Navy awards $34.4M contract to GUNDERSON MARINE LLC for shipbuilding and repair, with a 712-day duration

Contract Overview

Contract Amount: $34,419,464 ($34.4M)

Contractor: Gunderson Marine LLC

Awarding Agency: Department of Defense

Start Date: 2023-09-21

End Date: 2025-09-02

Contract Duration: 712 days

Daily Burn Rate: $48.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CRAFT FY22/23 FUNDING

Place of Performance

Location: PORTLAND, MULTNOMAH County, OREGON, 97210

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $34.4 million to GUNDERSON MARINE LLC for work described as: CRAFT FY22/23 FUNDING Key points: 1. Contract awarded to a single, established shipyard, suggesting specialized capabilities. 2. Fixed-price contract type aims to control costs and provide predictability. 3. Long-term duration indicates a significant, ongoing need for shipbuilding services. 4. Awarded under full and open competition, implying a robust bidding process. 5. Geographic concentration in Oregon may point to regional industrial strengths. 6. The contract's value is substantial, reflecting the complexity of naval shipbuilding.

Value Assessment

Rating: good

The contract value of $34.4 million for shipbuilding and repair appears reasonable given the 712-day duration and the nature of naval vessel construction. Benchmarking against similar large-scale shipbuilding contracts is challenging due to the unique specifications of each vessel and the specialized nature of the industry. However, the firm fixed-price structure suggests an effort to manage costs effectively. The award to GUNDERSON MARINE LLC, a known entity in the maritime sector, implies a level of confidence in their ability to deliver within the allocated budget.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while the competition was open, certain sources were initially excluded before the final selection. This suggests a potentially complex procurement process where specific requirements might have narrowed the initial pool of eligible bidders. The final award implies that GUNDERSON MARINE LLC offered the best value among the qualified competitors. Further details on the exclusion criteria would be needed for a complete assessment of competition dynamics.

Taxpayer Impact: The use of full and open competition, even with initial exclusions, generally benefits taxpayers by encouraging multiple bids and driving down prices through market forces. This process aims to ensure the government receives the most advantageous offer.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive essential shipbuilding and repair services for its fleet. This contract supports the maintenance and readiness of naval assets, crucial for national security. The contract's execution in Oregon will likely have positive implications for the regional maritime workforce and related supply chains. Specialized shipbuilding and repair services will be delivered, contributing to the operational capabilities of the U.S. Navy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during the long contract duration.
Dependence on a single contractor for critical shipbuilding services could pose a risk if performance issues emerge.
The 'exclusion of sources' clause warrants further investigation to ensure fair competition was maintained.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established shipyard suggests a higher likelihood of successful project completion.
Long-term contract indicates a stable demand and potential for ongoing relationship building.

Sector Analysis

The shipbuilding and repair sector is a critical component of the defense industrial base, characterized by high capital investment, specialized labor, and long production cycles. The U.S. Navy is a major consumer of these services, with significant annual spending allocated to fleet maintenance, modernization, and new construction. This contract fits within the broader category of defense procurement, specifically focusing on the sustainment and enhancement of naval vessels. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of naval shipbuilding, but this award represents a significant investment in maintaining naval readiness.

Small Business Impact

This contract does not appear to have a specific small business set-aside. The award to GUNDERSON MARINE LLC, a presumably larger entity, suggests that subcontracting opportunities may arise for smaller businesses within the maritime supply chain. However, without explicit subcontracting plans or set-aside requirements, the direct impact on small businesses is not guaranteed and would depend on the prime contractor's procurement practices.

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 inherent in the firm fixed-price contract type, which incentivizes the contractor to meet specifications within budget. Transparency is facilitated through contract award databases, though detailed performance metrics may not be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval shipbuilding programs
Ship repair and maintenance contracts
Defense industrial base sustainment
Maritime sector procurement

Risk Flags

Potential for schedule delays due to complexity of shipbuilding.
Risk of cost overruns if scope is not fully defined or unforeseen issues arise.
Dependence on a single contractor for critical services.
Limited competition indicated by 'exclusion of sources'.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.4 million to GUNDERSON MARINE LLC. CRAFT FY22/23 FUNDING

Who is the contractor on this award?

The obligated recipient is GUNDERSON MARINE 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 $34.4 million.

What is the period of performance?

Start: 2023-09-21. End: 2025-09-02.

What is the track record of GUNDERSON MARINE LLC in fulfilling similar large-scale shipbuilding contracts for the Department of the Navy?

GUNDERSON MARINE LLC has a history of working with the Department of Defense and other maritime clients on various shipbuilding and repair projects. While specific details on past performance for contracts of this exact scale and duration are not provided in this summary, their established presence in the industry suggests experience with complex naval requirements. A deeper dive into their contract history, including on-time delivery rates, quality of work, and any past disputes or contract modifications, would be necessary for a comprehensive assessment of their track record. Reviewing past performance evaluations, if available, would offer further insight into their reliability and capability.

How does the awarded amount of $34.4 million compare to the estimated value or historical spending for similar shipbuilding and repair services by the Navy?

Direct comparison of the $34.4 million award is challenging without knowing the specific vessel class or repair scope. However, naval shipbuilding and repair are inherently high-cost endeavors. For context, major naval vessel construction can range from tens of millions for smaller craft to billions for aircraft carriers or submarines. Routine repair and maintenance contracts for destroyers or cruisers can also run into tens of millions. The firm fixed-price nature of this contract suggests that the Navy has a defined scope and budget, and this amount is considered the best value achievable through competition for the specified work. Historical spending patterns for similar services would need to be analyzed over several fiscal years to identify trends and outliers.

What are the primary risk indicators associated with this contract, considering its duration and the nature of shipbuilding?

Key risk indicators include the long duration (712 days), which increases the potential for unforeseen technical challenges, material cost fluctuations (though mitigated by fixed-price), and schedule delays. The specialized nature of shipbuilding means that any technical complexities or design changes could impact cost and timeline. Dependence on a single contractor, GUNDERSON MARINE LLC, presents a performance risk; any issues with their capacity, labor, or quality control could affect the Navy's operational readiness. Furthermore, the 'exclusion of sources' in the competition process, while potentially justified, could indicate a limited pool of qualified bidders, which might reduce competitive pressure and potentially lead to less favorable pricing or innovation.

How effective is the firm fixed-price contract type in ensuring program effectiveness and value for money in this context?

The firm fixed-price (FFP) contract type is generally considered effective for ensuring program effectiveness and value for money when the scope of work is well-defined and the risks are understood. For shipbuilding and repair, where specifications can be detailed, FFP incentivizes the contractor to control costs and manage resources efficiently to maximize profit. This structure shifts much of the cost risk to the contractor, protecting the government from unexpected cost increases. Program effectiveness is enhanced as the contractor is motivated to meet the defined specifications and delivery schedule to achieve financial success. However, if the scope is not perfectly defined, it can lead to disputes or change orders, potentially negating some benefits.

What are the historical spending patterns for shipbuilding and repair services by the Department of the Navy, and how does this contract fit within them?

The Department of the Navy consistently allocates billions of dollars annually towards shipbuilding and repair. This spending encompasses new vessel construction, major overhauls, routine maintenance, and modernization efforts. Historical data shows significant fluctuations based on shipbuilding plans, fleet readiness needs, and geopolitical factors. This $34.4 million contract represents a mid-tier investment within the Navy's overall shipbuilding and repair budget. It likely falls under the category of sustainment or modernization for existing fleet assets rather than the construction of entirely new capital ships, which command much larger budgets. Its value aligns with contracts for significant repair or upgrade projects on medium-sized vessels or a series of smaller repair tasks.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SEALED BID

Solicitation ID: N0002423R2245

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4350 NW FRONT AVE, PORTLAND, OR, 97210

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

Financial Breakdown

Contract Ceiling: $34,419,464

Exercised Options: $34,419,464

Current Obligation: $34,419,464

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline