DoD's $584M Ship Repair Contract with BAE Systems: A 12-Year Award Fee Deal
Contract Overview
Contract Amount: $584,277,279 ($584.3M)
Contractor: BAE Systems Maritime Solutions Norfolk Inc.
Awarding Agency: Department of Defense
Start Date: 2004-12-22
End Date: 2016-07-11
Contract Duration: 4,219 days
Daily Burn Rate: $138.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Place of Performance
Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $584.3 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC. for work described as: Key points: 1. Significant long-term commitment of over a decade for ship repair services. 2. Sole awardee BAE Systems Maritime Solutions Norfolk Inc. received the contract. 3. The contract type is Cost Plus Award Fee, incentivizing performance. 4. This spending falls under the Ship Building and Repairing sector.
Value Assessment
Rating: fair
The Cost Plus Award Fee structure allows for performance-based incentives. However, without specific award fee data, it's difficult to definitively assess if the final price represents excellent value compared to similar contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the long duration and specific nature of ship repair may limit the number of truly competitive bids over its lifespan.
Taxpayer Impact: Taxpayer funds are committed to a long-term service contract. The award fee structure aims to ensure efficient spending, but the total cost is subject to performance and potential cost overruns.
Public Impact
Supports naval readiness by ensuring maintenance and repair of critical assets. Provides long-term employment and economic activity in the Norfolk, Virginia region. Potential for technological advancements in ship repair through performance incentives.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration may reduce future competitive opportunities.
- Cost Plus Award Fee can lead to cost uncertainty if not managed tightly.
Positive Signals
- Full and open competition initially ensures market-based pricing.
- Award fee structure incentivizes contractor performance and efficiency.
Sector Analysis
This contract falls within the Ship Building and Repairing sector, which is crucial for national defense. Spending in this area is often characterized by long-term, high-value contracts due to the complexity and specialized nature of naval vessels.
Small Business Impact
The data indicates this contract was awarded to BAE Systems Maritime Solutions Norfolk Inc. and does not specify any subcontracting to small businesses. Further analysis would be needed to determine small business participation.
Oversight & Accountability
The Department of the Navy awarded this contract, implying oversight through their contracting and program management offices. The award fee mechanism itself serves as a form of performance oversight.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Long contract duration (over 12 years)
- Cost Plus Award Fee contract type
- Lack of specific award fee payout data
- No indication of small business subcontracting
Tags
ship-building-and-repairing, department-of-defense, va, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $584.3 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC.. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is BAE SYSTEMS MARITIME SOLUTIONS NORFOLK 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 $584.3 million.
What is the period of performance?
Start: 2004-12-22. End: 2016-07-11.
What was the actual total amount paid out, including award fees, over the contract's life?
The provided data shows the base award amount but not the final obligated amount including all award fees. Understanding the total expenditure is crucial for a complete value assessment. Without this, it's hard to know if the incentives truly drove cost savings or simply increased the total payout.
Were there any performance issues or cost overruns despite the award fee structure?
The Cost Plus Award Fee (CPAF) contract type aims to mitigate risk by incentivizing performance. However, CPAF contracts can still experience cost growth if the base cost estimates are inaccurate or if the award fee criteria are not sufficiently stringent to control overall spending.
How did the final pricing compare to the initial bids received during the full and open competition?
While the contract was awarded under full and open competition, the final price is influenced by the Cost Plus Award Fee structure and the contractor's performance. A comparison of the final awarded amount against the initial competitive bids would reveal the effectiveness of the pricing strategy and incentive structure in achieving cost efficiencies.
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: 3
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: BAE Systems PLC (UEI: 217304393)
Address: 750 W BERKLEY AVE, NORFOLK, VA, 23523
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2004-12-22
Current End Date: 2016-07-11
Potential End Date: 2016-07-11 00:00:00
Last Modified: 2016-07-11
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