operational.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type introduces risk of cost overruns if not managed tightly.
The duration of the project (nearly 4 years) increases exposure to potential delays and cost fluctuations.
Specialized nature of the equipment may limit the pool of experienced contractors, potentially impacting competition despite 'full and open' designation.

Positive Signals

Awarded under 'full and open' competition, suggesting a broad search for qualified bidders.
The contract addresses a critical need for infrastructure modernization at a key defense facility.
The fixed fee component of the CPFF contract provides some level of cost certainty for the contractor's effort.

Sector Analysis

This contract falls within the Facilities Support Services sector, specifically related to industrial plant equipment and construction. The defense industrial base relies heavily on specialized manufacturing equipment like hammer mills for producing essential materials such as propellants and explosives. Spending in this area is critical for maintaining national security capabilities. Comparable spending benchmarks would typically involve large-scale industrial equipment procurement and construction projects within government-owned, contractor-operated facilities.

Small Business Impact

The data indicates that small business participation (sb) is false, and there is no mention of a small business set-aside. This suggests the contract was not specifically targeted towards small businesses. Subcontracting opportunities for small businesses may exist within the broader scope of the construction project, but this is not explicitly detailed in the provided information. The primary contractor, BAE SYSTEMS ORDNANCE SYSTEMS INC, is a large defense contractor, implying that direct set-aside benefits for small businesses are unlikely for the prime contract itself.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army, likely through contracting officers and program managers responsible for RFAAP operations. The Cost Plus Fixed Fee structure necessitates close monitoring of costs incurred by the contractor to ensure the fixed fee is justified and that costs remain reasonable. Transparency may be limited due to the specialized nature of defense contracting, but standard reporting requirements and potential audits by the Defense Contract Audit Agency (DCAA) would apply. Inspector General (IG) jurisdiction would be invoked if significant fraud, waste, or abuse were suspected.

Related Government Programs

Ordnance Manufacturing Facilities
Ammunition Plant Modernization
Defense Industrial Base Infrastructure
Facilities Support Services Contracts
Cost Plus Fixed Fee Contracts

Risk Flags

Cost Plus Fixed Fee contract type can lead to cost overruns if not closely managed.
Long project duration increases exposure to market volatility and potential delays.
Lack of specific technical details makes independent value assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $7.4 million to BAE SYSTEMS ORDNANCE SYSTEMS INC. THIS TASK ORDER IS TO FUND THE CONSTRUCTION OF A NEW HAMMER MILL FOR SHEETED CELLULOSE AT RFAAP.

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS ORDNANCE SYSTEMS INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $7.4 million.

What is the period of performance?

Start: 2023-06-29. End: 2026-09-30.

What is the specific type and capacity of the hammer mill being procured, and how does it compare to existing or previous equipment at RFAAP?

The provided data indicates the task order is for a 'new hammer mill for sheeted cellulose' at the Radford Army Ammunition Plant (RFAAP). However, specific technical details regarding the mill's capacity (e.g., throughput in tons per hour), size, power requirements, or the exact type of cellulose it will process are not included. Sheeted cellulose is a key component in the production of certain energetic materials. Understanding the specifications is crucial to assess if this $7.4 million investment represents a significant technological upgrade or merely a like-for-like replacement. Without this information, it's difficult to benchmark the value against industry standards for similar specialized industrial equipment.

How does the $7.4 million cost compare to similar hammer mill procurements or industrial equipment installations within the Department of Defense or other government agencies?

Benchmarking the $7.4 million cost requires comparing it to similar procurements, which is challenging without more specific details on the hammer mill's specifications and the scope of associated construction. Industrial hammer mills can vary significantly in price based on size, material handling capabilities, required precision, and environmental controls. For large-scale industrial equipment intended for defense manufacturing, costs can range from hundreds of thousands to several million dollars. The 'Cost Plus Fixed Fee' (CPFF) nature of this contract adds complexity, as the final cost is subject to actual expenses incurred plus a predetermined fee. A thorough value assessment would necessitate reviewing historical data for comparable equipment purchases or construction projects at other ammunition plants or defense manufacturing facilities.

What are the key performance metrics or milestones associated with this hammer mill construction project, and how will BAE Systems' performance be evaluated?

The provided data specifies a performance period from June 29, 2023, to September 30, 2026 (1189 days duration), indicating the timeline for construction and installation. However, specific performance metrics or key milestones beyond the completion date are not detailed. For a CPFF contract of this nature, performance evaluation typically focuses on adherence to the schedule, effective cost management (ensuring costs are reasonable and allocable to the contract), quality of the construction and installation, and meeting technical specifications of the hammer mill. BAE Systems' performance would likely be assessed through regular progress reports, site inspections, and potentially acceptance testing of the installed equipment. The fixed fee is contingent upon satisfactory performance.

What is the historical spending pattern for facilities support services or similar equipment upgrades at the Radford Army Ammunition Plant (RFAAP)?

Historical spending data for RFAAP's facilities support services or equipment upgrades is not provided in the current dataset. To establish a spending pattern, one would need to analyze contract awards to RFAAP over several fiscal years, categorizing them by service type (e.g., construction, equipment procurement, maintenance) and value. This analysis would reveal trends in investment, identify major projects, and potentially highlight periods of significant modernization or expansion. Understanding past investments helps contextualize the current $7.4 million award, determining if it aligns with historical spending levels or represents a departure, perhaps due to new requirements or aging infrastructure.

Given the CPFF contract type, what specific controls are in place to mitigate the risk of cost overruns and ensure efficient use of taxpayer funds?

The Cost Plus Fixed Fee (CPFF) contract type inherently carries a risk of cost overruns because the contractor is reimbursed for actual allowable costs plus a fixed fee. To mitigate this, the Department of Defense typically employs several controls. These include rigorous cost accounting standards that contractors must follow, requiring detailed documentation for all claimed expenses. The Defense Contract Audit Agency (DCAA) often performs audits to verify the allowability, allocability, and reasonableness of costs. Contracting officers must exercise diligent oversight, regularly reviewing contractor progress reports, expenditures, and performance against the contract requirements. Negotiation of a fair and reasonable fixed fee, based on the complexity and risk of the work, is also a critical control point. Clear definition of the scope of work and change order management processes are essential to prevent scope creep.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

Address: STATE RT 114, RADFORD, VA, 24141

Business Categories: Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $7,412,768

Exercised Options: $7,412,768

Current Obligation: $7,412,768

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: W52P1J11G0002

IDV Type: BOA

Timeline