Navy awards $41.4M contract for USS Pearl Harbor repair, with BAE Systems as prime

Contract Overview

Contract Amount: $41,418,939 ($41.4M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2018-02-07

End Date: 2019-05-31

Contract Duration: 478 days

Daily Burn Rate: $86.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::CL::IGF USS PEARL HARBOR LSD 52 SELECTED RESTRICTED AVAILABILITY

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92136

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $41.4 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: IGF::CL::IGF USS PEARL HARBOR LSD 52 SELECTED RESTRICTED AVAILABILITY Key points: 1. Contract value represents a significant investment in naval readiness and ship maintenance. 2. The award to a single, established contractor suggests a focus on specialized expertise. 3. Fixed-price contract type aims to control costs and provide budget certainty. 4. The duration of the contract indicates a substantial scope of work for ship repair. 5. Geographic concentration in California highlights regional defense industry activity.

Value Assessment

Rating: good

The contract value of $41.4 million for ship repair appears reasonable given the scope of work typically involved in maintaining a naval vessel. Benchmarking against similar large-scale naval repair contracts would provide a more precise value-for-money assessment. The firm fixed-price structure suggests an effort to manage costs effectively, but the final cost will depend on the execution and any unforeseen issues encountered during the repair process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of only one award suggests that BAE Systems Maritime Solutions was the most competitive bidder based on factors such as price, technical capability, and past performance. This level of competition is generally favorable for price discovery and ensuring the government receives the best value.

Taxpayer Impact: Full and open competition generally leads to more competitive pricing, potentially saving taxpayer dollars compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring a key vessel is maintained. Services delivered include essential repairs and maintenance for the USS Pearl Harbor (LSD 52). The geographic impact is concentrated in San Diego, California, supporting local maritime industry jobs. Workforce implications include employment for skilled tradespeople and support staff at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen repair issues arise beyond the initial scope.
Dependence on a single contractor for critical repair services could pose a risk if performance falters.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established contractor like BAE Systems suggests a high likelihood of successful execution.
Full and open competition indicates a robust bidding process.

Sector Analysis

This contract falls within the shipbuilding and repair sector, a critical component of the defense industrial base. The market is characterized by specialized facilities and a highly skilled workforce. Spending in this sector is often driven by naval modernization, maintenance, and repair requirements. Comparable spending benchmarks would involve analyzing other large-scale naval vessel repair and maintenance contracts.

Small Business Impact

While this contract was awarded under full and open competition and the prime contractor is BAE Systems, there is no explicit indication of a small business set-aside. However, large prime contractors are often required to subcontract portions of their work to small businesses. The extent of small business participation will depend on the specific subcontracting plan developed by BAE Systems, which could provide opportunities for smaller firms in the maritime repair ecosystem.

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. The Inspector General's office for the Department of Defense may conduct audits or investigations if concerns regarding fraud, waste, or abuse arise.

Related Government Programs

Naval Ship Maintenance and Repair
Shipbuilding and Repair Contracts
Defense Readiness Contracts
Vessel Maintenance Services

Risk Flags

Potential for schedule slippage
Risk of cost overruns via change orders
Contractor performance variability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.4 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. IGF::CL::IGF USS PEARL HARBOR LSD 52 SELECTED RESTRICTED AVAILABILITY

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO 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 $41.4 million.

What is the period of performance?

Start: 2018-02-07. End: 2019-05-31.

What is BAE Systems Maritime Solutions' track record with similar naval repair contracts?

BAE Systems Maritime Solutions has a significant track record in naval shipbuilding and repair, including extensive experience with various classes of U.S. Navy vessels. They have been involved in major overhauls, modernization programs, and routine maintenance for destroyers, cruisers, amphibious assault ships, and aircraft carriers. Their performance on previous contracts, including adherence to schedules, quality of work, and cost management, would be a key factor in the Navy's decision-making process for awarding new contracts. Reviewing past performance evaluations and any documented issues or commendations would provide a clearer picture of their capabilities and reliability for complex projects like the USS Pearl Harbor repair.

How does the $41.4 million contract value compare to the cost of similar naval vessel repairs?

The $41.4 million contract value for the USS Pearl Harbor repair needs to be contextualized against the specific scope of work and the class of vessel. LSD-class ships are amphibious transport docks, and their repair needs can vary significantly based on their operational history and required upgrades. To benchmark effectively, one would compare this figure to contracts for similar maintenance availabilities on other LSDs or comparable amphibious ships. Factors such as the duration of the availability (478 days), the complexity of the required repairs (e.g., hull work, propulsion systems, electronics upgrades), and the prevailing market rates for shipyard labor and materials in San Diego are crucial. Without detailed scope information, a direct comparison is difficult, but the amount suggests a comprehensive repair effort.

What are the primary risks associated with this specific contract?

The primary risks associated with this contract include potential schedule delays due to unforeseen technical issues discovered during the repair process, which could impact the Navy's operational readiness. Cost overruns are another risk, although mitigated by the firm fixed-price structure; however, change orders for scope expansion or unexpected problems can still increase the total cost. Contractor performance risk exists, as the successful and timely completion relies heavily on BAE Systems' execution capabilities and workforce availability. Furthermore, supply chain disruptions for specialized parts or materials could also pose a risk. The geographic concentration in California might also present risks related to local labor market conditions or regulatory environments.

How effective is the firm fixed-price (FFP) contract type in managing costs for naval repair projects?

The firm fixed-price (FFP) contract type is generally considered effective for managing costs in naval repair projects when the scope of work is well-defined and understood upfront. It shifts the risk of cost overruns to the contractor, incentivizing them to control expenses and work efficiently to maximize profit. This provides the government with a high degree of cost certainty. However, for complex repairs where unforeseen issues are common, FFP contracts can sometimes lead to contractors being overly conservative in their bids or seeking change orders for any deviation from the initial scope, potentially increasing the overall cost through modifications. The Navy's ability to clearly define the repair requirements is crucial for the FFP's effectiveness in this context.

What are the historical spending patterns for ship repair and maintenance within the Department of the Navy?

Historical spending patterns for ship repair and maintenance within the Department of the Navy show a consistent and substantial allocation of resources, reflecting the aging fleet and the continuous need for operational readiness. Annual spending typically runs into the billions of dollars, covering a wide range of services from routine maintenance to major overhauls and modernization programs across various ship classes. Spending levels can fluctuate based on fleet size, deployment schedules, budget appropriations, and the specific maintenance cycles of different vessels. Contracts are often awarded through competitive processes, with major shipyards and specialized maritime companies being the primary recipients. Analyzing historical data reveals trends in contract types, average contract values, and the distribution of work among different geographic regions and contractors.

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: N0002417R4443

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC

Address: 2205 E BELT ST, SAN DIEGO, CA, 92113

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $42,755,899

Exercised Options: $41,418,939

Current Obligation: $41,418,939

Subaward Activity

Number of Subawards: 196

Total Subaward Amount: $39,516,254

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline