Navy awards $3.8M contract for ship repair to Sumitomo Heavy Industries, Ltd

Contract Overview

Contract Amount: $3,808,455 ($3.8M)

Contractor: Sumitomo Heavy Industries, Ltd

Awarding Agency: Department of Defense

Start Date: 2025-05-21

End Date: 2026-04-06

Contract Duration: 320 days

Daily Burn Rate: $11.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS RALPH JOHNSON DDG114 5C1 SRA BUDL1

Plain-Language Summary

Department of Defense obligated $3.8 million to SUMITOMO HEAVY INDUSTRIES, LTD for work described as: USS RALPH JOHNSON DDG114 5C1 SRA BUDL1 Key points: 1. Contract awarded under full and open competition, suggesting a competitive bidding process. 2. The contract is for ship building and repairing services, a critical component of naval readiness. 3. Fixed-price contract type aims to control costs for the government. 4. The award is a delivery order, indicating it's part of a larger contract vehicle. 5. The duration of the contract is 320 days, suggesting a focused scope of work. 6. The North American Industry Classification System (NAICS) code 336611 points to shipbuilding and repair facilities.

Value Assessment

Rating: good

The contract value of $3.8 million for ship repair is moderate. Without specific details on the scope of work, direct comparison to similar contracts is challenging. However, the firm fixed-price nature of the award suggests an effort to establish a clear cost ceiling. Benchmarking against industry rates for specialized ship repair services would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The number of bidders is not specified, but this procurement method generally fosters price discovery and allows the government to select the most advantageous offer based on price and other factors.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is expected to drive down prices through market forces and encourage a wider range of suppliers to participate.

Public Impact

The U.S. Navy benefits from the maintenance and repair of its vessels, ensuring operational readiness. Services delivered include ship building and repairing, crucial for maintaining the fleet's structural integrity and functionality. The geographic impact is likely focused on naval bases or shipyards where the repairs will be conducted. The contract supports the maritime industrial base, potentially involving skilled labor in shipbuilding and repair.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen complexities arise during repairs, despite fixed-price structure.
Dependence on a single contractor for a specific repair task could lead to scheduling challenges if the contractor faces internal issues.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Awarded through full and open competition, suggesting a competitive market for these services.
The contract is for a defined period, allowing for focused management and oversight.

Sector Analysis

The shipbuilding and repair sector is a vital part of the defense industrial base, supporting naval operations and global maritime interests. This contract falls under the broader category of industrial services supporting defense assets. The market for specialized ship repair is often characterized by a limited number of highly skilled firms capable of undertaking complex naval vessel maintenance.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). There is no explicit information on subcontracting plans for small businesses. The impact on the small business ecosystem would depend on whether Sumitomo Heavy Industries, Ltd. engages small businesses as subcontractors for specialized services or materials.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency is generally facilitated through contract award databases, though specific performance details may be sensitive.

Related Government Programs

Naval Ship Maintenance Contracts
Shipbuilding and Repair Services
Defense Procurement

Risk Flags

Potential for scope creep if repair needs exceed initial assessment.
Dependence on contractor's ability to meet delivery schedule.
Geopolitical factors affecting international supply chains or contractor operations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.8 million to SUMITOMO HEAVY INDUSTRIES, LTD. USS RALPH JOHNSON DDG114 5C1 SRA BUDL1

Who is the contractor on this award?

The obligated recipient is SUMITOMO HEAVY INDUSTRIES, LTD.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $3.8 million.

What is the period of performance?

Start: 2025-05-21. End: 2026-04-06.

What is the historical spending pattern for ship repair and maintenance services by the Department of the Navy?

The Department of the Navy historically allocates significant funding towards ship repair and maintenance to ensure the operational readiness of its vast fleet. Annual spending can fluctuate based on the age of vessels, deployment schedules, and modernization requirements. Analyzing historical data reveals consistent investment in this area, with major contracts often awarded for complex overhauls, upgrades, and routine maintenance. The total annual expenditure can range in the billions of dollars, reflecting the scale of the U.S. Navy's shipbuilding and repair needs. Specific spending patterns are influenced by geopolitical events, defense budgets, and the lifecycle of naval assets.

How does the firm fixed-price contract type mitigate risks for the government in this ship repair contract?

A firm fixed-price (FFP) contract type is designed to provide the government with cost certainty. Under an FFP agreement, the contractor, Sumitomo Heavy Industries, Ltd., is obligated to complete the specified scope of work for a predetermined price. This shifts the risk of cost overruns from the government to the contractor. If the contractor incurs higher-than-expected costs due to inefficiencies, material price increases, or labor issues, these additional expenses are absorbed by the contractor. This structure incentivizes the contractor to manage costs effectively and perform the work efficiently to maximize their profit margin, thereby protecting the government from unexpected budget increases for this specific delivery order.

What is the typical duration and scope of 'delivery orders' within larger contract vehicles for ship repair?

A delivery order is a task-specific order issued under a larger, pre-negotiated contract vehicle, often a Basic Ordering Agreement (BOA) or Indefinite Delivery/Indefinite Quantity (IDIQ) contract. For ship repair, delivery orders typically specify the exact services required, the timeline for completion, and the associated cost for that particular task. The duration can vary widely, from short-term repairs lasting a few weeks to more extensive overhauls that might extend over several months, as indicated by the 320-day duration here. The scope is defined by the specific maintenance, repair, or upgrade needs of a particular vessel or component, ensuring that the government only procures the services it needs at the time it needs them, while having a pre-established framework for pricing and terms.

What are the potential implications of awarding ship repair contracts to international firms like Sumitomo Heavy Industries, Ltd.?

Awarding ship repair contracts to international firms like Sumitomo Heavy Industries, Ltd. can offer several potential benefits and considerations. On the positive side, it can foster international partnerships, potentially lead to competitive pricing due to global market dynamics, and leverage specialized expertise that might be unique to certain international shipyards. However, there are also strategic implications to consider, such as potential impacts on domestic shipbuilding and repair capabilities, national security concerns related to sensitive technology or vessel access, and logistical complexities. The U.S. government often balances these factors, ensuring that such awards align with broader defense industrial base strategies and security protocols.

How does the NAICS code 336611 (Shipbuilding and Repairing) inform our understanding of this contract's context?

The North American Industry Classification System (NAICS) code 336611 specifically identifies establishments primarily engaged in building and repairing ships and boats. This classification provides crucial context for the contract awarded to Sumitomo Heavy Industries, Ltd. It signifies that the work involves the complex processes of constructing, fabricating, and repairing large marine vessels. This includes activities like hull construction, outfitting, conversion, and repair of various types of ships. Understanding this NAICS code helps in benchmarking the contract against industry standards, identifying relevant market players, and assessing the specialized nature of the services required by the Department of the Navy.

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: N6264925RA023

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 19, NATSUSHIMACHO, YOKOSUKA

Business Categories: Category Business, Foreign Owned, International Organization, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $3,808,455

Exercised Options: $3,808,455

Current Obligation: $3,808,455

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6264921G0002

IDV Type: BOA

Timeline