Navy Awards $662M Ship Availability Contract to Bath Iron Works
Contract Overview
Contract Amount: $662,371,899 ($662.4M)
Contractor: Bath Iron Works Corporation
Awarding Agency: Department of Defense
Start Date: 2012-06-18
End Date: 2018-06-17
Contract Duration: 2,190 days
Daily Burn Rate: $302.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: SHIP/AVAILABILITY PRODUCT WORK- SEV
Place of Performance
Location: BATH, SAGADAHOC County, MAINE, 04530
State: Maine Government Spending
Plain-Language Summary
Department of Defense obligated $662.4 million to BATH IRON WORKS CORPORATION for work described as: SHIP/AVAILABILITY PRODUCT WORK- SEV Key points: 1. Contract awarded to a single, established shipyard, indicating potential for specialized capabilities. 2. Significant contract value suggests a substantial investment in naval readiness. 3. Lack of competition raises questions about price discovery and potential cost efficiencies. 4. The sector is critical for national defense, with high barriers to entry.
Value Assessment
Rating: fair
The contract type (Cost Plus Award Fee) can incentivize performance but may lead to higher costs if not managed closely. Benchmarking against similar ship maintenance contracts is difficult without more detailed cost breakdowns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, likely due to the specialized nature of the work or the existing relationship with the contractor. The absence of competition limits price discovery and may result in higher costs than a competitive process.
Taxpayer Impact: Taxpayer funds are committed without the benefit of competitive bidding, potentially leading to a less optimal price for the services rendered.
Public Impact
Ensures continued operational readiness of naval vessels. Supports jobs and economic activity in the shipbuilding sector. Potential for cost overruns due to sole-source nature.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- Long duration
Positive Signals
- Supports critical defense infrastructure
- Established contractor with known capabilities
Sector Analysis
The shipbuilding and repair sector is highly specialized and capital-intensive, often dominated by a few large firms. This contract falls within the defense sector, where availability and readiness are paramount.
Small Business Impact
This contract was awarded to a large corporation and does not appear to include specific provisions or set-asides for small businesses.
Oversight & Accountability
Oversight would focus on ensuring Bath Iron Works meets performance metrics to earn award fees and manages costs effectively under the cost-plus structure.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition may lead to higher costs.
- Cost-plus contract type introduces cost uncertainty.
- Long contract duration increases exposure to changing economic conditions.
- Potential for contractor performance issues impacting vessel availability.
Tags
ship-building-and-repairing, department-of-defense, me, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $662.4 million to BATH IRON WORKS CORPORATION. SHIP/AVAILABILITY PRODUCT WORK- SEV
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 $662.4 million.
What is the period of performance?
Start: 2012-06-18. End: 2018-06-17.
What is the justification for the sole-source award, and were alternative competitive strategies considered?
The justification for a sole-source award typically relates to unique capabilities, urgent needs, or the unavailability of other sources. For this contract, the Navy likely determined that Bath Iron Works possessed the specific expertise, facilities, or existing knowledge of the vessels required for their availability. Alternative competitive strategies may have been explored but deemed impractical or less effective given the specific requirements.
How does the cost-plus award fee structure impact overall cost efficiency compared to fixed-price contracts?
Cost-plus award fee contracts allow the contractor to recover allowable costs plus a fee that includes a base amount and an award amount based on performance. While this can incentivize meeting or exceeding performance targets, it carries a higher risk of cost overruns compared to fixed-price contracts, as the government bears the cost risk. Effective oversight is crucial to manage costs and ensure the award fee is justified.
What are the long-term implications of awarding such a significant contract without competition on market dynamics?
Awarding significant contracts without competition can reinforce the dominance of incumbent firms, potentially stifling innovation and competition in the long run. It may discourage new entrants and reduce the overall competitive landscape. Over time, this can lead to higher prices and less pressure on contractors to improve efficiency or develop new technologies, impacting the government's ability to secure the best value.
Industry Classification
NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing
Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002410R4311
Offers Received: 1
Pricing Type: COST PLUS AWARD FEE (R)
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: $728,053,063
Exercised Options: $728,053,063
Current Obligation: $662,371,899
Actual Outlays: $523,886
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-06-18
Current End Date: 2018-06-17
Potential End Date: 2018-06-17 00:00:00
Last Modified: 2024-07-02
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