DoD's $18.1M contract for NPS 724 dismantlement awarded to a single Russian firm

Contract Overview

Contract Amount: $18,109,662 ($18.1M)

Contractor: Zvyozdochka, Shiprepairing Center, Open Joint Stock Company

Awarding Agency: Department of Defense

Start Date: 2007-06-13

End Date: 2009-09-30

Contract Duration: 840 days

Daily Burn Rate: $21.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PREPARATION OF NPS 724 DISMANTLEMENT

Plain-Language Summary

Department of Defense obligated $18.1 million to ZVYOZDOCHKA, SHIPREPAIRING CENTER, OPEN JOINT STOCK COMPANY for work described as: PREPARATION OF NPS 724 DISMANTLEMENT Key points: 1. The contract's value appears high relative to the specialized nature of the service. 2. Limited competition raises concerns about potential overpayment and lack of market-driven pricing. 3. The firm's track record and specific expertise in this niche dismantlement are key risk indicators. 4. Performance context is limited due to the lack of publicly available performance metrics. 5. This contract falls within the 'Other Metal Container Manufacturing' sector, a niche area. 6. The absence of small business involvement suggests a focus on specialized, large-scale capabilities.

Value Assessment

Rating: questionable

Benchmarking this contract is challenging due to its specialized nature and the sole-source award. The price of $18.1 million for the preparation of NPS 724 dismantlement seems substantial. Without comparable contracts or detailed cost breakdowns, it's difficult to definitively assess value for money. The lack of competition inherently limits the ability to ensure the most cost-effective solution was secured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. The Defense Threat Reduction Agency (DTRA) likely identified ZVYozdochka, Shiprepairing Center as the only entity capable of performing this specific task. This lack of competition means taxpayers did not benefit from a competitive bidding process that could have driven down costs.

Taxpayer Impact: Sole-source awards mean taxpayers may not have received the best possible price, as there was no pressure from competing firms to offer lower bids.

Public Impact

The primary beneficiary is the Department of Defense, which receives services for the dismantlement of specific military assets. The service delivered is the preparation for the dismantlement of the NPS 724. Geographic impact is likely limited to the location where the dismantlement occurs, potentially within Russia. Workforce implications would primarily affect the specialized personnel employed by the awarded contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and taxpayer value.
Lack of transparency regarding contractor's specific qualifications and past performance.
Potential for cost overruns due to absence of competitive pressure.
Limited insight into the technical feasibility and risks associated with the dismantlement process.

Positive Signals

Contract awarded to a firm with presumed specialized capabilities in ship repair and potentially dismantlement.
The contract addresses a specific national security need for the disposal of sensitive assets.

Sector Analysis

This contract falls under the 'Other Metal Container Manufacturing' category, which is a niche within the broader industrial manufacturing sector. The market for specialized military asset dismantlement is likely small and dominated by a few highly specialized firms, often with government-specific security clearances and expertise. Comparable spending benchmarks are difficult to establish due to the unique nature of the asset and the limited number of potential providers.

Small Business Impact

This contract does not appear to have any small business set-aside provisions, nor is there information suggesting subcontracting opportunities for small businesses. The nature of the work likely requires specialized, large-scale industrial capabilities typically found in larger, established firms.

Oversight & Accountability

Oversight mechanisms for this contract are not detailed in the provided data. As a sole-source award to a foreign entity, oversight would likely involve intergovernmental agreements and specific contractual clauses managed by the Defense Threat Reduction Agency. Transparency is limited by the nature of the award and the foreign jurisdiction of the contractor.

Related Government Programs

Defense Threat Reduction Agency Contracts
Military Asset Disposal
Foreign Military Sales Support
Shipbreaking and Dismantlement Services

Risk Flags

Sole Source Award
Foreign Contractor
Lack of Competition
Potential for Cost Overruns
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.1 million to ZVYOZDOCHKA, SHIPREPAIRING CENTER, OPEN JOINT STOCK COMPANY. PREPARATION OF NPS 724 DISMANTLEMENT

Who is the contractor on this award?

The obligated recipient is ZVYOZDOCHKA, SHIPREPAIRING CENTER, OPEN JOINT STOCK COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Threat Reduction Agency).

What is the total obligated amount?

The obligated amount is $18.1 million.

What is the period of performance?

Start: 2007-06-13. End: 2009-09-30.

What is the specific nature of the NPS 724 asset being dismantled, and why is specialized preparation required?

The NPS 724 likely refers to a specific type of naval platform or vessel, possibly a submarine or a specialized ship, that requires a complex and potentially hazardous dismantlement process. The 'preparation' phase could involve de-fueling, removal of hazardous materials (like nuclear components or chemical agents), decontamination, and structural stabilization before the actual dismantling can occur. The need for specialized preparation stems from the unique design, materials, and potential residual hazards associated with such military assets, requiring expertise beyond standard scrap metal processing.

What is the track record of ZVYozdochka, Shiprepairing Center in similar dismantlement projects, particularly for the US Department of Defense?

Information regarding ZVYozdochka, Shiprepairing Center's specific track record with the US Department of Defense for dismantlement projects is not readily available in public databases. As a Russian state-owned enterprise primarily focused on ship repair, its experience likely lies within Russian naval programs. The award of this contract suggests that DTRA assessed them as having the necessary capabilities, possibly through prior indirect engagements or specific technical evaluations. Further due diligence would be required to ascertain the depth and relevance of their experience for this particular task.

How was the $18.1 million price determined for this sole-source contract, and what cost components are included?

For sole-source contracts, the price is typically determined through negotiation between the contracting agency and the sole-source provider. The government aims to ensure the price is 'fair and reasonable.' This often involves reviewing the contractor's cost proposals, historical pricing for similar work (if available), and market research on the cost of labor, materials, and overhead in the contractor's region. Without access to the specific negotiation details or cost breakdowns submitted by ZVYozdochka, it's impossible to detail the exact cost components or the precise methodology used to arrive at $18.1 million.

What are the potential risks associated with awarding a sole-source contract of this magnitude to a foreign entity?

Awarding a sole-source contract of this magnitude to a foreign entity introduces several risks. These include geopolitical risks, potential challenges in oversight and enforcement of contractual terms, currency exchange rate fluctuations, and difficulties in ensuring compliance with US security and environmental standards. Furthermore, the lack of competition means the government has limited leverage to address performance issues or cost overruns. Dependence on a single foreign supplier for critical national security-related services can also be a strategic vulnerability.

Are there any alternative contractors or methods that could have been considered for this dismantlement task?

Given the sole-source nature of the award, it implies that DTRA determined no viable alternatives existed or could be developed within the required timeframe and security parameters. However, in a broader context, alternative approaches might include seeking bids from other international specialized firms, exploring different dismantlement technologies, or potentially developing domestic capabilities if the asset were to be brought back to the US. The specific constraints of the NPS 724 asset and its location likely dictated the necessity of this particular sole-source award.

Industry Classification

NAICS: Manufacturing › Boiler, Tank, and Shipping Container Manufacturing › Other Metal Container Manufacturing

Product/Service Code: SALVAGE SERVICES › DEMOLITION OF NONBUILDING FACILITY

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: 12 MASHINOSTROITELEI AV., SEVERODVINSK

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,109,662

Exercised Options: $18,109,662

Current Obligation: $18,109,662

Contract Characteristics

Cost or Pricing Data: NO

Timeline