Navy awards $1.73B contract for DDG 51 Class Post Delivery services to Bath Iron Works

Contract Overview

Contract Amount: $17,321,439 ($17.3M)

Contractor: Bath Iron Works Corporation

Awarding Agency: Department of Defense

Start Date: 2006-09-25

End Date: 2014-06-04

Contract Duration: 2,809 days

Daily Burn Rate: $6.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: DDG 51 CLASS POST DELIVERY

Place of Performance

Location: BATH, SAGADAHOC County, MAINE, 04530

State: Maine Government Spending

Plain-Language Summary

Department of Defense obligated $17.3 million to BATH IRON WORKS CORPORATION for work described as: DDG 51 CLASS POST DELIVERY Key points: 1. Contract awarded for post-delivery services, indicating ongoing support needs for a significant naval asset. 2. The contract's cost-plus-award-fee structure incentivizes performance but requires careful monitoring of costs. 3. Bath Iron Works, a major shipyard, is the sole awardee, suggesting specialized capabilities for this class of vessel. 4. The duration of the contract (2809 days) points to a long-term commitment for sustainment. 5. The award was made under full and open competition, suggesting a robust bidding process. 6. This contract represents a substantial investment in maintaining naval readiness and capability.

Value Assessment

Rating: good

The contract value of $1.73 billion for post-delivery services for DDG 51 class ships is significant. While specific benchmarks for post-delivery services are not readily available, the cost-plus-award-fee (CPAF) pricing structure allows for flexibility and incentivizes contractor performance. However, it also necessitates rigorous oversight to manage costs effectively. Comparing this to similar long-term sustainment contracts for major naval platforms would provide further context on value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This competitive environment is generally favorable for price discovery and achieving competitive pricing. The fact that Bath Iron Works was the sole awardee suggests they possessed the most advantageous proposal based on the evaluation criteria, which could include technical capability, past performance, and price.

Taxpayer Impact: Full and open competition typically benefits taxpayers by fostering a market where multiple capable contractors vie for the work, driving down costs and improving the quality of services offered.

Public Impact

The primary beneficiaries are the U.S. Navy, ensuring the continued operational readiness of the DDG 51 class destroyers. Services delivered include post-delivery support, maintenance, modernization, and potentially repairs for these critical warships. The geographic impact is centered around Bath Iron Works in Maine, a key shipbuilding hub, and wherever the DDG 51 class vessels are deployed globally. Workforce implications include sustained employment for skilled trades, engineers, and support staff at Bath Iron Works and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-award-fee contracts can lead to cost overruns if not managed diligently.
Sole awardee may limit future competition if capabilities are not widely distributed.
Long contract duration increases exposure to economic fluctuations and potential changes in requirements.

Positive Signals

Awarded under full and open competition, suggesting a competitive process.
Bath Iron Works has a long history and established expertise in building and servicing this class of ships.
The contract aims to ensure the operational readiness of a key naval asset.

Sector Analysis

The shipbuilding and repair sector is a critical component of the U.S. industrial base, particularly for defense. This contract falls within the naval shipbuilding and repair sub-sector. The DDG 51 Arleigh Burke class destroyers are a cornerstone of the U.S. Navy's fleet, and their sustainment is vital. Spending on naval vessel maintenance and modernization is a significant portion of the defense budget, with major shipyards like Bath Iron Works playing a crucial role.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). Large prime contractors like Bath Iron Works are often required to have subcontracting plans to engage small businesses. The impact on the small business ecosystem would depend on the specific subcontracting goals and achievements outlined in the contract, potentially providing opportunities for specialized suppliers and service providers.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the significant value and duration, robust oversight mechanisms, including regular performance reviews, financial audits, and potentially Inspector General involvement, would be expected to ensure accountability and transparency. The cost-plus-award-fee structure necessitates close monitoring of expenditures and performance against award criteria.

Related Government Programs

DDG 51 Class Destroyer Program
Naval Ship Maintenance and Modernization
Shipbuilding and Repair Contracts
Defense Procurement

Risk Flags

Potential for cost growth under CPAF structure.
Long-term contract duration may not align with evolving technological needs.
Sole awardee could limit future competitive opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.3 million to BATH IRON WORKS CORPORATION. DDG 51 CLASS POST DELIVERY

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 $17.3 million.

What is the period of performance?

Start: 2006-09-25. End: 2014-06-04.

What is the historical spending trend for post-delivery services for the DDG 51 class destroyers?

Analyzing historical spending for post-delivery services for the DDG 51 class requires examining previous contracts awarded for similar sustainment activities. This specific contract, valued at $1.73 billion and spanning from 2006 to 2014, represents a significant investment. Trends might show increasing costs over time due to aging platforms, evolving technological requirements, or changes in maintenance philosophies. Comparing the per-ship cost or total program sustainment expenditure across different fiscal years and contract vehicles would reveal patterns in investment and potential cost escalation or efficiency gains. Data on prior contracts for maintenance, repair, and modernization of these vessels would be crucial for a comprehensive trend analysis.

How does the cost-plus-award-fee (CPAF) structure compare to other contract types for similar naval sustainment services?

The Cost-Plus-Award-Fee (CPAF) structure used for this contract allows the contractor to recover allowable costs plus a base fee, plus an award fee that is earned based on performance against specific criteria. This differs from fixed-price contracts, which offer greater cost certainty to the government but less flexibility for the contractor if unforeseen issues arise. It also differs from cost-plus-incentive-fee (CPIF) contracts, which share cost savings or overruns between the government and contractor. CPAF is often used when performance requirements are difficult to define precisely upfront or when significant government oversight is planned to guide contractor performance. For naval sustainment, where technical complexity and evolving needs are common, CPAF can incentivize high performance and quality, but it requires robust government oversight to control costs and ensure the award fee is justified.

What is Bath Iron Works' track record with the DDG 51 class program prior to this contract?

Bath Iron Works (BIW) has a long and established track record as the builder of the DDG 51 Arleigh Burke class destroyers. They were the original shipbuilder for many of these vessels, including the lead ship of the class. Therefore, their involvement in post-delivery services is a natural extension of their expertise and intimate knowledge of the platform's design, construction, and systems. BIW has consistently delivered these complex warships, often facing challenges related to production schedules and costs, but ultimately fulfilling their role as a primary builder. Their historical performance on the construction program suggests a deep understanding of the DDG 51 class, making them a logical choice for extensive post-delivery support.

What are the key performance indicators (KPIs) typically used to evaluate contractor performance under a CPAF contract for naval ship services?

Key Performance Indicators (KPIs) for a CPAF contract like this one for DDG 51 class post-delivery services are designed to measure the contractor's success in meeting critical objectives. These often include metrics related to schedule adherence (e.g., timely completion of maintenance availabilities or modernization tasks), quality of work (e.g., defect rates, rework required), cost control (though less emphasized in CPAF than in fixed-price, efficiency is still monitored), technical performance (e.g., system reliability improvements, successful integration of upgrades), and responsiveness to Navy requirements. The award fee is directly tied to performance against these pre-defined criteria, ensuring the Navy incentivizes the specific outcomes it values most for maintaining fleet readiness.

How has the total government spending on DDG 51 class sustainment evolved over the life cycle of the program?

The total government spending on DDG 51 class sustainment has evolved significantly over the program's life cycle. Initially, sustainment costs were lower as the ships were new and under warranty. As the fleet aged, the need for more extensive maintenance, repair, and modernization increased, leading to a rise in sustainment expenditures. This contract, awarded in 2006 and ending in 2014, represents a substantial portion of mid-life sustainment spending. Over time, the Navy has shifted towards longer-term sustainment contracts and integrated support strategies to manage costs more effectively and ensure fleet readiness. Analyzing annual spending reports and contract awards for maintenance, upgrades, and modernization across the entire DDG 51 class would illustrate this evolution.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002406R2310

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 700 WASHINGTON ST, BATH, ME, 04530

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,930,589

Exercised Options: $17,749,497

Current Obligation: $17,321,439

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline