Department of the Navy awards $23.1M contract for shipbuilding and repair, with limited competition

Contract Overview

Contract Amount: $23,097,503 ($23.1M)

Contractor: Austal USA, LLC

Awarding Agency: Department of Defense

Start Date: 2015-09-29

End Date: 2019-03-31

Contract Duration: 1,279 days

Daily Burn Rate: $18.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: POST DELIVERY - BOA ITEM 0001 AND ITEM 0002

Place of Performance

Location: MOBILE, MOBILE County, ALABAMA, 36610

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $23.1 million to AUSTAL USA, LLC for work described as: POST DELIVERY - BOA ITEM 0001 AND ITEM 0002 Key points: 1. The contract value of $23.1 million appears moderate for shipbuilding and repair services. 2. Limited competition suggests potential for higher pricing and reduced innovation. 3. The contract duration of 1279 days indicates a significant, long-term commitment. 4. The 'Ship Building and Repairing' sector is critical for national defense and maritime capabilities. 5. The contract's performance period spans nearly four years, requiring sustained oversight. 6. The use of a Cost Plus Fixed Fee (CPFF) pricing structure warrants careful monitoring of costs.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the services rendered. However, $23.1 million for shipbuilding and repair over nearly four years suggests a moderate investment. The CPFF pricing structure can lead to cost overruns if not managed tightly, potentially impacting value for money. Further analysis would require comparing the scope of work and deliverables to similar contracts awarded by the Navy or other defense agencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not competed openly, indicating a limited competition scenario. The specific reasons for this limitation are not provided, but it could be due to specialized capabilities, existing relationships, or urgent needs. A limited competition environment typically results in fewer bids, potentially leading to less competitive pricing and a reduced incentive for the contractor to offer the best possible value.

Taxpayer Impact: Taxpayers may face higher costs due to the lack of robust competition. The absence of a broad bidding process limits the government's ability to secure the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational readiness. Services delivered likely include maintenance, repair, and potentially minor construction for naval vessels. The geographic impact is centered in Alabama, where Austal USA is located. This contract supports skilled labor within the shipbuilding and repair industry in Alabama.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to CPFF pricing structure.
Limited competition may result in suboptimal pricing.
Lack of detailed scope of work makes value assessment difficult.

Positive Signals

Contract awarded to a known entity, Austal USA, LLC.
Long-term contract provides stability for services.
Focus on critical shipbuilding and repair capabilities.

Sector Analysis

The shipbuilding and repair sector is a vital component of the defense industrial base, essential for maintaining naval fleets. This contract falls within the broader manufacturing and defense services industry. Comparable spending benchmarks would involve analyzing other contracts for vessel maintenance and repair, which can range from millions to billions of dollars depending on the scale and complexity of the work.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. However, the prime contractor, Austal USA, may engage small businesses as subcontractors for specific components or services, which would be detailed in their subcontracting plan, if applicable.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the terms and conditions of the Cost Plus Fixed Fee contract, including performance metrics and delivery schedules. Transparency is facilitated through contract databases, though specific details of performance and cost breakdowns may be limited.

Related Government Programs

Naval Ship Maintenance Contracts
Defense Shipbuilding Programs
Ship Repair and Overhaul Services
Defense Industrial Base Contracts

Risk Flags

Limited competition may lead to higher costs.
Cost Plus Fixed Fee pricing requires diligent oversight to manage expenses.
Lack of detailed scope of work hinders precise value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.1 million to AUSTAL USA, LLC. POST DELIVERY - BOA ITEM 0001 AND ITEM 0002

Who is the contractor on this award?

The obligated recipient is AUSTAL USA, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $23.1 million.

What is the period of performance?

Start: 2015-09-29. End: 2019-03-31.

What is the specific nature of the shipbuilding and repair work covered under this contract?

The provided data indicates the contract pertains to 'Ship Building and Repairing' (nd: 'Ship Building and Repairing') and is associated with the Department of the Navy (ag: 'Department of Defense', sa: 'Department of the Navy'). However, the specific details of the work, such as the types of vessels, the scope of repairs, or any new construction elements, are not explicitly defined in the abbreviated data. The contract type is Cost Plus Fixed Fee (pt: 'COST PLUS FIXED FEE'), suggesting that the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure is often used when the scope of work is not precisely defined at the outset or involves significant uncertainty.

How does the $23.1 million contract value compare to typical spending for similar naval vessel maintenance and repair?

The contract value of $23.1 million awarded to Austal USA, LLC, for shipbuilding and repair services over a period of 1279 days (approximately 3.5 years) represents a moderate investment. However, without knowing the specific class of vessels, the extent of the work (e.g., routine maintenance, major overhauls, or minor construction), and the geographic location of the work, a direct comparison is difficult. Naval vessel maintenance and repair contracts can vary significantly in cost, ranging from a few million dollars for smaller vessels or routine upkeep to hundreds of millions or even billions for major refits or new construction of large warships. This contract's value suggests it likely covers significant but not the most extensive repair or maintenance activities for a specific set of vessels.

What are the potential risks associated with the Cost Plus Fixed Fee (CPFF) contract type used here?

The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility when the scope of work is uncertain, carries inherent risks. For the government, the primary risk is that the contractor may have less incentive to control costs rigorously, as all allowable costs are reimbursed. If the contractor's cost estimates are inaccurate or if inefficiencies arise, the total cost to the government could exceed initial projections. The fixed fee, however, provides some predictability regarding the contractor's profit. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate these risks and ensure value for money.

What does the 'NOT AVAILABLE FOR COMPETITION' status imply for the procurement process and taxpayer value?

The 'NOT AVAILABLE FOR COMPETITION' (ct: 'NOT AVAILABLE FOR COMPETITION') designation indicates that this contract was not awarded through a full and open competitive process. This typically occurs when only one responsible source can satisfy the agency's needs, or in specific circumstances like urgent and compelling requirements. While such designations are legally permissible, they generally lead to less price competition compared to fully competed contracts. This can potentially result in higher prices for taxpayers, as the government does not benefit from the bidding process driving down costs. Robust justification and documentation are required for such sole-source or limited-source awards to ensure they are indeed necessary and provide fair and reasonable pricing.

How does Austal USA's track record in shipbuilding and repair influence the assessment of this contract?

Austal USA, LLC, is a known entity in the shipbuilding industry, particularly recognized for its work on high-speed vessels and naval platforms. Their track record includes contracts with the U.S. Navy and other maritime clients. While specific performance details on past contracts are not provided here, their established presence suggests a level of expertise and capability relevant to this award. Assessing this contract's success would involve reviewing Austal USA's performance on this specific delivery order, including adherence to schedule, budget, and quality standards, in conjunction with their broader company history.

What is the historical spending pattern for shipbuilding and repair by the Department of the Navy, and how does this contract fit?

The Department of the Navy historically spends billions of dollars annually on shipbuilding, repair, and maintenance to sustain its global fleet. This spending encompasses a wide range of activities, from routine upkeep of individual vessels to the construction of new aircraft carriers and submarines. This $23.1 million delivery order represents a relatively small portion of the Navy's overall shipbuilding and repair budget. It likely addresses specific maintenance, repair, or minor modification needs for a particular class of ships, fitting into the broader strategy of fleet readiness and sustainment rather than major new platform acquisition.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002414R2304

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Austal Limited

Address: 1 DUNLAP DR, MOBILE, AL, 36610

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

Financial Breakdown

Contract Ceiling: $25,480,640

Exercised Options: $25,480,640

Current Obligation: $23,097,503

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002415G2304

IDV Type: BOA

Timeline