Navy awards $1.6B contract for shipbuilding and repair to BAE Systems, highlighting long-term support needs

Contract Overview

Contract Amount: $160,420,564 ($160.4M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2001-08-02

End Date: 2007-07-31

Contract Duration: 2,189 days

Daily Burn Rate: $73.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92170

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $160.4 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. Long contract duration of over 6 years indicates a significant, ongoing requirement. 3. Cost-plus incentive contract type suggests a focus on managing costs while incentivizing performance. 4. The award to a single contractor, BAE Systems, may indicate specialized capabilities required. 5. The contract falls under the shipbuilding and repair sector, crucial for naval readiness. 6. Geographic focus on California for this award.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without detailed cost breakdowns and comparisons to similar shipbuilding and repair contracts. The cost-plus incentive fee structure aims to control costs, but the final price can vary based on performance and incurred expenses. The total award amount of $1.6 billion over nearly six years suggests a substantial investment, but its value-for-money depends heavily on the successful delivery of services and the efficiency achieved.

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 fact that BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. was the selected contractor suggests they offered the best value proposition among the bidders. The number of bidders is not specified, but full and open competition generally promotes price discovery and can lead to more competitive pricing.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing inherent in a full and open competition, which aims to ensure the government receives the best possible value for its investment in naval shipbuilding and repair.

Public Impact

The primary beneficiaries are the Department of the Navy, ensuring the readiness and maintenance of its fleet. Services delivered include shipbuilding and repair, critical for maintaining naval assets. The geographic impact is concentrated in California, where BAE Systems Maritime Solutions is located. This contract supports a skilled workforce in the shipbuilding and repair industry in California.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus incentive fee contracts can sometimes lead to higher final costs if not managed rigorously.
Long-term contracts may reduce flexibility to adapt to changing technological requirements or market conditions.
Reliance on a single primary contractor for a significant duration could pose risks if performance issues arise.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The incentive fee structure encourages contractor performance and cost control.
The contract supports critical naval infrastructure and readiness, a key government objective.

Sector Analysis

The shipbuilding and repair sector is a vital component of the defense industrial base, supporting national security by maintaining and modernizing naval fleets. This contract falls within the broader manufacturing and transportation infrastructure industries. Comparable spending benchmarks in this sector are often in the billions of dollars due to the complexity and scale of naval vessels. The North American Industry Classification System (NAICS) code 336611 specifically covers shipbuilding and repairing.

Small Business Impact

This contract was not set aside for small businesses, and there is no explicit indication of subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like BAE Systems suggests that the primary focus is on specialized capabilities. Further analysis would be needed to determine if small businesses are involved in the supply chain or as subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are built into the cost-plus incentive fee structure, which links contractor payment to performance and cost targets. Transparency is generally maintained through contract awards databases, though detailed performance metrics and cost breakdowns may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance Contracts
Shipbuilding and Conversion Contracts
Defense Procurement
Naval Fleet Support
Maritime Defense Industrial Base

Risk Flags

Long-term contract duration
Cost-plus incentive fee contract type
Potential for cost overruns
Reliance on a single prime contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $160.4 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. See the official description on USAspending.

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 $160.4 million.

What is the period of performance?

Start: 2001-08-02. End: 2007-07-31.

What is the historical spending pattern for shipbuilding and repair contracts awarded by the Department of the Navy to BAE Systems Maritime Solutions?

Analyzing historical spending patterns for shipbuilding and repair contracts awarded by the Department of the Navy to BAE Systems Maritime Solutions requires access to comprehensive contract databases. This specific contract, awarded on August 2, 2001, with an estimated value of $1.6 billion and an end date of July 31, 2007, represents a significant but singular data point. To establish a pattern, one would need to aggregate data on all similar contracts awarded to this contractor over multiple fiscal years, looking at total award values, contract types, and durations. This would reveal trends in the Navy's reliance on BAE Systems for these services, the typical scale of their engagements, and whether spending has increased or decreased over time. Without this broader dataset, it's difficult to draw definitive conclusions about historical spending patterns beyond this single large award.

How does the cost-plus incentive fee (CPIF) structure of this contract typically influence contractor behavior and final costs compared to fixed-price contracts?

The Cost-Plus Incentive Fee (CPIF) structure of this contract is designed to balance cost control with performance incentives. Unlike fixed-price contracts where the contractor bears the primary risk of cost overruns, CPIF contracts allow the contractor to recover allowable costs plus a fee that is adjusted based on performance against pre-determined targets (e.g., cost, schedule, or technical performance). This structure incentivizes the contractor, BAE Systems, to manage costs efficiently and meet performance objectives to maximize their fee. However, it also means the government shares in cost savings or overruns, potentially leading to final costs that are higher than initially estimated if targets are missed or if costs escalate significantly. The government's oversight and negotiation of the target fee and sharing arrangements are critical to ensuring value under a CPIF contract.

What are the key performance indicators (KPIs) likely being tracked under this shipbuilding and repair contract?

Under a Cost-Plus Incentive Fee (CPIF) contract for shipbuilding and repair, key performance indicators (KPIs) would likely focus on a combination of cost, schedule, and technical performance. Cost KPIs would involve tracking actual costs against the target cost, with incentives tied to achieving cost savings. Schedule KPIs would monitor adherence to critical milestones for design, construction, and delivery, potentially with incentives for early completion or penalties for delays. Technical performance KPIs could include metrics related to quality of workmanship, adherence to specifications, system functionality, reliability, and safety standards. The specific KPIs would be detailed in the contract's Statement of Work (SOW) and performance incentive clauses, forming the basis for fee adjustments.

What is the strategic importance of BAE Systems Maritime Solutions San Diego Inc. to the Department of the Navy's shipbuilding and repair capabilities?

BAE Systems Maritime Solutions San Diego Inc. plays a significant strategic role for the Department of the Navy, particularly in the realm of shipbuilding and repair. As a major defense contractor with facilities in San Diego, a key naval hub, the company possesses specialized infrastructure, skilled labor, and technical expertise essential for maintaining and modernizing complex naval vessels. The award of a substantial, long-term contract like this one underscores the Navy's reliance on BAE Systems for critical support services that ensure fleet readiness and operational capability. Their capabilities likely encompass a range of activities from routine maintenance and upgrades to potentially more complex repair and modernization projects, making them a vital partner in sustaining the Navy's maritime dominance.

How does the geographic location in San Diego, California, influence the execution and oversight of this contract?

The geographic location of BAE Systems Maritime Solutions in San Diego, California, is strategically significant for the Department of the Navy. San Diego is a major homeport for the U.S. Pacific Fleet, meaning a substantial number of naval vessels requiring maintenance and repair services are based there. This proximity reduces transit times and costs associated with moving ships for servicing, potentially improving operational availability. For contract oversight, having the contractor located near a significant concentration of Navy assets facilitates easier access for government representatives, quality assurance personnel, and program managers. This can lead to more efficient communication, quicker issue resolution, and more direct observation of work progress and quality, thereby enhancing the effectiveness of oversight.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › NON-NUCLEAR SHIP REPAIR

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: FOOT OF SAMPSON ST, SAN DIEGO, CA, 90

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline