Navy's $77M USS Lake Erie SRA Contract Awarded to National Steel and Shipbuilding

Contract Overview

Contract Amount: $77,165,881 ($77.2M)

Contractor: National Steel and Shipbuilding Company

Awarding Agency: Department of Defense

Start Date: 2020-07-31

End Date: 2022-09-09

Contract Duration: 770 days

Daily Burn Rate: $100.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS LAKE ERIE SELECTED RESTRICTED AVAILABILITY (SRA)

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $77.2 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: USS LAKE ERIE SELECTED RESTRICTED AVAILABILITY (SRA) Key points: 1. The contract value of $77.17 million for the USS Lake Erie SRA is a significant investment in naval readiness. 2. Competition was full and open, suggesting a competitive bidding process that could lead to better pricing. 3. The firm fixed-price contract type shifts risk to the contractor, potentially protecting the government from cost overruns. 4. Shipbuilding and Repair is a critical sector for national defense, with this contract supporting a key asset.

Value Assessment

Rating: good

The $77.17 million award for a Restricted Availability (SRA) appears reasonable given the scope of work for a naval vessel. Benchmarking against similar complex ship repair contracts would provide a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating multiple bidders participated. This method generally promotes price discovery and can lead to more competitive pricing for the government.

Taxpayer Impact: The competitive nature of the award is expected to yield a fair price, ensuring taxpayer funds are used efficiently for essential naval maintenance.

Public Impact

Ensures the operational readiness of the USS Lake Erie, a critical asset for national security. Supports jobs and economic activity within the shipbuilding and repair industry. Demonstrates the Navy's commitment to maintaining its fleet through necessary maintenance and upgrades.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Potential for scope creep in complex ship repair projects.
Dependence on a single contractor for specialized skills.

Positive Signals

Full and open competition utilized.
Firm fixed-price contract type.
Contract awarded to a known entity in the shipbuilding sector.

Sector Analysis

The shipbuilding and repair sector is characterized by high costs, specialized labor, and long project durations. This contract falls within the typical spending range for major naval vessel maintenance and upgrades.

Small Business Impact

The data does not indicate whether small businesses were involved as subcontractors. Further analysis would be needed to determine the extent of small business participation in this contract.

Oversight & Accountability

The award process under full and open competition suggests adherence to standard procurement regulations. Oversight during the execution phase will be crucial to ensure contract terms are met and costs remain controlled.

Related Government Programs

Ship Building and Repairing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Contract duration of 770 days is substantial, requiring close monitoring.
Potential for cost overruns if the fixed price was not adequately estimated for the scope.
Dependence on National Steel and Shipbuilding Company for critical repair services.
Lack of specific detail on small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.2 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. USS LAKE ERIE SELECTED RESTRICTED AVAILABILITY (SRA)

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 $77.2 million.

What is the period of performance?

Start: 2020-07-31. End: 2022-09-09.

What specific repairs and upgrades are included in the Restricted Availability (SRA) for the USS Lake Erie?

The specific details of the SRA for the USS Lake Erie would typically be outlined in the contract's Statement of Work (SOW). This document details the required maintenance, repairs, and any modernization efforts. Without access to the SOW, it's difficult to ascertain the exact scope, but SRAs generally involve extensive hull work, system overhauls (propulsion, electrical, combat systems), and habitability improvements to ensure the vessel's continued operational effectiveness.

How does the firm fixed-price contract mitigate risks for the Department of the Navy?

A firm fixed-price (FFP) contract shifts the majority of cost risk to the contractor. Unlike cost-reimbursement contracts, the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This provides the Navy with cost certainty and protects against unexpected cost increases due to contractor inefficiencies or unforeseen challenges during the repair process, assuming the initial price was set appropriately.

What is the potential impact of this contract on the long-term readiness of the naval fleet?

This contract is crucial for maintaining the operational readiness of the USS Lake Erie, a Ticonderoga-class guided-missile cruiser. Regular and thorough maintenance, as provided by an SRA, prevents degradation of critical systems, extends the vessel's service life, and ensures it can effectively perform its missions. Failure to conduct such maintenance could lead to increased costs for more extensive repairs later, reduced operational availability, and potential mission failures.

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: N0002420R4401

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 2798 E 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: $77,574,708

Exercised Options: $77,165,881

Current Obligation: $77,165,881

Actual Outlays: $21,159,863

Subaward Activity

Number of Subawards: 145

Total Subaward Amount: $12,590,360

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline