Navy awards $178M for MCM-1 Class ship maintenance, BAE Systems secures multi-year contract

Contract Overview

Contract Amount: $178,061,050 ($178.1M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2008-05-14

End Date: 2019-09-30

Contract Duration: 4,156 days

Daily Burn Rate: $42.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: TAS::17 1804::TAS MAINTENANCE, REPAIR, AND ALTERATIONS FOR THE MCM-1 CLASS MULTI-SHIP MULTI-OPTION PROGRAM

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $178.1 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: TAS::17 1804::TAS MAINTENANCE, REPAIR, AND ALTERATIONS FOR THE MCM-1 CLASS MULTI-SHIP MULTI-OPTION PROGRAM Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Award Fee, which incentivizes contractor performance. 3. Long contract duration of over 11 years indicates a significant, long-term need. 4. The contract value of $178 million represents a substantial investment in naval readiness. 5. The primary contractor, BAE Systems Maritime Solutions, has a significant presence in naval shipbuilding and repair. 6. The contract is for maintenance, repair, and alterations, crucial for extending vessel lifespan and operational capability.

Value Assessment

Rating: good

The contract value of $178 million over more than 11 years suggests a significant investment in maintaining the MCM-1 class ships. While specific cost breakdowns are not provided, the Cost Plus Award Fee structure aims to control costs by incentivizing efficient performance. Benchmarking against similar multi-year, multi-ship maintenance contracts would provide a clearer picture of value for money, but the duration and scope indicate a substantial commitment to fleet readiness.

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 considered. The presence of two bids suggests a degree of competition, which is generally favorable for price discovery and achieving better value. The specific number of bidders and the details of the bidding process would offer further insight into the intensity of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and innovative solutions.

Public Impact

The U.S. Navy benefits directly through the sustained operational readiness of its MCM-1 class mine countermeasures ships. Services delivered include essential maintenance, repair, and alterations, ensuring the longevity and effectiveness of these critical vessels. The geographic impact is primarily centered in San Diego, California, where BAE Systems Maritime Solutions is located, supporting regional economic activity and specialized labor. Workforce implications include the employment of skilled labor in shipbuilding, repair, and technical services within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Award Fee contracts if not managed rigorously.
Long-term nature of the contract could lead to contractor lock-in, potentially reducing future competitive pressure.
Dependence on a single primary contractor for critical maintenance could pose supply chain or availability risks.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
Cost Plus Award Fee structure incentivizes contractor performance and efficiency.
Long-term contract provides stability and predictability for fleet maintenance planning.
Focus on maintenance and repair ensures the continued operational capability of vital naval assets.

Sector Analysis

This contract falls within the broader shipbuilding and repair sector, a critical component of the defense industrial base. The market for naval ship maintenance and repair is specialized, often dominated by a few large contractors with the necessary facilities and expertise. The $178 million value positions this as a significant contract within this niche, reflecting the substantial costs associated with maintaining complex naval vessels.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). While BAE Systems is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors, particularly in specialized repair services or component supply. The extent of small business subcontracting would need further investigation to assess its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. The Cost Plus Award Fee structure includes performance metrics that are subject to review and evaluation, influencing the 'award fee' portion of the payment. Inspector General investigations could be initiated if any irregularities or fraud are suspected. Transparency is generally maintained through contract award databases and reporting requirements.

Related Government Programs

Naval Ship Maintenance Contracts
Mine Countermeasures Ship Programs
Defense Industrial Base Support
BAE Systems Maritime Contracts
Department of the Navy Ship Repair

Risk Flags

Long contract duration may limit future competition.
CPAF contracts require diligent oversight to ensure value for money.
Dependence on specific class maintenance could be a vulnerability if contractor fails.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $178.1 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. TAS::17 1804::TAS MAINTENANCE, REPAIR, AND ALTERATIONS FOR THE MCM-1 CLASS MULTI-SHIP MULTI-OPTION PROGRAM

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 $178.1 million.

What is the period of performance?

Start: 2008-05-14. End: 2019-09-30.

What is the historical spending trend for MCM-1 Class ship maintenance and repair?

Analyzing historical spending on MCM-1 Class ship maintenance requires accessing detailed contract data over multiple fiscal years. Without specific historical data points for this particular class of ships, it's difficult to establish a precise trend. However, naval vessel maintenance is typically a recurring and significant expense, often increasing as ships age. The $178 million awarded here for a period exceeding 11 years suggests a substantial, ongoing commitment. Trends in defense budgets, fleet modernization plans, and the operational tempo of these vessels would influence year-over-year spending. A comprehensive analysis would involve examining past contracts for similar maintenance, repair, and alteration services for this class and comparable vessels to identify patterns in cost, duration, and contractor selection.

How does the Cost Plus Award Fee (CPAF) structure typically impact contractor performance and cost control for naval maintenance contracts?

The Cost Plus Award Fee (CPAF) contract structure is designed to provide flexibility in cost reimbursement while incentivizing superior performance. In this model, the contractor is reimbursed for allowable costs incurred, plus a base fee that is a fixed percentage of the estimated cost. Crucially, a significant portion of the potential profit is tied to an 'award fee,' determined by the government based on performance against pre-defined criteria. For naval maintenance, these criteria might include meeting deadlines, quality of work, cost efficiency, and adherence to technical specifications. This structure encourages contractors like BAE Systems to go beyond minimum requirements to achieve higher award fees, potentially leading to better outcomes and more efficient operations. However, it also requires robust government oversight to ensure the award fee criteria are objective and that the government is not overpaying for performance that should be standard.

What are the key performance indicators (KPIs) likely used to evaluate BAE Systems under this CPAF contract?

Under this Cost Plus Award Fee (CPAF) contract for MCM-1 Class ship maintenance, the Department of the Navy likely employs several Key Performance Indicators (KPIs) to evaluate BAE Systems Maritime Solutions. These would typically include metrics related to schedule adherence (e.g., timely completion of maintenance milestones), quality of workmanship (e.g., defect rates, rework required), cost control (e.g., performance against projected budgets, efficiency savings), and technical performance (e.g., successful execution of repairs and upgrades, system reliability post-maintenance). Additionally, KPIs might cover safety performance, responsiveness to emergent issues, and overall customer satisfaction. The government's Contracting Officer's Representative (COR) would monitor these KPIs throughout the contract duration, feeding into the assessment for the award fee determination, which directly impacts the contractor's final profit.

What is the strategic importance of the MCM-1 Class ships and their maintenance to the U.S. Navy's mission?

The MCM-1 Class ships, such as the Avenger-class, are crucial for the U.S. Navy's mine countermeasures (MCM) mission. Their primary role is to detect, classify, and neutralize naval mines, which pose a significant threat to naval operations, amphibious assaults, and freedom of navigation in contested waters. Maintaining the operational readiness of these specialized vessels is paramount for projecting power, ensuring sea lane security, and protecting naval forces from underwater threats. The long duration and substantial value of this contract underscore the Navy's commitment to sustaining this capability, which is vital for both wartime operations and peacetime presence in critical maritime regions. The effectiveness of the MCM mission directly impacts the Navy's ability to operate safely and effectively across the globe.

How does the geographic location of the contractor (San Diego, CA) influence the execution and oversight of this contract?

The contractor, BAE Systems Maritime Solutions, is located in San Diego, California. This geographic concentration is significant for several reasons. Firstly, it places the maintenance and repair facilities in close proximity to the homeports of many naval vessels, potentially reducing transit times and logistical complexities associated with maintenance. Secondly, it allows for more direct and frequent oversight by Navy personnel stationed in the region, facilitating easier communication and inspection. The presence of a major naval base and shipbuilding/repair infrastructure in San Diego creates a synergistic environment for such contracts. However, it also concentrates the risk; any disruptions in the San Diego area (e.g., labor disputes, natural disasters) could impact contract execution. The location also implies a significant economic impact on the Southern California region through employment and related industries.

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: SEALED BID

Solicitation ID: N0002407R4405

Offers Received: 2

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, 92113

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $179,671,924

Exercised Options: $179,538,737

Current Obligation: $178,061,050

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline