DoD Awards BAE Systems $225.7M for Explosives Production, Covering 2025-2027

Contract Overview

Contract Amount: $225,750,026 ($225.8M)

Contractor: BAE Systems Ordnance Systems Inc.

Awarding Agency: Department of Defense

Start Date: 2025-08-01

End Date: 2027-10-31

Contract Duration: 821 days

Daily Burn Rate: $275.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: THIS DELIVERY ORDER IS FOR THE U.S. GOVERNMENT EXPLOSIVE PRODUCTION REQUIREMENTS TO BE EXECUTED DURING ORDERING PERIOD 02.

Place of Performance

Location: KINGSPORT, SULLIVAN County, TENNESSEE, 37660

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $225.8 million to BAE SYSTEMS ORDNANCE SYSTEMS INC. for work described as: THIS DELIVERY ORDER IS FOR THE U.S. GOVERNMENT EXPLOSIVE PRODUCTION REQUIREMENTS TO BE EXECUTED DURING ORDERING PERIOD 02. Key points: 1. Significant contract for essential defense materiel. 2. BAE Systems is a major defense contractor. 3. Potential for price volatility due to economic price adjustment. 4. Manufacturing sector with critical national security implications.

Value Assessment

Rating: good

The contract value of $225.7M over approximately 2.7 years appears reasonable for specialized explosives manufacturing. Benchmarking against similar large-scale defense production contracts would provide further context.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. This method generally promotes price discovery and potentially better value for the government.

Taxpayer Impact: The competitive award aims to secure necessary explosives production at a fair price, ensuring taxpayer funds are used efficiently for defense readiness.

Public Impact

Ensures continued supply of critical explosives for U.S. military operations. Supports national defense industrial base and manufacturing capabilities. Potential economic impact on the Tennessee region where BAE Systems operates.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause introduces potential for cost overruns.
Long-term reliance on a single supplier for critical munitions.
Geopolitical instability could impact raw material costs and availability.

Positive Signals

Full and open competition likely secured competitive pricing.
Contract supports essential national security requirements.
Fixed-price elements provide some cost certainty.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically explosives production. Spending benchmarks for similar large-scale defense procurement contracts are typically in the hundreds of millions to billions of dollars.

Small Business Impact

While the prime contractor is BAE Systems, a large entity, the contract may offer subcontracting opportunities for small businesses in the supply chain for raw materials or specialized components.

Oversight & Accountability

The Department of the Army, under the Department of Defense, is responsible for oversight. Regular reporting and performance reviews will be crucial to ensure contract compliance and effective execution.

Related Government Programs

Explosives Manufacturing
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Potential for cost escalation due to EPA.
Dependence on a single supplier for critical munitions.
Vulnerability to supply chain disruptions for raw materials.
Geopolitical factors influencing material costs and availability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $225.8 million to BAE SYSTEMS ORDNANCE SYSTEMS INC.. THIS DELIVERY ORDER IS FOR THE U.S. GOVERNMENT EXPLOSIVE PRODUCTION REQUIREMENTS TO BE EXECUTED DURING ORDERING PERIOD 02.

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 $225.8 million.

What is the period of performance?

Start: 2025-08-01. End: 2027-10-31.

What is the historical cost performance of BAE Systems Ordnance Systems Inc. on similar defense production contracts?

Historical cost performance data for BAE Systems Ordnance Systems Inc. on similar defense production contracts is essential for a comprehensive value assessment. Analyzing past adherence to budgets, the impact of economic price adjustments on previous contracts, and any incurred cost overruns would provide critical insights into their reliability and efficiency in managing large-scale production.

What are the specific risks associated with the economic price adjustment clause in this contract?

The economic price adjustment (EPA) clause introduces risk by allowing for price increases based on fluctuations in specified economic factors, such as raw material costs or labor. This can lead to higher-than-anticipated expenditures for the government if these factors escalate significantly during the contract period, potentially exceeding initial budget projections and impacting overall cost-effectiveness.

How effectively does this contract ensure the long-term readiness and technological advancement of U.S. explosive production capabilities?

This contract addresses immediate production needs but its effectiveness for long-term readiness and technological advancement depends on factors beyond the stated value. It's crucial to assess if the contract incentivizes innovation, includes provisions for modernization of production facilities, and supports the development of next-generation explosive technologies to maintain a strategic advantage.

Industry Classification

NAICS: Manufacturing › Other Chemical Product and Preparation Manufacturing › Explosives Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

Address: 4509 W STONE DR, KINGSPORT, TN, 37660

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

Financial Breakdown

Contract Ceiling: $225,750,026

Exercised Options: $225,750,026

Current Obligation: $225,750,026

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W519TC24D0001

IDV Type: IDC

Timeline