DoD's $136M Ship Building Contract with BAE Systems Faces Scrutiny for Value and Competition
Contract Overview
Contract Amount: $136,323,503 ($136.3M)
Contractor: BAE Systems Maritime Solutions Norfolk Inc.
Awarding Agency: Department of Defense
Start Date: 2017-01-09
End Date: 2019-09-13
Contract Duration: 977 days
Daily Burn Rate: $139.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: IGF::OT::IGF USS SAN ANTONIO (LPD 17) DPMA
Place of Performance
Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $136.3 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC. for work described as: IGF::OT::IGF USS SAN ANTONIO (LPD 17) DPMA Key points: 1. The contract awarded to BAE Systems for ship building and repair represents a significant investment in naval capabilities. 2. Competition for this contract was full and open, suggesting a robust price discovery process. 3. However, the firm fixed-price structure and the specific nature of ship building can introduce risks related to cost overruns and schedule delays. 4. The sector is characterized by high capital intensity and specialized labor requirements.
Value Assessment
Rating: fair
The contract's value of $136M for ship building and repair needs further assessment against similar naval contracts. Without specific benchmarks for this type of vessel or repair work, it's difficult to definitively assess if the pricing is competitive.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically leads to better price discovery and potentially lower costs for the government. The use of a definitive contract suggests a well-defined scope of work.
Taxpayer Impact: While competition is positive, the final taxpayer impact depends on whether the firm fixed-price contract effectively controlled costs throughout its duration.
Public Impact
Naval readiness and shipbuilding capacity are directly impacted by this contract. The successful completion of this contract contributes to the U.S. Navy's operational fleet. Economic activity in the shipbuilding sector and related supply chains is supported by this award.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns despite firm fixed-price structure.
- Long-term sustainment and maintenance costs are not detailed.
- Dependence on a single contractor for critical shipbuilding.
Positive Signals
- Awarded under full and open competition.
- Firm fixed-price contract provides cost certainty.
- Supports critical naval infrastructure.
Sector Analysis
The shipbuilding and repair sector is a critical component of national defense, characterized by long production cycles, high technical complexity, and significant capital investment. Spending benchmarks in this area are often project-specific due to the unique nature of naval vessels.
Small Business Impact
The data indicates that neither small business participation nor set-asides were explicitly mentioned for this contract. Further analysis would be needed to determine if small businesses were involved as subcontractors or if opportunities were missed.
Oversight & Accountability
Oversight of this contract would involve monitoring BAE Systems' performance against the firm fixed-price terms, ensuring adherence to specifications, and managing any potential change orders or disputes to protect taxpayer interests.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Potential for cost overruns.
- Lack of specific small business participation data.
- Contract duration and complexity.
- Dependence on a single prime contractor.
Tags
ship-building-and-repairing, department-of-defense, va, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $136.3 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC.. IGF::OT::IGF USS SAN ANTONIO (LPD 17) DPMA
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 $136.3 million.
What is the period of performance?
Start: 2017-01-09. End: 2019-09-13.
What specific ship building or repair services were included in this $136M contract, and how do they align with the Navy's current fleet needs?
The contract is for ship building and repair, specifically related to the USS San Antonio (LPD 17) program. The exact scope of work, whether new construction, major overhaul, or specific repair tasks, needs further clarification. Understanding the specific services is crucial to assessing their alignment with the Navy's strategic fleet modernization and maintenance plans.
Given the firm fixed-price nature, what mechanisms were in place to mitigate risks of cost escalation or scope creep during the contract's execution?
While a firm fixed-price contract aims to cap costs, effective oversight mechanisms are vital. These typically include rigorous performance monitoring, strict change order management processes, and clear contract terms defining deliverables and acceptance criteria. The Department of the Navy would need robust project management to ensure BAE Systems adhered to the agreed-upon price and scope.
How does the awarded price of $136M compare to industry benchmarks for similar naval shipbuilding or repair projects, considering the vessel class and scope?
Benchmarking this $136M contract requires detailed comparison with similar contracts for LPD-class vessels or comparable naval shipbuilding/repair projects. Factors like the specific work scope (e.g., modernization vs. routine repair), the age and condition of the vessel, and prevailing market rates for labor and materials are critical. Without this comparative data, assessing the value for money is challenging.
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: N0002416R4409
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: BAE Systems PLC
Address: 750 W BERKLEY AVE, NORFOLK, VA, 23523
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $136,326,433
Exercised Options: $136,323,503
Current Obligation: $136,323,503
Actual Outlays: $-813,925
Subaward Activity
Number of Subawards: 250
Total Subaward Amount: $59,983,435
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2017-01-09
Current End Date: 2019-09-13
Potential End Date: 2019-09-13 00:00:00
Last Modified: 2022-09-02
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