BAE Systems awarded $34.3M for USS AMERICA (LHA-6) PMA, with a high per-unit cost

Contract Overview

Contract Amount: $34,303,482 ($34.3M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2018-01-18

End Date: 2019-03-08

Contract Duration: 414 days

Daily Burn Rate: $82.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS AMERICA (LHA-6) PMA

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $34.3 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: USS AMERICA (LHA-6) PMA Key points: 1. The contract value represents a significant investment in naval shipbuilding and repair. 2. Competition was robust, suggesting potential for competitive pricing, though final costs require scrutiny. 3. The fixed-price nature of the contract shifts some risk to the contractor. 4. This award is part of a broader strategy to maintain and modernize the U.S. Navy's fleet capabilities. 5. The contract duration of 414 days indicates a substantial scope of work. 6. The specific nature of the 'PMA' (Program Management/Maintenance/Assembly) requires further detail to fully assess value.

Value Assessment

Rating: fair

The award of $34.3 million for the USS AMERICA (LHA-6) PMA appears to be within the expected range for complex naval vessel support. However, without specific details on the scope of 'PMA' (which could encompass program management, maintenance, or assembly), a direct comparison to similar contracts is challenging. The fixed-price contract type suggests a defined cost structure, but the overall value proposition hinges on the delivered outcomes and the efficiency of the contractor's execution. Benchmarking against historical spending on similar vessel classes or specific maintenance tasks would provide a clearer picture of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple capable contractors had the opportunity to bid. The presence of two bidders suggests a degree of competition, which is generally favorable for price discovery and potentially achieving better value. However, the ultimate effectiveness of this competition in driving down costs depends on the specific requirements of the PMA and the number of truly qualified and competitive bidders.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple companies to vie for the contract, theoretically leading to more competitive pricing and a wider range of innovative solutions.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the operational readiness and capability of the USS AMERICA (LHA-6). Services delivered likely include program management, maintenance, repair, or assembly related to the vessel's systems. The geographic impact is centered around the vessel's homeport and maintenance facilities, primarily in San Diego, California. Workforce implications include skilled labor in shipbuilding, repair, and program management within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific detail on 'PMA' makes it difficult to assess the full scope and potential for cost overruns.
The contract value, while competitively bid, may still represent a significant cost for the services rendered.
Reliance on a single prime contractor for complex vessel support can create dependencies.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Fixed-price contract type helps to control costs and manage budget predictability.
Contractor BAE Systems has a significant presence and experience in naval shipbuilding and support.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically the shipbuilding and repair sector. This sector is characterized by high barriers to entry, specialized labor, and significant government investment. The market size for naval shipbuilding and repair is substantial, driven by national security requirements. This contract for the USS AMERICA (LHA-6) PMA fits within the broader context of maintaining and modernizing the U.S. Navy's fleet, which includes numerous large-scale shipbuilding and maintenance programs.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of naval shipbuilding and repair, prime contracts are often awarded to large, established defense contractors. Subcontracting opportunities may exist for small businesses, but the extent of this is not detailed in the provided data. The impact on the small business ecosystem would depend on the specific subcontracting plans BAE Systems implements.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the fixed-price contract structure, requiring the contractor to deliver specified goods or services within the agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance metrics and oversight activities are not detailed here. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Ship Building
Amphibious Assault Ships
Fleet Readiness
Defense Logistics

Risk Flags

Ambiguity in contract scope ('PMA').
Potential for quality compromises under fixed-price if contractor faces cost pressures.
Limited public data on specific performance metrics and value benchmarks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.3 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. USS AMERICA (LHA-6) PMA

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 $34.3 million.

What is the period of performance?

Start: 2018-01-18. End: 2019-03-08.

What specific services are included under the 'PMA' designation for the USS AMERICA (LHA-6)?

The 'PMA' designation in this context likely refers to Program Management, Maintenance, and/or Assembly. For the USS AMERICA (LHA-6), a large amphibious assault ship, this could encompass a wide range of activities. It might include overseeing the execution of maintenance schedules, managing repair projects, coordinating upgrades, ensuring logistical support, and potentially assembling or integrating new systems. Without further clarification from the contract documentation, the precise scope remains ambiguous. Understanding the specific deliverables is crucial for assessing the value and performance of the contract, as 'maintenance' could range from routine checks to major overhauls, and 'assembly' could relate to new installations or modifications.

How does the $34.3 million award compare to historical spending on similar naval vessel support contracts?

Comparing the $34.3 million award requires context regarding the specific services rendered under the 'PMA' and the class of vessel. For a large, complex platform like the LHA-6 (America-class amphibious assault ship), this amount could represent a significant portion of its lifecycle support budget or a specific major maintenance availability. Historical data for similar contracts, such as those for other LHA or LHD class ships, would be necessary for a meaningful comparison. Factors like the age of the vessel, the scope of work (e.g., routine maintenance vs. major modernization), and the prevailing economic conditions at the time of award all influence cost. A preliminary assessment suggests it's a substantial sum, typical for major naval vessel support, but detailed benchmarking is needed.

What are the key performance indicators (KPIs) used to evaluate BAE Systems' performance on this contract?

Specific Key Performance Indicators (KPIs) for this contract are not publicly detailed in the provided data. However, for naval vessel support contracts, common KPIs typically revolve around schedule adherence (completing work by the contracted dates), cost control (staying within the fixed price), quality of work (meeting technical specifications and standards), and operational readiness impact (minimizing downtime and ensuring the vessel's systems function as intended). For a Program Management, Maintenance, and Assembly contract, KPIs might also include the efficiency of resource allocation, the effectiveness of risk mitigation, and successful integration of any new systems or repairs. The Navy would likely have internal metrics to track these aspects throughout the contract's duration.

What is the potential risk associated with the fixed-price contract type for this naval support work?

The fixed-price contract type (PT: FIRM FIXED PRICE) generally shifts the risk of cost overruns to the contractor, BAE Systems. This is advantageous for the government as it provides budget certainty. However, risks remain. If the scope of work proves more complex or time-consuming than anticipated by BAE Systems, they may incur losses or be incentivized to cut corners on quality to maintain profitability, potentially impacting the long-term reliability of the USS AMERICA (LHA-6). Conversely, if BAE Systems significantly underbid the contract, they might face financial distress. Effective oversight by the Navy is crucial to ensure the contractor maintains quality standards despite the fixed-price constraint and to manage any scope creep through formal change order processes.

How does this contract fit into the broader context of U.S. Navy shipbuilding and maintenance spending?

This contract for the USS AMERICA (LHA-6) PMA is a component of the U.S. Navy's substantial annual spending on shipbuilding, conversion, and repair. The Navy operates a large and aging fleet, necessitating continuous investment in maintenance, modernization, and new construction to maintain operational readiness and strategic advantage. Contracts like this, even for individual vessels, contribute to the overall health and capability of the naval force. The spending reflects the high cost associated with maintaining technologically advanced platforms and the importance placed on ensuring the availability of key assets like the America-class amphibious assault ships, which are critical for power projection and humanitarian assistance operations.

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: N0002416R4401

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: BAE Systems PLC (UEI: 217304393)

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

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: $36,704,560

Exercised Options: $34,303,482

Current Obligation: $34,303,482

Subaward Activity

Number of Subawards: 151

Total Subaward Amount: $30,208,758

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002416D4419

IDV Type: IDC

Timeline