DoD's $13M shipbuilding contract with Patti Shipyards shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $13,076,066 ($13.1M)

Contractor: Patti Shipyards, Inc

Awarding Agency: Department of Defense

Start Date: 2006-08-23

End Date: 2011-09-30

Contract Duration: 1,864 days

Daily Burn Rate: $7.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 2652 MVP QUARTERS BARGE TAGGATZ

Place of Performance

Location: PENSACOLA, ESCAMBIA County, FLORIDA, 32507

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $13.1 million to PATTI SHIPYARDS, INC for work described as: 2652 MVP QUARTERS BARGE TAGGATZ Key points: 1. Contract awarded through full and open competition, indicating a broad search for qualified bidders. 2. The firm-fixed-price structure aligns costs and provides predictability for the government. 3. Awarded to a single contractor, suggesting potential limitations in market competition. 4. The contract duration of 1864 days (over 5 years) indicates a long-term need for these services. 5. The North American Industry Classification System (NAICS) code 336611 points to the shipbuilding and repair sector. 6. The contract was awarded in Florida, a state with a significant maritime industry.

Value Assessment

Rating: good

The contract's value of approximately $13 million for shipbuilding and repair services appears reasonable given the duration and the nature of the work. While specific benchmarks for comparable barge construction are not provided, the firm-fixed-price nature of the award suggests that the contractor assumed the risk for cost overruns, which is generally favorable for the government. The absence of detailed performance metrics makes a definitive value assessment challenging, but the award through full and open competition implies a degree of market validation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' suggesting that the Department of Defense actively sought bids from all responsible sources. However, the fact that only one bid was received and subsequently awarded indicates that the actual competitive landscape may have been narrower than initially anticipated. This could be due to the specialized nature of the requirement, the number of qualified shipyards, or other market dynamics.

Taxpayer Impact: While full and open competition is ideal, receiving only one bid means taxpayers may not have benefited from the most aggressive pricing that multiple competing offers could have generated. This scenario warrants further investigation into why more bids were not submitted.

Public Impact

The primary beneficiaries are the Department of Defense, which receives essential shipbuilding and repair services for its assets. The contract supports the operational readiness of naval or other maritime assets requiring specialized barge construction or maintenance. The geographic impact is concentrated in Florida, where Patti Shipyards is located, potentially supporting local jobs and the regional maritime economy. The contract likely supports a skilled workforce in shipbuilding and repair, including engineers, welders, and technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bids received (one) despite full and open competition, suggesting potential market concentration or barriers to entry.
Lack of detailed performance data makes it difficult to assess the contractor's historical performance on this specific contract.
The long contract duration could introduce risks related to technological obsolescence or changing operational requirements if not managed proactively.

Positive Signals

Awarded under a firm-fixed-price contract type, which shifts cost risk to the contractor and provides budget certainty.
The contract was competed under 'full and open' procedures, indicating an effort to maximize the pool of potential offerors.
The contract is for shipbuilding and repair, a critical capability for national defense and maritime operations.

Sector Analysis

The shipbuilding and repairing industry (NAICS 336611) is a capital-intensive sector critical for national defense, commercial shipping, and infrastructure projects. The market can be characterized by large, specialized firms capable of undertaking complex projects. Federal spending in this sector often supports naval shipbuilding, maintenance of vessels, and construction of specialized craft. Comparable spending benchmarks are highly project-specific, varying significantly based on vessel size, complexity, and materials. This contract fits within the broader defense industrial base, supporting specialized maritime assets.

Small Business Impact

There is no indication that this contract included small business set-asides, as the 'sb' field is false. Furthermore, the 'ss' field is also false, meaning it was not a small business set-aside. This suggests the contract was likely awarded to a large business capable of handling the specialized requirements of shipbuilding and repair. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in the provided data. The impact on the small business ecosystem is likely minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which penalizes the contractor for cost overruns. Transparency is facilitated by the contract award data being publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's lifecycle.

Related Government Programs

Naval Shipbuilding Programs
Maritime Vessel Maintenance Contracts
Defense Logistics Agency Contracts
Ship Repair and Conversion Contracts

Risk Flags

Single Bidder Received
Long Contract Duration
Potential Market Concentration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.1 million to PATTI SHIPYARDS, INC. 2652 MVP QUARTERS BARGE TAGGATZ

Who is the contractor on this award?

The obligated recipient is PATTI SHIPYARDS, INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $13.1 million.

What is the period of performance?

Start: 2006-08-23. End: 2011-09-30.

What is the track record of Patti Shipyards, Inc. with the Department of Defense and other federal agencies?

Patti Shipyards, Inc. has a history of contracts with the federal government, primarily within the Department of Defense. While this specific contract was awarded in 2006, the company has likely engaged in various shipbuilding, repair, and conversion projects over the years. A deeper dive into federal procurement databases like SAM.gov or FPDS would reveal the full scope of their federal contract history, including award values, contract types, and performance ratings on past projects. Understanding their past performance, particularly on similar shipbuilding or repair contracts, is crucial for assessing their reliability and capability for future endeavors. Their specialization in maritime services suggests a focused expertise that could be valuable to the government.

How does the $13 million award compare to similar shipbuilding contracts for barges awarded by the DoD?

Benchmarking this $13 million contract requires comparing it to similar barge construction or major repair contracts awarded by the Department of Defense or other maritime agencies. Factors such as barge size, capacity, material, complexity of systems (e.g., propulsion, navigation), and the specific repair or construction scope are critical. Without detailed specifications for the barges covered under this contract, a direct comparison is difficult. However, $13 million for a significant shipbuilding or major repair project over a five-year period suggests a substantial undertaking. If this contract involved the construction of new, specialized barges, the cost might be considered within a reasonable range. If it primarily covered routine maintenance or smaller repairs, it could be on the higher side, warranting closer scrutiny of the scope of work and pricing.

What are the primary risks associated with a firm-fixed-price contract for shipbuilding over a 5-year period?

The primary risk for the government in a firm-fixed-price (FFP) contract, especially one spanning over five years, is that the contractor may cut corners on quality or materials to protect their profit margin if costs escalate unexpectedly. While FFP shifts cost risk to the contractor, it requires robust government oversight to ensure the contracted scope and quality are delivered. For shipbuilding, risks include potential delays due to supply chain issues, labor shortages, or unforeseen technical challenges. Technological advancements during the contract period could also render the delivered product less optimal than newer designs. The long duration increases the exposure to these risks, necessitating strong contract management and clear performance standards.

What does the fact that only one bid was received, despite 'full and open competition,' imply about the shipbuilding market?

Receiving only one bid under 'full and open competition' for a significant contract like this suggests several possibilities about the shipbuilding market. It could indicate a highly specialized niche where few companies possess the necessary expertise, facilities, and certifications. Alternatively, it might point to significant barriers to entry, such as high capital investment requirements, stringent regulatory compliance, or long lead times for materials and components. Market consolidation, where a few large players dominate, could also be a factor. From a taxpayer perspective, this lack of robust competition raises concerns about potentially inflated pricing and reduced incentive for the awarded contractor to be highly efficient, as they face less pressure from rivals.

How has federal spending on shipbuilding and repair services evolved over the years, and where does this contract fit?

Federal spending on shipbuilding and repair services fluctuates based on national security priorities, fleet modernization needs, and the condition of existing assets. The Department of Defense is consistently a major spender in this category, funding everything from aircraft carriers and submarines to smaller vessels and support craft. This $13 million contract, awarded in 2006 for services extending to 2011, represents a specific, albeit relatively modest, investment within the broader context of naval shipbuilding and maintenance budgets, which often run into billions annually. Its place is within the segment of the market focused on specialized vessels like barges, supporting logistical or operational requirements rather than major combat platforms. Analyzing historical spending trends would reveal if such contracts are increasing or decreasing in frequency and value.

Industry Classification

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

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912BU06R0024

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 306 S PINEWOOD LN, PENSACOLA, FL, 32507

Business Categories: Category Business, Emerging Small Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $13,076,066

Exercised Options: $13,076,066

Current Obligation: $13,076,066

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline