BAE Systems awarded $77.5M for shipbuilding support, with a significant portion allocated to labor

Contract Overview

Contract Amount: $77,552,431 ($77.6M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2016-02-19

End Date: 2020-01-29

Contract Duration: 1,440 days

Daily Burn Rate: $53.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: PSA SUPPORT- LEVEL OF EFFORT

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $77.6 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: PSA SUPPORT- LEVEL OF EFFORT Key points: 1. Contract value indicates substantial investment in naval shipbuilding capabilities. 2. The cost-plus award fee structure incentivizes performance but requires careful oversight. 3. A single award suggests limited competition or specialized capabilities required. 4. The contract duration of 1440 days points to a long-term strategic need. 5. Focus on labor hours suggests a significant human capital component to the support services.

Value Assessment

Rating: fair

The contract's cost-plus award fee structure can lead to cost overruns if not managed diligently. Benchmarking against similar shipbuilding support contracts is difficult without more granular data on the specific services provided. The award fee component, while intended to drive performance, introduces variability in the final cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting multiple bidders were considered. However, the definitive contract type and single award may indicate that BAE Systems was the most advantageous offer, potentially due to specialized expertise or existing infrastructure.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through market forces.

Public Impact

Benefits the Department of the Navy by providing essential support for shipbuilding and repair. Services delivered likely include program management, engineering, technical support, and logistics. Geographic impact is centered in California, a key hub for naval operations. Workforce implications include employment for skilled labor in the shipbuilding and defense sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus award fee contracts can incentivize higher costs if not closely monitored.
The large contract value necessitates robust oversight to ensure value for money.
Limited public detail on specific performance metrics makes independent assessment challenging.

Positive Signals

Awarded under full and open competition, indicating a competitive process.
The contract duration suggests a stable, long-term need being met.
BAE Systems is a major defense contractor with established capabilities in this sector.

Sector Analysis

This contract falls within the shipbuilding and repair sector, a critical component of national defense. The market is characterized by high barriers to entry, significant capital investment, and a limited number of large, specialized firms. Spending in this area is often driven by strategic naval modernization and maintenance programs.

Small Business Impact

While this contract was awarded to a large prime contractor, it's crucial to understand subcontracting plans. Large defense contracts often include provisions for small business participation, which can stimulate the small business ecosystem. However, without specific set-aside information, the direct impact on small businesses remains unclear.

Oversight & Accountability

Oversight is likely managed by the Department of the Navy contracting officers and program managers. The cost-plus award fee structure requires detailed monitoring of costs and performance against defined award criteria. Transparency may be limited due to the sensitive nature of defense contracts, but Inspector General oversight would apply.

Related Government Programs

Naval Shipbuilding Programs
Ship Repair and Maintenance Contracts
Defense Logistics Support
Naval Sea Systems Command (NAVSEA) Contracts

Risk Flags

Cost Overrun Risk
Performance Measurement Complexity
Contract Oversight Intensity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.6 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. PSA SUPPORT- LEVEL OF EFFORT

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO 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 $77.6 million.

What is the period of performance?

Start: 2016-02-19. End: 2020-01-29.

What specific shipbuilding support services does this contract encompass?

While the data indicates 'PSA SUPPORT- LEVEL OF EFFORT,' the precise nature of the support services is not detailed. Typically, such contracts for shipbuilding and repair can include a broad range of activities such as program management, systems engineering, technical assistance, logistics support, maintenance planning, and potentially direct labor for repair or modification work. The 'level of effort' designation suggests that payment is primarily based on the resources (labor hours, materials) expended rather than fixed deliverables, common in complex, evolving projects.

How does the $77.5 million award compare to historical spending on similar shipbuilding support contracts?

Direct comparison is challenging without knowing the specific scope and duration of 'similar' contracts. However, $77.5 million over approximately four years (February 2016 - January 2020) represents a significant investment. Major shipbuilding support contracts can range from tens of millions to billions of dollars, depending on the complexity of the vessel, the type of support (e.g., design, construction, modernization, maintenance), and the duration. This contract appears to be of moderate to large size within the context of ongoing naval support activities.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract structure for this type of service?

The primary risks with a CPAF contract are potential cost growth and contractor incentives. While the 'award fee' component is designed to incentivize performance beyond minimum requirements, it can also lead contractors to incur higher costs to achieve higher fee payouts. The government must establish clear, measurable performance criteria and diligently monitor costs to ensure that the award fee truly reflects superior performance and not just increased spending. Without robust oversight, the 'cost plus' aspect can lead to less cost-consciousness than fixed-price contracts.

What is BAE Systems' track record with the Department of the Navy for shipbuilding support?

BAE Systems is a major defense contractor with extensive experience and a significant track record supporting the Department of the Navy across various platforms and programs, including shipbuilding and repair. They are involved in constructing and modernizing naval vessels, providing complex systems, and offering lifecycle support. Their long-standing presence and numerous contracts suggest a deep understanding of naval requirements and established operational capabilities, though specific performance on individual contracts would require further detailed analysis.

What does the 'Ship Building and Repairing' NAICS code (336611) imply about the nature of this contract?

The NAICS code 336611, 'Ship Building and Repairing,' indicates that the primary economic activity associated with this contract involves the construction, alteration, or repair of ships and other marine vessels. This suggests the contract likely supports either the physical construction of new vessels, the maintenance and repair of existing fleets, or the modernization and upgrade of naval assets. The 'Level of Effort' designation implies that the contract is focused on providing the necessary resources and labor to achieve these shipbuilding or repair objectives.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002415R2309

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

Address: 2205 E BELT ST, SAN DIEGO, CA, 92113

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: $123,934,354

Exercised Options: $79,909,662

Current Obligation: $77,552,431

Subaward Activity

Number of Subawards: 260

Total Subaward Amount: $32,212,271

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline