DoD Awards $2.55B for DDG 1001/1002 Construction and FY11 Class Services to Bath Iron Works
Contract Overview
Contract Amount: $2,551,812,435 ($2.6B)
Contractor: Bath Iron Works Corporation
Awarding Agency: Department of Defense
Start Date: 2011-09-15
End Date: 2025-06-29
Contract Duration: 5,036 days
Daily Burn Rate: $506.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: DDG 1001/1002 CONSTRUCTION AND FY11 CLASS SERVICES
Place of Performance
Location: BATH, SAGADAHOC County, MAINE, 04530
State: Maine Government Spending
Plain-Language Summary
Department of Defense obligated $2.55 billion to BATH IRON WORKS CORPORATION for work described as: DDG 1001/1002 CONSTRUCTION AND FY11 CLASS SERVICES Key points: 1. Significant investment in naval shipbuilding for advanced destroyers. 2. Bath Iron Works is the sole provider for this specific class of ships. 3. Long-term contract duration (2011-2025) indicates substantial project scope and potential for cost overruns. 4. Fixed Price Incentive contract type aims to balance cost control with performance incentives.
Value Assessment
Rating: questionable
The contract value of $2.55 billion for two destroyers and class services is substantial. Benchmarking against similar complex naval shipbuilding contracts is difficult without more detailed cost breakdowns, but the duration and scope suggest a high price point.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was sole-sourced, meaning competition was not sought. This limits price discovery and potentially leads to higher costs for taxpayers as the contractor faces less pressure to offer competitive pricing.
Taxpayer Impact: The lack of competition for such a large contract raises concerns about taxpayer value and the potential for inflated costs.
Public Impact
Enhances U.S. naval capabilities with advanced destroyer platforms. Supports high-skilled manufacturing jobs in Maine. Long-term commitment impacts future defense budget allocations. Potential for schedule delays and cost increases inherent in complex shipbuilding.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price discovery.
- Long contract duration increases risk of cost escalation.
- Fixed Price Incentive contract can lead to cost overruns if not managed carefully.
- Lack of small business participation noted.
Positive Signals
- Acquisition of critical naval assets.
- Supports domestic shipbuilding industry.
- Contract includes incentives for performance.
Sector Analysis
Naval shipbuilding is a highly specialized and capital-intensive sector dominated by a few major contractors. Spending benchmarks are difficult due to unique ship designs and long production cycles, but this contract represents a significant portion of the Navy's shipbuilding budget.
Small Business Impact
The data indicates no specific set-aside for small businesses in this contract. Large, complex defense contracts like this often involve extensive subcontracting, but direct small business participation appears limited based on the provided information.
Oversight & Accountability
The sole-source nature of this award warrants close oversight from the Department of Defense and Congress to ensure cost reasonableness and effective program execution throughout the contract's long duration.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award
- Long contract duration
- Potential for cost overruns (FPI)
- Lack of small business participation
- Limited price discovery
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 $2.55 billion to BATH IRON WORKS CORPORATION. DDG 1001/1002 CONSTRUCTION AND FY11 CLASS SERVICES
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 $2.55 billion.
What is the period of performance?
Start: 2011-09-15. End: 2025-06-29.
What is the projected cost per destroyer, and how does it compare to similar vessels acquired through competitive processes?
The total contract value is $2.55 billion for two destroyers and associated services over a long period. Without a clear cost breakdown per ship and comparison data for competitively procured vessels, it's difficult to assess value. Sole-source awards often result in higher per-unit costs due to the absence of competitive pressure to reduce prices.
What are the specific risks associated with the Fixed Price Incentive (FPI) contract type for this project?
An FPI contract has a target cost, target profit, and a price ceiling. While it incentivizes the contractor to control costs, if the final cost exceeds the target, both the government and contractor share the overrun according to a pre-defined formula. This can still lead to significant cost increases above the target if cost controls are not rigorously maintained.
How effectively does this contract ensure the delivery of advanced naval capabilities within reasonable taxpayer expense?
The effectiveness is questionable due to the sole-source nature, which inherently limits competitive pressure on pricing. While the acquisition of advanced destroyers is a strategic necessity, the lack of competition raises concerns about whether taxpayers are receiving the best possible value. Robust oversight is crucial to mitigate these risks.
Industry Classification
NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing
Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002409R2300
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Wico Limited
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: $2,626,613,905
Exercised Options: $2,573,168,213
Current Obligation: $2,551,812,435
Actual Outlays: $27,356,115
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2011-09-15
Current End Date: 2025-06-29
Potential End Date: 2025-06-29 00:00:00
Last Modified: 2025-09-30
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