DoD's $241M ship repair contract awarded to BAE Systems without competition raises value concerns

Contract Overview

Contract Amount: $240,912,112 ($240.9M)

Contractor: BAE Systems Maritime Solutions Norfolk Inc.

Awarding Agency: Department of Defense

Start Date: 2020-11-20

End Date: 2023-01-14

Contract Duration: 785 days

Daily Burn Rate: $306.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS WASP (LHD 1) FY21 DOCKING SELECTED RESTRICTED AVAILABILITY (DSRA) TYCOM REPAIR/MOD PACKAGE

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $240.9 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC. for work described as: USS WASP (LHD 1) FY21 DOCKING SELECTED RESTRICTED AVAILABILITY (DSRA) TYCOM REPAIR/MOD PACKAGE Key points: 1. The contract's significant value and lack of competition warrant scrutiny for potential cost overruns. 2. Limited competition may have led to suboptimal pricing and reduced incentive for cost efficiency. 3. The extended duration of the contract (785 days) could indicate complex work or potential for delays. 4. This award represents a substantial investment in naval readiness, focusing on critical repair and modernization. 5. The absence of small business set-asides suggests the primary contractor handles the bulk of the work.

Value Assessment

Rating: questionable

The $241 million price tag for the USS WASP (LHD 1) docking availability is substantial. Without a competitive bidding process, it is difficult to benchmark this price against market rates or similar contracts. The firm-fixed-price nature provides some cost certainty, but the lack of competition raises questions about whether the government received the best possible value. Further analysis would require comparing the scope of work and pricing to historical DSRA contracts or similar vessel repair projects.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'selected restricted availability' process, which was not competed. This means only one contractor, BAE Systems Maritime Solutions, was solicited. The lack of open competition limits the government's ability to explore a wider range of potential providers and potentially negotiate more favorable terms. It suggests that either BAE Systems was the only qualified or available provider, or that the selection process did not prioritize broad market engagement.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, there's less assurance that the price reflects the most economical option available in the market.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the USS WASP (LHD 1) remains operational and modernized. Services delivered include critical repairs and modifications to a major naval vessel. The geographic impact is centered in Norfolk, Virginia, supporting the naval base and associated infrastructure. Workforce implications include employment for skilled tradespeople and technicians at BAE Systems' facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may inflate costs.
Extended contract duration could mask inefficiencies.
Sole-source award limits price discovery.
Potential for scope creep without competitive baseline.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Award ensures critical naval asset readiness.
BAE Systems is an established maritime solutions provider.

Sector Analysis

The ship building and repairing sector (NAICS 336611) is a critical component of the defense industrial base. This contract falls within the naval vessel maintenance and repair sub-sector. Spending in this area is often driven by defense readiness requirements and the aging of the fleet. Comparable spending benchmarks would typically involve analyzing other major overhaul and modernization contracts for similar amphibious assault ships.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like BAE Systems suggests that the majority of the work will be performed by the prime or its large subcontractors. This limits direct opportunities for small businesses to participate in this specific contract, though they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The firm-fixed-price structure provides a degree of accountability for the contractor to deliver the specified work within the agreed-upon cost. Transparency is limited by the non-competitive nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Ship Maintenance and Repair
Amphibious Assault Ship Modernization
Defense Logistics and Readiness Contracts
Ship Building and Repairing Services

Risk Flags

Lack of Competition
High Contract Value
Extended Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $240.9 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC.. USS WASP (LHD 1) FY21 DOCKING SELECTED RESTRICTED AVAILABILITY (DSRA) TYCOM REPAIR/MOD PACKAGE

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 $240.9 million.

What is the period of performance?

Start: 2020-11-20. End: 2023-01-14.

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

BAE Systems Maritime Solutions has a significant history of performing complex repair, modernization, and maintenance work for the U.S. Navy and other maritime clients. They are a major shipbuilder and repairer, often involved in large-scale projects for various naval platforms, including aircraft carriers and amphibious assault ships. Their track record typically includes extensive experience with docking availabilities, which involve dry-docking vessels for comprehensive maintenance and upgrades. While specific performance metrics for past contracts are not detailed here, their established presence suggests a capacity to handle demanding projects. However, the lack of competition on this specific contract means past performance alone does not guarantee optimal value for this particular award.

How does the $241 million cost compare to similar docking availabilities for LHD-class ships?

Benchmarking the $241 million cost for the USS WASP (LHD 1) DSRA is challenging without access to detailed historical data on similar contracts, especially given the non-competitive nature of this award. Docking availabilities for large naval vessels like LHDs are inherently complex and expensive, involving extensive labor, specialized materials, and significant shipyard overhead. Factors such as the specific scope of work (repairs, upgrades, system modernizations), the condition of the vessel, and prevailing market rates for labor and materials can cause substantial cost variations. Generally, major overhauls for ships of this class can range from tens to hundreds of millions of dollars. The lack of competitive bids makes it difficult to ascertain if this specific price represents a fair market value or if it is inflated due to the absence of competition.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($241 million) include potential cost overruns, reduced incentive for efficiency, and a lack of innovation. Without competitive pressure, the contractor may have less motivation to control costs tightly or to seek the most cost-effective solutions. There's also a risk that the scope of work could expand beyond the initial requirements without a competitive baseline to check against. Furthermore, the government loses the opportunity to benefit from potentially lower prices or innovative approaches that might have been offered by other qualified bidders. Ensuring rigorous oversight and detailed contract management becomes even more critical in sole-source situations to mitigate these risks.

What does the 785-day duration imply about the scope and complexity of the work?

The 785-day duration (approximately 2.15 years) for the USS WASP (LHD 1) docking availability suggests a very extensive and complex scope of work. This timeframe likely encompasses not just routine maintenance and repairs but also significant modernization efforts, system upgrades, and potentially hull work. Such long durations are typical for major overhauls of large naval vessels, which require substantial planning, execution, and coordination across multiple trades and technical disciplines. It indicates that the vessel will be out of service for an extended period, highlighting the importance of this availability for its long-term operational readiness. The duration also implies significant resource allocation from the contractor.

How does this contract fit into the broader context of naval shipbuilding and repair spending?

This contract represents a significant, albeit singular, investment within the broader context of naval shipbuilding and repair spending. The U.S. Navy operates a large and aging fleet, necessitating continuous maintenance, repair, and modernization to ensure operational readiness. Spending on docking availabilities like this is a crucial component of the Navy's overall maintenance budget. While individual contracts can be substantial, they are part of a larger, ongoing cycle of fleet sustainment. This specific award contributes to the workload of the naval repair industrial base, supporting jobs and infrastructure. It reflects the Navy's commitment to maintaining its amphibious assault capabilities.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002420R4404

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

Financial Breakdown

Contract Ceiling: $246,763,836

Exercised Options: $240,912,112

Current Obligation: $240,912,112

Actual Outlays: $141,056,391

Subaward Activity

Number of Subawards: 334

Total Subaward Amount: $134,141,601

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline