DoD's $4.9B DDG 51 Class Ship Construction contract with Bath Iron Works faces scrutiny over competition and cost
Contract Overview
Contract Amount: $4,928,187,959 ($4.9B)
Contractor: Bath Iron Works Corporation
Awarding Agency: Department of Defense
Start Date: 2013-06-03
End Date: 2026-12-26
Contract Duration: 4,954 days
Daily Burn Rate: $994.8K/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: FY13-FY17 DDG 51 CLASS SHIP CONSTRUCTION.
Place of Performance
Location: BATH, SAGADAHOC County, MAINE, 04530
State: Maine Government Spending
Plain-Language Summary
Department of Defense obligated $4.93 billion to BATH IRON WORKS CORPORATION for work described as: FY13-FY17 DDG 51 CLASS SHIP CONSTRUCTION. Key points: 1. The contract awarded to Bath Iron Works Corporation represents a significant investment in naval shipbuilding. 2. Competition for this contract was limited after the exclusion of sources, raising questions about price discovery. 3. The fixed-price incentive contract type aims to balance cost control with contractor performance. 4. The sector is dominated by a few large players, making competition inherently challenging.
Value Assessment
Rating: fair
The total award value of $4.9 billion over several years suggests a substantial commitment. Benchmarking against similar complex naval shipbuilding contracts is difficult due to unique specifications and long lead times, but the scale indicates a significant expenditure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a non-traditional competitive process. This approach may limit price discovery and potentially lead to higher costs compared to a fully open competition.
Taxpayer Impact: The significant taxpayer investment of nearly $5 billion for these vessels necessitates careful oversight to ensure value for money and prevent cost overruns.
Public Impact
Taxpayers are funding the construction of critical naval assets, impacting national defense capabilities. The long-term nature of the contract affects the defense industrial base and associated employment. The procurement process and contract type influence the efficiency and cost-effectiveness of shipbuilding.
Waste & Efficiency Indicators
Waste Risk Score: 70 / 10
Warning Flags
- Limited competition raises concerns about potential price inflation.
- Fixed-price incentive contracts can still lead to cost overruns if not managed effectively.
- Long contract duration increases exposure to economic fluctuations and changing requirements.
Positive Signals
- Awarding to an established shipyard ensures continuity in naval shipbuilding.
- The contract supports critical national defense infrastructure.
- The fixed-price incentive structure provides some cost control mechanisms.
Sector Analysis
This contract falls within the Defense sector, specifically Ship Building and Repairing. Spending in this area is often characterized by high costs, long procurement cycles, and limited competition due to specialized capabilities and national security requirements.
Small Business Impact
The data indicates this contract was awarded to Bath Iron Works Corporation, a large business. There is no explicit mention of small business participation or subcontracting goals within the provided data, suggesting limited direct impact on small businesses.
Oversight & Accountability
The Department of the Navy is responsible for overseeing this contract. Given the significant value and long duration, robust oversight mechanisms are crucial to monitor performance, manage risks, and ensure compliance with contract terms.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Potential for cost overruns despite FPI structure.
- Limited competition may result in suboptimal pricing.
- Long contract duration increases vulnerability to economic shifts.
- Dependence on a single contractor for critical assets.
- Risk of schedule delays impacting fleet modernization.
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 $4.93 billion to BATH IRON WORKS CORPORATION. FY13-FY17 DDG 51 CLASS SHIP CONSTRUCTION.
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 $4.93 billion.
What is the period of performance?
Start: 2013-06-03. End: 2026-12-26.
What specific factors led to the exclusion of sources in the competition for this DDG 51 class ship construction contract?
The exclusion of sources typically occurs when only a limited number of contractors possess the unique capabilities, technology, or security clearances required for a specialized project. For naval shipbuilding, this could relate to specific design expertise, existing production lines, or classified technology integration, making full and open competition impractical or detrimental to national security.
How does the fixed-price incentive (FPI) contract structure mitigate risks associated with long-term shipbuilding projects?
An FPI contract establishes a target cost and target profit. If the final cost is below the target, both the contractor and the government share in the savings. Conversely, if the cost exceeds the target, both share the overrun up to a ceiling price. This incentivizes the contractor to control costs while allowing for adjustments based on performance and unforeseen challenges inherent in long-term, complex projects.
What is the projected long-term impact of this contract on the U.S. naval fleet's capabilities and readiness?
The construction of DDG 51 class destroyers is vital for maintaining and modernizing the U.S. Navy's surface combatant force. These ships are multi-mission platforms essential for air defense, anti-submarine warfare, and surface warfare. Successful and timely completion of this contract directly contributes to fleet readiness and the Navy's ability to project power globally.
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: N0002412R2316
Offers Received: 2
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: $5,033,887,511
Exercised Options: $5,019,845,195
Current Obligation: $4,928,187,959
Subaward Activity
Number of Subawards: 93
Total Subaward Amount: $6,725,687
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2013-06-03
Current End Date: 2026-12-26
Potential End Date: 2026-12-26 00:00:00
Last Modified: 2025-12-23
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