Homeland Security awards $921.7M for Arctic Security Cutters, a sole-source shipbuilding contract

Contract Overview

Contract Amount: $921,744,317 ($921.7M)

Contractor: Bollinger Shipyards Lockport, L.L.C.

Awarding Agency: Department of Homeland Security

Start Date: 2025-12-26

End Date: 2030-12-25

Contract Duration: 1,825 days

Daily Burn Rate: $505.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LETTER CONTRACT AWARD OF ARCTIC SECURITY CUTTERS

Place of Performance

Location: LOCKPORT, LAFOURCHE County, LOUISIANA, 70374

State: Louisiana Government Spending

Plain-Language Summary

Department of Homeland Security obligated $921.7 million to BOLLINGER SHIPYARDS LOCKPORT, L.L.C. for work described as: LETTER CONTRACT AWARD OF ARCTIC SECURITY CUTTERS Key points: 1. Contract awarded to Bollinger Shipyards Lockport, L.L.C. for Arctic Security Cutters. 2. This is a sole-source award, raising questions about competition and potential cost savings. 3. The contract duration is 5 years, with a firm-fixed-price structure. 4. The North American Industry Classification System (NAICS) code is 336611 for Ship Building and Repairing. 5. The contract is for a significant investment in national security capabilities. 6. The award is a definitive contract, indicating a firm commitment. 7. The contract is not set aside for small businesses.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized requirements for Arctic Security Cutters. Without competitive bids, it's difficult to assess if the $921.7 million price represents optimal value for money. The firm-fixed-price structure offers some cost certainty, but the lack of competition means taxpayers may not benefit from the price discovery inherent in a bidding process. Further analysis would require understanding the detailed specifications and comparing them to similar, albeit likely less specialized, shipbuilding projects.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This approach is typically used when a unique capability or product is required, or in cases of urgent need where competition is not feasible. The lack of competition means that the U.S. Coast Guard did not benefit from a range of proposals and pricing strategies that would typically emerge from a full and open competition. This can limit the government's ability to secure the most advantageous pricing.

Taxpayer Impact: A sole-source award means taxpayers may not be getting the best possible price, as there was no competitive pressure to drive down costs. The government did not explore alternative solutions or pricing from multiple vendors.

Public Impact

The U.S. Coast Guard will benefit from enhanced capabilities to operate in the Arctic region. The contract will result in the construction of new Arctic Security Cutters, crucial for national security and maritime safety. The geographic impact is primarily focused on the Arctic, a region of increasing strategic importance. The contract is expected to create or sustain jobs in the shipbuilding and repair sector, particularly in Louisiana where Bollinger Shipyards is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Specialized nature of Arctic cutters may present unique construction challenges and risks.
Long-term sustainment and operational costs of these specialized vessels are not detailed in this award.

Positive Signals

Addresses a critical national security need for Arctic domain awareness and presence.
Firm-fixed-price contract provides cost certainty for the awarded scope of work.
Award to a domestic shipyard supports U.S. industrial base and jobs.

Sector Analysis

The shipbuilding and repairing industry (NAICS 336611) is a capital-intensive sector involving complex engineering and manufacturing processes. This contract falls within the defense and national security segment of the industry, focusing on specialized vessels designed for harsh environments. The market for such specialized naval and coast guard vessels is often characterized by a limited number of qualified shipyards, and government contracts are a significant driver of activity. Comparable spending benchmarks are difficult to establish without more specific details on vessel size and capabilities, but large naval shipbuilding contracts can run into hundreds of millions or billions of dollars.

Small Business Impact

This contract is not a small business set-aside, as indicated by 'sb': false. Bollinger Shipyards Lockport, L.L.C. is a large business. There is no explicit mention of subcontracting requirements for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, unless the prime contractor voluntarily engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract will be managed by the U.S. Coast Guard, a component of the Department of Homeland Security. As a definitive contract with a firm-fixed-price structure, oversight will likely focus on adherence to specifications, delivery schedules, and quality control. Transparency is generally maintained through contract award databases, but detailed programmatic oversight information is not provided. The Department of Homeland Security has an Office of Inspector General that provides independent oversight of its programs and operations.

Related Government Programs

Polar Security Cutter Program
U.S. Coast Guard Icebreaker Modernization
Naval Shipbuilding Contracts
Department of Homeland Security Acquisitions

Risk Flags

Sole-source award
Potential for cost overruns on specialized vessels
Long procurement timelines for major shipbuilding

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $921.7 million to BOLLINGER SHIPYARDS LOCKPORT, L.L.C.. LETTER CONTRACT AWARD OF ARCTIC SECURITY CUTTERS

Who is the contractor on this award?

The obligated recipient is BOLLINGER SHIPYARDS LOCKPORT, L.L.C..

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 $921.7 million.

What is the period of performance?

Start: 2025-12-26. End: 2030-12-25.

What is the track record of Bollinger Shipyards Lockport, L.L.C. in delivering complex shipbuilding projects, particularly those with specialized requirements?

Bollinger Shipyards Lockport, L.L.C. has a long history in shipbuilding and repair, with a portfolio that includes various vessels for commercial and government clients. They have experience in constructing patrol boats, cutters, and other specialized craft. However, the construction of large, ice-capable vessels like the Arctic Security Cutters represents a significant undertaking. While they have delivered complex projects, the specific challenges associated with Arctic-class vessels, including advanced propulsion, hull integrity for ice operations, and specialized sensor integration, require a detailed review of their past performance on projects of similar scale and technical sophistication. Information on their performance on previous large government contracts, including any cost overruns or schedule delays, would be crucial for a comprehensive assessment.

How does the $921.7 million award for Arctic Security Cutters compare to the cost of similar specialized vessels, considering the sole-source nature of this contract?

Direct cost comparisons for specialized Arctic Security Cutters are challenging due to their unique design and limited production. The sole-source nature of this award means there was no competitive bidding process to establish a market-driven price. However, the U.S. Coast Guard's Polar Security Cutter (PSC) program, which these vessels are part of, has faced significant cost growth and schedule delays in its history, with previous estimates for lead ships being in the hundreds of millions. Without competitive proposals, it is difficult to definitively state whether $921.7 million represents a fair market price. Benchmarking against other nations' icebreaker construction costs or similar large naval vessels, adjusted for capability differences, would be necessary for a more robust value assessment.

What are the primary risks associated with this sole-source contract for Arctic Security Cutters, and what mitigation strategies are in place?

The primary risk with this sole-source contract is the potential for inflated costs due to the lack of competition, which limits price discovery and negotiation leverage for the government. Another significant risk involves the technical complexity and specialized nature of Arctic-class vessels; unforeseen design challenges, material sourcing issues, or construction difficulties could lead to schedule delays and cost overruns. Furthermore, the long-term operational and maintenance costs of these highly specialized assets are substantial and need careful management. Mitigation strategies typically involve rigorous government oversight of design and production, detailed contract clauses for managing changes, performance incentives or penalties, and thorough independent cost reviews. The firm-fixed-price structure itself aims to transfer some cost risk to the contractor.

What is the historical spending pattern for the U.S. Coast Guard's acquisition of major assets, and how does this award fit within that context?

The U.S. Coast Guard historically faces significant challenges in acquiring major assets due to the high cost, long lead times, and complex technological requirements. Major acquisitions, such as new cutters or aircraft, often experience budget fluctuations, scope changes, and schedule slips. The Polar Security Cutter program, of which these Arctic Security Cutters are a part, has been a long-standing requirement with a history of acquisition challenges and evolving cost estimates. This $921.7 million award represents a substantial single investment, reflecting the high cost of specialized maritime platforms. It fits within a pattern of the Coast Guard seeking to modernize its aging fleet and enhance its capabilities in critical areas like the Arctic, but it also underscores the persistent difficulties in executing large-scale shipbuilding programs efficiently.

What are the implications of awarding this contract to Bollinger Shipyards Lockport, L.L.C. for the broader U.S. shipbuilding industrial base, especially concerning competition?

Awarding this significant contract to Bollinger Shipyards Lockport, L.L.C. provides a substantial workload and economic stimulus to that specific shipyard and its supply chain, supporting jobs and domestic manufacturing capabilities. However, the sole-source nature of the award means that other capable U.S. shipyards were not given an opportunity to compete for this work. This can have implications for the broader industrial base by potentially concentrating work and limiting opportunities for diversification or innovation that might arise from a competitive environment. While supporting a domestic prime contractor is a strategic goal, the lack of competition raises questions about overall industrial base health and the government's ability to foster a robust, competitive shipbuilding sector capable of meeting diverse future needs.

Industry Classification

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

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 70Z02326Q93210002

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8365 HIGHWAY 308, LOCKPORT, LA, 70374

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,142,956,960

Exercised Options: $2,142,956,960

Current Obligation: $921,744,317

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline