Navy awards $66M contract for USS OKANE (DDG 77) FY26 Dry-docking and Related Services to BAE Systems

Contract Overview

Contract Amount: $66,091,433 ($66.1M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2026-01-05

End Date: 2027-02-09

Contract Duration: 400 days

Daily Burn Rate: $165.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS OKANE (DDG 77) FY26 DSRA

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92113

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $66.1 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: USS OKANE (DDG 77) FY26 DSRA Key points: 1. The contract value of $66.1 million represents a significant investment in maintaining the operational readiness of a key naval asset. 2. BAE Systems, a major defense contractor, secured this award, indicating established capabilities in naval ship repair. 3. The firm-fixed-price contract type suggests that cost risks are largely borne by the contractor, potentially leading to more predictable project outcomes. 4. The duration of the contract, spanning over a year, points to a complex scope of work involving extensive maintenance and repair. 5. The award falls under the Ship Building and Repairing NAICS code, a sector critical for national defense infrastructure. 6. The contract's execution in California places it within a region with significant naval presence and shipbuilding/repair infrastructure.

Value Assessment

Rating: good

The contract value of $66.1 million for a DDG-class destroyer's dry-docking and related services appears reasonable given the complexity and duration of such maintenance. Benchmarking against similar large-scale naval vessel repair contracts would provide a more precise value-for-money assessment. However, the firm-fixed-price structure generally aligns with efforts to control costs, assuming the scope was well-defined. The contractor, BAE Systems, is a known entity in this space, suggesting a level of expertise that can contribute to efficient execution.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of four bidders (as suggested by 'no': 4) signifies a competitive environment, which typically drives better pricing and service offerings. The competitive process allows the Navy to select the offer that best balances technical merit, past performance, and cost. The level of competition suggests that the market for these specialized services is robust.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it fosters a market where contractors are incentivized to offer competitive pricing and high-quality services to win awards. This process helps ensure that government funds are used efficiently and effectively.

Public Impact

The primary beneficiaries are the U.S. Navy and national security, through the sustained readiness of the USS OKANE. The services delivered include essential dry-docking, maintenance, and repair, ensuring the vessel's seaworthiness and operational capability. The geographic impact is concentrated in California, where the repair work will be performed, potentially supporting local maritime industry jobs. The contract supports a specialized workforce within BAE Systems and potentially its subcontractors, including skilled tradespeople, engineers, and project managers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if unforeseen issues arise during the extensive repair work, which could impact final costs despite the fixed-price nature.
Dependence on BAE Systems' specialized facilities and workforce could create bottlenecks if other high-priority naval maintenance needs arise concurrently.
The long duration of the contract increases the risk of material cost fluctuations or supply chain disruptions impacting project timelines.

Positive Signals

The firm-fixed-price contract structure shifts cost overrun risk to the contractor, encouraging efficient project management.
Awarding to a well-established contractor like BAE Systems suggests a higher likelihood of successful technical execution and adherence to quality standards.
Full and open competition indicates a healthy market and likely resulted in a competitive price for the services rendered.
The contract's focus on a specific vessel's maintenance directly supports naval readiness, a critical national security objective.

Sector Analysis

The Ship Building and Repairing sector (NAICS 336611) is a critical component of the U.S. industrial base, directly supporting naval power projection and national defense. This contract represents a significant portion of spending within this specialized segment, focusing on the maintenance and sustainment of existing naval assets rather than new construction. The market is characterized by a few large, established players like BAE Systems, alongside smaller specialized firms. Spending in this sector is often driven by defense budgets and the lifecycle needs of naval fleets.

Small Business Impact

This contract was awarded under full and open competition and does not appear to have a specific small business set-aside. While BAE Systems is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors, particularly for specialized components or services. The extent of small business subcontracting will depend on BAE Systems' procurement strategy and the specific needs of the repair work. Further analysis of subcontracting plans would be necessary to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily be managed by the Department of the Navy, likely through contracting officers and program managers responsible for naval vessel maintenance. The firm-fixed-price nature of the contract provides a degree of financial oversight by setting a ceiling on costs. Transparency is facilitated by the public nature of contract awards, though detailed performance metrics may not be publicly disclosed. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Naval Ship Maintenance and Repair Contracts
Dry-Docking Services for Naval Vessels
DDG-Class Destroyer Sustainment Programs
BAE Systems Maritime Contracts
Department of the Navy Shipyard Services

Risk Flags

Potential for cost increases due to unforeseen repair requirements.
Risk of schedule delays impacting operational readiness.
Dependence on specialized contractor capabilities and facilities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.1 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. USS OKANE (DDG 77) FY26 DSRA

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $66.1 million.

What is the period of performance?

Start: 2026-01-05. End: 2027-02-09.

What is BAE Systems' track record with similar DDG-class destroyer maintenance contracts?

BAE Systems has a substantial track record in naval shipbuilding and repair, including extensive work on DDG-class destroyers. They are a primary contractor for various modernization, overhaul, and repair projects for the U.S. Navy. Their facilities, particularly in San Diego, are equipped to handle complex maintenance tasks for these vessels. Historical data indicates they have successfully completed numerous similar contracts, often involving dry-docking, hull repairs, system upgrades, and component replacements. While specific performance metrics for past DDG contracts are not always public, their continued selection for high-value awards suggests a generally positive performance history and strong capability in meeting the Navy's requirements for maintaining fleet readiness.

How does the $66.1 million contract value compare to previous maintenance cycles for the USS OKANE or similar vessels?

Comparing the $66.1 million contract value requires context regarding the specific scope of work and the vessel's maintenance cycle. Dry-docking and major repair contracts for DDG-class destroyers can vary significantly in cost based on the extent of work required, the age of the vessel, and the specific systems needing attention. For instance, a routine dry-docking might cost tens of millions, while a mid-life modernization could easily exceed $100 million. Without knowing the exact scope of FY26 DSRA (Dry-docking and Special Repair Availability) for the USS OKANE, a direct comparison is difficult. However, $66.1 million falls within the expected range for a comprehensive maintenance availability for a vessel of this class, especially considering the firm-fixed-price nature which often incorporates contingency for unforeseen issues.

What are the primary risks associated with this specific contract, beyond general contract risks?

Primary risks specific to this contract include the potential for unforeseen structural or system issues discovered during the extensive dry-docking and repair process, which could lead to scope creep or delays, despite the firm-fixed-price structure. The age and operational tempo of the USS OKANE (DDG 77) might mean more complex repairs are needed than initially anticipated. Another risk is the availability of specialized parts and skilled labor within the required timeframe, given the high demand for naval maintenance services. Furthermore, the concentration of work at a single facility (BAE Systems San Diego) presents a risk if that facility encounters operational issues or if competing high-priority projects strain its resources. Ensuring seamless integration of repaired systems back into the ship's operational capability is also a critical risk area.

How effective is the firm-fixed-price (FFP) contract type in ensuring value for money for this type of naval repair?

The firm-fixed-price (FFP) contract type is generally considered effective in ensuring value for money for well-defined services like naval repair, as it places the primary risk of cost overruns on the contractor. This incentivizes the contractor, BAE Systems, to manage costs efficiently and complete the work within the agreed budget. For the Navy, FFP provides cost certainty, making budgeting more predictable. However, the effectiveness hinges on the accuracy of the initial scope definition. If significant unforeseen issues arise that require substantial changes to the scope, the FFP contract can become contentious, potentially leading to change orders or disputes. In such cases, the government might end up paying more than anticipated if the contractor successfully argues for additional compensation due to unforeseen conditions.

What is the historical spending trend for USS OKANE (DDG 77) maintenance and repair?

Analyzing historical spending trends for the USS OKANE (DDG 77) requires access to detailed contract databases. As a Flight IIA Arleigh Burke-class destroyer commissioned in 2003, it has undergone multiple maintenance availabilities throughout its service life. Spending typically occurs in cycles, with major dry-docking and repair availabilities (like DSRA) happening every few years, interspersed with shorter maintenance periods. Costs for these availabilities can range from tens to over a hundred million dollars, depending on the scope. Without specific historical data for DDG 77, it's reasonable to assume spending patterns align with other vessels of its class and age, reflecting the increasing costs associated with maintaining aging platforms and incorporating modern upgrades. The $66.1M for FY26 DSRA should be viewed within this lifecycle context.

What does the 'Ship Building and Repairing' NAICS code (336611) encompass, and how does this contract fit?

The North American Industry Classification System (NAICS) code 336611, 'Ship Building and Repairing,' covers establishments primarily engaged in building, repairing, and converting ships and boats. This includes naval vessels, commercial ships, barges, and other watercraft. Establishments in this sector may also manufacture related equipment, such as marine engines and propulsion systems. This specific contract for the USS OKANE's dry-docking and related services falls squarely within the 'Repairing' component of this NAICS code. It involves the maintenance, overhaul, and repair of a naval vessel, requiring specialized facilities, skilled labor, and adherence to stringent naval standards, all of which are characteristic activities covered by 336611.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002425R4406

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

Address: 2205 BELT ST, SAN DIEGO, CA, 92113

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: $70,392,029

Exercised Options: $66,091,433

Current Obligation: $66,091,433

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline