DoD's $78M USS Porter repair contract awarded to BAE Systems, highlighting shipbuilding and repair sector spending

Contract Overview

Contract Amount: $77,984,539 ($78.0M)

Contractor: BAE Systems Maritime Solutions Norfolk Inc.

Awarding Agency: Department of Defense

Start Date: 2013-04-30

End Date: 2014-06-09

Contract Duration: 405 days

Daily Burn Rate: $192.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS PORTER FY13 EDSRA

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $78.0 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC. for work described as: USS PORTER FY13 EDSRA Key points: 1. Contract value of $78M for ship repair services indicates significant investment in naval readiness. 2. Award to BAE Systems, a major defense contractor, suggests established capabilities in complex maritime maintenance. 3. The firm-fixed-price contract type aims to control costs and provide predictability for the Navy. 4. A single award for this extensive repair work may warrant scrutiny of the competition process. 5. The duration of 405 days suggests a comprehensive overhaul or significant repair effort. 6. This contract falls within the broader shipbuilding and repair industry, a critical component of national defense.

Value Assessment

Rating: fair

The contract value of $78,984,539 for the USS Porter's EDSRA (Estimated Docking and Selected Repair Availability) appears substantial. Benchmarking against similar complex naval repair availabilities is challenging without more specific scope details. However, the award to a single, large contractor like BAE Systems suggests a potentially higher price point compared to a more competitive bidding environment. Further analysis would require comparing the scope of work and pricing against other recent availabilities for similar vessel classes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were theoretically able to submit proposals. However, the fact that only two bids were received suggests that the market for such specialized and extensive naval repair services may be limited, or that the requirements were highly specific, favoring a limited number of capable contractors. This level of competition, while technically open, might not have driven the most aggressive pricing.

Taxpayer Impact: While competition was open, the low number of bids could mean taxpayers did not benefit from the most cost-effective pricing achievable in a broader market. The government secured a capable provider, but the potential for savings through more robust competition was likely constrained.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the USS Porter is operational and combat-ready. Services delivered include extensive repairs and maintenance, crucial for extending the ship's service life and capabilities. The geographic impact is centered around Norfolk, Virginia, a major naval hub, supporting regional maritime infrastructure. This contract supports skilled labor within the shipbuilding and repair sector, including engineers, technicians, and tradespeople.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bids) may have resulted in a higher price than a more robustly competed contract.
The substantial value of the contract warrants close monitoring of performance and adherence to the fixed-price terms.
Potential for scope creep or change orders on a long-duration repair availability could increase the final cost.

Positive Signals

Awarded under full and open competition, allowing any qualified vendor to bid.
Firm-fixed-price contract type provides cost certainty for the government.
Contractor BAE Systems is a recognized leader in maritime defense services, suggesting technical proficiency.
The repair ensures the operational readiness of a key naval asset.

Sector Analysis

The shipbuilding and repair sector is a vital component of the U.S. defense industrial base, characterized by high technical barriers to entry and significant capital investment. This contract falls within the broader category of ship maintenance, repair, and overhaul (MRO), which is a substantial market driven by the needs of the U.S. Navy and other maritime entities. Spending in this sector is often project-based and tied to specific vessel availabilities, making direct comparisons difficult without detailed scope alignment. The $78M figure is significant but not unusual for major naval availabilities.

Small Business Impact

This contract was not specifically set aside for small businesses, and the award went to BAE Systems, a large defense contractor. There is no explicit indication of small business subcontracting requirements in the provided data. Therefore, the direct impact on the small business ecosystem is likely minimal, though BAE Systems may engage small businesses as subcontractors for specialized services.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Performance monitoring, quality assurance, and adherence to contract terms are standard oversight mechanisms. Given the nature of the work (ship repair), quality assurance representatives are likely embedded during the availability. Transparency is generally maintained through contract award databases, though detailed performance metrics may not be publicly available.

Related Government Programs

Naval Ship Repair Contracts
Shipbuilding and Repair Services
Department of Defense Maintenance and Repair
Fleet Readiness Expenditures

Risk Flags

Limited Competition
Potential for Cost Overruns (if scope changes)
Contractor Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.0 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC.. USS PORTER FY13 EDSRA

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 $78.0 million.

What is the period of performance?

Start: 2013-04-30. End: 2014-06-09.

What is the track record of BAE Systems Maritime Solutions in performing similar naval repair availabilities?

BAE Systems Maritime Solutions is a well-established entity within the defense shipbuilding and repair industry, frequently awarded contracts for naval vessel maintenance and modernization. They have a history of performing complex availabilities on various classes of ships, including destroyers, aircraft carriers, and amphibious assault ships. Their performance record typically involves managing large workforces, complex logistics, and adhering to stringent quality and schedule requirements. While specific performance metrics for individual contracts are often proprietary or found in internal Navy evaluations, their continued success in securing significant contracts suggests a generally positive track record in delivering required services for naval platforms.

How does the $78M contract value compare to similar repair availabilities for Arleigh Burke-class destroyers?

The $78,984,539 contract value for the USS Porter (DDG-78) FY13 EDSRA is substantial. Comparing it directly to similar availabilities for Arleigh Burke-class destroyers requires access to detailed scope of work and pricing data for other contracts, which is not publicly available in a standardized format. However, major repair availabilities, especially those involving docking, extensive system overhauls, and modernization upgrades, can range from tens of millions to well over $100 million depending on the specific work items, ship's condition, and shipyard location. Given the 'Selected Repair Availability' designation, this likely involved significant work beyond routine maintenance, placing it within the expected range for major upkeep of a guided-missile destroyer.

What are the primary risks associated with a firm-fixed-price contract for a long-duration ship repair?

The primary risk for the government in a firm-fixed-price (FFP) contract, especially one with a long duration like 405 days, is that the contractor may not be incentivized to control costs beyond what is necessary to complete the work within the agreed price. If unforeseen issues arise (e.g., discovery of unexpected hull damage, system failures requiring more extensive repair than initially scoped), the contractor bears the cost overruns, which could lead to pressure for change orders or potential disputes. For the contractor, the risk lies in underestimating the scope, labor hours, or material costs, potentially leading to reduced profit margins or losses. Effective government oversight is crucial to manage scope and prevent contractor claims for work not originally envisioned.

What is the typical duration for a Selected Repair Availability (SRA) for a ship of this class?

The duration of 405 days (approximately 13.5 months) for the USS Porter's FY13 EDSRA is on the longer side for a typical Selected Repair Availability (SRA). While SRAs can vary significantly based on the scope of work, the ship's condition, and the availability of shipyard resources, standard SRAs often range from 3 to 9 months. Longer durations, like this one, usually indicate a more comprehensive scope, potentially including major system upgrades, modernization efforts, or significant structural repairs beyond routine maintenance. The extended period suggests a deep-level overhaul aimed at extending the ship's service life and enhancing its capabilities.

How does the number of bids (2) impact the government's ability to ensure competitive pricing?

Receiving only two bids in a full and open competition can limit the government's ability to ensure the most competitive pricing. While two bidders provide a basis for comparison, a larger number of bids typically fosters greater price competition as vendors strive to offer the most attractive terms. With only two offers, the government is reliant on the pricing strategies of those two specific entities. If one bidder is significantly more capable or has a stronger relationship with the agency, the other may feel less pressure to offer aggressive pricing. This scenario increases the importance of robust cost analysis by the government to validate the reasonableness of the offered prices.

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: N0002413R4400

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

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 and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $80,071,488

Exercised Options: $77,984,539

Current Obligation: $77,984,539

Subaward Activity

Number of Subawards: 152

Total Subaward Amount: $212,446,255

Contract Characteristics

Cost or Pricing Data: NO

Timeline