Navy awards $17.8M for shipbuilding materials to Austal USA, a sole-source contract

Contract Overview

Contract Amount: $17,794,690 ($17.8M)

Contractor: Austal USA, LLC

Awarding Agency: Department of Defense

Start Date: 2017-11-08

End Date: 2020-03-31

Contract Duration: 874 days

Daily Burn Rate: $20.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: POST DELIVERY - BOA ITEM 0005 (MATERIAL)

Place of Performance

Location: MOBILE, MOBILE County, ALABAMA, 36610

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $17.8 million to AUSTAL USA, LLC for work described as: POST DELIVERY - BOA ITEM 0005 (MATERIAL) Key points: 1. The contract value of $17.8 million for shipbuilding materials suggests a significant investment in naval capabilities. 2. The sole-source nature of this award warrants scrutiny regarding the justification for limited competition. 3. The contract duration of 874 days indicates a medium-term commitment for material supply. 4. The cost-plus award fee structure incentivizes contractor performance but requires careful oversight to manage costs. 5. The absence of small business set-aside flags potential missed opportunities for smaller enterprises in the supply chain. 6. The shipbuilding and repair sector is critical for national defense, with material costs being a substantial component.

Value Assessment

Rating: fair

Benchmarking the value of this $17.8 million contract for shipbuilding materials is challenging without specific details on the materials procured and their market rates. However, the cost-plus award fee structure implies that the government is willing to cover costs plus a fee, which can sometimes lead to higher overall expenditures compared to fixed-price contracts if not managed diligently. Comparing this to similar sole-source awards for specialized shipbuilding components would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. The justification for this approach is not provided in the data. Sole-source awards can be appropriate when only one responsible source can provide the required supplies or services, but they also carry a higher risk of inflated pricing due to the lack of competitive pressure. The absence of multiple bidders means that price discovery through market forces was bypassed.

Taxpayer Impact: Taxpayers may face higher costs due to the lack of competition. Without bids from multiple suppliers, there is less assurance that the price reflects the best possible value.

Public Impact

The primary beneficiaries are the Department of the Navy, which receives essential materials for its shipbuilding programs. The contract supports the production and maintenance of naval vessels, contributing to national security. The geographic impact is concentrated in Alabama, where Austal USA, LLC is located, potentially supporting local jobs and the regional economy. The contract implies a need for specialized shipbuilding materials, potentially impacting a niche segment of the manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer dollars.
The cost-plus award fee structure requires robust government oversight to prevent cost overruns and ensure fair profit margins.
Limited transparency on the specific materials procured makes it difficult to assess the reasonableness of the award amount.
The sole-source nature may indicate a lack of available qualified suppliers or a strategic decision to use a specific contractor, which needs justification.

Positive Signals

The award to Austal USA, LLC, a known entity in shipbuilding, suggests a level of established capability and reliability.
The contract supports critical defense infrastructure, aligning with national security objectives.
The cost-plus award fee structure, if managed effectively, can incentivize contractor performance and quality.

Sector Analysis

The shipbuilding and repair sector is a vital component of the defense industrial base, characterized by high capital investment, specialized labor, and complex supply chains. This contract for materials falls within the broader manufacturing and defense sector. Comparable spending benchmarks would typically involve analyzing the cost of similar raw materials or components used in naval construction, as well as the overall spending on shipbuilding by the Department of Defense, which runs into billions annually.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and that Austal USA, LLC is not a small business. This suggests that opportunities for small business subcontracting may not have been a primary focus or requirement for this specific award. Further investigation into subcontracting plans would be needed to understand the full impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The cost-plus award fee structure necessitates diligent monitoring of costs incurred by the contractor and the achievement of performance objectives to ensure fair value. Transparency regarding the specific materials, pricing, and performance metrics would be crucial for accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Shipbuilding Programs
Defense Material Procurement
Shipbuilding and Repair Contracts
Department of Defense Supply Chain Management

Risk Flags

Sole-source award requires justification.
Cost-plus award fee structure necessitates robust oversight.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.8 million to AUSTAL USA, LLC. POST DELIVERY - BOA ITEM 0005 (MATERIAL)

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 $17.8 million.

What is the period of performance?

Start: 2017-11-08. End: 2020-03-31.

What specific materials were procured under this $17.8 million contract, and how do their prices compare to market rates?

The provided data does not specify the exact materials procured under contract number 336611. It is identified as 'POST DELIVERY - BOA ITEM 0005 (MATERIAL)'. Without this detailed information, a direct comparison of per-unit costs to market rates is not feasible. The 'na' code '336611' corresponds to Ship Building and Repairing, indicating the general industry. To assess value, one would need to obtain the contract's statement of work and material specifications, then benchmark these against industry pricing databases or quotes from other potential suppliers, if available. The cost-plus award fee structure also means the final price is subject to costs incurred plus a negotiated fee, making a simple per-unit cost comparison less straightforward than with fixed-price contracts.

What is the justification for awarding this contract on a sole-source basis to Austal USA, LLC?

The data explicitly states the contract type as 'NOT AVAILABLE FOR COMPETITION', which is synonymous with a sole-source award. However, the specific justification for why only Austal USA, LLC could provide these shipbuilding materials is not detailed in the provided dataset. Typically, sole-source justifications are required by federal acquisition regulations and must demonstrate that only one responsible source exists, or that a compelling urgency, national security interest, or specific technological capability necessitates bypassing full and open competition. Without access to the official justification document (e.g., a Justification and Approval - J&A), it is impossible to ascertain the precise reasons. This lack of competitive bidding raises concerns about potential price inflation and reduced value for taxpayer funds.

How does the cost-plus award fee (CPAF) structure impact the overall cost and risk for this contract compared to other contract types?

The Cost-Plus Award Fee (CPAF) structure means the contractor (Austal USA, LLC) is reimbursed for allowable costs incurred, plus a base fee and an additional award fee based on performance against defined criteria. This structure is often used when the scope of work is not precisely defined or when innovation and high performance are critical. For the government, CPAF offers flexibility and can incentivize superior performance. However, it carries a higher risk of cost growth compared to fixed-price contracts because the government bears the majority of the cost risk. Effective oversight is crucial to ensure costs are reasonable and that the award fee is genuinely earned based on objective performance metrics, preventing potential overpayment.

What is Austal USA, LLC's track record with the Department of Defense, particularly in shipbuilding materials supply?

Austal USA, LLC is a well-established shipbuilder, primarily known for constructing aluminum commercial and military vessels. Their track record with the Department of Defense includes significant contracts for Littoral Combat Ships (LCS) and Expeditionary Fast Transports (EPF) for the U.S. Navy. While their primary expertise lies in vessel construction, this contract indicates they also supply or procure necessary materials. Their history suggests a capacity to handle large, complex defense contracts. However, specific performance data related to material supply, including on-time delivery, quality, and cost management for components, would require a deeper dive into contract performance reports and past performance evaluations beyond the basic award data.

What is the historical spending pattern for shipbuilding materials by the Department of the Navy, and how does this $17.8M award fit within that context?

The Department of the Navy's spending on shipbuilding and repair is substantial, often running into tens of billions of dollars annually. This $17.8 million award for materials represents a relatively small fraction of the Navy's overall shipbuilding budget. Historically, the Navy procures a vast array of materials, from raw metals and composites to highly specialized electronic components and propulsion systems. Awards for specific material categories can fluctuate based on shipbuilding schedules, modernization efforts, and fleet readiness requirements. This particular award fits within the ongoing need for materials to support fleet maintenance, repair, and new construction programs, though its specific impact within the broader historical context depends on the nature and quantity of the materials supplied.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002414R2304

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

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: $18,327,589

Exercised Options: $18,327,589

Current Obligation: $17,794,690

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