DoD's $653.6M LHA/LHD San Diego Spiral II MSMO contract awarded to National Steel and Shipbuilding Company
Contract Overview
Contract Amount: $653,650,419 ($653.7M)
Contractor: National Steel and Shipbuilding Company
Awarding Agency: Department of Defense
Start Date: 2013-09-12
End Date: 2018-09-11
Contract Duration: 1,825 days
Daily Burn Rate: $358.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: LHA AND LHD SAN DIEGO SPIRAL II MSMO
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92113
Plain-Language Summary
Department of Defense obligated $653.7 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: LHA AND LHD SAN DIEGO SPIRAL II MSMO Key points: 1. Significant investment in naval shipbuilding and repair capabilities. 2. Contract awarded via full and open competition, suggesting market availability. 3. Cost-plus incentive fee structure aims to balance cost control with performance. 4. Focus on LHA/LHD class ships highlights strategic naval asset modernization.
Value Assessment
Rating: fair
The contract's cost-plus incentive fee structure can lead to cost overruns if not managed tightly. Benchmarking against similar complex shipbuilding contracts is difficult due to unique project specifications.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The award was made under full and open competition, indicating multiple bidders were considered. This method generally promotes competitive pricing, though the complexity of naval shipbuilding can limit the number of truly competitive bids.
Taxpayer Impact: Taxpayer funds are directed towards critical defense infrastructure, supporting national security and the shipbuilding industrial base.
Public Impact
Supports U.S. Navy's amphibious assault capabilities with advanced ship platforms. Contributes to the U.S. shipbuilding industrial base and associated jobs. Ensures modernization of key naval assets for global power projection.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns with Cost Plus Incentive Fee contracts.
- Long-term maintenance and operational costs of these complex vessels.
- Dependence on a single contractor for specialized shipbuilding.
Positive Signals
- Enhances U.S. naval power projection capabilities.
- Supports domestic jobs in a critical industrial sector.
- Competition ensures a baseline level of market engagement.
Sector Analysis
This contract falls within the shipbuilding and repair sector, a capital-intensive industry vital for national defense. Spending benchmarks are highly variable based on ship class and complexity, but $653.6M represents a substantial investment for two vessels.
Small Business Impact
While the prime contractor is a large entity, the complex nature of naval shipbuilding often involves a significant supply chain. Opportunities for small businesses likely exist as subcontractors for specialized components and services.
Oversight & Accountability
The Department of the Navy is responsible for oversight. The contract's complexity and duration necessitate robust program management and regular performance reviews to ensure adherence to cost and schedule.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Cost escalation risk inherent in CPIF contracts.
- Potential for schedule delays in complex shipbuilding projects.
- Dependence on specialized workforce and supply chains.
- Long-term operational and maintenance costs.
Tags
ship-building-and-repairing, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $653.7 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. LHA AND LHD SAN DIEGO SPIRAL II MSMO
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 $653.7 million.
What is the period of performance?
Start: 2013-09-12. End: 2018-09-11.
What is the projected return on investment for these naval assets in terms of operational effectiveness and national security?
The return on investment is primarily measured by enhanced national security and global power projection capabilities. These LHA/LHD vessels are crucial for deploying troops and equipment, supporting humanitarian aid, and maintaining a forward military presence, which are intangible but vital strategic benefits.
What are the primary risks associated with the Cost Plus Incentive Fee (CPIF) contract type for this project?
The main risks with CPIF are potential cost overruns if targets are not met and the contractor's incentives are misaligned with the government's cost-saving goals. Effective government oversight is crucial to monitor performance, manage scope changes, and ensure fair pricing against established benchmarks.
How does this contract contribute to the long-term sustainability and technological advancement of the U.S. shipbuilding industrial base?
This contract supports the U.S. shipbuilding industrial base by providing consistent work and investment, fostering skilled labor retention, and encouraging technological innovation in naval architecture and construction. It helps maintain critical infrastructure and expertise necessary for future defense needs.
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: N0002413R4404
Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE (V)
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: $730,481,125
Exercised Options: $653,681,819
Current Obligation: $653,650,419
Subaward Activity
Number of Subawards: 573
Total Subaward Amount: $171,118,465
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2013-09-12
Current End Date: 2018-09-11
Potential End Date: 2018-09-11 00:00:00
Last Modified: 2020-09-19
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