DoD's DDG 51 Class Destroyer Construction Contract Awarded to Bath Iron Works for $1.4 Billion
Contract Overview
Contract Amount: $1,403,317,277 ($1.4B)
Contractor: Bath Iron Works Corporation
Awarding Agency: Department of Defense
Start Date: 2011-09-26
End Date: 2019-10-31
Contract Duration: 2,957 days
Daily Burn Rate: $474.6K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 2
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: CONSTRUCTION OF DDG 51 CLASS DESTROYER
Place of Performance
Location: BATH, SAGADAHOC County, MAINE, 04530
State: Maine Government Spending
Plain-Language Summary
Department of Defense obligated $1.40 billion to BATH IRON WORKS CORPORATION for work described as: CONSTRUCTION OF DDG 51 CLASS DESTROYER Key points: 1. The contract awarded to Bath Iron Works Corporation for the construction of DDG 51 Class Destroyers represents a significant investment in naval capabilities. 2. Competition for this contract was limited, as it was awarded under 'Full and Open Competition After Exclusion of Sources', suggesting specific capabilities or prior relationships may have influenced the selection. 3. The fixed-price incentive contract type aims to balance cost control with performance incentives, but carries inherent risks if costs escalate beyond projections. 4. The shipbuilding and repair sector is critical for national defense, with this contract contributing to the modernization and expansion of the U.S. Navy fleet.
Value Assessment
Rating: fair
The contract value of $1.4 billion for two destroyers appears substantial. Benchmarking against similar complex naval shipbuilding contracts is necessary to fully assess pricing fairness, as costs can vary significantly based on ship class, features, and construction complexity.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'Full and Open Competition After Exclusion of Sources'. This method implies that while competition was sought, certain sources were excluded, potentially limiting the breadth of price discovery and innovation.
Taxpayer Impact: The significant expenditure on naval shipbuilding directly impacts taxpayer funds, necessitating robust oversight to ensure value for money and adherence to contract terms.
Public Impact
Enhances U.S. naval power projection capabilities with advanced destroyer platforms. Supports high-skilled manufacturing jobs within the shipbuilding industry. Contributes to the technological advancement and readiness of the U.S. Navy. Potential for long-term maintenance and upgrade contracts, extending economic impact.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition may lead to higher costs.
- Fixed-price incentive contracts can be complex to manage.
- Potential for cost overruns if not managed effectively.
- Dependence on a single contractor for critical naval assets.
Positive Signals
- Acquisition of advanced naval platforms.
- Investment in domestic shipbuilding capabilities.
- Potential for technological innovation in warship design.
Sector Analysis
The shipbuilding and repair sector is a cornerstone of national defense, characterized by high capital investment, specialized labor, and long production cycles. Spending benchmarks in this sector are often project-specific due to the unique nature of naval vessels, but this contract represents a significant portion of annual defense shipbuilding outlays.
Small Business Impact
Analysis of small business participation is not directly available from the provided data. However, large prime contracts in defense shipbuilding often involve extensive subcontracting, which can provide opportunities for small businesses in specialized manufacturing and support roles.
Oversight & Accountability
The contract's 'DEFINITIVE CONTRACT' type and fixed-price incentive structure suggest a framework for oversight. However, the complexity of naval shipbuilding necessitates continuous monitoring by the Department of the Navy to ensure performance, cost control, and adherence to specifications.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Limited competition.
- Potential for cost overruns.
- Complexity of fixed-price incentive contracts.
- Long-term reliance on specific contractors.
- Need for robust program oversight.
Tags
ship-building-and-repairing, department-of-defense, me, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.40 billion to BATH IRON WORKS CORPORATION. CONSTRUCTION OF DDG 51 CLASS DESTROYER
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 $1.40 billion.
What is the period of performance?
Start: 2011-09-26. End: 2019-10-31.
What was the rationale for excluding specific sources in the 'Full and Open Competition After Exclusion of Sources' process, and how did this impact the final price?
The exclusion of sources typically occurs when specific technical capabilities, past performance, or security requirements are paramount and only met by a limited number of entities. This can reduce competitive pressure, potentially leading to a higher price than under unrestricted full and open competition. A detailed review of the solicitation and award documents would be needed to ascertain the precise reasons for exclusion and their pricing implications.
How does the 'Fixed Price Incentive' (FPI) contract type mitigate risks associated with cost overruns in complex shipbuilding projects like the DDG 51 class?
An FPI contract establishes a target cost, target profit, and a price ceiling. If the final cost is below the target, both the contractor and the government share in the savings. If costs exceed the target, the contractor bears an increasing share of the overrun up to the price ceiling. This incentivizes the contractor to control costs while providing the government with a cap on its liability.
What is the projected long-term economic impact and strategic value of these DDG 51 class destroyers beyond their initial construction phase?
Beyond construction, these destroyers provide significant long-term strategic value through enhanced naval presence, power projection, and deterrence. Economically, they create sustained employment in shipyards and related industries for decades through maintenance, modernization, and potential upgrades, contributing to a robust defense industrial base and national security.
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 AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002411R2305
Offers Received: 2
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Address: 700 WASHINGTON ST, BATH, ME, 04530
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $1,442,830,787
Exercised Options: $1,428,645,878
Current Obligation: $1,403,317,277
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2011-09-26
Current End Date: 2019-10-31
Potential End Date: 2019-10-31 00:00:00
Last Modified: 2024-06-04
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