DHS awards $12.5M contract for Greek cutter services to Virginia Electronic Systems, Inc

Contract Overview

Contract Amount: $12,477,474 ($12.5M)

Contractor: Virginia Electronic Systems, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2023-09-29

End Date: 2026-06-30

Contract Duration: 1,005 days

Daily Burn Rate: $12.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FMS GR-P-SCN SHIPYARD SERVICES FOR EDA EX-USCGC CUTTERS FOR GREECE

Plain-Language Summary

Department of Homeland Security obligated $12.5 million to VIRGINIA ELECTRONIC SYSTEMS, INC. for work described as: FMS GR-P-SCN SHIPYARD SERVICES FOR EDA EX-USCGC CUTTERS FOR GREECE Key points: 1. Contract awarded for specialized shipyard services on EDA cutters destined for Greece. 2. Virginia Electronic Systems, Inc. is the sole awardee for this specific requirement. 3. The contract is a firm-fixed-price definitive contract with a duration of approximately 1005 days. 4. This award falls under the Ship Building and Repairing NAICS code. 5. The contract value is $12,477,474.38. 6. No small business set-aside was indicated for this procurement.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more detailed cost breakdowns or comparisons to similar international transfers. The firm-fixed-price structure aims to control costs, but the absence of competitive bidding limits the ability to assess optimal pricing. The value appears reasonable for specialized shipyard services on complex vessels, but a lack of competitive data prevents a definitive 'good' or 'excellent' rating.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This approach is typically used when only one vendor possesses the necessary specialized capabilities, security clearances, or unique qualifications to perform the work. The limited competition means that price discovery through market forces was not a primary factor in this award.

Taxpayer Impact: Sole-source awards can sometimes lead to higher prices for taxpayers compared to competitive procurements, as the government does not benefit from multiple bids driving down costs.

Public Impact

The primary beneficiaries are the U.S. Coast Guard (in terms of divesting excess assets) and the Hellenic Coast Guard (receiving operational cutters). The services delivered include essential shipyard maintenance and preparation for the transfer of ex-USCGC cutters. The geographic impact is primarily within the United States where the shipyard services will be performed. Workforce implications include employment for skilled labor in the shipbuilding and repair sector at the awarded facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in a higher price than a fully competed contract.
Sole-source awards require strong justification to ensure fair and reasonable pricing.
Limited transparency into the pricing structure due to non-competitive nature.

Positive Signals

Firm-fixed-price contract type helps to cap potential cost overruns for the government.
The contract duration is clearly defined, providing a predictable timeline for services.
Awarding to a known entity may leverage existing relationships and expertise.

Sector Analysis

The shipbuilding and repairing sector is a critical component of the U.S. industrial base, supporting both commercial and defense needs. This contract, falling under NAICS code 336611, involves specialized services for naval vessels. While the overall market size for new shipbuilding is substantial, the market for specialized repair and refitting of existing vessels, particularly for foreign military sales or transfers, is more niche. This contract fits within this specialized segment, focusing on preparing assets for international transfer.

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. The award was made to Virginia Electronic Systems, Inc., and without further information on their subcontracting plans, the direct impact on the small business ecosystem is unclear. Larger prime contractors often have subcontracting goals, but this information is not available here.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Coast Guard contracting officers and program managers. As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency is limited due to the sole-source nature, but contract performance and financial expenditures would be monitored. There is no explicit mention of an Inspector General's specific jurisdiction over this particular award in the provided data, though IG oversight is a general function within federal agencies.

Related Government Programs

Foreign Military Sales
Excess Defense Articles (EDA) Program
U.S. Coast Guard Ship Maintenance Contracts
Naval Vessel Repair and Refurbishment

Risk Flags

Sole-source award limits price competition.
Potential for higher costs without competitive bidding.
Contract performance monitoring is critical due to limited alternatives.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $12.5 million to VIRGINIA ELECTRONIC SYSTEMS, INC.. FMS GR-P-SCN SHIPYARD SERVICES FOR EDA EX-USCGC CUTTERS FOR GREECE

Who is the contractor on this award?

The obligated recipient is VIRGINIA ELECTRONIC SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $12.5 million.

What is the period of performance?

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

What is the track record of Virginia Electronic Systems, Inc. with similar sole-source contracts for vessel preparation?

Assessing the track record of Virginia Electronic Systems, Inc. with similar sole-source contracts requires a deeper dive into historical contract awards and performance reviews. Without access to a comprehensive federal procurement database or specific contract performance reports, it is difficult to definitively state their experience with sole-source awards for vessel preparation, especially for international transfers. However, the fact that they were awarded this contract suggests they possess specialized capabilities deemed necessary by the U.S. Coast Guard. Further investigation into their past performance on other Coast Guard or Department of Defense contracts, particularly those involving ship maintenance or modification, would provide a clearer picture of their reliability and expertise in handling such specialized requirements.

How does the cost of this contract compare to similar shipyard services for EDA cutters?

Direct cost comparison for this $12.5 million contract is challenging due to the sole-source nature and the specific scope of work involving the preparation of ex-USCGC cutters for transfer to Greece. Without competitive bids, it's difficult to establish a market-driven price benchmark. To assess value, one would ideally compare this contract to previous EDA transfers of similar vessels or to commercial rates for comparable shipyard services. The firm-fixed-price contract type aims to provide cost certainty, but the absence of competition means the government did not benefit from potential price reductions that could arise from multiple bidders vying for the contract. A detailed cost analysis by the contracting officer would have been performed to ensure the price was fair and reasonable, but the specifics of that analysis are not publicly available.

What are the primary risks associated with a sole-source award for critical shipyard services?

The primary risks associated with a sole-source award for critical shipyard services include potential overpricing due to the lack of competition, limited negotiation leverage for the government, and a reduced incentive for the contractor to innovate or offer cost-saving efficiencies. There's also a risk that the sole-source provider may not have the most up-to-date technology or best practices if they are not regularly challenged by a competitive market. Furthermore, if the sole-source contractor experiences performance issues or financial instability, the government has fewer alternative options for completing the critical work in a timely manner, potentially leading to program delays and increased costs. Robust oversight and a thorough justification for the sole-source award are crucial to mitigate these risks.

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

The firm-fixed-price (FFP) contract type is generally considered effective in managing costs for projects where the scope of work is well-defined and risks are understood, such as specialized shipyard services. Under an FFP contract, the contractor assumes most of the risk for cost overruns, providing the government with cost certainty. This means the total price paid will not exceed the agreed-upon amount, regardless of the contractor's actual costs. For this $12.5 million contract, the FFP structure helps the U.S. Coast Guard budget accurately and protects against unexpected increases in labor or material costs during the contract period. However, the contractor may build in a contingency premium to account for potential risks, which could result in a higher initial price compared to other contract types if the scope were less certain.

What is the historical spending pattern for similar EDA cutter preparation contracts by the U.S. Coast Guard?

Analyzing historical spending patterns for similar EDA cutter preparation contracts by the U.S. Coast Guard is essential for context. While specific data for this $12.5 million contract is not provided, the Coast Guard frequently engages in the transfer of excess vessels through the EDA program. Spending on such contracts can vary significantly based on the vessel class, its condition, the extent of refurbishment required, and the prevailing market rates for shipyard services at the time of award. Historically, these contracts can range from a few million dollars to tens of millions, depending on the complexity. The Coast Guard aims to recoup costs through these transfers and ensure the vessels are operationally sound for the recipient nation. Understanding past award values and the scope of work for similar transfers would provide a benchmark for evaluating the reasonableness of this current contract.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4465 SHORE DR, VIRGINIA BEACH, VA, 23455

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $12,490,077

Exercised Options: $12,477,474

Current Obligation: $12,477,474

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline