DoD Awards $152M Ship Building Contract to Austal USA for Navy Support

Contract Overview

Contract Amount: $151,999,000 ($152.0M)

Contractor: Austal USA, LLC

Awarding Agency: Department of Defense

Start Date: 2024-09-12

End Date: 2026-09-11

Contract Duration: 729 days

Daily Burn Rate: $208.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SIB INVESTMENT SUPPORT

Place of Performance

Location: MOBILE, MOBILE County, ALABAMA, 36602

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $152.0 million to AUSTAL USA, LLC for work described as: SIB INVESTMENT SUPPORT Key points: 1. Significant investment in shipbuilding and repair capabilities. 2. Sole-source award raises questions about competition and potential cost savings. 3. Contract duration of 729 days indicates a substantial, long-term project. 4. Focus on the Navy's shipbuilding needs within the Defense sector.

Value Assessment

Rating: fair

The contract value of $151.99M for ship building and repair is substantial. Benchmarking against similar definitive contracts for specialized naval vessels is difficult without more detailed scope information. However, the Cost Plus Fixed Fee structure can sometimes lead to higher costs than fixed-price contracts if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially reduces the incentive for the contractor to offer the most competitive pricing. The justification for a sole-source award would be critical to understanding if this was the only viable option.

Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for the services rendered, as there was no market pressure to drive down costs.

Public Impact

Impacts naval readiness and shipbuilding capacity. Potential for job creation in Alabama's shipbuilding sector. Highlights reliance on specific contractors for specialized defense needs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus contract type
Long contract duration

Positive Signals

Supports critical defense infrastructure
Potential for skilled job creation

Sector Analysis

The shipbuilding and repair sector is a critical component of national defense, requiring specialized expertise and significant capital investment. Spending benchmarks in this area are highly variable, depending on the complexity and scale of the vessels or repairs involved. This contract falls within the Department of Defense's significant investments in maintaining and expanding its fleet.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses in this contract. Given the nature of large-scale shipbuilding, it is likely that any small business involvement would be through subcontracting, which is not detailed here.

Oversight & Accountability

Oversight will be crucial for this Cost Plus Fixed Fee contract to ensure costs remain reasonable and the scope of work is managed effectively. The Department of the Navy's contracting and program management offices will be responsible for monitoring performance and expenditures against the contract terms.

Related Government Programs

Ship Building and Repairing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competitive bidding
Potential for cost overruns due to CPFF structure
Long contract duration may not reflect current market conditions
Limited transparency on specific deliverables and performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $152.0 million to AUSTAL USA, LLC. SIB INVESTMENT SUPPORT

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 $152.0 million.

What is the period of performance?

Start: 2024-09-12. End: 2026-09-11.

What is the specific justification for awarding this contract on a sole-source basis, and were alternative competitive approaches considered and rejected?

The justification for a sole-source award is critical for understanding the necessity of this procurement method. Without competition, it's difficult to ascertain if the government secured the best possible price and value. Agencies typically sole-source when only one responsible source can provide the required supplies or services, or in cases of urgent need. A thorough review of the justification document is needed to assess the validity of these claims and their impact on taxpayer funds.

How will the Cost Plus Fixed Fee structure be managed to mitigate risks of cost overruns and ensure efficient resource utilization?

Managing a Cost Plus Fixed Fee (CPFF) contract requires robust oversight to control costs. The government must diligently monitor all allowable costs incurred by the contractor and ensure they align with the contract's scope. Establishing clear performance metrics and milestones, coupled with regular progress reviews and audits, can help incentivize efficiency and prevent unnecessary expenditures. The fixed fee component provides some predictability, but the variable cost base necessitates vigilant management.

What are the key performance indicators (KPIs) for this contract, and how will Austal USA's performance be measured against them to ensure successful delivery of shipbuilding support?

Key performance indicators for this shipbuilding support contract would likely include metrics related to schedule adherence, quality of work (e.g., defect rates, rework), cost control (staying within projected cost ceilings), and technical performance meeting specified requirements. The Department of the Navy will need to establish clear, measurable KPIs and a robust system for tracking and evaluating Austal USA's performance throughout the contract duration to ensure successful project outcomes and taxpayer value.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002424R2134

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $151,999,986

Exercised Options: $151,999,986

Current Obligation: $151,999,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline