Navy awards $4.99M for Ship Repair to BAE Systems, highlighting a need for specialized maritime services

Contract Overview

Contract Amount: $49,862,941 ($49.9M)

Contractor: BAE Systems Maritime Solutions Norfolk Inc.

Awarding Agency: Department of Defense

Start Date: 2019-09-16

End Date: 2020-07-09

Contract Duration: 297 days

Daily Burn Rate: $167.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS JASON DUNHAM DDG-109 DSRA

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $49.9 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC. for work described as: USS JASON DUNHAM DDG-109 DSRA Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract value is relatively modest, indicating a specific, focused scope of work. 3. BAE Systems, a major defense contractor, likely possesses the specialized capabilities required. 4. The fixed-price nature of the contract shifts performance risk to the contractor. 5. This award falls within the broader category of shipbuilding and repair, a critical defense sector. 6. The short duration suggests a project-specific need rather than a long-term maintenance agreement.

Value Assessment

Rating: good

The contract value of $4.99 million for ship repair services appears reasonable given the specialized nature of naval vessel maintenance. Benchmarking against similar contracts for destroyer-class ship repairs would provide a more precise value assessment. However, BAE Systems' established presence and capabilities in this niche suggest competitive pricing was likely achieved through the open competition.

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 were likely solicited. The presence of more than one bidder generally fosters price discovery and can lead to more favorable terms for the government. The specific number of bids received is not detailed, but the competition type suggests a robust process.

Taxpayer Impact: Taxpayers benefit from the competitive nature of this award, as it is expected to drive down costs and ensure the government receives fair market value for the ship repair services.

Public Impact

The U.S. Navy benefits directly through the maintenance and readiness of the USS Jason Dunham (DDG-109). Specialized ship repair services are delivered, ensuring the operational capability of a key naval asset. The geographic impact is likely concentrated around the Norfolk Naval Shipyard in Virginia, where the contractor is located. The contract supports skilled labor within the maritime repair industry, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen repair issues arise beyond the scope of the fixed-price contract.
Dependence on a single contractor for a critical repair task could pose a risk if performance issues emerge.

Positive Signals

Awarded through full and open competition, indicating a competitive market for these services.
BAE Systems has a strong track record in naval shipbuilding and repair, suggesting reliability.
The firm-fixed-price contract structure provides cost certainty for the government.

Sector Analysis

The shipbuilding and repair sector is a vital component of the defense industrial base, encompassing a wide range of activities from new construction to maintenance and modernization of naval vessels. This contract falls within the ship maintenance and repair sub-sector, which is characterized by specialized technical expertise and significant capital investment. Spending in this area is driven by the need to maintain fleet readiness and extend the service life of aging assets. Comparable spending benchmarks would typically be found within the Department of the Navy's annual shipbuilding and conversion budget, as well as specific ship class maintenance plans.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of naval ship repair, particularly for destroyer-class vessels, large, established contractors like BAE Systems are typically better positioned to meet the technical and logistical requirements. There is no explicit information regarding subcontracting plans for small businesses, but it is common for larger defense contracts to include provisions for small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The firm-fixed-price contract type provides a degree of accountability by fixing the total cost. Transparency is facilitated by the contract award notice, which details the contractor, value, and competition type. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Ship Maintenance
Shipbuilding and Repair Contracts
Defense Readiness Contracts
USS Jason Dunham (DDG-109) Specific Maintenance

Risk Flags

Potential for unforeseen repair issues impacting cost and schedule.
Contract performance quality risk.
Contractor dependency risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.9 million to BAE SYSTEMS MARITIME SOLUTIONS NORFOLK INC.. USS JASON DUNHAM DDG-109 DSRA

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS MARITIME SOLUTIONS NORFOLK 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 $49.9 million.

What is the period of performance?

Start: 2019-09-16. End: 2020-07-09.

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

BAE Systems has a substantial and well-documented track record in naval shipbuilding and repair, both domestically and internationally. They are a primary contractor for various naval platforms, including destroyers, aircraft carriers, and amphibious assault ships. Their experience encompasses a wide range of repair, overhaul, and modernization services. For instance, BAE Systems has been involved in major refit programs for Arleigh Burke-class destroyers, similar to the USS Jason Dunham (DDG-109). This extensive history suggests a high level of technical expertise, project management capability, and familiarity with naval specifications and requirements. Their performance on previous contracts, while subject to specific project details and reviews, generally positions them as a capable provider for complex naval maintenance tasks.

How does the $4.99 million award compare to typical repair costs for a DDG-109 class ship?

The $4.99 million award for the USS Jason Dunham (DDG-109) DSRA (Drydocking and Special Repair Availability) appears to be on the lower end for major repair availabilities for a guided-missile destroyer. Larger, more comprehensive availabilities that include significant upgrades, modernization, or extensive hull work can range from tens of millions to over a hundred million dollars. This specific award likely covers a more targeted scope of work, such as scheduled maintenance, specific system repairs, or inspections that do not require extensive shipyard time or major component replacements. Without the detailed scope of work, a precise comparison is difficult, but it suggests this was a focused repair task rather than a full overhaul.

What are the primary risks associated with this specific contract?

The primary risks associated with this contract include potential scope creep if unforeseen issues are discovered during the repair process, which could lead to cost increases or schedule delays, despite the firm-fixed-price nature. There's also a performance risk, where the quality of the repair work might not meet the Navy's stringent standards, potentially impacting the ship's readiness. Furthermore, reliance on a single contractor for a critical repair task introduces a dependency risk; any significant performance issues or disruptions from BAE Systems could have a direct impact on the USS Jason Dunham's operational availability. Finally, the short duration of the contract (297 days) implies a tight schedule, increasing the risk of delays if any complications arise.

What does the 'Ship Building and Repairing' NAICS code (336611) indicate about the contractor's capabilities?

The North American Industry Classification System (NAICS) code 336611, 'Ship Building and Repairing,' signifies that BAE Systems Maritime Solutions Norfolk Inc. is classified as an establishment primarily engaged in building, repairing, and/or modernizing ships, barges, and floating structures. This classification indicates that the company possesses the necessary infrastructure, specialized equipment, skilled workforce, and technical expertise required for complex maritime construction and maintenance activities. For naval contracts, this code suggests capabilities in areas such as hull fabrication, outfitting, systems integration, and repair of propulsion, electrical, and combat systems, which are critical for maintaining the operational readiness of vessels like the USS Jason Dunham.

How does the 'Delivery Order' (AW) contract type affect the overall contract structure?

A 'Delivery Order' (AW) typically refers to a specific order placed against an existing indefinite-delivery, indefinite-quantity (IDIQ) contract or a basic ordering agreement (BOA). In this context, it means that the $4.99 million award is for a specific task or set of tasks under a broader contract vehicle that allows for multiple orders over a period. This structure provides flexibility for the government to procure services as needed. For the contractor, it signifies a confirmed task with a defined scope and price. The 'Delivery Order' itself is the formal document authorizing the work and specifying the deliverables, payment terms, and delivery schedule for that particular instance of service.

What is the significance of the contract being 'FIRM FIXED PRICE' (PT)?

The 'FIRM FIXED PRICE' (PT) contract type is significant because it establishes a ceiling price that the contractor, BAE Systems, must adhere to. Under this structure, the contractor assumes the majority of the financial risk. If the costs of performing the work exceed the agreed-upon fixed price, the contractor is responsible for absorbing those additional costs. Conversely, if the contractor can complete the work for less than the fixed price, they retain the difference as profit. This contract type provides the government with the highest degree of cost certainty and predictability, making it attractive for well-defined scopes of work where risks can be reasonably assessed upfront.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002415R4405

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

Address: 750 W BERKLEY AVE, NORFOLK, VA, 23523

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $50,722,428

Exercised Options: $49,862,941

Current Obligation: $49,862,941

Actual Outlays: $2,499,490

Subaward Activity

Number of Subawards: 34

Total Subaward Amount: $3,563,559

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002416D4406

IDV Type: IDC

Timeline