Navy awards $32.1M contract for DDG 109 ship building and repair services to BAE Systems

Contract Overview

Contract Amount: $32,142,867 ($32.1M)

Contractor: BAE Systems Maritime Solutions Norfolk Inc.

Awarding Agency: Department of Defense

Start Date: 2011-03-04

End Date: 2012-03-01

Contract Duration: 363 days

Daily Burn Rate: $88.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: LOE AND MATERIAL FOR DDG 109 PSA

Place of Performance

Location: NORFOLK, NORFOLK (CITY) County, VIRGINIA, 23523

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $32.1 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC. for work described as: LOE AND MATERIAL FOR DDG 109 PSA Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Award Fee (CPAF), which incentivizes contractor performance. 3. The duration of 363 days indicates a focused, project-specific scope of work. 4. The award was made by the Department of the Navy, a major defense spender. 5. The North American Industry Classification System (NAICS) code 336611 points to shipbuilding and repair. 6. The contract value of $32.1M is a significant investment in naval asset maintenance or construction.

Value Assessment

Rating: good

The contract value of $32.1M for ship building and repair services appears reasonable given the complexity of naval vessels. Without specific details on the scope of work (e.g., specific repairs, new construction phase, or modernization), a direct per-unit cost comparison is difficult. However, the Cost Plus Award Fee structure allows for performance-based incentives, which can drive value for money if managed effectively. Benchmarking against similar DDG-class ship maintenance contracts would provide a more precise assessment of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 3 bids suggests a moderate level of competition for this specific requirement. A higher number of bidders typically leads to more competitive pricing and a wider range of technical solutions. The fact that BAE Systems was selected implies they offered the best value proposition among the competitors.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and better quality services. This approach ensures that the government is not locked into a single provider, promoting efficiency and cost savings.

Public Impact

The primary beneficiaries are the U.S. Navy, which receives essential shipbuilding and repair services for its fleet. This contract supports the maintenance and readiness of Arleigh Burke-class destroyers (DDG). The services are likely delivered in Norfolk, Virginia, a major naval hub. The contract supports skilled labor in the shipbuilding and repair industry, potentially including engineers, technicians, and tradespeople.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can sometimes lead to cost overruns if not closely monitored, as the contractor is reimbursed for allowable costs plus a fee that can be adjusted based on performance.
The specific performance metrics for the award fee are not detailed, making it difficult to assess the strength of the incentive structure.
The duration of the contract is relatively short (363 days), which might indicate a specific project phase rather than a long-term sustainment effort, potentially leading to follow-on contracts with associated transition costs.

Positive Signals

The contract was awarded through full and open competition, indicating a robust selection process.
The Cost Plus Award Fee (CPAF) structure incentivizes the contractor to meet or exceed performance expectations, potentially leading to higher quality outcomes.
The award to BAE Systems, a known entity in maritime solutions, suggests a degree of confidence in their capabilities.
The contract supports critical naval assets, contributing to national security readiness.

Sector Analysis

The shipbuilding and repair sector is a critical component of the defense industrial base, supporting the construction, maintenance, and modernization of naval vessels. This contract falls under NAICS code 336611, which encompasses establishments primarily engaged in building and repairing ships, barges, and floating structures. The market is characterized by high barriers to entry due to specialized facilities, skilled labor, and stringent regulatory requirements. Spending in this sector is heavily influenced by defense budgets and geopolitical priorities. Comparable spending benchmarks would involve analyzing other contracts for the maintenance or construction of similar naval platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, BAE Systems Maritime Solutions, is a large defense contractor. While there is no direct set-aside, large prime contractors are often required to subcontract a portion of their work to small businesses. The extent to which BAE Systems will utilize small business subcontractors for this specific contract is not detailed in the provided data, but it is a common practice in the defense industry to meet subcontracting goals and foster the small business ecosystem.

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 (CPAF) structure necessitates robust oversight to ensure that costs are allowable and reasonable, and that performance targets are met to justify the award fee. The Inspector General of the Department of Defense may also conduct audits or investigations into contract performance and financial management. Transparency is typically maintained through contract reporting mechanisms and periodic reviews, though specific details of oversight activities are often internal.

Related Government Programs

Naval Ship Building and Repair Contracts
Arleigh Burke-class Destroyer Programs
Defense Contract Management Agency (DCMA) Oversight
Department of Defense Shipbuilding Budgets

Risk Flags

Potential for cost growth under CPAF if not managed effectively.
Dependence on timely delivery of materials and components.
Availability of skilled labor for specialized shipbuilding tasks.
Risk of unforeseen technical challenges during repair or construction.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.1 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC.. LOE AND MATERIAL FOR DDG 109 PSA

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS MARITIME SOLUTIONS NORFOLK 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 $32.1 million.

What is the period of performance?

Start: 2011-03-04. End: 2012-03-01.

What is the historical spending pattern for BAE Systems Maritime Solutions with the Department of the Navy for similar shipbuilding and repair services?

Analyzing BAE Systems Maritime Solutions' historical spending with the Department of the Navy for similar services requires access to comprehensive contract databases. However, as a major defense contractor, BAE Systems has a significant track record in shipbuilding and repair. Previous contracts for Arleigh Burke-class destroyers or other naval vessels would provide context. Factors to consider include the volume and value of past awards, the types of services rendered (e.g., new construction, modernization, routine maintenance), and performance history on those contracts. A review of historical data would reveal trends in contract awards, potential sole-source awards versus competitive bids, and any significant cost variances or performance issues that might inform the assessment of the current contract's value and risk.

How does the Cost Plus Award Fee (CPAF) structure for this contract compare to industry standards for naval vessel repair?

The Cost Plus Award Fee (CPAF) contract type is common in the defense industry, particularly for complex projects where the scope may evolve or where performance incentives are desired. For naval vessel repair, CPAF allows the contractor to be reimbursed for all allowable costs incurred, plus a base fee and an award fee. The award fee is determined by the government based on the contractor's performance against pre-defined criteria, such as schedule adherence, quality of work, and cost control. Industry standards often involve detailed performance metrics and evaluation processes to ensure the award fee truly reflects exceptional performance. The effectiveness of CPAF hinges on well-defined criteria and objective evaluation by the government. Without specific details on the award fee criteria for this DDG 109 contract, it's challenging to definitively benchmark it against industry standards, but its use suggests a desire for performance-driven outcomes.

What are the key performance indicators (KPIs) used to determine the award fee for this contract, and how are they measured?

The specific Key Performance Indicators (KPIs) used to determine the award fee for this contract are not publicly detailed in the provided data. However, for Cost Plus Award Fee (CPAF) contracts in shipbuilding and repair, typical KPIs often include factors such as adherence to schedule milestones, quality of workmanship (e.g., defect rates, rework required), technical performance, cost management (efficiency in resource utilization), safety performance, and responsiveness to government direction. Measurement methods would likely involve regular progress reviews, inspections, quality assurance checks, and performance reporting by the contractor, with the government's contracting officer or designated representative evaluating performance against these established metrics. The clarity and objectivity of these KPIs are crucial for the fair assessment of the award fee.

What is the potential impact of this contract on the overall readiness and operational availability of the DDG 109?

This contract directly impacts the readiness and operational availability of the DDG 109 by ensuring that the vessel receives necessary maintenance, repairs, or upgrades. The scope of work, whether it involves routine maintenance, corrective repairs for identified issues, or modernization efforts, is critical. Timely and high-quality execution of the services under this contract will contribute to the ship's ability to deploy and perform its missions effectively. Conversely, delays or quality deficiencies could negatively affect operational availability, potentially impacting fleet readiness. The contract's duration of 363 days suggests a significant undertaking that is likely aimed at maintaining or enhancing the ship's combat effectiveness and lifespan.

Are there any known risks associated with BAE Systems Maritime Solutions' performance on previous naval shipbuilding or repair contracts that might be relevant to this award?

Assessing specific risks associated with BAE Systems Maritime Solutions' past performance requires a deep dive into contract performance histories, which are not fully detailed here. However, like any large defense contractor, BAE Systems may have encountered challenges on previous contracts, such as schedule delays, cost overruns, or technical issues. These could stem from various factors including supply chain disruptions, labor availability, complexity of the work, or unforeseen technical problems. The Department of the Navy would have conducted a source selection process that included evaluating BAE Systems' past performance record. Any significant negative past performance would typically be a factor in the evaluation, potentially impacting the award decision or leading to specific contractual clauses or increased oversight. Without specific documented issues, it's presumed their past performance was deemed acceptable for this award.

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: N0002410R2314

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 750 W BERKLEY AVE, NORFOLK, VA, 03

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $32,160,188

Exercised Options: $32,160,188

Current Obligation: $32,142,867

Contract Characteristics

Cost or Pricing Data: NO

Timeline