BAE Systems awarded $66M for ship repair, with 2 bids received under full and open competition

Contract Overview

Contract Amount: $66,034,099 ($66.0M)

Contractor: BAE Systems Maritime Solutions Norfolk Inc.

Awarding Agency: Department of Defense

Start Date: 2016-04-05

End Date: 2017-04-07

Contract Duration: 367 days

Daily Burn Rate: $179.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF ACCOMPLISHMENT OF FY USS MCFAUL EDSRA EXECUTION

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $66.0 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC. for work described as: IGF::OT::IGF ACCOMPLISHMENT OF FY USS MCFAUL EDSRA EXECUTION Key points: 1. The contract value of $66 million represents a significant investment in naval readiness. 2. Competition dynamics indicate a moderate level of market interest with two bidders. 3. The firm-fixed-price contract type suggests a defined scope and cost control. 4. Performance is tied to the USS McFaul, a critical asset for naval operations. 5. This contract falls within the shipbuilding and repair sector, vital for defense infrastructure. 6. The duration of 367 days aligns with typical major repair and overhaul schedules.

Value Assessment

Rating: good

The awarded amount of $66 million for ship repair appears reasonable given the scope of work for a major naval vessel. Benchmarking against similar contracts for destroyer repair and overhaul suggests that this price falls within the expected range. The firm-fixed-price structure provides cost certainty for the government, although it places the risk of cost overruns on the contractor. Without detailed work breakdown structures, a precise value-for-money assessment is challenging, but the competitive nature of the award provides some assurance of fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. Two bids were received, suggesting a moderate level of competition for this specific requirement. While two bidders are better than one, a higher number of bids could potentially lead to more aggressive pricing and a wider range of technical solutions. The agency's decision to proceed with two offers implies that sufficient competition was present to meet the government's needs.

Taxpayer Impact: The full and open competition, even with two bidders, is beneficial for taxpayers as it encourages competitive pricing and ensures the government is not locked into a single provider, potentially leading to better value.

Public Impact

The primary beneficiaries are the U.S. Navy, ensuring the operational readiness of the USS McFaul. Services delivered include essential ship repair and maintenance, crucial for extending the vessel's service life. The geographic impact is centered in Norfolk, Virginia, supporting the naval base and associated maritime industry. Workforce implications include employment for skilled tradespeople in shipbuilding and repair within the Norfolk area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise during repair, despite the fixed-price nature.
Dependence on a single contractor for a critical asset could pose a risk if performance issues emerge.
Limited competition (two bidders) might not have fully optimized price discovery for the government.

Positive Signals

Awarded under full and open competition, maximizing potential bidder pool.
Firm-fixed-price contract provides cost certainty for the government.
Contractor has experience in maritime solutions, suggesting relevant expertise.
Awarded to a known entity in the defense sector, implying established capabilities.

Sector Analysis

The shipbuilding and repair sector is a critical component of the U.S. defense industrial base, supporting naval fleet readiness. This contract falls under NAICS code 336611 (Ship Building and Repairing). Spending in this sector is substantial, driven by the need to maintain, modernize, and repair naval vessels. Comparable contracts often involve extensive overhauls, modernization programs, and routine maintenance, with values varying significantly based on the scope and complexity of the work. The market is characterized by a mix of large prime contractors and specialized repair facilities.

Small Business Impact

This contract was not set aside for small businesses, and the prime contractor, BAE Systems Maritime Solutions, is a large business. There is no explicit information provided regarding small business subcontracting goals or performance for this specific award. The impact on the small business ecosystem would depend on whether BAE Systems utilizes small businesses as subcontractors for specialized services or supplies, which is common in the defense contracting industry.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. The Department of the Navy is responsible for contract administration and performance monitoring. The firm-fixed-price nature of the contract provides a degree of financial oversight by establishing a ceiling cost. Transparency is generally maintained through contract award databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Ship Repair and Maintenance Programs
Shipbuilding and Repair Contracts
Defense Readiness Contracts
Fleet Modernization Programs

Risk Flags

Moderate Competition
Potential for Cost Overruns (Contractor Risk)
Quality Assurance Critical

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.0 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC.. IGF::OT::IGF ACCOMPLISHMENT OF FY USS MCFAUL EDSRA EXECUTION

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 $66.0 million.

What is the period of performance?

Start: 2016-04-05. End: 2017-04-07.

What is the track record of BAE Systems Maritime Solutions in performing similar ship repair contracts for the U.S. Navy?

BAE Systems Maritime Solutions has a significant track record in supporting the U.S. Navy's fleet readiness through ship repair and maintenance services. They are a major player in the defense shipbuilding and repair industry, with facilities capable of handling complex overhauls and upgrades. Historically, they have been awarded numerous contracts for various naval vessels, including destroyers, aircraft carriers, and amphibious assault ships. While specific performance metrics for every contract are not publicly detailed, their continued awards suggest a generally satisfactory performance history. However, like any large contractor, there may be instances of performance disputes or contract modifications that warrant closer examination in specific cases. Their extensive experience in the sector positions them as a capable provider for critical naval maintenance.

How does the awarded amount of $66 million compare to the estimated cost or budget for this specific repair project?

The provided data indicates an awarded amount of $66,034,098.56. Without access to the government's initial cost estimates or the contractor's proposed price breakdown, a direct comparison to the budget is not possible from the given information. However, the fact that the contract was awarded under full and open competition with two bids suggests that the awarded price was deemed acceptable by the contracting officer, likely falling within the government's estimated range or being the most advantageous offer received. The firm-fixed-price structure implies that the contractor proposed this price based on their assessment of the work required. Further analysis would require access to the government's independent government cost estimate (IGCE) and the details of the bids submitted.

What are the key performance indicators (KPIs) used to assess the successful completion of this ship repair contract?

Key performance indicators for ship repair contracts typically revolve around schedule adherence, quality of work, and adherence to technical specifications. For this contract, KPIs would likely include timely completion of milestones, successful testing and certification of repaired systems, and meeting all specified technical requirements outlined in the contract's Statement of Work (SOW). The government's quality assurance representatives (QARs) would monitor progress and inspect the work throughout the contract period. Successful completion would be formally accepted by the Navy upon verification that all contractual requirements have been met to the satisfaction of the technical authority, ensuring the USS McFaul is returned to operational readiness.

What is the historical spending trend for ship repair and maintenance services by the Department of the Navy over the last five fiscal years?

Historical spending trends for ship repair and maintenance by the Department of the Navy have generally shown a consistent and substantial investment. The Navy relies heavily on these services to maintain its global fleet's operational readiness. Over the last five fiscal years, annual spending has typically ranged in the tens of billions of dollars, reflecting the large size and operational tempo of the fleet. Factors influencing spending include the age of the fleet, the pace of new ship construction, and the strategic need for forward-deployed assets. While specific figures fluctuate year-to-year based on budget allocations and emergent repair needs, the overall trend indicates a sustained and critical requirement for these services, making it a significant portion of the Navy's overall budget.

What are the potential risks associated with a firm-fixed-price contract for a complex ship repair project?

Firm-fixed-price (FFP) contracts, while offering cost certainty to the government, carry inherent risks for complex projects like ship repair. The primary risk is that the contractor may underestimate the costs or encounter unforeseen technical challenges, leading to cost overruns that they must absorb. This can incentivize the contractor to cut corners on quality or scope to protect their profit margin, potentially impacting the longevity or performance of the repairs. Conversely, if the contractor significantly overestimates costs, the government may end up paying a premium. For the government, the risk lies in ensuring the contractor has adequately priced the work and that the quality is not compromised due to the contractor's cost-absorption needs. Robust government oversight and quality assurance are crucial to mitigate these risks.

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: N0002416R4403

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, 23523

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: $66,086,489

Exercised Options: $66,034,099

Current Obligation: $66,034,099

Subaward Activity

Number of Subawards: 116

Total Subaward Amount: $31,539,371

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline