Navy awards $222M contract for USS Gary execution planning and availability, spanning over a decade

Contract Overview

Contract Amount: $222,455,407 ($222.5M)

Contractor: National Steel and Shipbuilding Company

Awarding Agency: Department of Defense

Start Date: 2007-08-03

End Date: 2020-09-30

Contract Duration: 4,807 days

Daily Burn Rate: $46.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: ACCOMPLISH THE FY07 EXECUTION PLANNING FOR USS GARY (FFG 51) FY08 NON DRY-DOCKING CNO SCHEDULED AVAILABILITY

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92136

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $222.5 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: ACCOMPLISH THE FY07 EXECUTION PLANNING FOR USS GARY (FFG 51) FY08 NON DRY-DOCKING CNO SCHEDULED AVAILABILITY Key points: 1. Contract duration significantly exceeds typical execution timelines, raising questions about efficiency. 2. The cost-plus award fee structure allows for potential cost overruns beyond initial estimates. 3. Limited public data on performance metrics makes it difficult to assess value for money. 4. The contract's long tail suggests potential for scope creep and evolving requirements. 5. Shipbuilding and repair sector is characterized by high complexity and specialized labor needs. 6. The award represents a substantial investment in naval readiness and maintenance.

Value Assessment

Rating: fair

The total award value of $222.4 million for execution planning and a non-dry-docking availability for the USS Gary (FFG 51) appears substantial, especially considering the contract's extended period from 2007 to 2020. Benchmarking this against similar complex naval availabilities is challenging without more specific details on the scope of work. However, the cost-plus award fee (CPAF) structure, while offering flexibility, can lead to higher final costs compared to fixed-price contracts if not managed tightly. The long duration suggests a phased approach or significant unforeseen complexities.

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. The presence of two bids suggests a competitive environment, which theoretically should drive better pricing and terms. However, the specific details of the bidding process, including the number of proposals received and the evaluation criteria, are not publicly available. The long-term nature of the contract might have influenced the bidding strategy, potentially favoring companies with long-term capacity and expertise in naval shipbuilding and repair.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market that encourages competitive pricing and innovation, potentially leading to cost savings over the life of the contract.

Public Impact

The primary beneficiaries are the U.S. Navy, ensuring the operational readiness of the USS Gary (FFG 51). Services delivered include execution planning and a scheduled availability, crucial for maintaining the ship's structural integrity and combat systems. The geographic impact is centered in California, where the contractor, National Steel and Shipbuilding Company, is located. Workforce implications include employment for skilled tradespeople, engineers, and project managers within the naval shipbuilding and repair sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Extended contract duration (over 13 years) raises concerns about potential inefficiencies and cost escalation.
Cost-plus award fee structure may incentivize cost growth if not rigorously overseen.
Lack of detailed performance metrics makes it difficult to assess true value for money.
The specific nature of 'execution planning' over such a long period warrants further scrutiny.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Contract addresses critical naval readiness requirements for a specific vessel.
The contractor, National Steel and Shipbuilding Company, has experience in this sector.

Sector Analysis

The shipbuilding and repair sector is a critical component of national defense, characterized by high capital investment, specialized labor, and complex project management. Contracts in this industry often involve long lead times and significant technological sophistication. The market is typically dominated by a few large, experienced firms capable of undertaking such extensive projects. This contract fits within the broader category of defense procurement for vessel maintenance and modernization, a consistent area of federal spending.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the scale and complexity of naval shipbuilding and repair, large prime contractors are typically involved. However, the prime contractor, National Steel and Shipbuilding Company, may engage small businesses as subcontractors for specialized services or components, contributing to the broader small business ecosystem within the defense industrial base. Further analysis would be needed to determine the extent of small business subcontracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The cost-plus award fee structure necessitates robust oversight to ensure performance objectives are met and costs are controlled. Transparency is limited by the proprietary nature of detailed contract performance data. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance and Modernization
Shipbuilding and Repair Contracts
Defense Procurement
Fleet Readiness

Risk Flags

Extended contract duration
Cost-plus award fee structure
Lack of detailed performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $222.5 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. ACCOMPLISH THE FY07 EXECUTION PLANNING FOR USS GARY (FFG 51) FY08 NON DRY-DOCKING CNO SCHEDULED AVAILABILITY

Who is the contractor on this award?

The obligated recipient is NATIONAL STEEL AND SHIPBUILDING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $222.5 million.

What is the period of performance?

Start: 2007-08-03. End: 2020-09-30.

What specific services were included in the "FY07 EXECUTION PLANNING FOR USS GARY (FFG 51) FY08 NON DRY-DOCKING CNO SCHEDULED AVAILABILITY"?

The provided data indicates the contract covered "ACCOMPLISH THE FY07 EXECUTION PLANNING FOR USS GARY (FFG 51) FY08 NON DRY-DOCKING CNO SCHEDULED AVAILABILITY." This suggests a two-part scope: first, the planning phase for executing future work (FY07 execution planning), and second, the actual performance of a scheduled availability for the USS Gary (FFG 51) in FY08, specifically a non-dry-docking availability. A non-dry-docking availability typically involves maintenance, repairs, and upgrades that can be performed while the ship is afloat, often focusing on systems, habitability, and minor hull work, as opposed to major structural repairs requiring dry-docking. The extended award period (2007-2020) implies that the 'execution planning' might have been an ongoing or iterative process, or that the contract encompassed multiple availabilities or follow-on work beyond the initial FY08 scope.

How does the contract duration of over 13 years compare to typical naval availability contracts?

A contract duration of over 13 years (from August 3, 2007, to September 30, 2020) for a single vessel's execution planning and availability is exceptionally long. Typical naval availabilities, even complex ones, are usually completed within a much shorter timeframe, often ranging from a few months to a couple of years for major overhauls. The extended duration here suggests either a very phased approach to the availability, continuous or iterative execution planning over many years, or potentially the inclusion of multiple, subsequent availabilities or related services under a single contract vehicle. This longevity raises questions about efficiency, potential for scope creep, and whether a more modular contracting approach might have been more cost-effective or manageable.

What are the implications of the Cost Plus Award Fee (CPAF) contract type for this award?

The Cost Plus Award Fee (CPAF) contract type means the contractor is reimbursed for allowable costs incurred, plus a fee that consists of a base amount (often fixed) and an award amount. The award amount is determined based on the government's assessment of the contractor's performance against pre-defined criteria. For taxpayers, CPAF introduces a degree of uncertainty regarding the final cost, as the award fee component can increase the total price. While it incentivizes performance and allows flexibility for complex projects with evolving requirements, it necessitates rigorous government oversight to ensure the award criteria are objective and that the contractor is not incentivized to inflate costs to achieve higher fees. Without clear performance metrics and diligent oversight, CPAF contracts can be more expensive than fixed-price alternatives.

What is the significance of the 'Ship Building and Repairing' NAICS code (336611) in the context of this contract?

The North American Industry Classification System (NAICS) code 336611, 'Ship Building and Repairing,' signifies the primary industry sector this contract falls under. This code encompasses establishments primarily engaged in building and repairing ships, barges, and floating structures. For this contract, it confirms the nature of the work involves complex marine engineering, construction, and maintenance activities. Companies operating under this NAICS code typically possess specialized facilities, skilled labor (welders, pipefitters, electricians, engineers), and extensive experience in handling large-scale, high-value projects critical to naval and commercial maritime operations. Federal spending in this sector is often substantial due to national security requirements and the long lifecycle of vessels.

How does the contract's value of approximately $222 million compare to other naval shipbuilding and repair spending?

A contract value of approximately $222 million for a specific vessel's execution planning and availability is a significant, but not extraordinary, figure within the broader context of naval shipbuilding and repair. Major new ship construction contracts (e.g., aircraft carriers, destroyers, submarines) can run into billions of dollars. However, complex maintenance, modernization, and overhaul contracts for existing vessels can also reach hundreds of millions. This $222 million award likely represents a substantial investment in extending the service life and maintaining the operational capability of the USS Gary. Comparing it directly requires analyzing the scope and complexity of other similar availabilities or modernization efforts for vessels of the same class (e.g., Oliver Hazard Perry-class frigates) or comparable size and systems.

What does the 'st': 'CA' (State: California) indicate about the contract's execution and economic impact?

The 'st': 'CA' designation indicates that the contractor, National Steel and Shipbuilding Company, is located in California. This implies that the primary execution of the contract, including project management, engineering, and potentially the physical work on the vessel (if it was homeported or dry-docked there), occurred within California. This has direct economic implications for the state, including job creation for a skilled workforce in the shipbuilding and repair sector, utilization of local supply chains, and contribution to the regional economy. Federal contracts awarded to companies in specific states often have a notable localized economic impact, supporting industries and employment within that geographic area.

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

Solicitation ID: N0002406R4419

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 2798 EAST HARBOR DRIVE, SAN DIEGO, CA, 92113

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $223,059,479

Exercised Options: $223,059,479

Current Obligation: $222,455,407

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline