Navy awards $27.2M BOA for LCS 16 PSA execution to Austal USA, LLC

Contract Overview

Contract Amount: $27,194,016 ($27.2M)

Contractor: Austal USA, LLC

Awarding Agency: Department of Defense

Start Date: 2019-08-12

End Date: 2020-10-31

Contract Duration: 446 days

Daily Burn Rate: $61.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: POST DELIVERY - BASIC ORDERING AGREEMENT (BOA) ITEM 0001 LCS 16 PSA EXECUTION

Place of Performance

Location: MOBILE, MOBILE County, ALABAMA, 36610

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $27.2 million to AUSTAL USA, LLC for work described as: POST DELIVERY - BASIC ORDERING AGREEMENT (BOA) ITEM 0001 LCS 16 PSA EXECUTION Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns. 3. The contract duration is 446 days, indicating a medium-term project. 4. The award was a Delivery Order against a Basic Ordering Agreement (BOA). 5. The North American Industry Classification System (NAICS) code is 336611, Ship Building and Repairing. 6. The contract was awarded to Austal USA, LLC, a known entity in shipbuilding.

Value Assessment

Rating: fair

Benchmarking the value of this specific BOA item is challenging without more detailed cost breakdowns and comparisons to similar shipbuilding support services. The Cost Plus Fixed Fee (CPFF) contract type inherently carries risks of cost escalation, as the government pays actual costs plus a fixed fee. Without knowing the fixed fee percentage or the total estimated cost, a definitive value-for-money assessment is difficult. However, the total award amount of $27.2 million for a 446-day execution period suggests a significant investment in shipbuilding support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach is typically used when only one source is capable of fulfilling the requirement, or in situations where a specific existing contract vehicle is leveraged. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. The justification for a sole-source award would need to be thoroughly documented to ensure it was appropriate.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price through competitive bidding, potentially leading to higher costs for taxpayers.

Public Impact

The primary beneficiaries are the Department of the Navy and its shipbuilding programs. The services delivered are related to the execution of a Program Support Activity (PSA) for Littoral Combat Ship (LCS) 16. The geographic impact is likely concentrated around the contractor's facilities in Alabama, where Austal USA is located. Workforce implications include employment for skilled labor in shipbuilding and repair sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing.
Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Lack of detailed cost breakdown makes value assessment difficult.
Limited transparency on the justification for sole-source award.

Positive Signals

Award to an established shipbuilding contractor (Austal USA).
Contract supports critical Navy shipbuilding programs (LCS).
Basic Ordering Agreement (BOA) structure can streamline future task orders.

Sector Analysis

The shipbuilding and repair industry is a critical sector for national defense and economic activity. This contract falls within the broader defense industrial base, specifically supporting naval vessel construction and maintenance. The NAICS code 336611 covers establishments primarily engaged in building and repairing ships and boats. The market is characterized by large, specialized firms capable of handling complex, high-value projects. Benchmarking this specific BOA item against broader shipbuilding contracts is difficult, but it represents a component of the overall spending on naval fleet readiness and expansion.

Small Business Impact

This contract does not appear to have a small business set-aside. As a sole-source award to a large prime contractor, there is no direct indication of subcontracting opportunities for small businesses within this specific award. However, the prime contractor, Austal USA, may have its own small business subcontracting goals and plans for other parts of its operations or larger contracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, the justification and execution would be subject to internal review and potentially oversight from the Government Accountability Office (GAO) if protests were filed. Transparency regarding the specific details of the sole-source justification and the breakdown of costs within the CPFF structure would enhance accountability.

Related Government Programs

Littoral Combat Ship (LCS) Program
Naval Shipbuilding Contracts
Ship Building and Repairing Services
Department of the Navy Procurement

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited price competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.2 million to AUSTAL USA, LLC. POST DELIVERY - BASIC ORDERING AGREEMENT (BOA) ITEM 0001 LCS 16 PSA EXECUTION

Who is the contractor on this award?

The obligated recipient is AUSTAL USA, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $27.2 million.

What is the period of performance?

Start: 2019-08-12. End: 2020-10-31.

What is the track record of Austal USA, LLC with the Department of Defense, particularly in shipbuilding and repair?

Austal USA, LLC has a significant track record with the Department of Defense, primarily as a builder of U.S. Navy ships. They are known for constructing the Independence-class Littoral Combat Ships (LCS) and the Spearhead-class Expeditionary Fast Transport (EPF) vessels. Their experience includes managing complex shipbuilding programs, adhering to stringent military specifications, and delivering vessels on schedule and within budget for many projects. However, like many large defense contractors, they have also faced scrutiny and challenges on specific contracts related to cost, schedule, and performance. This particular contract, a Delivery Order against a BOA for PSA execution, suggests a supporting role rather than primary vessel construction, but still leverages their core shipbuilding expertise.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of value for money for shipbuilding support services?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not precisely defined, or when there is uncertainty about the costs involved, such as in research and development or complex support services. In this case, the government pays the contractor's actual allowable costs plus a predetermined fixed fee, which represents the contractor's profit. While CPFF provides flexibility, it carries a higher risk of cost overruns compared to fixed-price contracts, as the contractor is incentivized to incur costs to earn a larger fee (though the fee itself is fixed). For shipbuilding support services, a fixed-price contract might offer better value if the scope is well-defined. However, if the work involves unforeseen technical challenges or evolving requirements, CPFF can be appropriate, provided robust oversight is in place to control costs and ensure the fee remains reasonable relative to the effort.

What are the potential risks associated with a sole-source award for this type of service?

The primary risk associated with a sole-source award is the lack of price competition. Without multiple bidders vying for the contract, the government may not achieve the lowest possible price. This can lead to higher costs for taxpayers. Additionally, sole-source awards can sometimes indicate a lack of market research or an over-reliance on a single contractor, potentially stifling innovation and reducing overall market responsiveness. There's also a risk that the contractor may not feel the same pressure to perform efficiently or cost-effectively as they would in a competitive environment. Robust justification and oversight are crucial to mitigate these risks.

What does the award of a Delivery Order against a Basic Ordering Agreement (BOA) imply about the procurement process?

A Basic Ordering Agreement (BOA) is not a contract itself but rather a written instrument of understanding executed between a government agency and a contractor. It sets forth the terms and conditions that will apply to future contracts (orders) between the parties during the contract period. Awarding a Delivery Order against a BOA means that a specific task or requirement has been defined, and a formal order has been placed under the pre-established terms of the BOA. This approach can streamline the procurement process for recurring or anticipated needs, as many of the contractual terms have already been negotiated. However, the specific terms of the BOA and the nature of the competition for the BOA itself are critical to understanding the overall value and fairness of subsequent orders.

How does this contract fit into the broader context of Littoral Combat Ship (LCS) program spending?

This contract, valued at approximately $27.2 million for Program Support Activity (PSA) execution for LCS 16, represents a component of the overall significant investment in the Littoral Combat Ship (LCS) program. The LCS program has been a major focus for the Navy, involving the construction and sustainment of a new class of warships designed for various missions. Spending on LCS includes ship construction, research and development, training, maintenance, and support services like PSA. This specific award contributes to the operational readiness and execution phase of one particular LCS vessel. Understanding its place requires looking at the total lifecycle costs of the LCS program, which have been substantial and subject to ongoing review and adjustments by the Navy and Congress.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002414R2304

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Austal Limited

Address: 1 DUNLAP DR, MOBILE, AL, 36610

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $29,244,561

Exercised Options: $29,244,561

Current Obligation: $27,194,016

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002415G2304

IDV Type: BOA

Timeline