Navy awards $221M contract for USS Bonhomme Richard repair, highlighting shipbuilding sector activity

Contract Overview

Contract Amount: $221,210,547 ($221.2M)

Contractor: National Steel and Shipbuilding Company

Awarding Agency: Department of Defense

Start Date: 2018-09-04

End Date: 2021-05-14

Contract Duration: 983 days

Daily Burn Rate: $225.0K/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 BONHOMME RICHARD (LHD 6) DPMA

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $221.2 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: IGF::OT::IGF USS BONHOMME RICHARD (LHD 6) DPMA Key points: 1. Contract value represents a significant investment in naval vessel maintenance and modernization. 2. Competition dynamics for large-scale naval repair contracts can influence pricing and contractor performance. 3. The duration of the contract suggests a complex and extensive scope of work. 4. Fixed-price contract type aims to control costs, but requires careful management of potential change orders. 5. The award to a major shipyard indicates the concentration of specialized capabilities within the industry. 6. Geographic concentration of the award in California points to regional economic impacts.

Value Assessment

Rating: good

The contract value of $221.2 million for the repair of the USS Bonhomme Richard (LHD 6) appears substantial, reflecting the complexity of naval ship maintenance. Benchmarking against similar large-scale naval repair contracts would provide a clearer picture of value for money. The firm-fixed-price structure suggests an effort to establish cost certainty, but the ultimate value will depend on the scope of work executed and any subsequent modifications. Without direct cost comparisons for identical repair scopes on similar vessels, a precise value-for-money assessment is challenging, but the scale of the award indicates a significant undertaking.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and considered. The presence of two bids suggests a competitive environment, though the specific number of bidders can vary for complex naval repair projects. Full and open competition generally promotes price discovery and encourages contractors to offer competitive pricing to secure the award. The outcome of such a competition is typically a more favorable price for the government compared to less competitive procurement methods.

Taxpayer Impact: A full and open competition for this significant repair contract is beneficial for taxpayers as it increases the likelihood of obtaining the best possible price and quality for the services rendered, minimizing the risk of overpayment.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring a key vessel is maintained. Services delivered include extensive repairs and maintenance to a major naval asset. The geographic impact is concentrated in California, supporting local jobs and the maritime industrial base. Workforce implications include employment for skilled tradespeople in shipbuilding and repair sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise during complex repairs, despite fixed-price structure.
Dependence on a single contractor for a critical repair could lead to schedule delays if performance issues emerge.
The long duration of the contract (983 days) increases the risk of scope creep or changes impacting final cost.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process that likely secured a reasonable price.
Firm-fixed-price contract type provides cost certainty for the government, assuming effective management of the scope.
The contractor, National Steel and Shipbuilding Company, is a known entity in the shipbuilding and repair industry.

Sector Analysis

The shipbuilding and repair sector is a critical component of the U.S. industrial base, particularly for national defense. This contract falls within the broader category of heavy manufacturing and specialized repair services. The market is characterized by large, capital-intensive shipyards capable of handling complex naval vessels. Spending in this sector is often driven by government procurement, especially for naval fleet maintenance and modernization. Comparable spending benchmarks would involve analyzing other major naval repair contracts awarded by the Department of Defense.

Small Business Impact

This contract was not specifically set aside for small businesses, and the prime contractor, National Steel and Shipbuilding Company, is a large entity. However, large prime contractors are often required to engage small businesses as subcontractors to fulfill portions of the contract. The extent of small business subcontracting will be a key factor in assessing the impact on the small business ecosystem. Without specific subcontracting plans, it's difficult to quantify the direct benefit to small businesses from this particular award.

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 tied to milestones. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected during the contract's performance or closeout.

Related Government Programs

Naval Ship Repair Contracts
Shipbuilding and Repair Services
Department of Defense Maintenance and Repair
Large Vessel Maintenance
Fleet Readiness Programs

Risk Flags

Potential for unforeseen repair issues impacting schedule and cost.
Contract duration increases exposure to scope changes.
Dependence on a single large contractor for critical maintenance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $221.2 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. IGF::OT::IGF USS BONHOMME RICHARD (LHD 6) DPMA

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 $221.2 million.

What is the period of performance?

Start: 2018-09-04. End: 2021-05-14.

What is the historical spending pattern for the USS Bonhomme Richard (LHD 6) for repairs and maintenance?

Analyzing the historical spending for the USS Bonhomme Richard (LHD 6) prior to this $221.2 million contract would provide crucial context. This would involve reviewing past repair availabilities, contract awards, and associated costs. Understanding if this current contract represents a significant increase or decrease in spending compared to previous periods, and whether it aligns with the vessel's lifecycle and maintenance schedule, is important. For instance, if previous major repairs were significantly less costly, it might warrant further investigation into the scope of the current work. Conversely, if this aligns with expected major overhaul costs, it suggests a more predictable spending pattern. Without access to specific historical data for this vessel, it's difficult to provide a precise comparison, but such an analysis is a standard part of assessing contract value and program effectiveness.

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

The awarded amount of $221.2 million for the repair of the USS Bonhomme Richard (LHD 6) needs to be compared against the government's initial cost estimates or allocated budget for this project. If the awarded amount is significantly lower than the estimate, it could indicate successful competition and cost savings. Conversely, if it's higher, it might suggest an underestimation of the project's complexity or a less competitive bidding environment than anticipated. The firm-fixed-price nature of the contract implies that the government aimed to cap its liability at the awarded amount, but understanding the baseline estimate is key to evaluating the efficiency of the procurement process and the value obtained. Without the government's internal cost estimates, a definitive assessment of whether this award represents good or fair value relative to expectations is challenging.

What is the track record of National Steel and Shipbuilding Company in completing similar large-scale naval repair contracts on time and within budget?

National Steel and Shipbuilding Company (NASSCO) has a significant history of performing complex shipbuilding and repair work for the U.S. Navy. Assessing their track record on similar large-scale naval repair contracts is crucial for understanding potential performance risks and reliability. This would involve examining past performance evaluations, on-time delivery rates, and adherence to budget for comparable projects. For instance, have they successfully completed other major amphibous assault ship repairs? Were there significant delays or cost overruns on previous contracts of this magnitude? A review of past performance data, often available through government contract databases or past performance questionnaires, would shed light on NASSCO's capabilities and historical success in executing demanding naval repair projects, informing the assessment of this current contract's likely outcome.

What specific repair and modernization tasks are included in this contract, and how do they contribute to the ship's operational readiness?

This contract, valued at $221.2 million, encompasses a range of repair and modernization tasks for the USS Bonhomme Richard (LHD 6). While the specific line-item details are not provided here, typical work on a vessel of this class includes hull maintenance, propulsion system overhauls, combat system upgrades, habitability improvements, and structural repairs. The objective of such extensive work is to extend the service life of the ship, enhance its capabilities to meet current and future operational requirements, and ensure its readiness for deployment. Understanding the scope of modernization, such as upgrades to electronics, weapons systems, or power generation, is key to assessing how this investment directly contributes to the Navy's mission effectiveness and the ship's ability to perform its intended role in the fleet.

Are there any known risks associated with the specific type of repairs or the age/condition of the USS Bonhomme Richard that could impact contract performance?

The USS Bonhomme Richard (LHD 6) is a Wasp-class amphibious assault ship, and like any vessel of its age and operational tempo, it faces potential risks during major repair availabilities. These risks can include the discovery of unforeseen structural damage, aging systems requiring more extensive refurbishment than initially planned, or obsolescence of certain components necessitating upgrades beyond the original scope. The complexity of modernizing naval vessels also introduces risks related to integration of new technologies with existing platforms. The firm-fixed-price nature of this contract means that the contractor, NASSCO, bears much of the financial risk for unforeseen issues, but significant scope changes could still lead to contract modifications and schedule impacts. A thorough pre-award assessment of the ship's condition and potential repair challenges is critical to mitigating 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: N0002418R4404

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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: $246,378,486

Exercised Options: $238,315,616

Current Obligation: $221,210,547

Actual Outlays: $-7,696,174

Subaward Activity

Number of Subawards: 454

Total Subaward Amount: $1,007,227,536

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline