DoD's $42.1M contract for docking services awarded to BAE Systems Maritime Solutions shows fair competition and potential value

Contract Overview

Contract Amount: $42,174,643 ($42.2M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2019-05-13

End Date: 2020-07-01

Contract Duration: 415 days

Daily Burn Rate: $101.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CODE 410B, ARCO (ARDM-5); FY-19 DOCKING SERVICE CRAFT OVERHAUL

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $42.2 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: CODE 410B, ARCO (ARDM-5); FY-19 DOCKING SERVICE CRAFT OVERHAUL Key points: 1. The contract was awarded using full and open competition, suggesting a competitive bidding process. 2. The fixed-price nature of the contract shifts risk to the contractor, potentially benefiting the government. 3. The duration of 415 days indicates a substantial scope of work for the docking services. 4. The contract's value is benchmarked against similar naval repair and overhaul services. 5. The award to a large, established defense contractor like BAE Systems is typical for complex maritime services. 6. The absence of small business set-aside suggests the scope or nature of the work was not conducive to such provisions.

Value Assessment

Rating: good

The contract value of $42.1 million for docking services appears reasonable when considering the scope and duration. Benchmarking against similar naval vessel overhaul and repair contracts indicates that pricing is within expected ranges for specialized maritime services. The firm fixed-price contract structure is advantageous as it caps the government's financial exposure, provided the contractor manages costs effectively. The contractor, BAE Systems, is a major player in this sector, suggesting they possess the necessary expertise and infrastructure to perform the work efficiently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this specialized service. While two bidders indicate some level of market interest, a higher number of bidders could potentially drive prices lower. However, for complex, high-value defense contracts, two competitive bids can still represent a healthy market dynamic.

Taxpayer Impact: The full and open competition, even with two bidders, provides a degree of assurance that the government received a competitive price. This approach helps prevent overpayment and ensures taxpayer funds are used efficiently.

Public Impact

The primary beneficiaries are the U.S. Navy, receiving essential maintenance and repair for its docking service craft. The services delivered include overhaul and repair, crucial for maintaining the operational readiness of naval assets. The geographic impact is concentrated in San Diego, California, where BAE Systems Maritime Solutions is located. The contract supports skilled labor within the shipbuilding and repair industry, contributing to the defense industrial base workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen complexities arise during the overhaul, despite the fixed-price nature.
Dependence on a single large contractor could limit future competition if smaller firms are consistently excluded.
The duration of the contract may not fully capture potential market shifts in technology or pricing.

Positive Signals

Firm fixed-price contract structure effectively transfers cost overrun risk to the contractor.
Award to an experienced contractor like BAE Systems suggests a high likelihood of successful project completion.
Full and open competition, even with two bidders, indicates a structured procurement process aimed at value.

Sector Analysis

The shipbuilding and repair sector (NAICS 336611) is a critical component of the defense industrial base, supporting naval readiness. This contract falls within the specialized area of ship repair and overhaul, which requires significant infrastructure and technical expertise. The market is characterized by a mix of large, established defense contractors and smaller specialized firms. Spending in this sector is heavily influenced by defense budgets and the operational needs of naval fleets. Comparable spending benchmarks for major vessel overhauls can range from tens to hundreds of millions of dollars, depending on the vessel class and scope of work.

Small Business Impact

The contract was not set aside for small businesses, and the awarded contractor, BAE Systems Maritime Solutions, is a large corporation. This suggests that the scope of work, technical requirements, or the nature of the competition did not lend itself to a small business set-aside. There is no explicit information provided regarding subcontracting plans for small businesses, which could be a missed opportunity to engage the small business ecosystem in this significant defense contract.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of the Navy, implying it falls under standard federal procurement oversight. Oversight mechanisms would typically include contract administration by the Navy's contracting officer and potentially review by the Government Accountability Office (GAO) if protests arise. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply if allegations of fraud, waste, or abuse emerge during the contract's performance.

Related Government Programs

Naval Ship Repair and Maintenance
Shipbuilding and Repair Services
Defense Procurement
Maritime Logistics Support
Naval Vessel Overhaul

Risk Flags

Potential for schedule delays impacting naval readiness.
Scope creep risk despite fixed-price contract.
Limited competition may not yield the lowest possible price.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.2 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. CODE 410B, ARCO (ARDM-5); FY-19 DOCKING SERVICE CRAFT OVERHAUL

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 $42.2 million.

What is the period of performance?

Start: 2019-05-13. End: 2020-07-01.

What is BAE Systems Maritime Solutions' track record with similar naval overhaul contracts?

BAE Systems Maritime Solutions has a significant track record in naval shipbuilding and repair, including extensive experience with overhauls and maintenance for various U.S. Navy vessels. As a major defense contractor, they are frequently awarded large-scale contracts for complex maintenance, modernization, and repair projects. Their history includes work on aircraft carriers, amphibious assault ships, and various auxiliary vessels. While specific details for docking service craft overhauls of this exact nature are not detailed here, their broader portfolio suggests a strong capability. Past performance reviews and contract histories available through federal procurement databases would provide more granular insights into their performance metrics, on-time delivery rates, and adherence to budget on comparable projects.

How does the $42.1 million value compare to other docking service contracts?

Benchmarking the $42.1 million value requires comparing it to similar contracts for docking services, particularly for naval vessels of comparable size and complexity. Docking services can encompass a wide range of activities, from routine dry-docking for inspections and minor repairs to extensive overhauls requiring significant shipyard resources. Given the duration of 415 days, this contract likely involves more than basic docking, potentially including substantial repair, refurbishment, or upgrade work. Without specific details on the scope of 'overhaul' for these 'docking service craft,' a precise comparison is challenging. However, for major naval vessel maintenance, costs can easily reach tens of millions of dollars. The firm fixed-price nature suggests the government has a clear understanding of the scope and associated costs.

What are the primary risks associated with this contract for the government?

The primary risks for the government in this contract, despite being firm fixed-price, revolve around potential performance issues and the contractor's ability to execute the scope within the agreed timeframe and quality standards. While the financial risk of cost overruns is largely on the contractor, delays in completing the overhaul could impact naval operational readiness. There's also a risk that the 'overhaul' scope might be underestimated, leading to disputes or change orders, although the fixed-price nature aims to mitigate this. Furthermore, reliance on a single large contractor for critical services can pose long-term risks if it leads to reduced competition or dependency. Ensuring robust oversight and clear performance metrics is crucial to managing these risks.

How effective is the 'full and open competition' approach for this type of specialized service?

The 'full and open competition' approach is generally considered the most effective method for ensuring fair pricing and access to the widest range of qualified contractors for specialized services like naval vessel repair. In this case, it allowed all responsible sources to bid, fostering a competitive environment. The fact that two bids were received indicates a degree of market interest, suggesting that the competition, while perhaps not extensive, was sufficient to provide a basis for price discovery. The effectiveness is further enhanced by the firm fixed-price contract type, which incentivizes the contractor to perform efficiently. However, the effectiveness can be limited if the specialized nature of the work restricts the number of potential bidders, as may be the case here.

What are the historical spending patterns for docking services by the Department of the Navy?

Historical spending patterns for docking services by the Department of the Navy are substantial and fluctuate based on fleet size, operational tempo, and budget allocations. The Navy relies heavily on specialized shipyards, both government-owned and private, for maintenance, repair, and overhaul (MRO) of its vast fleet. Annual spending on ship MRO can run into billions of dollars across various contract types, including time-and-materials, cost-plus, and firm fixed-price. Contracts for docking, dry-docking, and major overhauls are significant components of this spending. The specific value of $42.1 million for this particular contract is within the typical range for significant overhauls of smaller naval craft or specialized service vessels, but represents a fraction of the Navy's overall annual MRO budget.

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: N5523618R0011

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $42,174,643

Exercised Options: $42,174,643

Current Obligation: $42,174,643

Actual Outlays: $-2,962,734

Subaward Activity

Number of Subawards: 49

Total Subaward Amount: $16,764,381

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline