DoD awards $39.6M for Littoral Combat Ship maintenance, with BAE Systems securing the contract

Contract Overview

Contract Amount: $39,649,568 ($39.6M)

Contractor: BAE Systems Maritime Solutions SAN Diego Inc.

Awarding Agency: Department of Defense

Start Date: 2024-02-12

End Date: 2025-11-05

Contract Duration: 632 days

Daily Burn Rate: $62.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C420A, USS OAKLAND (LCS-24) FY24 DSRA DELIVERY ORDER

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $39.6 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC. for work described as: C420A, USS OAKLAND (LCS-24) FY24 DSRA DELIVERY ORDER Key points: 1. Contract value represents a significant investment in naval readiness and fleet sustainment. 2. BAE Systems, a major defense contractor, has a substantial presence in shipbuilding and repair. 3. The contract's firm-fixed-price structure aims to control costs, but requires careful monitoring of performance. 4. This delivery order is part of a larger framework for maintaining the LCS class of vessels. 5. The duration of the contract suggests a comprehensive scope of work for the USS Oakland. 6. Geographic concentration in California may indicate regional industrial capacity and workforce reliance.

Value Assessment

Rating: good

The contract value of $39.6 million for the USS Oakland's DSRA appears reasonable given the scope of work for a Littoral Combat Ship. While direct comparisons are difficult without specific task details, maintenance and repair for complex naval vessels are inherently costly. The firm-fixed-price nature suggests an expectation of predictable costs, but the ultimate value-for-money will depend on the quality and timeliness of the services rendered by BAE Systems Maritime Solutions.

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 bidders had the opportunity to submit proposals. The presence of 3 bidders suggests a competitive environment, which typically drives better pricing and service offerings. This level of competition is favorable for the government and taxpayers, as it allows for a thorough evaluation of technical capabilities and cost proposals.

Taxpayer Impact: Full and open competition generally leads to more competitive pricing, potentially saving taxpayer dollars compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring the USS Oakland is maintained. Services delivered include Dry-docking, Ship's Availability (DSRA), and associated maintenance for the USS Oakland. The geographic impact is concentrated in San Diego, California, supporting the regional naval infrastructure and associated workforce. Workforce implications include employment for skilled trades and technical personnel within BAE Systems' San Diego facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise during maintenance, despite the firm-fixed-price structure.
Dependence on a single contractor for critical maintenance could pose risks if performance issues emerge.
The long duration of the contract requires sustained oversight to ensure adherence to specifications and timelines.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Firm-fixed-price contract type helps to control costs and provides budget certainty.
BAE Systems is an established defense contractor with significant experience in naval shipbuilding and repair.

Sector Analysis

This contract falls within the broader shipbuilding and repair sector, a critical component of the U.S. defense industrial base. The market is characterized by high barriers to entry, specialized labor requirements, and significant government investment. Spending on naval vessel maintenance and modernization is substantial, reflecting the ongoing need to maintain a technologically advanced and ready fleet. Comparable spending benchmarks would involve other major maintenance availabilities for similar naval platforms.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While BAE Systems is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on BAE Systems' procurement practices and the specific needs of the maintenance work.

Oversight & Accountability

Oversight will be provided by the Department of the Navy, likely through contracting officers' representatives (CORs) and quality assurance personnel. Transparency is facilitated by the contract award being publicly available. Accountability measures are inherent in the firm-fixed-price contract, with penalties or remedies for non-performance. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Littoral Combat Ship (LCS) Program
Naval Ship Maintenance and Repair Contracts
Defense Industrial Base Sustainment
Shipbuilding and Repair Services

Risk Flags

Potential for schedule delays
Cost growth risk despite FFP
Contractor performance monitoring required
Dependence on regional industrial capacity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.6 million to BAE SYSTEMS MARITIME SOLUTIONS SAN DIEGO INC.. C420A, USS OAKLAND (LCS-24) FY24 DSRA 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 $39.6 million.

What is the period of performance?

Start: 2024-02-12. End: 2025-11-05.

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

BAE Systems Maritime Solutions, a subsidiary of BAE Systems, has a significant history of performing complex maintenance, repair, and overhaul (MRO) services for various naval vessels, including destroyers, cruisers, and amphibious assault ships. Their San Diego facility is a key player in supporting the U.S. Pacific Fleet. While specific performance metrics for past LCS DSRA contracts are not detailed here, the company's long-standing relationship with the Navy and its extensive infrastructure suggest a capacity to handle such requirements. However, a deeper dive into past performance reviews, on-time delivery rates, and cost performance on comparable contracts would provide a more robust assessment of their reliability and efficiency for this specific USS Oakland delivery order.

How does the $39.6 million cost compare to similar Littoral Combat Ship maintenance contracts?

Directly comparing the $39.6 million cost for this specific DSRA delivery order to other LCS maintenance contracts is challenging without detailed scope-of-work breakdowns and the specific maintenance periods involved. Littoral Combat Ship maintenance can vary significantly based on the class variant (Freedom or Independence), the extent of modernization or repair required, and the specific availability period. However, major availabilities for naval vessels of this complexity typically run into tens of millions of dollars. The firm-fixed-price nature of this contract suggests the Navy sought to establish a clear cost ceiling. Benchmarking against historical data for similar DSRA periods on other LCS hulls, adjusted for inflation and scope, would be necessary for a precise value assessment.

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

The primary risks for the Navy in this contract include potential performance deficiencies by the contractor, BAE Systems Maritime Solutions, which could lead to delays in the USS Oakland's readiness and increased costs if contract modifications are needed. Schedule slippage is a significant risk, as delays in maintenance can impact fleet deployment schedules. Cost risk, while mitigated by the firm-fixed-price structure, could still materialize if unforeseen technical issues require extensive rework or if the initial cost estimate did not fully capture the complexity of the required maintenance. Furthermore, a heavy reliance on a single contractor for critical maintenance in a specific region could pose a logistical risk if the contractor faces operational challenges.

How effective is the firm-fixed-price contract type in ensuring program effectiveness for naval maintenance?

The firm-fixed-price (FFP) contract type is generally considered effective in ensuring program effectiveness for naval maintenance by establishing a clear cost ceiling and incentivizing the contractor to control costs and manage the schedule efficiently. For the Navy, FFP provides budget certainty, reducing the risk of cost overruns. It places the burden of managing performance risks and unforeseen difficulties on the contractor. However, the effectiveness of FFP hinges on the government's ability to accurately define the scope of work upfront. If the scope is poorly defined or if significant unforeseen issues arise, the contractor may be disincentivized to perform additional necessary work, or the government may need to issue costly contract modifications, potentially negating the cost-control benefits.

What are the historical spending patterns for Littoral Combat Ship maintenance and repair?

Historical spending on Littoral Combat Ship (LCS) maintenance and repair has been substantial and has evolved as the program matured. Early in the program, maintenance costs were a point of concern, with some analyses suggesting they were higher than initially projected. Over time, the Navy has worked to stabilize and optimize maintenance strategies, including the use of longer-term sustainment contracts and more predictable availability periods. Annual spending can fluctuate significantly based on the number of ships undergoing major maintenance availabilities and the specific scope of work required for each hull. The total lifecycle cost, including maintenance, is a critical factor in the overall assessment of the LCS program's affordability.

What is the significance of the contract being awarded in California for naval readiness?

The significance of this contract being awarded in California, specifically San Diego, relates to the concentration of naval assets and the established defense industrial base in the region. San Diego is a major homeport for the U.S. Pacific Fleet, including numerous LCS. Having maintenance capabilities located near these operational forces reduces transit times for ships needing repair and allows for quicker turnarounds, thereby enhancing naval readiness. The presence of experienced shipyards like BAE Systems in California is crucial for sustaining these forward-deployed or regionally based assets. This geographic proximity facilitates closer collaboration between the fleet and the maintenance provider, potentially improving communication and responsiveness.

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: N0002417R4325

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

Financial Breakdown

Contract Ceiling: $40,670,994

Exercised Options: $39,649,568

Current Obligation: $39,649,568

Actual Outlays: $13,374,899

Subaward Activity

Number of Subawards: 161

Total Subaward Amount: $10,977,927

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002418D4325

IDV Type: IDC

Timeline