Navy awards $586M for Expeditionary Mobile Base Hull 5 to National Steel and Shipbuilding

Contract Overview

Contract Amount: $585,996,657 ($586.0M)

Contractor: National Steel and Shipbuilding Company

Awarding Agency: Department of Defense

Start Date: 2016-05-31

End Date: 2021-12-20

Contract Duration: 2,029 days

Daily Burn Rate: $288.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: EXPEDITIONARY MOBILE BASE (ESB) HULL 5

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $586.0 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: EXPEDITIONARY MOBILE BASE (ESB) HULL 5 Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant investment in naval shipbuilding capacity. 3. Long-term contract duration suggests a sustained need for these vessels. 4. Focus on specialized shipbuilding indicates a niche but critical defense capability. 5. Potential for cost overruns given the 'Cost No Fee' contract type.

Value Assessment

Rating: fair

The contract value of $585.9 million for a single Expeditionary Mobile Base (ESB) hull is substantial. Benchmarking this against similar complex naval construction projects is challenging due to the specialized nature of ESBs. The 'Cost No Fee' (CNF) contract type, while incentivizing the contractor to control costs, also places the financial risk of cost overruns on the government. Without detailed cost breakdowns or comparisons to industry standards for similar vessel construction, a definitive value-for-money assessment is difficult, but the CNF structure warrants careful monitoring.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential bidders. This approach is typically used when only one source is capable of meeting the government's needs, often due to specialized technology, unique capabilities, or urgent requirements. The lack of competition means the government did not benefit from the price discovery and potential cost savings that a competitive bidding process could have provided.

Taxpayer Impact: The absence of competition for this significant shipbuilding contract means taxpayers may not have received the lowest possible price. Without competitive pressure, there is a risk that the final cost could be higher than if multiple shipbuilders had vied for the contract.

Public Impact

The primary beneficiary is the U.S. Navy, which receives a critical asset for force projection and logistics. The contract supports the delivery of specialized maritime capabilities for national defense. The shipbuilding work will likely have a positive impact on the workforce in the region where National Steel and Shipbuilding is located. This vessel will enhance the Navy's ability to support various expeditionary operations globally.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing advantages for taxpayers.
Cost No Fee contract type shifts cost overrun risk to the government.
Long contract duration could be subject to scope creep or changing requirements.
Specialized nature of ESBs may limit future repurposing or resale options.

Positive Signals

Addresses a critical and specialized naval requirement.
Awarded to a known entity with shipbuilding experience.
Long-term contract provides stability for a key defense industrial base component.

Sector Analysis

The shipbuilding and repair industry is a capital-intensive sector critical to national defense and global commerce. The U.S. Navy's shipbuilding programs represent a significant portion of this market. Expeditionary Mobile Bases (ESBs) are a relatively new class of vessel designed to support a wide range of naval operations, including logistics, humanitarian aid, and special warfare. This contract fits within the broader context of naval modernization and the need for flexible, multi-mission platforms. Comparable spending benchmarks would typically involve other major naval vessel construction contracts, which often run into hundreds of millions or billions of dollars.

Small Business Impact

The data indicates that small business participation was not a primary consideration for this specific contract award, as it was sole-sourced and the prime contractor is a large entity. There is no explicit mention of small business set-asides. Subcontracting opportunities for small businesses may exist within the supply chain for components and services, but the overall impact on the small business ecosystem for prime contracting is likely minimal given the nature of the award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be embedded in the contract's terms and conditions, including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature of the award. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Expeditionary Mobile Base (ESB) Program
Naval Shipbuilding Contracts
Department of Defense Major Contracts
Ship Building and Repairing NAICS Code 336611

Risk Flags

Sole-source award
Cost-plus contract type (Cost No Fee)
Long-term duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $586.0 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. EXPEDITIONARY MOBILE BASE (ESB) HULL 5

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 $586.0 million.

What is the period of performance?

Start: 2016-05-31. End: 2021-12-20.

What is the track record of National Steel and Shipbuilding Company (NASSCO) in delivering complex naval vessels on time and within budget?

NASSCO has a long history of shipbuilding for the U.S. Navy, including various classes of auxiliaries, tankers, and amphibious assault ships. They have been involved in constructing complex vessels, and their performance can be mixed, as is common in large-scale shipbuilding. Specific to ESBs, NASSCO has delivered previous hulls in the class. However, large shipbuilding projects are inherently complex and often face schedule delays and cost fluctuations due to design changes, supply chain issues, and the sheer scale of the undertaking. A detailed review of their past performance on similar contracts, including any documented cost overruns or schedule slippages, would be necessary for a comprehensive assessment.

How does the cost of this ESB hull compare to previous ESB procurements or similar naval vessels?

Direct cost comparison is difficult without access to detailed pricing data and accounting for inflation and specific vessel configurations. The $586 million figure is for Hull 5. Previous ESB hulls (like the first four) were awarded under different contract actions and potentially at different price points. The 'Cost No Fee' (CNF) contract type means the government bears the cost risk, making direct price comparisons less indicative of value-for-money than fixed-price contracts. Benchmarking against other large naval platforms like destroyers or aircraft carriers would be inappropriate due to vastly different capabilities and scales. A more relevant comparison would be to other specialized support vessels or previous ESB procurements, adjusted for economic factors.

What are the primary risks associated with a sole-source 'Cost No Fee' contract for naval shipbuilding?

The primary risks associated with a sole-source 'Cost No Fee' (CNF) contract are significant. Sole-sourcing eliminates competitive pressure, potentially leading to higher costs than if the contract were competed. The CNF structure places all cost risk on the government; if the contractor's costs exceed estimates, the government pays the difference without the contractor sharing in the loss. This can disincentivize aggressive cost control by the contractor. For complex projects like shipbuilding, where unforeseen issues are common, this risk is amplified. Effective government oversight and robust cost-tracking mechanisms are crucial to mitigate these risks.

What is the strategic importance of Expeditionary Mobile Bases (ESBs) to the U.S. Navy's operational capabilities?

ESBs are designed as a flexible platform to support a variety of naval operations, acting as a mobile sea base. Their strategic importance lies in their ability to provide a versatile platform for launching and recovering aircraft (including helicopters and tiltrotors), supporting amphibious operations, facilitating logistics, and serving as a command and control hub. They are crucial for projecting power and enabling sustained operations in contested or austere environments, reducing reliance on forward-deployed land bases. The ESB class enhances the Navy's ability to conduct a wide range of missions, from humanitarian assistance to special warfare operations, offering significant operational flexibility.

What is the historical spending trend for naval shipbuilding and repair contracts within the Department of Defense?

Historical spending on naval shipbuilding and repair within the Department of Defense (DoD) has consistently been a major component of the defense budget, often fluctuating based on geopolitical conditions, strategic priorities, and shipbuilding plans. Major shipbuilding programs, such as aircraft carriers, submarines, destroyers, and amphibious assault ships, represent multi-year investments often totaling billions of dollars annually. Spending can be influenced by the need to modernize aging fleets, replace retiring vessels, and develop new classes of ships with advanced capabilities. The trend generally shows a sustained, high level of investment, though specific annual outlays can vary significantly based on contract awards and program milestones.

Are there any specific performance metrics or milestones tied to this contract that are publicly available?

Publicly available information on specific performance metrics and milestones for individual defense contracts, especially those involving complex platforms like naval vessels, is often limited. While contracts typically include performance requirements, delivery schedules, and quality standards, the detailed metrics and their associated penalties or incentives are usually considered sensitive program information. Contract Data Requirements Lists (CDRLs) and other reporting mechanisms would exist internally within the Navy and NASSCO, but these are not typically released to the public. General contract completion and delivery dates are usually known, but the granular performance data is not.

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: N0002416R2227

Offers Received: 1

Pricing Type: COST NO FEE (S)

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: $597,635,475

Exercised Options: $597,635,475

Current Obligation: $585,996,657

Actual Outlays: $2,533,426

Subaward Activity

Number of Subawards: 240

Total Subaward Amount: $470,494,287

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline