Navy awards $79M ship repair contract to National Steel and Shipbuilding, highlighting sector competition

Contract Overview

Contract Amount: $79,012,220 ($79.0M)

Contractor: National Steel and Shipbuilding Company

Awarding Agency: Department of Defense

Start Date: 2018-07-13

End Date: 2020-01-20

Contract Duration: 556 days

Daily Burn Rate: $142.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS HIGGINS FY18 EDSRA

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $79.0 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: USS HIGGINS FY18 EDSRA Key points: 1. Contract value appears reasonable given the scope of ship repair and maintenance. 2. Full and open competition suggests a healthy market for these services. 3. Potential risks include schedule delays or cost overruns common in complex repair projects. 4. Performance context is crucial, as past contractor performance can indicate future success. 5. This contract fits within the broader defense shipbuilding and repair sector.

Value Assessment

Rating: good

The contract value of approximately $79 million for ship repair and maintenance is within expected ranges for major naval vessels. Benchmarking against similar contracts for the USS Higgins class or comparable destroyers would provide a more precise value-for-money assessment. The firm fixed-price nature of the contract suggests an effort to control costs, but the duration and complexity of the work could still lead to adjustments.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The presence of two bidders suggests a moderately competitive environment for this specific repair requirement.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive environment among potential contractors.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the operational readiness of the USS Higgins. Services delivered include essential repair, maintenance, and modernization activities for a naval vessel. The geographic impact is primarily in California, where the contractor is located and the work will be performed. Workforce implications include employment for skilled tradespeople in the shipbuilding and repair industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for schedule slippage in complex repair projects.
Risk of unforeseen technical issues requiring scope adjustments.
Dependence on a single contractor for critical repair services.

Positive Signals

Firm fixed-price contract structure helps control costs.
Full and open competition suggests a robust market.
Award to an established shipyard with relevant experience.

Sector Analysis

The shipbuilding and repair sector is a critical component of the defense industrial base, supporting naval readiness. This contract falls under the broader category of ship maintenance and repair, which is a significant area of federal spending. Market size for naval repair is substantial, driven by the large fleet size and the need for ongoing upkeep. Comparable spending benchmarks would involve analyzing other major repair contracts for similar naval vessels.

Small Business Impact

This contract does not appear to have a specific small business set-aside. The prime contractor, National Steel and Shipbuilding Company, is a large entity. There is no explicit information on subcontracting plans for small businesses, which could be an area for further inquiry to ensure small business participation in the defense industrial supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including performance standards and payment schedules. Transparency is facilitated through contract award databases, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

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

Risk Flags

Potential for schedule delays
Risk of cost overruns due to unforeseen issues
Dependence on contractor's technical expertise

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $79.0 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. USS HIGGINS FY18 EDSRA

Who is the contractor on this award?

The obligated recipient is NATIONAL STEEL AND SHIPBUILDING COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $79.0 million.

What is the period of performance?

Start: 2018-07-13. End: 2020-01-20.

What is the historical spending pattern for USS Higgins maintenance and repair?

Analyzing historical spending for the USS Higgins reveals a pattern of recurring maintenance and repair needs, typical for a vessel of its class and age. Prior to this $79 million award, there would likely have been other contracts for scheduled dry-docking, component replacements, and emergent repairs. Understanding the frequency and cost of these past activities provides context for the current contract's scope and value. For instance, if previous major overhauls were significantly less expensive, it might warrant further investigation into the reasons for the current contract's value, such as increased scope, inflation, or market conditions. Conversely, if this award aligns with previous major repair expenditures, it suggests a consistent level of investment in maintaining the ship's readiness.

How does the competition level for this contract compare to similar naval repair contracts?

This contract was awarded under full and open competition with two bidders. While 'full and open' is the most competitive category, the number of bidders provides further insight. A higher number of bidders (e.g., 4-5 or more) typically indicates a more robust and competitive market. Two bidders suggest a moderately competitive environment, which is still beneficial for the government compared to sole-source or limited competition scenarios. For similar naval repair contracts, the number of bidders can vary significantly based on the contract's complexity, specialized requirements, and the geographic concentration of qualified shipyards. Contracts requiring highly specialized capabilities or extensive facilities might naturally attract fewer bidders. Therefore, while two bidders are positive, comparing this to the average number of bidders for comparable naval repair contracts would offer a more nuanced understanding of the price discovery achieved.

What are the key performance indicators (KPIs) for this contract and how is performance being monitored?

Key performance indicators (KPIs) for a ship repair contract like this typically revolve around schedule adherence, quality of work, and cost control. Specific KPIs might include meeting key milestones for different repair phases (e.g., hull work completion, systems integration), achieving a certain standard of workmanship with minimal rework required, and staying within the allocated budget. Performance monitoring is usually conducted by the Navy's contracting officer's representative (COR) or a designated technical representative. They would conduct regular progress reviews, inspect completed work, and track expenditures against the contract. Failure to meet KPIs could result in contractual remedies, such as liquidated damages or withholding of payments, depending on the contract's terms and conditions.

What is the contractor's track record with similar naval repair contracts?

National Steel and Shipbuilding Company (NASSCO) has a significant track record in building and repairing naval vessels. They have previously undertaken complex projects for the Navy, including aircraft carriers, amphibious assault ships, and destroyers. Their experience with large-scale repair and maintenance contracts suggests a capability to handle the requirements of the USS Higgins. However, a detailed analysis would involve reviewing their past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), looking for any history of significant delays, cost overruns, or quality issues on comparable contracts. A strong past performance record generally indicates a lower risk for the government.

Are there any potential risks associated with the firm fixed-price (FFP) contract type for this scope of work?

While a Firm Fixed-Price (FFP) contract is generally preferred by the government for cost control, it can introduce risks for both parties, especially in complex repair scenarios. For the contractor, the primary risk is underestimating the labor, materials, or time required, potentially leading to reduced profit margins or even losses if unforeseen issues arise. For the government, the risk is that the contractor might cut corners on quality or scope to protect their profit if they encounter unexpected difficulties, although the FFP structure incentivizes efficient performance. In ship repair, unforeseen problems like discovering additional corrosion, outdated systems requiring upgrades, or material unavailability can significantly impact costs and schedules. The contract should ideally include clauses addressing equitable adjustments for changes in scope or unforeseen conditions 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: N0002418R4400

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 2798 HARBOR DR, SAN DIEGO, CA, 92113

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: $79,990,576

Exercised Options: $79,012,220

Current Obligation: $79,012,220

Actual Outlays: $2,198,400

Subaward Activity

Number of Subawards: 143

Total Subaward Amount: $74,992,696

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline