Navy awards $49.5M for ship maintenance, with 3 bids received

Contract Overview

Contract Amount: $49,452,229 ($49.5M)

Contractor: National Steel and Shipbuilding Company

Awarding Agency: Department of Defense

Start Date: 2017-03-17

End Date: 2022-11-18

Contract Duration: 2,072 days

Daily Burn Rate: $23.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::CT::IGF USS COWPENS (CG-63) FY17 SSRA2

Place of Performance

Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92136

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $49.5 million to NATIONAL STEEL AND SHIPBUILDING COMPANY for work described as: IGF::CT::IGF USS COWPENS (CG-63) FY17 SSRA2 Key points: 1. Value appears reasonable given the scope of ship repair and maintenance. 2. Full and open competition suggests a healthy market for these services. 3. Contract duration of over 5 years indicates a long-term need. 4. Fixed-price contract type shifts risk to the contractor. 5. This contract falls within the broader shipbuilding and repair sector.

Value Assessment

Rating: good

The contract value of $49.5 million for a multi-year period of ship maintenance appears to be within a reasonable range for complex naval vessel upkeep. Benchmarking against similar contracts for large ship repair and modernization would provide a more precise value-for-money assessment. The firm fixed-price structure suggests that the contractor bears the primary financial risk for cost overruns, which is generally favorable for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. Three bids were received, suggesting a competitive environment for this type of service. While three bidders is a moderate level of competition, it is sufficient to drive price discovery and encourage competitive pricing.

Taxpayer Impact: The full and open competition process, with multiple bidders, is beneficial for taxpayers as it helps ensure that the government receives competitive pricing and avoids paying an inflated cost for essential ship maintenance services.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the operational readiness of the USS COWPENS (CG-63). Services delivered include maintenance, repair, and potentially modernization of a guided-missile cruiser. The geographic impact is likely centered around the homeport or maintenance facility of the vessel, primarily in California. Workforce implications include skilled labor in shipbuilding, repair, and maritime trades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if not managed tightly due to the long duration.
Reliance on a single contractor for a significant period could lead to complacency.
Ensuring consistent quality across all maintenance tasks over five years.

Positive Signals

Firm fixed-price contract mitigates cost overrun risk for the government.
Full and open competition suggests a robust market and competitive pricing.
Long-term contract allows for predictable budgeting and planning for maintenance needs.

Sector Analysis

This contract operates within the broader shipbuilding and repair industry, a critical sector for national defense and maritime commerce. The North American Industry Classification System (NAICS) code 336611, Ship Building and Repairing, encompasses establishments primarily engaged in building and repairing ships and boats. The market is characterized by high barriers to entry due to specialized facilities, skilled labor, and stringent regulatory requirements. Government contracts, particularly for naval vessels, represent a significant portion of this sector's revenue.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. Given the nature of large-scale naval ship repair, prime contractors are often large, established firms. However, there may be opportunities for small businesses to participate as subcontractors, providing specialized services or components. Further analysis of the subcontracting plan would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver specified services within the agreed-upon price. Transparency is facilitated through contract award databases and reporting requirements. 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 Contracts
Shipbuilding and Repair Services
Defense Readiness Contracts
Fleet Modernization Programs
Department of the Navy Procurement

Risk Flags

Long contract duration may increase risk of scope creep or quality degradation.
Firm fixed-price requires careful initial scope definition to avoid contractor financial distress.
Limited number of bidders (3) warrants monitoring for future competition levels.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.5 million to NATIONAL STEEL AND SHIPBUILDING COMPANY. IGF::CT::IGF USS COWPENS (CG-63) FY17 SSRA2

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 $49.5 million.

What is the period of performance?

Start: 2017-03-17. End: 2022-11-18.

What is the track record of NATIONAL STEEL AND SHIPBUILDING COMPANY in performing similar naval maintenance contracts?

NATIONAL STEEL AND SHIPBUILDING COMPANY (NASSCO) has a long history of constructing and repairing naval vessels for the U.S. Navy. They have been involved in major overhauls, modernization projects, and routine maintenance for various classes of ships, including cruisers and amphibious assault ships. Their experience typically includes complex systems integration, hull repairs, and propulsion system maintenance. Past performance reviews and contract histories available through federal procurement databases would offer specific insights into their on-time delivery, quality of work, and adherence to budget on previous, comparable contracts. Assessing their performance on similar firm-fixed-price contracts for large naval vessels would be key to understanding their reliability for this specific award.

How does the awarded value compare to historical spending on the USS COWPENS (CG-63) for similar maintenance periods?

To compare the awarded value of $49.5 million for the USS COWPENS (CG-63) to historical spending, one would need to examine previous maintenance availabilities for this specific vessel or comparable Ticonderoga-class cruisers. Data on past Service Life Extension Programs (SLEPs), dry-docking periods, or major repair contracts would be essential. Factors such as inflation, the scope of work (e.g., routine maintenance vs. major upgrades), and the competitive landscape at the time of previous awards would need to be considered. If previous maintenance periods for this ship or similar vessels cost significantly more or less for comparable work, it would indicate whether this award represents a favorable or unfavorable price point for the Navy.

What are the primary risks associated with a five-year firm-fixed-price contract for ship maintenance?

A significant risk with a five-year firm-fixed-price contract for ship maintenance is the potential for unforeseen issues arising during the extended period that could significantly increase the contractor's costs beyond initial estimates. While the fixed price shifts cost risk to the contractor, severe underestimation of repair complexity, unexpected material price escalations, or emergent repair needs not fully captured in the initial scope could strain the contractor's ability to deliver profitably. This could potentially lead to quality compromises if the contractor seeks to cut costs, or even contractor default in extreme cases. For the government, the risk lies in ensuring the contractor has the capacity and incentive to maintain high quality throughout the contract's life, and that the initial price accurately reflects the anticipated work over such a long duration.

How effective is the 'full and open competition' strategy in ensuring competitive pricing for naval ship repair?

Full and open competition is generally considered the most effective strategy for ensuring competitive pricing in the federal acquisition process, including for naval ship repair. By allowing all responsible sources to submit proposals, the government maximizes the pool of potential bidders, thereby increasing the likelihood of receiving multiple, competitive offers. This competitive pressure incentivizes bidders to offer their best pricing and technical solutions to win the contract. In the case of naval ship repair, where specialized facilities and expertise are required, full and open competition ensures that companies capable of performing the work are aware of the opportunity and can bid. The receipt of three bids in this instance suggests that the strategy was successful in attracting a reasonable number of competitors, which should have contributed to price discovery.

What is the typical duration and value range for contracts of this nature (ship maintenance for a guided-missile cruiser)?

Contracts for the maintenance of guided-missile cruisers like the USS COWPENS (CG-63) can vary significantly in duration and value depending on the scope of work. Routine maintenance availabilities might be shorter, perhaps 6-18 months, with values ranging from $10 million to $50 million. However, major overhauls, modernization efforts, or Service Life Extension Programs (SLEPs) can extend durations to 2-4 years and push values well into the hundreds of millions of dollars. The awarded contract, with a duration of approximately 5.5 years (from award to estimated completion) and a value of $49.5 million, appears to represent a significant, multi-year maintenance and repair effort, possibly encompassing several smaller availabilities or a substantial mid-life refit, but likely not a full SLEP which would typically be much higher in value.

What are the implications of the 'Delivery Order' (AW) contract type for this award?

The 'Delivery Order' (AW) designation, in conjunction with the contract type 'FULL AND OPEN COMPETITION', typically indicates that this is a task order or delivery order placed against an existing indefinite-delivery indefinite-quantity (IDIQ) contract or a similar type of contract vehicle. This means that the $49.5 million is the value of this specific order, not necessarily the total value of the underlying contract vehicle. For this specific award, it implies that the Navy has identified a need for ship maintenance services and is placing a firm fixed-price order for that work. The underlying contract vehicle likely established terms and conditions for multiple orders over a period. This approach allows the Navy flexibility to order services as needed while ensuring competitive pricing for each order placed.

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: N0002417RX366

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 2798 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: $49,452,229

Exercised Options: $49,452,229

Current Obligation: $49,452,229

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002416D4418

IDV Type: IDC

Timeline