DoD's $180M Ship Repair Contract with BAE Systems Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $180,017,079 ($180.0M)
Contractor: BAE Systems Maritime Solutions Norfolk Inc.
Awarding Agency: Department of Defense
Start Date: 2018-08-17
End Date: 2023-03-10
Contract Duration: 1,666 days
Daily Burn Rate: $108.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: ACCOMPLISH AVAIL
Place of Performance
Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $180.0 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC. for work described as: ACCOMPLISH AVAIL Key points: 1. The contract awarded to BAE Systems Maritime Solutions represents a significant investment in naval shipbuilding and repair. 2. Full and open competition was cited, but the final price and value require further examination. 3. Potential risks include cost overruns and the long duration of the contract. 4. The sector is critical for national defense, but efficiency in spending is paramount.
Value Assessment
Rating: questionable
The contract's total value of $180 million over a 1666-day period warrants a closer look at its cost-effectiveness. Benchmarking against similar ship repair contracts is essential to determine if the pricing is competitive and reflects fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a broad solicitation process. However, the impact of this method on price discovery and the final negotiated price needs to be assessed to ensure optimal taxpayer value.
Taxpayer Impact: The substantial value of this contract means that any inefficiencies or suboptimal pricing could result in significant taxpayer losses.
Public Impact
Taxpayers may be footing a bill that could have been lower if pricing was more aggressively negotiated. The long-term nature of the contract raises questions about adaptability to future technological changes or cost-saving opportunities. The Department of Defense's reliance on specific contractors for critical services like ship repair impacts market dynamics.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns due to long contract duration.
- Lack of clear per-unit cost benchmark.
- Limited transparency on specific deliverables and their associated costs.
Positive Signals
- Awarded under full and open competition.
- Contract addresses critical national defense needs.
Sector Analysis
This contract falls within the shipbuilding and repair sector, a vital component of national defense infrastructure. Spending benchmarks in this area are often high due to specialized labor and materials, but efficiency remains a key concern.
Small Business Impact
The data indicates that this contract was not awarded to small businesses, as 'sb' is false. Further analysis would be needed to determine if opportunities for small business subcontracting were adequately explored or utilized.
Oversight & Accountability
Oversight of such a long-term, high-value contract is crucial. Regular performance reviews, cost audits, and adherence to contract terms by both the Department of Defense and BAE Systems are necessary to ensure accountability and prevent waste.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Long contract duration increases risk of cost escalation.
- Lack of detailed cost breakdown for value assessment.
- Potential for scope creep over the contract's lifespan.
- Limited information on performance metrics and quality assurance.
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 $180.0 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC.. ACCOMPLISH AVAIL
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 $180.0 million.
What is the period of performance?
Start: 2018-08-17. End: 2023-03-10.
What specific metrics were used to determine the $180 million value was fair and reasonable given the 1666-day duration?
The provided data does not detail the specific metrics used for value determination. Typically, agencies consider historical pricing, market research, cost proposals, and independent government cost estimates. Without this information, it's difficult to assess the fairness of the $180 million price point against the extensive contract duration.
How does the 'full and open competition' process ensure competitive pricing for long-term, specialized services like ship repair?
Full and open competition aims to maximize the number of potential bidders, theoretically driving down prices through rivalry. However, for highly specialized, long-term contracts like ship repair, the pool of qualified bidders might be limited. Effective price discovery relies on robust solicitation requirements, clear evaluation criteria, and potentially multiple rounds of negotiation to ensure the best value is achieved.
What are the primary risks associated with a 1666-day contract duration for ship repair, and how are they mitigated?
The primary risks include potential cost escalation due to inflation or unforeseen technical challenges, technological obsolescence, and reduced flexibility for the government. Mitigation strategies often involve incorporating economic price adjustment clauses, robust change order management processes, and performance incentives or penalties to manage risks and maintain cost control throughout the contract's life.
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: N0002418R4439
Offers Received: 1
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, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $180,017,079
Exercised Options: $180,017,079
Current Obligation: $180,017,079
Actual Outlays: $45,721,747
Subaward Activity
Number of Subawards: 275
Total Subaward Amount: $71,475,465
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2018-08-17
Current End Date: 2023-03-10
Potential End Date: 2023-03-10 00:00:00
Last Modified: 2023-09-29
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