DoD's $61.8M contract for steam system modernization at Radford Army Ammunition Plant awarded to BAE Systems

Contract Overview

Contract Amount: $61,760,560 ($61.8M)

Contractor: BAE Systems Ordnance Systems Inc

Awarding Agency: Department of Defense

Start Date: 2023-09-11

End Date: 2026-12-31

Contract Duration: 1,207 days

Daily Burn Rate: $51.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: EFFORT FOR CONSTRUCTION, REPAIR, AND MODERNIZATION OF THE STEAM DISTRIBUTION SYSTEM AT RFAAP.

Place of Performance

Location: RADFORD, RADFORD CITY County, VIRGINIA, 24141

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $61.8 million to BAE SYSTEMS ORDNANCE SYSTEMS INC for work described as: EFFORT FOR CONSTRUCTION, REPAIR, AND MODERNIZATION OF THE STEAM DISTRIBUTION SYSTEM AT RFAAP. Key points: 1. Contract focuses on critical infrastructure upgrades for steam distribution. 2. BAE Systems, a major defense contractor, secured the award. 3. The contract is a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle. 4. Fixed-price contract type aims to control costs for the government. 5. Project duration extends over three years, indicating a significant scope of work. 6. Location in Virginia suggests potential regional economic impact.

Value Assessment

Rating: good

The contract value of $61.8 million for steam system modernization appears reasonable given the scope of construction, repair, and modernization. Without specific benchmarks for similar large-scale industrial facility steam system overhauls, direct cost comparison is challenging. However, the firm-fixed-price structure suggests an effort to ensure cost certainty for the government, which is a positive indicator of value. The contractor, BAE Systems, is a well-established entity with significant experience in defense-related infrastructure projects, implying a level of expertise that should contribute to efficient execution and value delivery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The specific number of bidders is not provided, but the 'full and open' designation suggests a competitive process that likely drove pricing and technical solutions. This approach is generally favored for ensuring the government receives the best possible value by leveraging a broad range of market capabilities.

Taxpayer Impact: Full and open competition maximizes the chances of obtaining competitive pricing and innovative solutions, ultimately benefiting taxpayers by ensuring funds are used efficiently for essential infrastructure.

Public Impact

The primary beneficiaries are the Department of Defense and the operations at the Radford Army Ammunition Plant, ensuring reliable steam supply for its functions. Services delivered include construction, repair, and modernization of the steam distribution system. The geographic impact is concentrated at the Radford Army Ammunition Plant in Virginia. Workforce implications may include job creation for skilled trades and construction professionals in the region during the contract period.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen complexities arise during modernization.
Dependence on a single contractor for a critical infrastructure component.
Risk of schedule delays impacting plant operations if execution is not timely.

Positive Signals

Award to a reputable contractor with a strong track record in defense projects.
Firm-fixed-price contract type provides cost certainty.
Full and open competition suggests a robust selection process.
Long-term contract duration allows for thorough planning and execution.

Sector Analysis

This contract falls within the Facilities Support Services sector, specifically focusing on the maintenance and upgrade of industrial infrastructure. The market for large-scale industrial facility modernization is specialized, often dominated by large defense contractors and engineering firms capable of handling complex projects. Spending in this area is critical for maintaining the operational readiness of government facilities, particularly those involved in defense manufacturing or logistics. Benchmarks for such projects are highly project-specific due to unique site conditions and system requirements.

Small Business Impact

The provided data indicates that small business participation (sb) is false, and there is no mention of small business set-asides. This suggests the contract was not specifically targeted towards small businesses. Consequently, the direct impact on the small business ecosystem may be limited unless BAE Systems engages small businesses as subcontractors, which is not explicitly detailed in this award information.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army contracting and technical teams responsible for the Radford Army Ammunition Plant. Accountability measures are inherent in the firm-fixed-price contract structure, which incentivizes the contractor to meet defined cost and performance targets. Transparency is generally maintained through contract award databases and reporting requirements, though specific project-level oversight details are not provided.

Related Government Programs

Army Ammunition Plant Operations
Industrial Facility Maintenance
Defense Infrastructure Modernization
Steam System Engineering and Construction
Government Facility Services

Risk Flags

Potential for schedule delays
Risk of cost overruns due to unforeseen site conditions
Operational disruption during modernization
Safety hazards associated with high-pressure steam systems

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.8 million to BAE SYSTEMS ORDNANCE SYSTEMS INC. EFFORT FOR CONSTRUCTION, REPAIR, AND MODERNIZATION OF THE STEAM DISTRIBUTION SYSTEM 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 $61.8 million.

What is the period of performance?

Start: 2023-09-11. End: 2026-12-31.

What is BAE Systems' track record with similar steam system modernization projects for the Department of Defense?

BAE Systems has a substantial track record in large-scale defense contracting, including infrastructure development and modernization. While specific details on their past steam system modernization projects for the DoD are not immediately available in this dataset, their extensive experience with military installations suggests a capability to handle such complex projects. They have been involved in numerous projects requiring significant construction, repair, and upgrade of critical infrastructure at various defense sites. Further investigation into their project portfolio and past performance reviews would be necessary to fully assess their specific expertise in steam distribution systems.

How does the $61.8 million cost compare to similar steam system modernization projects at other military installations?

Directly comparing the $61.8 million cost to similar projects is challenging without access to a comprehensive database of comparable steam system modernization efforts at other military installations. Factors such as the size of the facility, the age and condition of the existing system, the complexity of the required upgrades (e.g., pipe material, insulation, control systems), and regional labor costs can significantly influence project expenses. The firm-fixed-price nature of this contract suggests an effort to cap costs, but the initial estimate's reasonableness depends heavily on detailed engineering assessments and market conditions at the time of bidding. Benchmarking would require identifying projects with similar scope, scale, and location.

What are the primary risks associated with modernizing a steam distribution system at an active ammunition plant?

Modernizing a steam distribution system at an active ammunition plant presents several significant risks. Firstly, there's the risk of disrupting ongoing plant operations, which could impact production schedules and national security readiness. Safety is paramount, as steam systems operate under high pressure and temperature, and any failure could be catastrophic, especially in an environment handling explosives. Secondly, unforeseen conditions in aging infrastructure (e.g., hidden corrosion, asbestos, undocumented modifications) can lead to scope creep and cost overruns, even under a fixed-price contract. Thirdly, ensuring compatibility with existing plant processes and future modernization plans is crucial to avoid creating new bottlenecks or inefficiencies. Finally, environmental compliance during construction and disposal of old materials adds another layer of complexity.

How effective is the firm-fixed-price contract type in managing costs for this type of infrastructure project?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs in infrastructure projects where the scope of work is well-defined and risks are manageable. For this steam system modernization, FFP provides cost certainty to the government, as the contractor assumes the primary risk of cost overruns. This incentivizes the contractor to perform efficiently and control their expenses. However, if significant unforeseen issues arise that were not reasonably foreseeable during the bidding process, the contractor might seek change orders, potentially increasing the total cost. The success of FFP in this context relies heavily on the thoroughness of the initial design and scope definition.

What is the historical spending trend for facilities support services at the Radford Army Ammunition Plant?

Analyzing historical spending trends for facilities support services at the Radford Army Ammunition Plant requires access to historical contract data specific to this installation. Without that data, it's impossible to provide a precise trend. However, it is reasonable to assume that facilities maintenance and modernization are ongoing requirements for such a critical defense asset. Spending in this category can fluctuate based on the lifecycle of infrastructure, specific modernization initiatives, and budget allocations. A significant project like this steam system overhaul suggests a period of focused investment in upgrading aging infrastructure, potentially indicating a higher spending level in this specific category during the contract period compared to routine maintenance years.

Industry Classification

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

Product/Service Code: PIPE, TUBING, HOSE, AND FITTINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $61,760,560

Exercised Options: $61,760,560

Current Obligation: $61,760,560

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: W52P1J11G0002

IDV Type: BOA

Timeline