Navy awards $140.7M contract for dry dock construction, with 91.7% of funds obligated

Contract Overview

Contract Amount: $140,745,734 ($140.7M)

Contractor: Austal USA, LLC

Awarding Agency: Department of Defense

Start Date: 2022-06-17

End Date: 2026-08-29

Contract Duration: 1,534 days

Daily Burn Rate: $91.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AFDM DRY DOCK

Place of Performance

Location: MOBILE, MOBILE County, ALABAMA, 36602

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $140.7 million to AUSTAL USA, LLC for work described as: AFDM DRY DOCK Key points: 1. Contract value represents a significant investment in naval infrastructure. 2. Competition dynamics suggest a potentially competitive bidding environment for this specialized service. 3. Risk indicators include the long duration of the contract and the complexity of shipbuilding and repair. 4. Performance context is tied to the Navy's ongoing shipbuilding and maintenance needs. 5. Sector positioning places this contract within the broader defense industrial base, specifically shipbuilding and repair.

Value Assessment

Rating: good

The contract value of $140.7 million for a dry dock appears reasonable given the specialized nature of shipbuilding and repair. Benchmarking against similar large-scale naval construction projects would provide a more precise value-for-money assessment. The firm fixed-price structure suggests that cost overruns are primarily the contractor's responsibility, which can be a positive indicator for cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of two bids suggests a degree of competition, though the exact number of interested parties and the rigor of the evaluation process are not detailed. A competitive process generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple companies to bid, driving down prices and ensuring the government receives competitive offers.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive a critical piece of infrastructure for ship maintenance and repair. The service delivered is the construction of a dry dock, essential for the upkeep of naval vessels. The geographic impact is concentrated in Alabama, where the contractor is located and likely where the dry dock will be constructed or utilized. Workforce implications include potential job creation and utilization of skilled labor in the shipbuilding and repair sector in Alabama.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 3 years) can introduce risks related to material cost fluctuations and potential changes in requirements.
Dependence on a single contractor for a critical infrastructure project could pose a risk if performance issues arise.
The specialized nature of dry dock construction may limit the pool of qualified contractors, potentially impacting future competition.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process.
Firm fixed-price contract type helps mitigate cost escalation risks for the government.
The contractor, Austal USA, LLC, is an established entity in shipbuilding, implying a degree of experience and capability.

Sector Analysis

This contract falls within the shipbuilding and repairing industry, a critical component of the defense industrial base. The market for specialized naval infrastructure like dry docks is relatively niche, often dominated by a few large shipbuilders and specialized construction firms. Comparable spending benchmarks would involve looking at other major naval construction or repair facility projects, which can run into hundreds of millions of dollars.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside. Given the scale and specialized nature of dry dock construction, it is unlikely that small businesses would be the primary awardees, though they may participate as subcontractors. Further analysis would be needed to determine subcontracting plans and their impact on the small business 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 firm fixed-price contract terms, requiring the contractor to deliver the specified dry dock within the agreed-upon price. Transparency is generally maintained through contract award databases, though detailed performance monitoring is usually internal to the agency.

Related Government Programs

Naval shipbuilding and repair contracts
Shipyard infrastructure development
Defense construction projects
Maritime defense spending

Risk Flags

Long contract duration
Firm Fixed Price risk for contractor
Specialized infrastructure construction

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $140.7 million to AUSTAL USA, LLC. AFDM DRY DOCK

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 $140.7 million.

What is the period of performance?

Start: 2022-06-17. End: 2026-08-29.

What is Austal USA, LLC's track record with large-scale naval construction contracts?

Austal USA, LLC has a significant track record in shipbuilding, particularly with the U.S. Navy, having built various classes of vessels including Littoral Combat Ships (LCS) and Expeditionary Fast Transports (EFT). Their experience extends to complex construction projects. However, this specific contract for dry dock construction represents a different type of infrastructure project compared to their typical vessel construction. While their shipbuilding expertise is relevant, the unique challenges of constructing a dry dock facility would require specific engineering and construction capabilities that may differ from their core shipbuilding operations. A review of their past performance on similar infrastructure projects, if any, would be crucial for a comprehensive assessment.

How does the awarded amount compare to similar dry dock construction projects for the Navy or other military branches?

Benchmarking the $140.7 million award for this dry dock requires identifying comparable projects. Large-scale naval infrastructure projects, including dry docks, can vary significantly in cost due to factors such as size, complexity, location, and specific technological requirements. Projects involving specialized features or integration with existing shipyard facilities can command higher prices. Without specific details on the dimensions and capabilities of this particular dry dock, a precise comparison is difficult. However, historical data on similar naval dry dock or major shipyard facility upgrades suggests that costs can range from tens of millions to well over a hundred million dollars, making the current award fall within a plausible range for a significant infrastructure investment.

What are the primary risks associated with a firm fixed-price contract for a long-duration construction project like this?

While a firm fixed-price (FFP) contract is generally advantageous for the government by capping costs, it carries inherent risks for the contractor, which can indirectly affect the project. For a long-duration project like this dry dock construction, the primary risks for the contractor include unforeseen increases in material costs (steel, concrete, etc.), labor cost escalations, and potential delays caused by external factors (e.g., supply chain disruptions, permitting issues, weather). If these risks materialize and the contractor cannot absorb the increased costs, they may seek change orders, potentially leading to disputes or even project slowdowns. The government's risk is primarily related to the contractor's ability to successfully execute the project within the fixed price; if the contractor faces severe financial distress, project completion could be jeopardized.

What is the expected impact of this dry dock on the Navy's operational readiness and maintenance capabilities?

The addition of a new dry dock is expected to significantly enhance the Navy's operational readiness and maintenance capabilities. Dry docks are essential for performing routine maintenance, major repairs, and upgrades on naval vessels that cannot be conducted while ships are afloat. A new, modern dry dock can reduce maintenance backlogs, decrease vessel downtime, and potentially accommodate larger or more specialized vessels in the fleet. This investment suggests a strategic effort by the Navy to bolster its ship repair infrastructure, ensuring that its fleet remains in optimal condition and can be rapidly deployed and sustained during operations. The specific location and capacity of the dry dock will determine its precise impact on regional maintenance hubs and overall fleet availability.

How has federal spending in the shipbuilding and repairing sector (NAICS 336611) trended in recent years?

Federal spending in the shipbuilding and repairing sector (NAICS 336611) has historically been substantial, driven by the defense needs of the U.S. Navy and Coast Guard, as well as commercial shipbuilding incentives. In recent years, spending has generally remained robust, reflecting ongoing modernization efforts, fleet expansion, and maintenance requirements. Defense appropriations often constitute the largest portion of this sector's federal funding. While specific year-over-year fluctuations occur based on budget cycles and strategic priorities, the overall trend indicates consistent and significant investment in maintaining and expanding the U.S. shipbuilding industrial base. Factors like geopolitical tensions and national security strategies heavily influence the level of federal commitment to this sector.

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: SEALED BID

Solicitation ID: N0002422R2243

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Austal Limited

Address: 100 AUSTAL WAY, 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: $140,745,734

Exercised Options: $140,745,734

Current Obligation: $140,745,734

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline