BAE Systems awarded $31.7M for USS Fitzgerald FY23 SRA, highlighting critical ship maintenance needs

Contract Overview

Contract Amount: $31,680,208 ($31.7M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2023-01-17

End Date: 2023-12-15

Contract Duration: 332 days

Daily Burn Rate: $95.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C420A USS FITZGERALD (DDG-62) FY23 SRA DELIVERY ORDER

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $31.7 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: C420A USS FITZGERALD (DDG-62) FY23 SRA DELIVERY ORDER Key points: 1. This contract addresses essential maintenance for a key naval asset, ensuring operational readiness. 2. The award was made under full and open competition, suggesting a competitive bidding process. 3. The fixed-price nature of the contract shifts performance risk to the contractor. 4. The duration of the contract indicates a significant scope of work for ship repair. 5. The geographic location of the award in California may reflect regional shipbuilding capabilities.

Value Assessment

Rating: good

The contract value of $31.7 million for a Ship Repair Availability (SRA) for a DDG-62 class destroyer appears reasonable given the complexity of modern naval vessel maintenance. Benchmarking against similar SRAs for destroyers would provide a more precise value-for-money assessment, but the scope typically includes hull, mechanical, and electrical systems overhauls. The firm-fixed-price contract type suggests that the government has a clear understanding of the requirements and has negotiated a price that includes contractor profit and risk.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified contractors were solicited and allowed to bid. The presence of 3 bidders suggests a healthy level of competition for this type of specialized service. This competitive environment is expected to drive more favorable pricing and service offerings for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a marketplace where contractors strive to offer the best value, potentially leading to cost savings and higher quality services.

Public Impact

The U.S. Navy benefits from the enhanced operational readiness of the USS Fitzgerald. This contract supports critical ship maintenance and repair services, ensuring the vessel's seaworthiness. The primary geographic impact is in San Diego, California, where the ship is likely homeported or undergoing repairs. The contract supports skilled labor within the maritime repair industry in the San Diego region.

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 BAE Systems' specialized facilities and workforce in San Diego.
Risk of schedule delays impacting the ship's availability for operational deployments.

Positive Signals

Firm-fixed-price contract structure transfers cost risk to the contractor.
Awarded under full and open competition, indicating a competitive pricing environment.
The contractor, BAE Systems, is a major defense industrial base participant with extensive experience in naval shipbuilding and repair.

Sector Analysis

The Ship Building and Repairing sector (NAICS 336611) is a critical component of the defense industrial base, supporting the maintenance and modernization of naval fleets. This contract falls within the broader defense sector, specifically focusing on sustainment and readiness. Spending in this area is essential for maintaining the operational capability of naval vessels. Comparable spending benchmarks would involve analyzing other Ship Repair Availability (SRA) contracts for similar classes of destroyers.

Small Business Impact

This contract was awarded to BAE Systems Maritime Solutions, a large prime contractor, and there is no indication of a small business set-aside. While the prime contract is not set aside, large defense contractors are often required to meet subcontracting goals with small businesses. The extent to which BAE Systems will utilize small businesses for specialized repair services or component supply will determine the downstream impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will be provided by the Department of the Navy, likely through contracting officers and program managers responsible for naval vessel maintenance. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified services within the agreed-upon price. Transparency is facilitated by the public nature of contract awards, though detailed performance metrics may not be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance Contracts
Ship Repair and Alterations
DDG-51 Class Destroyer Sustainment
Defense Readiness Contracts
Naval Fleet Modernization

Risk Flags

Potential for schedule slippage
Risk of unforeseen repair requirements
Dependence on contractor's specialized workforce

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.7 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. C420A USS FITZGERALD (DDG-62) FY23 SRA DELIVERY ORDER

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 $31.7 million.

What is the period of performance?

Start: 2023-01-17. End: 2023-12-15.

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

BAE Systems Maritime Solutions has a significant track record in naval shipbuilding and repair, including extensive work on destroyers and other surface combatants. They are a major player in the U.S. defense industrial base, frequently awarded contracts for complex maintenance, modernization, and overhaul projects. Their experience often includes managing large-scale availabilities, requiring sophisticated project management, skilled labor, and specialized facilities. Historical data from the Federal Procurement Data System (FPDS) would show numerous awards to BAE Systems for similar services across various naval platforms, indicating a strong capability to execute contracts like the SRA for the USS Fitzgerald. Assessing the performance history on these past contracts, including on-time delivery and adherence to budget, would provide further insight into their reliability.

How does the $31.7 million cost compare to previous SRAs for the USS Fitzgerald or similar destroyers?

Direct comparison of this $31.7 million award to previous Ship Repair Availabilities (SRAs) for the USS Fitzgerald or similar DDG-51 class destroyers requires access to historical contract data. However, the cost of major ship maintenance can fluctuate significantly based on the scope of work, the specific systems requiring repair or overhaul, the prevailing labor rates, and the economic conditions at the time of award. Factors such as the age of the vessel, the extent of modernization required, and any unforeseen emergent issues discovered during the availability can also impact the final cost. Generally, SRAs for destroyers are multi-million dollar efforts, and this figure appears within the expected range for a comprehensive availability. A detailed analysis would involve comparing the specific work items and duration (332 days) against similar past availabilities.

What are the primary risks associated with this specific contract for the USS Fitzgerald?

The primary risks associated with this contract include potential schedule delays and cost overruns, despite the firm-fixed-price structure. Unforeseen issues discovered during the repair availability, such as unexpected hull damage, complex system failures, or the need for additional modernization beyond the initial scope, could necessitate contract modifications or claims, potentially increasing the overall cost to the government. Performance risks also exist, relating to the quality of the repairs and the contractor's ability to meet technical specifications. Furthermore, the availability of specialized labor and parts, particularly in a high-demand environment, could pose a risk to timely completion. The geographic concentration of the work in California might also present logistical challenges or increased costs compared to other locations.

How effective is the firm-fixed-price contract type in managing costs for naval ship repair?

The firm-fixed-price (FFP) contract type is generally considered effective in managing costs for naval ship repair when the scope of work is well-defined and understood upfront. Under an FFP contract, the contractor assumes the majority of the financial risk, agreeing to a set price regardless of their actual costs. This incentivizes the contractor to control expenses and perform efficiently. For routine maintenance and planned overhauls where requirements are predictable, FFP can lead to significant cost savings for the government. However, if significant unforeseen problems arise during the repair availability that were not reasonably foreseeable at the time of contract award, the FFP structure can lead to disputes or requests for equitable adjustments, potentially negating some of the cost control benefits. The success of FFP in this context often hinges on the thoroughness of the initial technical assessment and the clarity of the contract specifications.

What is the historical spending trend for Ship Repair and Alterations (SRA) within the Department of the Navy?

Historical spending trends for Ship Repair and Alterations (SRA) within the Department of the Navy (DoN) show a consistent and substantial investment required to maintain the operational readiness of its vast fleet. Annual spending on SRAs typically runs into the billions of dollars, reflecting the complex and ongoing maintenance needs of aircraft carriers, submarines, destroyers, cruisers, and amphibious assault ships. Factors influencing these trends include the age of the fleet, geopolitical demands requiring extended deployments, new technological insertions requiring upgrades, and the availability of shipyard capacity. Budgetary allocations for SRAs are a critical component of the DoN's overall shipbuilding and conversion, and operation and maintenance accounts. Analyzing multi-year spending data reveals cyclical patterns related to major maintenance availabilities and modernization programs, underscoring the continuous requirement for these services.

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: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

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: $42,281,025

Exercised Options: $31,680,208

Current Obligation: $31,680,208

Actual Outlays: $20,102,625

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002416D4416

IDV Type: IDC

Timeline