Navy awards $14.5M for shipbuilding conceptual studies to Austal USA, with 8 bidders

Contract Overview

Contract Amount: $14,496,880 ($14.5M)

Contractor: Austal USA, LLC

Awarding Agency: Department of Defense

Start Date: 2020-09-04

End Date: 2025-09-30

Contract Duration: 1,852 days

Daily Burn Rate: $7.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LUSV CONCEPTUAL STUDIES

Place of Performance

Location: MOBILE, MOBILE County, ALABAMA, 36602

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $14.5 million to AUSTAL USA, LLC for work described as: LUSV CONCEPTUAL STUDIES Key points: 1. The contract value represents a significant investment in early-stage design and concept development for naval vessels. 2. With 8 bidders, the competition level suggests a healthy market interest in this specialized area of shipbuilding. 3. The firm-fixed-price structure aims to control costs and provide predictability for the government. 4. The contract duration of over 1800 days indicates a long-term need for these conceptual studies. 5. The award to Austal USA, a known entity in shipbuilding, provides a degree of performance confidence. 6. The focus on conceptual studies suggests a forward-looking approach to future naval capabilities.

Value Assessment

Rating: good

Benchmarking per-unit costs for conceptual studies is challenging due to the intangible nature of the deliverables. However, the total award of $14.5 million over approximately five years suggests a substantial allocation for research and development in shipbuilding. Comparing this to similar contracts for advanced naval concept development would be necessary for a precise value-for-money assessment. The firm-fixed-price nature of the contract is a positive indicator for cost control, assuming the scope is well-defined.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with 8 distinct bidders participating. This indicates a robust and competitive market for naval shipbuilding conceptual studies. The presence of multiple bidders generally leads to more competitive pricing and a wider range of innovative solutions being presented to the government. The agency received a good number of proposals, suggesting that the solicitation was attractive and accessible to qualified firms.

Taxpayer Impact: A high level of competition benefits taxpayers by driving down prices and encouraging the development of more cost-effective designs. It also ensures that the government has access to the best available talent and ideas in the industry.

Public Impact

The primary beneficiaries are the Department of the Navy and the broader U.S. defense industrial base, which will gain insights into future vessel designs. The services delivered include crucial conceptual studies that will inform the development of next-generation naval platforms. The geographic impact is primarily centered in Alabama, where Austal USA's operations are located, potentially supporting local jobs and the regional economy. This contract supports a specialized segment of the shipbuilding workforce, including naval architects, engineers, and design specialists.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in long-term conceptual studies if not managed tightly.
Dependence on a single contractor for a critical phase of development could pose risks if performance issues arise.
The long duration might lead to outdated concepts if market or technological shifts are not continuously monitored.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established shipbuilder like Austal USA suggests a baseline level of capability and experience.
Robust competition indicates a healthy market and potential for innovative solutions.

Sector Analysis

The shipbuilding and repair industry is a critical component of the U.S. defense industrial base, characterized by high barriers to entry, significant capital investment, and complex technological requirements. This contract falls within the naval shipbuilding sector, specifically focusing on the early, conceptual stages of design. Comparable spending in this area often involves significant R&D investments by both government and private entities. The market size for naval shipbuilding is substantial, driven by national security needs and ongoing fleet modernization efforts.

Small Business Impact

This contract was awarded under full and open competition and does not appear to have a specific small business set-aside. However, the prime contractor, Austal USA, may engage small businesses as subcontractors for specialized services or components. The extent of small business participation will depend on Austal USA's subcontracting plan and the nature of the conceptual study requirements. Without specific subcontracting data, the direct impact on the small business ecosystem is difficult to ascertain, but it represents an opportunity for specialized small firms to contribute to larger defense projects.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the firm-fixed-price contract terms, requiring Austal USA to deliver defined conceptual study outcomes. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General of the Department of Defense may have jurisdiction for audits and investigations if any irregularities or fraud are suspected.

Related Government Programs

Naval Ship Modernization Programs
Shipbuilding Research and Development
Advanced Naval Technology Initiatives
Future Surface Combatant Programs
Amphibious Assault Ship Development

Risk Flags

Long contract duration increases risk of scope drift or obsolescence.
Conceptual nature of work can lead to challenges in defining and measuring success.
Firm-fixed-price may disincentivize exploration of unforeseen innovative paths.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.5 million to AUSTAL USA, LLC. LUSV CONCEPTUAL STUDIES

Who is the contractor on this award?

The obligated recipient is AUSTAL USA, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $14.5 million.

What is the period of performance?

Start: 2020-09-04. End: 2025-09-30.

What is Austal USA's track record with similar conceptual study contracts for the Department of Defense?

Austal USA has a significant track record in shipbuilding, particularly with the U.S. Navy, primarily focused on constructing vessels like Littoral Combat Ships (LCS) and Expeditionary Fast Transports (EPF). While their primary strength lies in construction, they have also been involved in design and engineering aspects of these programs. Specific data on their past performance solely on 'conceptual studies' as distinct deliverables is less publicly prominent than their construction awards. However, their experience in delivering complex naval platforms suggests a foundational capability in the design and engineering phases that underpin conceptual work. Evaluating their past performance would involve reviewing contract histories for similar R&D or preliminary design efforts, looking at on-time delivery, adherence to budget (where applicable for design phases), and technical success in previous projects.

How does the $14.5 million contract value compare to other conceptual study contracts for naval vessels?

The $14.5 million value for conceptual studies over approximately five years is substantial, reflecting the complexity and strategic importance of future naval vessel development. Benchmarking this against similar contracts is challenging as 'conceptual studies' can vary widely in scope, duration, and the specific technologies or vessel types involved. However, for major naval platforms, early-stage design and concept development phases can indeed run into the tens of millions of dollars, especially when exploring novel technologies or significant platform overhauls. This figure appears consistent with the investment required for advanced R&D in a high-cost sector like defense shipbuilding, where innovation is critical but carries inherent risks and requires significant upfront analysis.

What are the primary risks associated with a firm-fixed-price contract for conceptual studies?

The primary risk with a firm-fixed-price (FFP) contract for conceptual studies lies in the potential for undefined or evolving requirements. Conceptual work, by its nature, is exploratory. If the government's needs or the technological landscape shifts significantly during the contract period, the FFP structure could lead to contractor reluctance to incorporate changes without additional funding, or conversely, the contractor might cut corners to maintain profitability if the initial price was underestimated. Another risk is that the contractor may focus on delivering the minimum required to meet the contract terms, potentially stifling innovation or failing to explore all promising avenues if they are not explicitly defined in the initial scope. Effective government oversight and clear communication channels are crucial to mitigate these risks.

What is the expected impact of these conceptual studies on future Navy shipbuilding programs?

These conceptual studies are expected to lay the groundwork for future Navy shipbuilding programs by exploring innovative designs, technologies, and operational concepts for upcoming naval platforms. They will help the Navy identify the most promising avenues for technological advancement and platform development, potentially leading to more capable, cost-effective, and survivable vessels. The insights gained could influence requirements for new classes of ships, upgrades to existing fleets, or the adoption of new materials and systems. Ultimately, this investment aims to ensure the Navy maintains a technological edge and can adapt to evolving geopolitical threats by informing the strategic decisions made in the subsequent design and acquisition phases of shipbuilding.

How has federal spending on shipbuilding conceptual studies evolved over the past five years?

Federal spending on shipbuilding conceptual studies has likely remained a consistent, albeit relatively small, portion of the overall shipbuilding budget. While specific figures for 'conceptual studies' alone are difficult to isolate from broader R&D or preliminary design funding, the Navy's continuous focus on fleet modernization and future capability development suggests sustained investment in this area. Spending trends would be influenced by strategic priorities, technological advancements (e.g., unmanned systems, directed energy), and budget allocations. Periods of heightened focus on specific platform types or emerging threats might see temporary increases in funding for related conceptual work. Overall, it's a critical but often less visible component compared to the actual construction of vessels.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002419R6314

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Austal Limited

Address: 100 ADDSCO RD, MOBILE, AL, 36602

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $23,033,370

Exercised Options: $23,033,370

Current Obligation: $14,496,880

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline