Navy's DDG 51 Class Ship Construction: $5.34B Spent FY18-FY22, Awarded to Bath Iron Works
Contract Overview
Contract Amount: $5,338,036,970 ($5.3B)
Contractor: Bath Iron Works Corporation
Awarding Agency: Department of Defense
Start Date: 2018-09-27
End Date: 2030-12-20
Contract Duration: 4,467 days
Daily Burn Rate: $1.2M/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 2
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: FY18-FY22 DDG 51 CLASS SHIP CONSTRUCTION
Place of Performance
Location: BATH, SAGADAHOC County, MAINE, 04530
State: Maine Government Spending
Plain-Language Summary
Department of Defense obligated $5.34 billion to BATH IRON WORKS CORPORATION for work described as: FY18-FY22 DDG 51 CLASS SHIP CONSTRUCTION Key points: 1. Significant investment in naval shipbuilding, focusing on a critical defense asset. 2. Sole-source award to Bath Iron Works suggests limited competition for this specific contract. 3. Long-term contract duration (ending 2030) indicates ongoing program needs and potential for cost escalation. 4. Fixed Price Incentive contract type aims to balance cost control with contractor performance incentives.
Value Assessment
Rating: questionable
The total award value of $5.34 billion over five years is substantial. Benchmarking against similar complex naval vessel construction contracts is difficult without more granular cost data, but the long duration and single-source nature raise concerns about potential overpricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a limited competition scenario. This approach, while potentially necessary for specialized capabilities, can reduce price discovery and may lead to higher costs compared to full and open competition.
Taxpayer Impact: The substantial expenditure on a single contractor for a critical defense program represents a significant allocation of taxpayer funds, with potential for reduced value due to limited competition.
Public Impact
Ensures continued modernization and capability of the U.S. Navy's fleet. Supports a major defense contractor and its associated workforce. Long-term commitment impacts future defense budget allocations. Potential for technological advancements in shipbuilding processes.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition may inflate costs.
- Long contract duration increases risk of cost overruns.
- Fixed Price Incentive contracts can be complex to manage.
- Lack of small business participation noted.
Positive Signals
- Addresses critical national defense needs.
- Utilizes a proven shipbuilding platform.
- Contract structure incentivizes performance.
Sector Analysis
This contract falls within the shipbuilding and repair sector, a high-cost, technologically intensive industry critical for national defense. Spending benchmarks are difficult to establish precisely due to the unique nature of naval vessels, but this represents a significant portion of the Navy's shipbuilding budget.
Small Business Impact
The data indicates no reported small business participation in this contract. Large-scale defense shipbuilding typically involves prime contractors managing complex supply chains, often limiting direct subcontracting opportunities for small businesses on the prime contract itself.
Oversight & Accountability
The Department of the Navy is responsible for oversight of this contract. Given the long duration and significant value, robust oversight mechanisms are crucial to ensure cost control, adherence to specifications, and effective performance management.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Cost Overruns
- Schedule Delays
- Limited Competition Impact on Price
- Technological Obsolescence
- Contractor Performance Issues
Tags
ship-building-and-repairing, department-of-defense, me, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $5.34 billion to BATH IRON WORKS CORPORATION. FY18-FY22 DDG 51 CLASS SHIP CONSTRUCTION
Who is the contractor on this award?
The obligated recipient is BATH IRON WORKS CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $5.34 billion.
What is the period of performance?
Start: 2018-09-27. End: 2030-12-20.
What specific factors led to the exclusion of other sources, and were these justifications thoroughly vetted?
The exclusion of sources typically occurs when only one or a limited number of contractors possess the unique capabilities, facilities, or security clearances required for a specialized project like advanced warship construction. Thorough vetting involves documenting the necessity, exploring alternatives, and ensuring fair pricing despite limited competition.
How effectively does the Fixed Price Incentive (FPI) contract structure manage cost risks for this long-term shipbuilding program?
FPI contracts aim to incentivize cost savings by sharing the benefits of lower-than-expected costs between the government and contractor. However, for long-duration, complex projects like shipbuilding, defining target costs and sharing formulas requires careful negotiation. Inadequate cost estimation or unforeseen technical challenges can still lead to significant cost growth.
What is the projected long-term impact of this contract on the Navy's overall shipbuilding budget and strategic priorities?
This contract represents a substantial commitment to maintaining and modernizing the DDG 51 class, a cornerstone of the fleet. Its significant financial outlay will influence future budget allocations for other shipbuilding programs and strategic initiatives, potentially requiring trade-offs in other areas of naval investment.
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 AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002418R2302
Offers Received: 2
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Wico Limited
Address: 700 WASHINGTON ST, BATH, ME, 04530
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: $5,462,914,275
Exercised Options: $5,380,681,928
Current Obligation: $5,338,036,970
Subaward Activity
Number of Subawards: 24
Total Subaward Amount: $53,285,954
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2018-09-27
Current End Date: 2030-12-20
Potential End Date: 2030-12-20 00:00:00
Last Modified: 2025-12-23
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