DoD's DDG 1000 Program Awarded $3.31 Billion to Bath Iron Works, Facing Cost Overruns and Limited Competition
Contract Overview
Contract Amount: $3,310,046,925 ($3.3B)
Contractor: Bath Iron Works Corporation
Awarding Agency: Department of Defense
Start Date: 2006-08-08
End Date: 2021-12-26
Contract Duration: 5,619 days
Daily Burn Rate: $589.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: DDG 1000 DETAIL DESIGN
Place of Performance
Location: BATH, SAGADAHOC County, MAINE, 04530
State: Maine Government Spending
Plain-Language Summary
Department of Defense obligated $3.31 billion to BATH IRON WORKS CORPORATION for work described as: DDG 1000 DETAIL DESIGN Key points: 1. Significant cost: $3.31 billion awarded for ship design and construction. 2. Sole-source award: Bath Iron Works secured the contract without open competition. 3. Risk of cost overruns: The contract type and duration suggest potential for increased spending. 4. Sector: Defense shipbuilding and repair, a high-cost, complex industry.
Value Assessment
Rating: questionable
The contract's cost-plus incentive fee structure, coupled with a long duration, raises concerns about potential cost escalations beyond initial estimates. Benchmarking against similar complex naval vessel programs is difficult due to the unique nature of the DDG 1000.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award to Bath Iron Works. This lack of competition limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: The absence of competitive bidding on such a large contract likely results in taxpayers paying a premium for the DDG 1000 program.
Public Impact
Taxpayers may be overpaying for advanced naval capabilities due to the lack of competition. The long-term success and operational effectiveness of the DDG 1000 class ships remain a subject of scrutiny. This contract highlights potential inefficiencies in defense procurement processes for highly specialized assets.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- Potential for cost overruns
Positive Signals
- Awarded to established defense contractor
- Addresses critical naval modernization needs
Sector Analysis
The defense shipbuilding and repair sector is characterized by high barriers to entry, long program cycles, and significant government investment. Benchmarks are difficult due to the unique nature of advanced naval platforms like the DDG 1000.
Small Business Impact
This contract was awarded to a large prime contractor, Bath Iron Works. There is no indication of significant subcontracting opportunities for small businesses within the provided data, though this is common for major defense platforms.
Oversight & Accountability
The long duration and cost-plus nature of this contract warrant close oversight from the Department of Defense to ensure cost control and adherence to program objectives. Accountability for cost overruns will be critical.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Cost-plus contract type
- Potential for cost overruns
- Long contract duration
- High dollar value
Tags
ship-building-and-repairing, department-of-defense, me, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $3.31 billion to BATH IRON WORKS CORPORATION. DDG 1000 DETAIL DESIGN
Who is the contractor on this award?
The obligated recipient is BATH IRON WORKS CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $3.31 billion.
What is the period of performance?
Start: 2006-08-08. End: 2021-12-26.
What specific technological advancements justify the high cost and sole-source nature of the DDG 1000 program?
The DDG 1000 program was intended to incorporate revolutionary technologies, including advanced radar, integrated power systems, and a reduced crew size, aiming for a next-generation surface combatant. However, the justification for the sole-source award and the associated costs requires detailed technical and strategic analysis to determine if these advancements truly necessitate the premium paid and if alternative competitive approaches could have yielded similar or better outcomes.
How effectively has the Department of Defense managed cost and schedule risks associated with this long-term, cost-plus contract?
Managing cost and schedule risks on long-term, cost-plus contracts for complex defense platforms like the DDG 1000 is inherently challenging. While the contract type aims to incentivize performance, it also opens the door for cost growth. Effective management requires robust oversight, clear performance metrics, and proactive risk mitigation strategies. The actual effectiveness would be assessed by comparing final costs and delivery dates against initial projections and program goals.
What is the long-term strategic value and operational readiness impact of the DDG 1000 class ships, considering their procurement challenges?
The DDG 1000 class was envisioned as a leap forward in naval capabilities, offering enhanced survivability, reduced manning, and advanced offensive and defensive systems. The strategic value lies in its potential to shape future naval warfare doctrines. However, the procurement challenges, including cost and competition issues, raise questions about the program's overall effectiveness and the readiness of these advanced platforms to meet evolving threats within budget constraints.
Industry Classification
NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing
Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002406R2303
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Address: 700 WASHINGTON ST, BATH, ME, 04530
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $3,334,374,287
Exercised Options: $3,316,157,260
Current Obligation: $3,310,046,925
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2006-08-08
Current End Date: 2021-12-26
Potential End Date: 2021-12-26 00:00:00
Last Modified: 2024-06-17
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