Naval Sea Systems Command awarded $235.8M for non-nuclear ship repair, with Southwest Marine Inc. as the prime contractor

Contract Overview

Contract Amount: $235,833,201 ($235.8M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2000-09-07

End Date: 2004-02-28

Contract Duration: 1,269 days

Daily Burn Rate: $185.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200012!1700!003672!BZ008 !NAVAL SEA SYSTEMS COMMAND !N0002400C8506 !A!*!* !20000907!20050914!080911274!080911274!043554364!N!* !SOUTHWEST MARINE INC !FOOT OF SAMPSON ST !SAN DIEGO !CA!92170!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!0001!+000000197390!N!N!000000000000!J999!NON-NUCLEAR SHIP REPAIR (WEST) !A3 !SHIPS !2SEJ!DOCK AMPHIB TRANSPORT-LPD !3731!3!*!*!*!B!A!*!A !U!R!2!002!B!* !Z!N!Z!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!Y!*!N!*!*!*!

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92136, UNITED STATES OF AMERICA

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $235.8 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: 200012!1700!003672!BZ008 !NAVAL SEA SYSTEMS COMMAND !N0002400C8506 !A!*!* !20000907!20050914!080911274!080911274!043554364!N!* !SOUTHWEST MARINE INC !FOOT OF SAMPSON ST !SAN DIEGO !CA!92170!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!0001!+000000197390!N!N!000000000000!J999!NON… Key points: 1. Contract value of $235.8 million for ship repair services. 2. Awarded under full and open competition, suggesting a competitive bidding process. 3. Contract duration of approximately 3.5 years indicates a medium-term service requirement. 4. The contract type is Cost Plus Award Fee (CPAF), which incentivizes performance but can lead to cost overruns. 5. The prime contractor, Southwest Marine Inc., has a significant role in this defense sector contract. 6. The geographic focus is San Diego, California, aligning with naval fleet locations.

Value Assessment

Rating: fair

The contract value of $235.8 million for ship repair services over roughly 3.5 years appears substantial. Benchmarking against similar naval ship repair contracts would be necessary to definitively assess value for money. The Cost Plus Award Fee (CPAF) contract type, while allowing for flexibility and performance incentives, carries inherent risks of cost escalation if not managed tightly. The total obligated amount and the base contract value suggest a significant investment in maintaining naval assets.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this significant ship repair requirement. A higher number of bidders typically leads to more competitive pricing and better value for the government, but two bidders still provide a basis for price discovery and selection.

Taxpayer Impact: Full and open competition, even with two bidders, generally benefits taxpayers by fostering a more competitive environment that can drive down costs compared to sole-source or limited competition awards.

Public Impact

Naval fleet readiness and operational capability are enhanced through the repair and maintenance of critical vessels. The contract supports the U.S. Navy's Pacific Fleet operations based in San Diego. Jobs are likely created or sustained within the shipbuilding and repair industry in the San Diego area. The services provided ensure the seaworthiness and combat effectiveness of Amphibious Transport (LPD) class ships.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee (CPAF) contracts can lead to higher final costs than fixed-price contracts if not closely monitored.
The limited number of bidders (two) might indicate potential barriers to entry or a concentrated market for specialized ship repair.
Reliance on a single prime contractor for a large portion of ship repair could pose risks if performance issues arise.

Positive Signals

Awarded under full and open competition, suggesting a fair process and potential for competitive pricing.
The contract supports critical naval assets, contributing to national security objectives.
The geographic focus on San Diego aligns with the operational needs of the Pacific Fleet.

Sector Analysis

This contract falls within the broader defense industrial base, specifically focusing on ship repair and maintenance. The market for naval ship repair is specialized, often dominated by a few large firms capable of handling complex military vessels. Spending in this sector is driven by the need to maintain a modern and operational fleet, with significant government investment allocated annually. Comparable spending benchmarks would involve analyzing other large-scale repair contracts for naval vessels across different ship classes and geographic locations.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, and the prime contractor is Southwest Marine Inc. There is no explicit information on subcontracting plans for small businesses within this award. Further analysis would be needed to determine if small business participation was mandated or encouraged through subcontracting goals, which is crucial for assessing the impact on the small business defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Naval Sea Systems Command (NAVSEA) and potentially the Department of Defense's Inspector General. The Cost Plus Award Fee (CPAF) structure necessitates robust oversight to ensure costs are reasonable and award fees are justified based on performance metrics. Transparency would be assessed through contract award data availability and reporting requirements.

Related Government Programs

Naval Ship Repair Contracts
Defense Maintenance and Repair Services
Shipbuilding and Repair Industry
Department of the Navy Procurement
Amphibious Assault Ship Maintenance

Risk Flags

Cost Plus Award Fee (CPAF) contract type carries inherent risk of cost escalation.
Limited competition (two bidders) may result in suboptimal pricing.
Potential for contractor performance issues in complex ship repair.
Dependence on a single prime contractor for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $235.8 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. 200012!1700!003672!BZ008 !NAVAL SEA SYSTEMS COMMAND !N0002400C8506 !A!*!* !20000907!20050914!080911274!080911274!043554364!N!* !SOUTHWEST MARINE INC !FOOT OF SAMPSON ST !SAN DIEGO !CA!92170!66000!073!06!SAN DIEGO !SAN DIEGO !CALIFORNIA!0001!+000000197390!N!N!000000000000!J999!NON-NUCLEAR SHIP REPAIR (WEST) !A3 !SHIPS !2SEJ!DOCK AMPHIB TRANSPORT-LPD !3731!3!*!*!*!B!A!*!A !U!R!2!002!B!* !Z!N!Z!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!Y!*!N!*!*!*!

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $235.8 million.

What is the period of performance?

Start: 2000-09-07. End: 2004-02-28.

What is the track record of Southwest Marine Inc. in performing similar naval ship repair contracts?

Southwest Marine Inc. has a history of performing ship repair services for the U.S. Navy. Analyzing their past performance on similar contracts, particularly those involving Amphibious Transport (LPD) class ships or other large naval vessels, would provide insight into their capabilities and reliability. This includes reviewing past contract awards, performance evaluations (e.g., CPARS reports if available), and any history of disputes or contract terminations. A strong track record suggests a lower risk of performance issues, while a history of problems could indicate potential challenges in delivering the required services on time and within budget for this current contract.

How does the awarded amount of $235.8 million compare to the estimated cost or budget for this type of ship repair service?

Without access to the government's initial cost estimates or budget allocations for this specific contract, a direct comparison is difficult. However, $235.8 million represents a significant investment. To assess value, this amount should be benchmarked against historical spending on similar repair projects for LPD-class ships, as well as against industry standards for complex naval vessel maintenance. Factors such as the scope of work (e.g., routine maintenance vs. major overhauls), the age and condition of the specific vessels being repaired, and prevailing market rates for specialized labor and materials would influence the expected cost. A higher-than-expected award value might suggest competitive pressures or unforeseen complexities.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract for ship repair?

The primary risks associated with a CPAF contract for ship repair include potential cost overruns and a lack of strong incentive for the contractor to control costs aggressively. While the 'award fee' component is designed to incentivize performance, the 'cost-plus' element means the government reimburses the contractor's allowable costs plus a fee. If the government's oversight is insufficient, or if the contractor inflates costs, the final price could exceed initial expectations. Additionally, defining and measuring performance metrics for award fees in complex ship repair can be challenging, potentially leading to disputes or subjective evaluations. This contract type requires diligent monitoring by the contracting officer and technical team.

What is the historical spending trend for non-nuclear ship repair (West) by the Naval Sea Systems Command?

Historical spending data for non-nuclear ship repair (West) by the Naval Sea Systems Command (NAVSEA) would reveal trends in demand and investment in this area. Analyzing spending over several fiscal years would indicate whether this $235.8 million contract represents a typical, increased, or decreased level of investment. Factors influencing historical spending include fleet size, operational tempo, the age of the fleet requiring maintenance, and budget priorities. A consistent or increasing spending trend might suggest a stable or growing need for these services, while a declining trend could indicate fleet modernization or shifting maintenance strategies.

How does the competition level (two bidders) impact the potential for cost savings for the taxpayer on this contract?

A competition level with only two bidders presents a moderate, rather than optimal, scenario for taxpayer cost savings. While competition is generally preferable to a sole-source award, a larger number of bidders typically drives prices down more effectively through increased market pressure. With only two bidders, there is a risk that the winning bid may not reflect the lowest possible price achievable in a more robustly competitive market. Taxpayers benefit most when multiple capable firms vie for contracts, forcing each to offer their best price and most efficient approach. However, two bidders still provide a basis for comparison and negotiation, which is better than no competition.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: FOOT OF SAMPSON ST, SAN DIEGO, CA, 92170

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline