Department of the Navy awards $104.8M contract for shipbuilding and repair services to BAE Systems Maritime Solutions

Contract Overview

Contract Amount: $104,757,437 ($104.8M)

Contractor: BAE Systems Maritime Solutions Norfolk Inc.

Awarding Agency: Department of Defense

Start Date: 2018-06-01

End Date: 2020-02-15

Contract Duration: 624 days

Daily Burn Rate: $167.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ACCOMPLISHMENT OF AVAILABILITY

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $104.8 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC. for work described as: ACCOMPLISHMENT OF AVAILABILITY Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 3. Performance period spans over 600 days, indicating a significant project duration. 4. The awardee, BAE Systems, is a major defense contractor with established capabilities. 5. The contract falls under the Ship Building and Repair industry, a critical defense sector. 6. The contract value represents a substantial investment in naval readiness and infrastructure.

Value Assessment

Rating: good

The contract value of $104.8 million for shipbuilding and repair services appears reasonable given the scope and duration. Benchmarking against similar large-scale naval repair and construction contracts would provide a more precise value-for-money assessment. However, the firm fixed-price nature of the contract suggests that the contractor bears the primary risk for cost overruns, which can be a positive indicator for the government if managed effectively. The specific services rendered and the complexity of the work will ultimately determine the true value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified bidders were likely solicited and evaluated. The presence of open competition is generally favorable as it encourages a wider range of proposals and can lead to more competitive pricing. The number of bids received and the specific evaluation criteria would offer further insight into the robustness of the competition. Without that data, it's assumed a healthy competitive environment existed.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down prices through market forces and ensuring the government receives the best value proposition. It reduces the likelihood of inflated costs associated with sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the U.S. Navy, receiving essential shipbuilding and repair services to maintain fleet readiness. Services delivered include critical maintenance, repair, and potentially modernization of naval vessels. The geographic impact is centered in Virginia, a key hub for naval operations and shipbuilding. This contract supports a skilled workforce in the maritime defense industry, including engineers, technicians, and shipbuilders.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the firm fixed-price contract does not adequately account for unforeseen complexities in shipbuilding/repair.
Dependence on a single large contractor could limit future competitive opportunities if not managed strategically.
The long performance period may introduce risks related to technological obsolescence or changing operational requirements.

Positive Signals

Firm fixed-price contract structure transfers cost risk to the contractor.
Award to a major defense contractor like BAE Systems suggests a high level of capability and experience.
Full and open competition indicates a potentially robust market and competitive pricing.
The contract supports critical naval infrastructure and readiness, aligning with national security objectives.

Sector Analysis

The shipbuilding and repair sector is a vital component of the defense industrial base, characterized by high capital investment, specialized labor, and long production cycles. This contract falls within the broader industrial manufacturing and defense services market. Comparable spending benchmarks would involve analyzing other large naval vessel maintenance and construction contracts awarded by the Department of Defense, which often run into hundreds of millions or even billions of dollars depending on the scale and complexity of the vessels involved.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract, nor does it detail subcontracting plans. Given the scale and nature of shipbuilding and repair, large prime contractors like BAE Systems often utilize a complex supply chain. Analysis of subcontracting reports would be necessary to determine the extent of small business participation and its impact on the small business ecosystem within this sector.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which incentivizes the contractor to manage costs effectively. Transparency is typically facilitated through contract award databases and reporting requirements. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Naval Ship Maintenance Contracts
Shipbuilding and Conversion Contracts
Defense Readiness Contracts
Maritime Defense Industrial Base Contracts

Risk Flags

Potential for cost overruns if scope is not well-defined.
Contractor performance risk on long-duration projects.
Dependence on a single large contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $104.8 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC.. ACCOMPLISHMENT OF AVAILABILITY

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 $104.8 million.

What is the period of performance?

Start: 2018-06-01. End: 2020-02-15.

What is the historical spending pattern for BAE Systems Maritime Solutions with the Department of the Navy for similar shipbuilding and repair services?

To assess the historical spending pattern, one would need to analyze contract databases for BAE Systems Maritime Solutions' awards from the Department of the Navy over several fiscal years. This analysis should focus specifically on contracts categorized under shipbuilding and repair (NAICS code 336611 or similar). Key metrics to examine would include the total dollar value of contracts awarded, the frequency of awards, and the types of services rendered (e.g., maintenance, overhaul, new construction). Comparing the current $104.8 million award against this historical data would reveal whether this contract represents a typical, increased, or decreased level of spending for the contractor within this service category. It would also help identify any trends in contract duration, competition levels, and pricing.

How does the awarded amount of $104.8 million compare to the average value of similar shipbuilding and repair contracts awarded by the Navy in the past five years?

Benchmarking this $104.8 million contract against the average value of similar shipbuilding and repair contracts awarded by the Department of the Navy over the last five years requires access to historical contract data. A thorough analysis would involve filtering contracts by the relevant Product Service Code (PSC) or NAICS code (e.g., 336611 for Ship Building and Repairing) and by the awarding agency (Department of the Navy). Calculating the average contract value, median contract value, and the distribution of contract sizes would provide context. If $104.8 million falls within the typical range (e.g., near the median or average), it suggests the pricing is in line with market norms. If it's significantly higher or lower, it warrants further investigation into the specific scope of work, complexity, and competitive landscape of this particular award.

What specific performance metrics or deliverables were outlined in the contract, and how will the Navy assess BAE Systems' performance against them?

The contract details would specify key performance metrics (KPMs) and deliverables crucial for assessing BAE Systems' performance. These typically include adherence to schedules, quality standards for repairs or construction, safety compliance, and potentially efficiency targets. The Navy's assessment would likely involve regular progress reviews, inspections of work performed, milestone certifications, and final acceptance testing. Contract clauses would outline the procedures for performance evaluation, including reporting requirements from the contractor and the Navy's methods for verifying completion and quality. Failure to meet these KPMs could result in penalties, withholding of payments, or other contractual remedies, underscoring the importance of clear and measurable performance standards.

What is the track record of BAE Systems Maritime Solutions in delivering complex shipbuilding and repair projects on time and within budget for the Department of the Navy?

Evaluating BAE Systems Maritime Solutions' track record involves reviewing their past performance on similar contracts with the Department of the Navy. This includes examining contract completion data for timeliness and adherence to budget, particularly for firm fixed-price contracts. Databases like the Federal Procurement Data System (FPDS) or CPARS (Contractor Performance Assessment Reporting System) can provide insights into past performance ratings, any instances of delays, cost overruns, or disputes. A history of successful, on-time, and within-budget project completion would indicate a lower risk profile for this current contract. Conversely, a pattern of performance issues would raise concerns about the contractor's ability to meet the current contract's requirements effectively.

What are the potential risks associated with the firm fixed-price (FFP) contract type for this specific shipbuilding and repair project?

While a firm fixed-price (FFP) contract shifts cost risk to the contractor, potential risks remain for this shipbuilding and repair project. If the scope of work is not precisely defined or if unforeseen technical challenges arise during the execution phase (e.g., discovering unexpected structural damage on a vessel), the contractor might face significant cost overruns. This could lead to pressure to cut corners on quality or safety, or potentially result in contract disputes or claims for equitable adjustments if the government is deemed responsible for scope changes. For the government, the risk is paying a premium price upfront to cover the contractor's risk contingency. Effective contract administration, clear scope definition, and robust change management processes are crucial to mitigate these FFP-related 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: N0002417R4438

Offers Received: 1

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $115,846,886

Exercised Options: $104,757,437

Current Obligation: $104,757,437

Subaward Activity

Number of Subawards: 131

Total Subaward Amount: $40,073,865

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline