DoD's $380M Ship Repair Contract with NASSCO Raises Concerns Over Competition and Value

Contract Overview

Contract Amount: $38,056,453 ($38.1M)

Contractor: National Steel and Shipbuilding Company

Awarding Agency: Department of Defense

Start Date: 2012-11-16

End Date: 2016-05-31

Contract Duration: 1,292 days

Daily Burn Rate: $29.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SPECIAL STUDIES, ANALYSES AND REVIEWS

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $38.1 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: SPECIAL STUDIES, ANALYSES AND REVIEWS Key points: 1. Significant contract value of $380.5M for ship repair services. 2. Lack of competition raises questions about price discovery and potential overspending. 3. Contract awarded to National Steel and Shipbuilding Company (NASSCO) under a 'not competed' basis. 4. The sector is critical for national defense, but this award warrants scrutiny.

Value Assessment

Rating: questionable

The contract's Cost Plus Fixed Fee structure, combined with a lack of competition, makes a direct pricing assessment difficult. Without competitive bids, it's challenging to benchmark against similar services or determine if the fixed fee adequately incentivizes cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition award. This significantly limits price discovery and may lead to higher costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The absence of competition likely results in a higher cost to taxpayers than if the contract had been openly bid, potentially by millions of dollars.

Public Impact

Taxpayers may be overpaying for essential ship repair services due to the lack of competitive bidding. The long duration of the contract (over 3 years) means sustained potential for inflated costs. Dependence on a single contractor for critical repair services could pose long-term strategic risks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus contract type
Long contract duration
Potential for cost overruns

Positive Signals

Essential service provision
Experienced contractor

Sector Analysis

The shipbuilding and repairing sector (NAICS 336611) is vital for national defense, involving complex and high-value contracts. Spending benchmarks in this sector are highly variable due to specialized requirements, but competitive bidding is typically crucial for cost efficiency.

Small Business Impact

There is no indication of small business participation in this contract. Large-scale defense contracts often involve prime contractors who may subcontract, but the initial award to NASSCO does not suggest a focus on small business engagement.

Oversight & Accountability

The 'not competed' status suggests potential oversight gaps or justifications for sole-sourcing that require further examination. Robust oversight is needed to ensure the fixed fee and contract terms are fair and that performance is adequately monitored.

Related Government Programs

Ship Building and Repairing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competitive bidding
Potential for inflated costs
Limited transparency in pricing
Sole-source award justification
Long contract duration
Cost-plus contract type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.1 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. SPECIAL STUDIES, ANALYSES AND REVIEWS

Who is the contractor on this award?

The obligated recipient is NATIONAL STEEL AND SHIPBUILDING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $38.1 million.

What is the period of performance?

Start: 2012-11-16. End: 2016-05-31.

What specific justifications were provided for not competing this significant ship repair contract, and do they align with federal procurement regulations for sole-source awards?

Federal regulations allow for sole-source awards under specific circumstances, such as when only one responsible source can provide the required supplies or services. A thorough review of the contract file would be necessary to determine the exact justification cited by the Department of the Navy and assess its validity and compliance with FAR Part 6.

How does the cost-plus-fixed-fee structure, in the absence of competition, impact the government's ability to control costs and ensure value for money in this contract?

Cost-plus-fixed-fee contracts can incentivize contractors to incur costs, as the fee is fixed regardless of the final cost. Without competition, the government lacks a benchmark to assess the reasonableness of incurred costs or the fairness of the fixed fee, increasing the risk of paying more than necessary.

What is the historical performance and cost-efficiency record of NASSCO on similar, previously awarded contracts, particularly those that were not competed?

Analyzing NASSCO's past performance on comparable contracts, especially those awarded without competition, is crucial. This would involve reviewing past contract data, audit reports, and performance evaluations to identify trends in cost overruns, schedule adherence, and overall value delivered to the government.

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: N0002412R2404

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 2798 HARBOR DR, SAN DIEGO, CA, 92113

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: $42,613,882

Exercised Options: $42,613,882

Current Obligation: $38,056,453

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline