Coast Guard Awards $1.4B Ship Building Contract to Eastern Shipbuilding Group Under Full and Open Competition

Contract Overview

Contract Amount: $1,398,692,803 ($1.4B)

Contractor: Eastern Shipbuilding Group, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2014-06-17

End Date: 2027-06-30

Contract Duration: 4,761 days

Daily Burn Rate: $293.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIXED PRICE INCENTIVE

Sector: Other

Official Description: OPC P&CD CONTRACT 2 REFERENCE SOLICITATION NUMBER HSCG23-12-R-OPC0001

Place of Performance

Location: PANAMA CITY, BAY County, FLORIDA, 32401

State: Florida Government Spending

Plain-Language Summary

Department of Homeland Security obligated $1.40 billion to EASTERN SHIPBUILDING GROUP, INC. for work described as: OPC P&CD CONTRACT 2 REFERENCE SOLICITATION NUMBER HSCG23-12-R-OPC0001 Key points: 1. The contract, valued at $1.4 billion, is for ship building and repairing services. 2. Eastern Shipbuilding Group, Inc. secured the award through a full and open competition. 3. The contract spans nearly 13 years, indicating a long-term need for these services. 4. The fixed-price incentive contract type suggests a focus on cost control while incentivizing performance.

Value Assessment

Rating: good

The contract value of $1.4 billion is substantial for ship building. Benchmarking against similar large-scale naval construction contracts would be necessary for a precise assessment, but the fixed-price incentive structure aims to manage costs effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The award was made under full and open competition, suggesting a robust process for soliciting bids and ensuring fair market pricing. This method typically leads to more competitive pricing compared to limited or sole-source procurements.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces, ensuring the government receives the best value for its investment in critical shipbuilding.

Public Impact

Ensures the U.S. Coast Guard maintains and expands its fleet capabilities. Supports critical maritime security and operational readiness. Potential for job creation and economic impact in the shipbuilding sector. Long-term commitment provides stability for the contractor and related supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (nearly 13 years) could present scope creep risks.
Fixed-price incentive contracts can be complex to manage and may lead to disputes if performance targets are not met.
Reliance on a single contractor for such a large, long-term project carries inherent risk.

Positive Signals

Awarded through full and open competition, indicating competitive pricing.
Fixed-price incentive structure aligns contractor and government interests.
Long-term nature suggests a strategic and sustained need for the services.

Sector Analysis

This contract falls within the Ship Building and Repairing sector (NAICS 336611). Large-scale shipbuilding contracts are significant investments, often involving complex engineering and long production cycles. Benchmarks would typically compare cost per displacement ton or per vessel type.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses in this particular contract award. Large shipbuilding contracts are often dominated by major industry players, but subcontracting opportunities may exist.

Oversight & Accountability

The contract's long duration and fixed-price incentive structure will require diligent oversight from the Department of Homeland Security and the U.S. Coast Guard to ensure performance, cost control, and adherence to contract terms.

Related Government Programs

Ship Building and Repairing
Department of Homeland Security Contracting
U.S. Coast Guard Programs

Risk Flags

Long-term contract duration increases risk of cost overruns or obsolescence.
Complexity of Fixed Price Incentive contracts requires robust oversight.
Potential for contractor performance issues impacting delivery schedules.
Dependence on a single large contractor for critical assets.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $1.40 billion to EASTERN SHIPBUILDING GROUP, INC.. OPC P&CD CONTRACT 2 REFERENCE SOLICITATION NUMBER HSCG23-12-R-OPC0001

Who is the contractor on this award?

The obligated recipient is EASTERN SHIPBUILDING GROUP, 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 $1.40 billion.

What is the period of performance?

Start: 2014-06-17. End: 2027-06-30.

What is the specific breakdown of costs within the $1.4 billion contract, and how do they compare to industry benchmarks for similar vessels?

Detailed cost breakdowns are typically proprietary. However, the fixed-price incentive (FPI) structure suggests that the government and contractor share in cost savings or overruns beyond target costs. Benchmarking would involve comparing the cost per vessel, cost per displacement ton, and specific system costs against comparable naval or commercial shipbuilding projects.

What are the key performance metrics and incentive targets within the fixed-price incentive contract, and what are the potential risks if these are not met?

Key performance metrics likely relate to vessel delivery schedules, technical specifications, and operational readiness. Incentive targets would be tied to achieving or exceeding these metrics, potentially offering cost savings or bonuses. Failure to meet targets could result in penalties, shared cost overruns, or reduced profit margins for the contractor, impacting overall value.

How will the long-term nature of this contract (nearly 13 years) impact the Coast Guard's ability to adapt to future technological advancements or changing mission requirements?

The extended duration necessitates careful contract structuring with potential for modifications or phased approaches to incorporate new technologies. While providing stability, it risks locking the Coast Guard into specific designs. Flexibility clauses and regular reviews are crucial to mitigate obsolescence and ensure the fleet remains relevant throughout the contract period.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 8

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 2200 NELSON ST, PANAMA CITY, FL, 32401

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

Financial Breakdown

Contract Ceiling: $1,709,639,956

Exercised Options: $1,405,257,105

Current Obligation: $1,398,692,803

Subaward Activity

Number of Subawards: 709

Total Subaward Amount: $429,526,251

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline