DoD's $28.7M contract for USS Philippine Sea repairs awarded to BAE Systems, highlighting shipbuilding and repair sector activity

Contract Overview

Contract Amount: $28,725,000 ($28.7M)

Contractor: BAE Systems Jacksonville Ship Repair LLC

Awarding Agency: Department of Defense

Start Date: 2006-11-22

End Date: 2007-07-16

Contract Duration: 236 days

Daily Burn Rate: $121.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS PHILIPPINE SEA (CG 58) ESRA

Place of Performance

Location: JACKSONVILLE, DUVAL County, FLORIDA, 32228

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $28.7 million to BAE SYSTEMS JACKSONVILLE SHIP REPAIR LLC for work described as: USS PHILIPPINE SEA (CG 58) ESRA Key points: 1. The contract value of $28.7 million represents a significant investment in maintaining naval assets. 2. BAE Systems, a major defense contractor, secured this award, indicating established capabilities in ship repair. 3. The fixed-price contract type suggests a defined scope and budget, potentially mitigating cost overrun risks. 4. The contract duration of 236 days points to a substantial scope of work for the USS Philippine Sea. 5. This award falls within the broader shipbuilding and repairing industry, a critical component of national defense. 6. The award amount of $28.7M is a key data point for understanding the cost of major naval vessel maintenance.

Value Assessment

Rating: good

The contract value of $28.7 million for the repair of the USS Philippine Sea (CG 58) appears reasonable given the complexity of naval vessel maintenance. Benchmarking against similar major repair contracts for guided-missile cruisers would provide a more precise value-for-money assessment. However, the firm fixed-price nature of the award suggests that the government has a clear understanding of the costs involved, which is a positive indicator for cost control.

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 two bidders (no: 2) suggests a competitive environment, which typically drives better pricing and service quality. The government's ability to solicit and receive bids from various sources is a strong indicator of a healthy market for ship repair services.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and higher quality services, ensuring that taxpayer funds are used efficiently.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring the USS Philippine Sea remains a capable asset. The services delivered include essential repairs and maintenance to a guided-missile cruiser, crucial for national security. The geographic impact is centered in Jacksonville, Florida, supporting local maritime industrial capabilities and workforce. The contract supports skilled labor within the shipbuilding and repair sector, including engineers, technicians, and shipyard workers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if unforeseen issues arise during the extensive repair work.
Dependence on a single contractor for a critical naval asset's maintenance could pose a risk if performance falters.
The firm fixed-price nature, while good for budget certainty, could incentivize the contractor to cut corners if not closely monitored.

Positive Signals

Awarded through full and open competition, suggesting a robust bidding process.
BAE Systems has a significant track record in defense contracting, implying experience and capability.
The firm fixed-price contract type provides budget certainty for the Department of the Navy.
The contract is for a specific vessel, allowing for focused and tailored repair efforts.

Sector Analysis

The shipbuilding and repairing industry (NAICS 336611) is a vital sector for national defense, involving the construction, repair, and conversion of ships and marine equipment. This contract represents a typical expenditure within this sector, focusing on the maintenance and sustainment of existing naval assets rather than new construction. Spending in this area is often driven by the operational tempo and aging fleet requirements of the U.S. Navy. Comparable spending benchmarks would involve analyzing other major repair contracts for similar naval vessels.

Small Business Impact

This contract was awarded under full and open competition and does not indicate 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 services or components. The extent of small business subcontracting would depend on BAE Systems' internal policies and the specific requirements of the repair work.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, with performance expectations and delivery schedules. Transparency is facilitated through contract award databases, though detailed performance metrics are typically internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance Contracts
Shipbuilding and Repair Services
Defense Readiness Contracts
Guided Missile Cruiser Maintenance
Department of the Navy Ship Repair

Risk Flags

Potential for cost overruns if scope is not well-defined.
Risk of performance delays impacting operational readiness.
Dependence on specialized skills and materials.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.7 million to BAE SYSTEMS JACKSONVILLE SHIP REPAIR LLC. USS PHILIPPINE SEA (CG 58) ESRA

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS JACKSONVILLE SHIP REPAIR 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 $28.7 million.

What is the period of performance?

Start: 2006-11-22. End: 2007-07-16.

What is BAE Systems' track record with similar naval repair contracts?

BAE Systems has a substantial and well-documented track record in performing complex repair, maintenance, and modernization services for a wide range of U.S. Navy vessels, including cruisers, destroyers, and aircraft carriers. They operate major shipyards on the East and Gulf Coasts, equipped to handle large-scale projects. Their history includes numerous contracts for routine maintenance, scheduled availabilities, and urgent repair needs. While specific performance data for every contract is not publicly detailed, their consistent selection for significant naval contracts suggests a generally positive performance history and capability to meet demanding military specifications and timelines. However, like any large contractor, they may have faced performance challenges or disputes on specific projects, which are often resolved through contractual mechanisms or are not publicly disclosed.

How does the $28.7 million award compare to the cost of similar naval vessel repair contracts?

The $28.7 million award for the repair of the USS Philippine Sea (CG 58) falls within a typical range for major maintenance availabilities of guided-missile cruisers. The cost of such repairs can vary significantly based on the scope of work, the specific systems requiring attention (e.g., propulsion, combat systems, hull integrity), the duration of the availability, and the prevailing market rates for labor and materials. For context, major modernization or overhaul contracts for similar vessels can range from tens of millions to over a hundred million dollars. Routine maintenance or smaller repair jobs would be considerably less. Without a detailed breakdown of the work required for the USS Philippine Sea, a precise comparison is difficult, but the awarded amount suggests a significant, but not exceptionally high, level of repair and maintenance.

What are the primary risks associated with this type of contract?

The primary risks associated with this firm fixed-price contract for naval vessel repair include potential for scope creep if unforeseen issues are discovered during the repair process, which could lead to change orders and increased costs, despite the fixed-price nature. There's also a risk related to the contractor's performance; if BAE Systems experiences delays or quality issues, it could impact the Navy's operational readiness. Furthermore, the availability of specialized parts or skilled labor could pose logistical challenges. Finally, the firm fixed-price structure, while beneficial for budget control, could incentivize the contractor to minimize costs in ways that might compromise quality if not rigorously overseen by the Navy.

How effective is the full and open competition process in ensuring value for this contract?

The full and open competition process is generally considered effective in ensuring value for contracts like this by fostering a competitive environment. It allows multiple qualified contractors, such as BAE Systems and potentially others, to bid on the work, driving down prices and encouraging innovation. The requirement for proposals to be evaluated based on technical merit and price helps the Department of the Navy select the best overall value. The fact that there were two bidders indicates a level of competition. However, the effectiveness is also contingent on the clarity of the solicitation, the evaluation criteria, and the government's ability to accurately assess proposals. In highly specialized fields like naval repair, the number of truly capable bidders might be limited, potentially reducing the competitive pressure compared to more commoditized markets.

What are the historical spending patterns for USS Philippine Sea (CG 58) maintenance and repair?

Analyzing historical spending patterns for the USS Philippine Sea (CG 58) would require accessing detailed contract award databases over the vessel's service life. Typically, a guided-missile cruiser undergoes periodic maintenance availabilities, ranging from shorter, less expensive dockside repairs to longer, more comprehensive overhauls. Spending would likely fluctuate year-to-year, with larger expenditures occurring during scheduled major maintenance periods. Factors influencing historical spending include the ship's operational tempo, its age, and the specific upgrades or repairs identified during inspections. Without access to specific historical contract data for CG 58, it's difficult to provide precise figures, but it's reasonable to assume consistent, multi-million dollar investments over its operational lifespan to maintain its combat readiness.

What is the significance of the firm fixed-price contract type for this repair work?

The firm fixed-price (FFP) contract type is significant because it places the primary risk of cost overruns on the contractor, BAE Systems, rather than the government. This means the agreed-upon price is generally not subject to adjustment based on the contractor's actual costs incurred. For the Department of the Navy, this provides a high degree of budget certainty and predictability. It incentivizes the contractor to manage costs efficiently and perform the work within the agreed budget. However, for an FFP contract to be successful, the scope of work must be clearly defined and well-understood upfront. If significant unforeseen issues arise that require substantial deviation from the original scope, the government may need to issue change orders, which can increase the total cost and administrative burden.

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: N4002706R0051

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

Address: 8500 HECKSCHER DR, JACKSONVILLE, FL, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $28,790,076

Exercised Options: $28,725,000

Current Obligation: $28,725,000

Contract Characteristics

Cost or Pricing Data: NO

Timeline