DoD's $875.7M contract for DDG 91 execution planning awarded to BAE Systems Maritime Solutions

Contract Overview

Contract Amount: $875,656,173 ($875.7M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2011-06-21

End Date: 2012-12-13

Contract Duration: 541 days

Daily Burn Rate: $1.6M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: EXECUTION PLANNING DDG 91 FY 12 SRA; DDG SAN DIEGO MSMO

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92113

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $875.7 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: EXECUTION PLANNING DDG 91 FY 12 SRA; DDG SAN DIEGO MSMO Key points: 1. Contract value represents a significant investment in naval shipbuilding support. 2. BAE Systems Maritime Solutions is a key player in naval shipbuilding and repair. 3. The contract's cost-plus incentive fee structure aims to balance cost control with performance. 4. Execution planning is critical for timely and budget-conscious delivery of naval assets. 5. This contract falls within the broader context of ongoing naval modernization efforts. 6. The duration of the contract suggests a phased approach to planning and execution.

Value Assessment

Rating: good

The contract value of $875.7 million for execution planning of DDG 91 appears substantial, reflecting the complexity of modern naval vessel construction. Benchmarking against similar large-scale shipbuilding support contracts would provide further context on value for money. The cost-plus incentive fee (CPIF) structure suggests an expectation of shared risk and reward, aiming for efficient cost management while ensuring quality and timely delivery. Without specific performance metrics or detailed cost breakdowns, a precise value-for-money assessment is challenging, but the scale indicates a significant commitment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of two bids suggests a competitive environment, which typically drives better pricing and terms for the government. The specific details of the bidding process, including the number of proposals received and the evaluation criteria, would offer deeper insights into the effectiveness of the competition in achieving optimal value.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market that encourages competitive pricing and innovation, leading to potentially lower costs and higher quality services.

Public Impact

The primary beneficiaries are the Department of the Navy and the BAE Systems Maritime Solutions workforce. The contract supports the planning and execution phases for a Guided Missile Destroyer (DDG 91). The geographic impact is centered around BAE Systems' facilities in San Diego, California. This contract sustains skilled jobs in shipbuilding and related technical fields within the defense sector. Successful execution contributes to the U.S. Navy's fleet readiness and national security objectives.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in cost-plus contracts if not rigorously managed.
Complexity of coordinating planning efforts across multiple stakeholders and technical disciplines.
Dependence on a single contractor for critical execution planning phases.

Positive Signals

Awarded through full and open competition, suggesting a competitive process.
Cost-plus incentive fee structure aligns contractor incentives with government objectives.
BAE Systems' established presence and expertise in naval shipbuilding.
Contract duration allows for comprehensive planning and risk mitigation.

Sector Analysis

This contract falls within the shipbuilding and repair sector, a critical component of the U.S. defense industrial base. The market is characterized by high barriers to entry, significant capital investment, and specialized technical expertise. Spending in this sector is driven by naval modernization programs and fleet maintenance requirements. Comparable spending benchmarks would involve analyzing other large-scale shipbuilding contracts awarded by the Navy for destroyer-class vessels or similar capital-intensive platforms.

Small Business Impact

While this contract was awarded to a large prime contractor, BAE Systems Maritime Solutions, the implications for small businesses depend on subcontracting opportunities. Large defense contracts often include provisions for small business participation. Analysis of BAE Systems' subcontracting plan and historical performance would reveal the extent to which small businesses are integrated into the supply chain for this project, potentially benefiting the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the contract's cost-plus incentive fee structure, which links contractor profit to performance outcomes. Transparency is typically managed through contract reporting requirements and potential audits. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Naval Shipbuilding Programs
Guided Missile Destroyer (DDG) Program
Defense Contract Management Agency (DCMA) Oversight
Shipbuilding and Repair Services

Risk Flags

Potential for cost growth due to CPIF structure.
Complexity of modern naval vessel construction.
Dependence on specialized shipbuilding expertise.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $875.7 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. EXECUTION PLANNING DDG 91 FY 12 SRA; DDG SAN DIEGO MSMO

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 $875.7 million.

What is the period of performance?

Start: 2011-06-21. End: 2012-12-13.

What is BAE Systems Maritime Solutions' track record with similar large-scale naval shipbuilding contracts?

BAE Systems Maritime Solutions has a significant track record in naval shipbuilding and repair, including extensive work on destroyers and other major naval vessels. They have been involved in various phases of shipbuilding, from design and engineering to construction and modernization. Their experience with complex platforms like the Arleigh Burke-class destroyers (which DDG 91 is part of) suggests a strong capability to manage large, technically demanding contracts. Historical performance data, including on-time delivery, cost performance, and quality metrics from previous contracts, would be crucial for a comprehensive assessment of their suitability and reliability for this specific execution planning role.

How does the cost-plus incentive fee (CPIF) structure compare to other contract types for this type of service?

The Cost-Plus Incentive Fee (CPIF) contract is often used when the government desires to incentivize contractor efficiency and cost control while acknowledging inherent uncertainties in project scope or execution. Compared to a firm-fixed-price contract, CPIF offers more flexibility for the government if unforeseen issues arise, but it carries a higher risk of cost growth if not managed diligently. It differs from a cost-plus-fixed-fee (CPFF) contract by including a formula that adjusts profit based on the contractor's ability to meet or beat target costs. This structure aims to align the contractor's profit motive with the government's objective of achieving the best possible value within budget constraints, making it suitable for complex, long-term projects like naval shipbuilding planning where precise cost estimation is challenging upfront.

What are the primary risks associated with the execution planning phase of a DDG program?

The execution planning phase for a Guided Missile Destroyer (DDG) program involves several critical risks. These include potential inaccuracies in initial cost and schedule estimations due to the complexity of the vessel's systems and integration requirements. Technical risks can arise from incorporating new technologies or design modifications. Furthermore, risks related to supply chain disruptions, workforce availability and skill gaps, and coordination challenges among numerous subcontractors and government stakeholders can impact the planning process. Inadequate risk identification and mitigation strategies during this phase can lead to significant cost overruns, schedule delays, and performance issues in the subsequent construction phases.

What historical spending patterns exist for DDG class shipbuilding and repair contracts within the Department of the Navy?

Historical spending patterns for DDG class shipbuilding and repair contracts within the Department of the Navy reveal a consistent and substantial investment driven by fleet modernization and replacement needs. The Arleigh Burke-class (DDG 51) program, in particular, has seen decades of funding, with costs per ship varying based on technological upgrades, inflation, and production efficiency over time. Early ships were less expensive than later variants incorporating advanced combat systems and capabilities. Repair and modernization contracts also represent a significant portion of the spending, ensuring the longevity and operational readiness of the existing fleet. Overall, spending is characterized by large, multi-year procurements and significant sustainment budgets.

How does the geographic concentration in San Diego, California, impact the contract's execution and oversight?

The geographic concentration of this contract's execution planning in San Diego, California, leverages the established naval shipbuilding infrastructure and skilled workforce present in that region. This proximity can facilitate closer collaboration between the contractor (BAE Systems Maritime Solutions) and the Navy's program offices and oversight bodies located there. It may streamline communication, reduce travel costs, and allow for more frequent site visits and inspections. However, it also concentrates risk; disruptions specific to the San Diego area, such as natural disasters or labor disputes, could have a disproportionate impact on the contract's progress. Oversight may be more efficient due to co-location, but requires robust contingency planning for localized risks.

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: N0002410R4405

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

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, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $966,548,638

Exercised Options: $875,833,315

Current Obligation: $875,656,173

Actual Outlays: $180,183

Subaward Activity

Number of Subawards: 2065

Total Subaward Amount: $317,314,005

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline