Navy's $771M LSD Class Ship Maintenance Contract Awarded to National Steel and Shipbuilding Company
Contract Overview
Contract Amount: $770,825,664 ($770.8M)
Contractor: National Steel and Shipbuilding Company
Awarding Agency: Department of Defense
Start Date: 2008-07-03
End Date: 2020-09-30
Contract Duration: 4,472 days
Daily Burn Rate: $172.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: MAINTENANCE, REPAIR, AND ALTERATIONS FOR THE LSD CLASS MID-LIFE MULTI-SHIP MULTI-OPTION PROGRAM
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92186
Plain-Language Summary
Department of Defense obligated $770.8 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: MAINTENANCE, REPAIR, AND ALTERATIONS FOR THE LSD CLASS MID-LIFE MULTI-SHIP MULTI-OPTION PROGRAM Key points: 1. Significant investment in naval vessel upkeep, impacting shipbuilding and repair sector. 2. Sole awardee suggests potential for concentrated market power or specialized capabilities. 3. Long-term contract duration (2008-2020) indicates ongoing need for these services. 4. Cost Plus Award Fee contract type allows for performance incentives but requires careful oversight.
Value Assessment
Rating: fair
The Cost Plus Award Fee structure can lead to costs exceeding initial estimates if not managed rigorously. Benchmarking against similar multi-ship maintenance contracts is difficult without detailed cost breakdowns, but the total value suggests a substantial program.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the single awardee for this specific program implies that only one entity met the requirements or was the most competitive.
Taxpayer Impact: Taxpayer funds are allocated for critical defense infrastructure maintenance, ensuring fleet readiness. The competitive award process aims to secure the best value, though the final cost is subject to performance incentives.
Public Impact
Ensures the operational readiness of the Navy's LSD class ships, crucial for national defense. Supports jobs and economic activity within the shipbuilding and repair industry, particularly in California. Long-term commitment to a specific shipyard may foster specialized expertise but could limit future competitive opportunities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns with Cost Plus Award Fee structure.
- Limited visibility into specific cost drivers without detailed performance data.
- Concentration of work with one contractor may reduce future competitive pressure.
Positive Signals
- Awarded through full and open competition.
- Contract aims to maintain critical naval assets.
- Performance incentives are built into the contract type.
Sector Analysis
The shipbuilding and repair sector is capital-intensive and subject to cyclical demand, often driven by government contracts. This award represents a significant portion of spending within NAICS code 336611 (Ship Building and Repairing).
Small Business Impact
The data indicates this contract was awarded to a large business (National Steel and Shipbuilding Company). There is no specific information provided regarding subcontracting opportunities for small businesses within this contract.
Oversight & Accountability
The Cost Plus Award Fee structure necessitates robust oversight from the Department of the Navy to ensure costs are reasonable and performance targets are met. Regular audits and performance reviews are critical for accountability.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Potential for cost overruns due to contract type.
- Limited visibility into detailed cost breakdowns.
- Long-term reliance on a single contractor.
- Market concentration risk.
- Dependence on government funding cycles.
Tags
ship-building-and-repairing, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $770.8 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. MAINTENANCE, REPAIR, AND ALTERATIONS FOR THE LSD CLASS MID-LIFE MULTI-SHIP MULTI-OPTION PROGRAM
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 $770.8 million.
What is the period of performance?
Start: 2008-07-03. End: 2020-09-30.
What was the basis for selecting a single contractor for this multi-option program, given it was awarded under full and open competition?
While awarded under full and open competition, the selection of a single contractor likely stemmed from that entity offering the most advantageous proposal based on technical capability, past performance, and price. Specific evaluation criteria and the competitive landscape at the time of award would determine if only one bidder was deemed suitable or significantly superior.
How effectively were cost controls managed under the Cost Plus Award Fee structure to prevent contractor overspending?
Assessing cost control effectiveness requires detailed analysis of the award fees paid versus the base cost. If the contractor consistently achieved high performance ratings and received significant award fees, it suggests effective management. Conversely, if costs escalated without commensurate performance gains, oversight may have been insufficient, leading to potential taxpayer overpayment.
What is the long-term strategic impact of awarding such a large, long-duration contract to a single entity on the broader shipbuilding and repair market?
Awarding a large, long-duration contract to one entity can solidify that company's market position and capabilities, potentially leading to greater efficiency and expertise. However, it may also discourage other potential competitors from investing in similar capabilities, thereby reducing future competition and potentially increasing prices for subsequent contracts.
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: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002407R4007
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: General Dynamics Corp (UEI: 001381284)
Address: 2798 HARBOR DR, SAN DIEGO, CA, 92113
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $848,918,134
Exercised Options: $770,967,424
Current Obligation: $770,825,664
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2008-07-03
Current End Date: 2020-09-30
Potential End Date: 2020-09-30 00:00:00
Last Modified: 2020-09-19
More Contracts from National Steel and Shipbuilding Company
- Federal Contract — $5.9B (Department of Defense)
- Detail Design and Construction (DD&C) for T-AO 205 — $5.8B (Department of Defense)
- T-AO 214 - 221 DD&C Block BUY — $2.5B (Department of Defense)
- MLP System Design Part 1 (SD1) With Priced Option for SD2 — $2.0B (Department of Defense)
- Expeditionary SEA Base (ESB) Hull 6 Lltm UCA — $1.9B (Department of Defense)
View all National Steel and Shipbuilding Company federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)