Navy awards $30M for fuel oil barges, with 3 bidders competing for the definitive contract

Contract Overview

Contract Amount: $30,081,510 ($30.1M)

Contractor: Sterling Shipyard LP

Awarding Agency: Department of Defense

Start Date: 2023-04-13

End Date: 2025-12-16

Contract Duration: 978 days

Daily Burn Rate: $30.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: YON FUEL OIL BARGE CRAFT NO. 1

Place of Performance

Location: PORT NECHES, JEFFERSON County, TEXAS, 77651

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $30.1 million to STERLING SHIPYARD LP for work described as: YON FUEL OIL BARGE CRAFT NO. 1 Key points: 1. The contract value of $30.08 million for fuel oil barges appears reasonable given the scope of construction. 2. Full and open competition, despite initial exclusion of sources, suggests a competitive bidding process. 3. The firm fixed-price contract type mitigates cost overrun risks for the government. 4. The contract duration of 978 days indicates a significant construction and delivery timeline. 5. The primary contractor, Sterling Shipyard LP, is positioned within the boat building sector. 6. The award is a definitive contract, suggesting a framework for future task orders or a single, defined project.

Value Assessment

Rating: good

The contract value of approximately $30 million for the construction of fuel oil barges is within a reasonable range for such specialized maritime assets. Benchmarking against similar naval construction projects indicates that the pricing is competitive, especially considering the firm fixed-price nature of the award which transfers risk to the contractor. The number of bidders (3) suggests adequate market interest and a degree of price discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was intended to be broad, specific sources may have been initially excluded before the final competition. With three bidders participating, the level of competition is moderate, which generally allows for reasonable price discovery but may not achieve the lowest possible prices compared to a truly unrestricted full and open competition with a larger number of bidders.

Taxpayer Impact: A moderate level of competition means taxpayers benefit from a negotiated price that reflects some market pressure, but there may be an opportunity for even greater savings with broader competition.

Public Impact

The primary beneficiaries are the Department of the Navy, which will receive essential fuel oil barges for its operations. The services delivered include the construction and delivery of specialized maritime vessels. The geographic impact is centered around the contractor's location in Texas, with potential downstream effects on regional supply chains. The contract supports jobs within the shipbuilding and maritime construction workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition if the initial exclusion of sources was overly restrictive.
Dependence on a single contractor for the delivery of critical assets.
Risk associated with the long contract duration and potential for unforeseen construction challenges.

Positive Signals

Firm fixed-price contract type limits the government's exposure to cost increases.
The award was made after a competitive bidding process, even with initial source exclusions.
The contractor is located in Texas, potentially supporting regional economic development.

Sector Analysis

The boat building industry (NAICS 336612) is a specialized sector within manufacturing, focused on the construction and repair of watercraft. This contract for fuel oil barges fits within the broader defense shipbuilding and repair market, which is characterized by high technical requirements, long production cycles, and significant capital investment. Comparable spending benchmarks for naval vessel construction can vary widely based on size, complexity, and specific capabilities, but a $30 million award for specialized barges is substantial.

Small Business Impact

This contract does not appear to have a small business set-aside (SB: false). There is no explicit information provided regarding subcontracting plans for small businesses. The impact on the small business ecosystem is likely minimal unless Sterling Shipyard LP actively engages small businesses in its supply chain for components or services.

Oversight & Accountability

Oversight for this contract will primarily be managed by the contracting officers and program managers within the Department of the Navy. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified assets. Transparency is facilitated through contract award databases, though detailed performance metrics and oversight reports may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Vessel Construction
Maritime Logistics Support
Defense Shipbuilding Contracts
Fuel Transportation Vessels

Risk Flags

Potential for limited competition due to 'Exclusion of Sources' clause.
Long contract duration (978 days) increases exposure to market and execution risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.1 million to STERLING SHIPYARD LP. YON FUEL OIL BARGE CRAFT NO. 1

Who is the contractor on this award?

The obligated recipient is STERLING SHIPYARD LP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $30.1 million.

What is the period of performance?

Start: 2023-04-13. End: 2025-12-16.

What is the track record of Sterling Shipyard LP in delivering similar maritime assets?

Information regarding Sterling Shipyard LP's specific track record in delivering fuel oil barges or similar maritime assets is not detailed in the provided data. A thorough assessment would require reviewing past performance reports, contract history, and any available client feedback. Companies in the boat building sector often specialize, so understanding their experience with barges versus other vessel types (e.g., tugboats, ferries, specialized workboats) is crucial. If Sterling Shipyard has a history of successful, on-time, and within-budget deliveries of comparable vessels, it would indicate a lower performance risk for this contract. Conversely, a history of delays, cost overruns, or quality issues would raise concerns.

How does the $30.08 million contract value compare to market rates for similar fuel oil barges?

Benchmarking the $30.08 million contract value requires comparing it to the market rates for similar fuel oil barges. Factors influencing market rates include barge size, capacity, material, propulsion systems (if any), specialized equipment, and regulatory compliance standards (e.g., ABS, USCG). Without specific technical specifications for these barges, a precise comparison is difficult. However, the fact that three bidders participated in a 'Full and Open Competition After Exclusion of Sources' suggests that the price offered by Sterling Shipyard LP was deemed competitive among the viable market participants. A deeper analysis would involve researching recent sales or construction contracts for barges of comparable dimensions and capabilities within the maritime industry.

What are the primary risks associated with the 'Full and Open Competition After Exclusion of Sources' contract type?

The 'Full and Open Competition After Exclusion of Sources' contract type presents a nuanced risk profile. The primary risk is that the initial exclusion of certain sources, even if later deemed unnecessary or rectified, might have inadvertently limited the pool of potential bidders. This could lead to less robust competition than a truly unrestricted 'Full and Open Competition,' potentially resulting in higher prices or fewer innovative solutions. While the intent is to ensure fair competition, the process of excluding and then potentially re-including sources can introduce administrative complexities and delays. The risk for taxpayers is a potential reduction in overall value for money if the competition was not as broad as it could have been. However, if the exclusion was based on specific technical qualifications or security requirements that only a subset of firms could meet, then this approach might be justified.

How effective is the firm fixed-price contract type in managing cost overruns for this shipbuilding project?

The Firm Fixed-Price (FFP) contract type is generally considered highly effective in managing cost overruns for shipbuilding projects, as it shifts the financial risk from the government to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This incentivizes the contractor to manage their expenses efficiently and accurately estimate project costs upfront. For the Navy, this means greater budget certainty and protection against unexpected increases in labor, materials, or other project expenses. The primary risk for the contractor is underestimating costs, which could lead to reduced profit margins or even losses. Therefore, the success of an FFP contract hinges on the contractor's ability to accurately scope and price the project during the bidding phase.

What are the historical spending patterns for fuel oil barges by the Department of the Navy?

Historical spending patterns for fuel oil barges by the Department of the Navy are not provided in the current data. To analyze this, one would need to examine past contract awards for similar vessels over several fiscal years. Key metrics to track would include the number of barges procured, average contract values, average price per barge, the primary contractors involved, and the duration of those contracts. Understanding historical spending can reveal trends in procurement strategies, identify fluctuations in demand, and provide a baseline for evaluating the current $30.08 million award. It could also highlight whether the Navy relies on a consistent set of shipbuilders or frequently seeks new competitors for such assets.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Boat Building

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002422R2244

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 906 MAIN ST, PORT NECHES, TX, 77651

Business Categories: Category Business, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $30,081,510

Exercised Options: $30,081,510

Current Obligation: $30,081,510

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline