DoD's $67M Ship Repair Contract with BAE Systems Faces Scrutiny for Value and Competition

Contract Overview

Contract Amount: $66,915,596 ($66.9M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2016-05-25

End Date: 2017-08-25

Contract Duration: 457 days

Daily Burn Rate: $146.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE AWARD FEE

Sector: Defense

Official Description: ACCOMPLISHMENT OF USS PAUL HAMILTON EDSR. IGF::OT::IGF

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $66.9 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: ACCOMPLISHMENT OF USS PAUL HAMILTON EDSR. IGF::OT::IGF Key points: 1. The contract awarded to BAE Systems for ship repair services represents a significant expenditure. 2. Competition details are unclear, raising questions about price discovery and potential value. 3. The fixed-price award fee structure warrants examination for its effectiveness in controlling costs. 4. The sector is dominated by large, established players, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: questionable

The contract's total award value of $66.9M for ship repair is substantial. Benchmarking against similar, complex ship repair contracts is crucial to determine if this price reflects fair market value and efficient resource allocation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

While listed as full and open competition, the specific details of the bidding process and the number of bidders are not provided. This lack of transparency makes it difficult to assess if true price discovery occurred and if the most cost-effective solution was secured.

Taxpayer Impact: The effectiveness of the competition method directly impacts taxpayer dollars. If competition was not robust, taxpayers may have overpaid for the services rendered.

Public Impact

Taxpayers may be impacted by potentially inflated costs if competition was not fully realized. The long-term implications for naval readiness depend on the quality and timeliness of the repairs. The concentration of significant contracts within a few large companies can affect market dynamics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed competition metrics
Potential for cost overruns with award fee structure
Limited small business participation indicated

Positive Signals

Contract awarded to a known entity
Clear contract type (Fixed Price Award Fee)

Sector Analysis

The Ship Building and Repairing sector (NAICS 336611) is a critical component of national defense infrastructure. Spending in this area is often substantial due to the complexity and specialized nature of naval vessels, with benchmarks varying widely based on ship class and scope of work.

Small Business Impact

The data indicates that small businesses were not involved in this specific contract (ss: false, sb: false). This raises concerns about the agency's commitment to fostering small business participation in the defense industrial base, particularly in specialized sectors like shipbuilding and repair.

Oversight & Accountability

Oversight of this contract would involve monitoring BAE Systems' performance against the award fee criteria and ensuring adherence to the contract terms. The Department of the Navy's contracting officers are responsible for ensuring accountability and value for money.

Related Government Programs

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

Risk Flags

Potential for lack of robust competition despite 'full and open' designation.
Award fee structure may not guarantee cost efficiency.
Absence of small business participation.
Significant contract value requires thorough performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.9 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. ACCOMPLISHMENT OF USS PAUL HAMILTON EDSR. IGF::OT::IGF

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 $66.9 million.

What is the period of performance?

Start: 2016-05-25. End: 2017-08-25.

How does the $66.9M award value compare to industry benchmarks for similar ship repair services, considering the specific vessel type and scope of work?

Benchmarking requires detailed analysis of the contract's Statement of Work (SOW) against historical data for comparable naval vessel repairs. Factors like vessel class, age, specific systems requiring repair, and geographic location influence costs. Without the SOW, a precise comparison is difficult, but $66.9M is a significant sum, suggesting a major overhaul or extensive repairs.

What specific metrics were used to determine the award fee, and how effectively did they incentivize cost savings and performance for the Department of Defense?

Award fee structures are designed to reward contractors for performance exceeding baseline expectations. The effectiveness hinges on clearly defined, measurable criteria tied to cost control, schedule adherence, and quality. If the criteria were too lenient or poorly defined, it could lead to higher costs without commensurate performance gains, diminishing the value for taxpayers.

Given the 'full and open competition' designation, what was the competitive landscape, and were there any barriers that might have limited broader participation?

While designated 'full and open,' the actual competitive landscape is key. This includes the number of bids received and the qualifications of the bidders. Barriers could include stringent pre-qualification requirements, specialized facilities needed, or the sheer scale of the contract, potentially favoring large, established firms like BAE Systems and limiting opportunities for smaller, emerging competitors.

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: N0002416R4400

Offers Received: 3

Pricing Type: FIXED PRICE AWARD FEE (M)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $66,915,596

Exercised Options: $66,915,596

Current Obligation: $66,915,596

Subaward Activity

Number of Subawards: 131

Total Subaward Amount: $27,147,649

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline