Navy awards $89.7M contract for LPD 18 and LPD 20 ship work to BAE Systems

Contract Overview

Contract Amount: $89,700,162 ($89.7M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2007-02-27

End Date: 2011-12-31

Contract Duration: 1,768 days

Daily Burn Rate: $50.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: THIS CONTRACT ACTION WAS FOR THE AWARD OF CONTRACT N00024-07-C-2200 FOR WEST COAST FOA AND PSA WORK ON LPD 18 AND LPD 20 SHIPS. OPTION CLIN 0004 WAS EXERCISED AT TIME OF AWARD, AND FUNDS WERE OBLIGATED TO CLINS 0001 AND 0004 AT TIME OF BASE CONTRACT AWARD.

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92113

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $89.7 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: THIS CONTRACT ACTION WAS FOR THE AWARD OF CONTRACT N00024-07-C-2200 FOR WEST COAST FOA AND PSA WORK ON LPD 18 AND LPD 20 SHIPS. OPTION CLIN 0004 WAS EXERCISED AT TIME OF AWARD, AND FUNDS WERE OBLIGATED TO CLINS 0001 AND 0004 AT TIME OF BASE CONTRACT AWARD. Key points: 1. Contract focuses on West Coast Fleet Operations and Post-Shakedown Availability work. 2. Significant portion of funds obligated at base contract award, indicating planned scope. 3. Cost-Plus-Award-Fee (CPAF) structure incentivizes performance but requires careful oversight. 4. Long contract duration suggests a complex, multi-year project. 5. Awarded under full and open competition, implying a robust bidding process. 6. No small business set-aside, suggesting the prime contractor is a large entity.

Value Assessment

Rating: fair

The contract's value of $89.7 million for ship maintenance and repair over nearly five years appears substantial. Benchmarking against similar LPD class ship availabilities would be necessary for a precise value-for-money assessment. The Cost-Plus-Award-Fee (CPAF) pricing structure, while common for complex projects, can lead to higher costs if not managed effectively, as contractor profit is tied to performance metrics. Without specific performance data or comparisons to industry benchmarks for similar services, it's difficult to definitively assess if this represents excellent value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and considered. The presence of multiple bidders generally fosters price discovery and can lead to more competitive pricing for the government. The specific number of bids received is not detailed, but the 'full and open' designation suggests a competitive environment was established.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it increases the likelihood of obtaining services at a fair market price through a competitive bidding process.

Public Impact

The primary beneficiaries are the U.S. Navy's LPD 18 and LPD 20 ships, ensuring their operational readiness. Services include Fleet Operations and Post-Shakedown Availability, crucial for maintaining complex naval vessels. The geographic impact is focused on the West Coast, where these ships are likely based or serviced. The contract supports a segment of the shipbuilding and repair workforce, likely skilled tradespeople.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

CPAF contracts can sometimes lead to cost overruns if performance metrics are not rigorously defined and monitored.
Long contract durations increase the risk of scope creep or unforeseen cost increases due to market fluctuations.
Lack of specific details on competition level (e.g., number of bidders) limits a full assessment of price competitiveness.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Contract is for essential maintenance and availability, directly supporting naval readiness.
Clear end dates provide a defined period for service delivery and cost management.

Sector Analysis

This contract falls within the shipbuilding and repair sector, a critical component of the defense industrial base. The market is characterized by high barriers to entry, specialized labor, and significant government investment. Spending in this sector is heavily influenced by defense budgets and naval modernization programs. Comparable spending benchmarks would typically involve other major ship repair and maintenance contracts for similar vessel classes within the Navy.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the prime contract was awarded to a large business entity, likely BAE Systems Maritime Solutions. While there's no direct set-aside, large prime contractors are often required to meet small business subcontracting goals. The extent to which BAE Systems will utilize small businesses for specialized services or components will impact the small business ecosystem within the defense industrial base.

Oversight & Accountability

Oversight for this Cost-Plus-Award-Fee contract would typically be managed by the Department of the Navy's contracting and program management offices. Performance metrics defined in the contract are key to assessing contractor performance and determining award fees. Transparency is generally maintained through contract awards databases, though detailed performance reports may be less public. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance and Repair
LPD Class Ship Programs
Defense Shipbuilding Contracts
Fleet Readiness Programs

Risk Flags

Cost-Plus-Award-Fee (CPAF) contract type requires diligent oversight to manage costs.
Long contract duration increases risk of cost escalation and scope creep.
Specific performance metrics for award fee are not publicly detailed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $89.7 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. THIS CONTRACT ACTION WAS FOR THE AWARD OF CONTRACT N00024-07-C-2200 FOR WEST COAST FOA AND PSA WORK ON LPD 18 AND LPD 20 SHIPS. OPTION CLIN 0004 WAS EXERCISED AT TIME OF AWARD, AND FUNDS WERE OBLIGATED TO CLINS 0001 AND 0004 AT TIME OF BASE CONTRACT AWARD.

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 $89.7 million.

What is the period of performance?

Start: 2007-02-27. End: 2011-12-31.

What is the historical spending pattern for BAE Systems Maritime Solutions with the Department of the Navy for similar ship repair services?

Analyzing BAE Systems Maritime Solutions' historical spending with the Department of the Navy for similar ship repair services requires access to comprehensive contract databases. Generally, large defense contractors like BAE Systems have a long-standing relationship with the Navy, undertaking numerous contracts for shipbuilding, repair, and modernization across various vessel classes. Specific to LPD-class ships, BAE Systems has been involved in significant work, including new construction and post-delivery support. Historical data would reveal trends in contract values, types (e.g., fixed-price, cost-plus), and performance outcomes. A detailed analysis would involve comparing the $89.7 million awarded here against the total value and frequency of their previous Navy contracts in this specific service area to identify any significant deviations or patterns in award size and duration.

How does the Cost-Plus-Award-Fee (CPAF) structure for this contract compare to industry standards for ship repair and maintenance?

The Cost-Plus-Award-Fee (CPAF) structure is common in complex, high-risk defense contracts where defining a fixed scope and price upfront is challenging. For ship repair and maintenance, especially for major availabilities like Post-Shakedown Availability (PSA), CPAF allows the government to reimburse the contractor for actual costs incurred while providing an additional award fee based on achieving specific performance targets (e.g., schedule adherence, quality, cost control). Industry standards often see a mix of contract types. While CPAF is prevalent for complex naval projects, simpler maintenance tasks might use fixed-price contracts. The key to CPAF's effectiveness lies in well-defined performance metrics and robust government oversight to ensure the 'award' portion truly reflects superior performance and doesn't simply inflate costs. Benchmarking the award fee criteria against similar Navy contracts would indicate if the government is effectively incentivizing value.

What are the specific performance metrics used to determine the 'award fee' in this CPAF contract, and how are they measured?

The specific performance metrics used to determine the award fee in this CPAF contract are not publicly detailed in the provided award data. Typically, for a contract involving Fleet Operations and Post-Shakedown Availability (PSA) for LPD-class ships, these metrics would likely encompass areas such as adherence to the maintenance schedule, quality of workmanship, safety compliance, responsiveness to emergent issues, and potentially cost management relative to targets. The government's technical representatives and contracting officer would assess the contractor's performance against these pre-defined criteria throughout the contract period. The award fee determination process usually involves a formal evaluation report submitted by the government, which then informs the final fee amount paid to the contractor. Without access to the contract's Statement of Work (SOW) and Performance Requirements Summary (PRS), a precise understanding of these metrics is not possible.

What is the potential risk associated with the long duration (1768 days) of this contract for taxpayers?

The long duration of this contract, approximately 4.8 years, presents several potential risks for taxpayers. Firstly, it increases the likelihood of cost escalation due to inflation, material price fluctuations, and potential changes in labor costs over an extended period. Secondly, a longer contract term can lead to 'scope creep,' where additional requirements or modifications are added over time, potentially increasing the overall cost beyond the initial $89.7 million estimate if not managed strictly. Thirdly, the government's ability to adapt to evolving technological requirements or strategic shifts in naval operations might be constrained by a long-term commitment to a specific maintenance approach or contractor. Finally, extended contracts can sometimes reduce the urgency for the contractor to innovate or improve efficiency, as the revenue stream is secured for a considerable duration.

How does the $89.7 million contract value compare to the total budget allocated for LPD 18 and LPD 20 sustainment over their lifecycle?

The $89.7 million contract value represents a specific award for West Coast Fleet Operations and Post-Shakedown Availability (PSA) work on LPD 18 and LPD 20 ships, covering a period from February 2007 to December 2011. This amount is a component of the broader sustainment costs for these vessels. The total lifecycle sustainment budget for LPD-class ships is significantly larger, encompassing routine maintenance, major overhauls, upgrades, spare parts, training, and personnel over their entire operational life, which can span several decades. This $89.7 million award is a substantial but discrete investment focused on a particular phase of the ships' operational readiness. To compare it to the total lifecycle budget would require analyzing the Navy's long-term shipbuilding and maintenance plans, which are typically multi-billion dollar figures spread over many years.

Industry Classification

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

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

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: 2205 E BELT ST, SAN DIEGO, CA, 90

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

Financial Breakdown

Contract Ceiling: $92,111,960

Exercised Options: $91,886,437

Current Obligation: $89,700,162

Contract Characteristics

Cost or Pricing Data: NO

Timeline