Navy Awards $435.5M Undefinitized Contract for Ship Maintenance to National Steel and Shipbuilding
Contract Overview
Contract Amount: $435,509,811 ($435.5M)
Contractor: National Steel and Shipbuilding Company
Awarding Agency: Department of Defense
Start Date: 2023-09-29
End Date: 2025-12-04
Contract Duration: 797 days
Daily Burn Rate: $546.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: N00024-23-C-4424 USS CHUNG-HOON/USS JAMES E. WILLIAMS UNDEFINITIZED CONTRACT ACTION FOR PLANNING
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92113
Plain-Language Summary
Department of Defense obligated $435.5 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: N00024-23-C-4424 USS CHUNG-HOON/USS JAMES E. WILLIAMS UNDEFINITIZED CONTRACT ACTION FOR PLANNING Key points: 1. Significant contract value for ship maintenance services. 2. Sole-source award raises questions about competition and price discovery. 3. Potential for cost overruns due to undefinitized contract action. 4. Focus on ship building and repair sector within the Department of Defense.
Value Assessment
Rating: questionable
The contract is an undefinitized contract action (UCA), meaning terms and pricing are not fully finalized. This carries inherent risk of cost escalation compared to a fully negotiated contract. Benchmarking is difficult without finalized pricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source or limited competition award. Without competitive bidding, the government may not achieve the best possible price or terms, potentially leading to higher costs for taxpayers.
Taxpayer Impact: The lack of competition for a large contract like this could result in taxpayers paying more than necessary for the ship maintenance services.
Public Impact
Taxpayers may face higher costs due to the sole-source nature of the award. The undefinitized contract action introduces uncertainty regarding the final cost. Essential maintenance for naval vessels is being addressed, ensuring fleet readiness. Potential delays or cost increases could impact future defense budgets.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Undefinitized Contract Action (UCA)
- Sole-Source Award
- Lack of Competition
- Potential for Cost Overruns
Positive Signals
- Addresses critical ship maintenance needs
- Contract awarded to a known entity in the sector
Sector Analysis
This contract falls within the Ship Building and Repairing sector, a critical component of national defense. Spending in this area is substantial, and efficient contracting is vital for maintaining naval assets and managing taxpayer funds effectively.
Small Business Impact
The data does not indicate any specific provisions or considerations for small businesses in this contract award. Further analysis would be needed to determine if small business participation was sought or achieved.
Oversight & Accountability
The use of an undefinitized contract action requires robust oversight to ensure the contractor is performing efficiently and that final pricing is fair and reasonable. The Department of the Navy must actively manage this contract to mitigate risks.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award lacks competition
- Undefinitized contract action (UCA) carries cost risk
- Potential for price escalation
- Limited transparency on justification for sole-sourcing
- High contract value increases financial exposure
Tags
ship-building-and-repairing, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $435.5 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. N00024-23-C-4424 USS CHUNG-HOON/USS JAMES E. WILLIAMS UNDEFINITIZED CONTRACT ACTION FOR PLANNING
Who is the contractor on this award?
The obligated recipient is NATIONAL STEEL AND SHIPBUILDING COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $435.5 million.
What is the period of performance?
Start: 2023-09-29. End: 2025-12-04.
What is the primary justification for awarding this contract on a sole-source basis instead of through full and open competition?
The justification for a sole-source award typically stems from unique capabilities, urgent needs, or the unavailability of other sources. For naval ship maintenance, specific facilities, specialized expertise, or proprietary knowledge might be cited. However, without a detailed justification document, it's difficult to ascertain the precise reasons, and it raises concerns about whether competition was adequately explored.
What are the potential financial risks associated with an undefinitized contract action (UCA) for this magnitude?
UCAs pose significant financial risks as the final price is not established at the outset. The contractor incurs costs before definitive terms are agreed upon, increasing the likelihood of price escalations. For a $435.5 million contract, this could lead to substantial cost growth beyond initial estimates, impacting the Navy's budget and potentially requiring additional appropriations.
How will the Department of the Navy ensure fair pricing and prevent cost overruns given the undefinitized and sole-source nature of this contract?
The Navy must implement stringent oversight, including regular performance reviews, cost monitoring, and negotiation of a fair and reasonable final price. Establishing clear milestones and deliverables within the UCA, along with robust auditing of contractor costs, are crucial. Proactive engagement and negotiation are key to mitigating risks and ensuring value for taxpayer money.
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: N0002423R4424
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 2798 E HARBOR DR, SAN DIEGO, CA, 92113
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: $826,497,727
Exercised Options: $436,203,758
Current Obligation: $435,509,811
Actual Outlays: $78,158,467
Subaward Activity
Number of Subawards: 231
Total Subaward Amount: $77,302,067
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2023-09-29
Current End Date: 2025-12-04
Potential End Date: 2025-12-04 00:00:00
Last Modified: 2026-01-13
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