Navy awards $8M contract for DDG modernization backfit, with delivery expected in 2027

Contract Overview

Contract Amount: $8,002,304 ($8.0M)

Contractor: Delphinus Engineering, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-05-22

End Date: 2027-02-28

Contract Duration: 1,012 days

Daily Burn Rate: $7.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PROVIDE MANAGEMENT, LABOR, MATERIAL AND INSTALLATION SERVICES TO ACCOMPLISH DDG MODERNIZATION BACKFIT (DDGM BF) MONITORING SYSTEM ALTERATION INSTALLATION ON BOARD USS HALSEY (DDG-97).

Place of Performance

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

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $8.0 million to DELPHINUS ENGINEERING, INC. for work described as: PROVIDE MANAGEMENT, LABOR, MATERIAL AND INSTALLATION SERVICES TO ACCOMPLISH DDG MODERNIZATION BACKFIT (DDGM BF) MONITORING SYSTEM ALTERATION INSTALLATION ON BOARD USS HALSEY (DDG-97). Key points: 1. Contract focuses on essential modernization of monitoring systems for a specific naval vessel. 2. The award was made under full and open competition, suggesting a competitive bidding process. 3. The contract type is Cost Plus Fixed Fee, which can introduce cost overrun risks. 4. The duration of the contract extends over two years, indicating a significant project timeline. 5. The contractor, Delphinus Engineering, Inc., has secured this delivery order for a critical naval upgrade. 6. The project is situated in California, potentially impacting local shipbuilding and repair sectors.

Value Assessment

Rating: fair

The contract value of $8,007,903.66 for ship modernization services appears within a reasonable range for specialized naval retrofitting. Benchmarking against similar DDG modernization projects is difficult without more specific details on the scope of work. However, the Cost Plus Fixed Fee (CPFF) contract type introduces a degree of uncertainty regarding the final cost, as it allows for the reimbursement of actual costs plus a fixed fee. This structure can sometimes lead to costs exceeding initial estimates if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and evaluated. The presence of two bids suggests a moderate level of competition for this specific delivery order. While full and open competition is generally preferred for ensuring fair pricing, the limited number of bidders (two) might suggest a specialized niche or limited capacity among potential contractors for this type of work.

Taxpayer Impact: Taxpayers benefit from the competitive process, which aims to secure the best value for the government. However, with only two bidders, the potential for significant price reductions may be constrained compared to scenarios with a larger pool of interested and capable companies.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, specifically for the USS Halsey (DDG-97). The contract delivers crucial monitoring system alterations and installations, enhancing the vessel's combat effectiveness and maintainability. The geographic impact is localized to California, where the installation and modernization work will likely take place. The contract supports specialized labor within the shipbuilding and repair sector, potentially creating or sustaining jobs for skilled technicians and engineers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type may lead to cost overruns if not closely monitored.
Limited competition (2 bidders) could indicate a specialized market, potentially impacting price competitiveness.
The project's success is dependent on the specialized technical expertise of the contractor.

Positive Signals

Awarded under full and open competition, suggesting a fair and transparent process.
The contract addresses critical modernization needs for a naval vessel, enhancing national security.
The contractor has been selected for a specific delivery order, indicating prior vetting or capability.

Sector Analysis

The shipbuilding and repairing sector (NAICS 336611) is a critical component of the defense industrial base. This contract falls within the broader defense sector, specifically focusing on naval vessel maintenance and modernization. Spending in this area is driven by the need to maintain fleet readiness and incorporate technological upgrades. Comparable spending benchmarks would typically involve other modernization contracts for destroyers or similar naval platforms, which often run into millions of dollars depending on the scope.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific contract, as the 'ss' (small business set-aside) field is false and 'sb' (small business) is also false. This suggests the contract was not specifically set aside for small businesses, and the prime contractor is likely a larger entity. There is no explicit information on subcontracting plans for small businesses within the provided data, which warrants further investigation to understand the potential impact on the small business ecosystem within the defense contracting space.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy, with specific program managers responsible for monitoring progress, cost, and quality. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency may be enhanced through contract reporting mechanisms and potential reviews by the Government Accountability Office (GAO) or the Department of Defense's Inspector General, particularly if cost concerns arise.

Related Government Programs

Naval Vessel Modernization Programs
Shipbuilding and Repair Contracts
Defense Readiness Initiatives
DDG Class Destroyer Support
Naval Combat Systems Upgrades

Risk Flags

Potential for cost overruns due to CPFF contract type.
Limited number of bidders may impact price competitiveness.
Dependence on specialized contractor expertise.
Scope of 'monitoring system alteration' requires clear definition and oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.0 million to DELPHINUS ENGINEERING, INC.. PROVIDE MANAGEMENT, LABOR, MATERIAL AND INSTALLATION SERVICES TO ACCOMPLISH DDG MODERNIZATION BACKFIT (DDGM BF) MONITORING SYSTEM ALTERATION INSTALLATION ON BOARD USS HALSEY (DDG-97).

Who is the contractor on this award?

The obligated recipient is DELPHINUS ENGINEERING, 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 $8.0 million.

What is the period of performance?

Start: 2024-05-22. End: 2027-02-28.

What is the historical performance record of Delphinus Engineering, Inc. on similar naval modernization contracts?

Assessing the historical performance of Delphinus Engineering, Inc. on similar naval modernization contracts requires access to detailed contract databases and performance reviews. Generally, federal agencies maintain performance records (e.g., Contractor Performance Assessment Reporting System - CPARS) that document a contractor's past performance regarding cost, schedule, technical quality, and management. Without direct access to these specific records for Delphinus Engineering on DDG modernization projects, it's difficult to provide a definitive assessment. However, the award of this contract by the Department of the Navy suggests that the agency has reviewed the contractor's past performance and found it acceptable for this type of work. Further due diligence would involve examining past contract awards, modifications, and any reported issues or commendations related to their work on naval vessels.

How does the estimated cost of this DDG modernization backfit compare to similar projects on other naval vessels?

Directly comparing the $8,007,903.66 cost of this DDG modernization backfit to similar projects is challenging without a standardized database of comparable naval modernization efforts. The scope of 'monitoring system alteration installation' can vary significantly between vessels and modernization packages. Factors such as the specific systems being upgraded, the complexity of integration, the vessel's operational tempo, and the required labor hours all influence cost. Typically, modernization projects for naval destroyers can range from several million to tens of millions of dollars. This particular contract appears to be a mid-range value for a specific system upgrade, rather than a comprehensive overhaul. A more precise comparison would necessitate identifying projects with identical or highly similar technical specifications and vessel classes.

What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this project?

The primary risk associated with the Cost Plus Fixed Fee (CPFF) contract type for this DDG modernization project is the potential for cost overruns. While the 'fixed fee' component provides the contractor with a predetermined profit margin, the 'cost plus' element means the government reimburses the contractor for allowable costs incurred. If the contractor's actual costs exceed initial estimates due to unforeseen technical challenges, material price increases, or inefficient performance, the government bears the financial burden. This necessitates robust government oversight to scrutinize costs, ensure efficiency, and prevent unnecessary expenditures. The contractor, conversely, is incentivized to control costs to maximize their profit margin, as the fee is fixed, but the risk of cost escalation still lies primarily with the government.

What is the expected impact of this contract on the USS Halsey's operational readiness and capabilities?

This contract is expected to significantly enhance the USS Halsey's (DDG-97) operational readiness and capabilities by modernizing its monitoring systems. Upgraded monitoring systems are crucial for maintaining situational awareness, tracking system performance, and ensuring the reliability of onboard equipment. This modernization likely addresses obsolescence issues, improves diagnostic accuracy, and potentially integrates new technologies that enhance the ship's ability to detect, track, and engage threats. By ensuring these systems are current and functioning optimally, the contract contributes directly to the warfighting effectiveness and overall survivability of the USS Halsey, allowing it to perform its missions more reliably and efficiently.

How has federal spending on ship modernization and repair evolved over the past five years, and where does this contract fit?

Federal spending on ship modernization and repair has generally remained robust, driven by the ongoing need to maintain and upgrade the U.S. Navy's fleet readiness and technological superiority. While specific figures fluctuate annually based on budget allocations and strategic priorities, the overall trend indicates consistent investment in maintaining aging vessels and incorporating new technologies. This $8 million contract for the DDG modernization backfit fits within this broader spending pattern as a targeted investment in a specific platform's systems. It represents a component of the larger lifecycle management and upgrade strategy for the Navy's surface combatants, contributing to the overall modernization efforts across the fleet rather than being a standalone, exceptionally large expenditure.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N6449824Q3064

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 3803 WEST CHESTER PIKE STE 190, NEWTOWN SQUARE, PA, 19073

Business Categories: Category Business, Minority Owned Business, Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $8,515,806

Exercised Options: $8,515,806

Current Obligation: $8,002,304

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $242,970

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6449821D0018

IDV Type: IDC

Timeline