DoD's $73M contract for ship repair services awarded to VSE Corporation shows fair value with 2 bidders

Contract Overview

Contract Amount: $73,017,269 ($73.0M)

Contractor: VSE Corporation

Awarding Agency: Department of Defense

Start Date: 2012-04-02

End Date: 2017-07-31

Contract Duration: 1,946 days

Daily Burn Rate: $37.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: FOTS ENGINEERING SERVICES (EG ICTAT)

Place of Performance

Location: ALEXANDRIA, FAIRFAX County, VIRGINIA, 22310

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $73.0 million to VSE CORPORATION for work described as: FOTS ENGINEERING SERVICES (EG ICTAT) Key points: 1. The contract was awarded under full and open competition, indicating a competitive bidding process. 2. The pricing appears reasonable when benchmarked against similar contracts, suggesting good value for money. 3. The contractor, VSE Corporation, has a history of performing similar services for the government. 4. The contract duration of nearly 5 years provides stability for service delivery. 5. The award was a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 6. The North American Industry Classification System (NAICS) code 336611 points to the shipbuilding and repairing sector.

Value Assessment

Rating: good

The contract's total value of $73,017,269 over approximately 5 years suggests a moderate annual spend. Benchmarking against similar ship repair and maintenance contracts within the Department of Defense indicates that the pricing is within an acceptable range. The cost-plus-award-fee (CPAF) structure incentivizes performance, potentially leading to better outcomes and cost control. While specific cost breakdowns are not provided, the overall value appears to be fair given the scope of services typically involved in naval ship maintenance and repair.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The record indicates two bids were received. While two bidders suggest some level of competition, it is on the lower end for a contract of this magnitude. A higher number of bidders could potentially drive prices down further and increase the range of innovative solutions. However, the presence of multiple bids still allows for price discovery and comparison.

Taxpayer Impact: The full and open competition, despite having only two bidders, ensures that taxpayer funds are not being awarded without some level of market vetting. This process helps to prevent sole-source awards and encourages competitive pricing, even if the competition is limited.

Public Impact

The primary beneficiaries are the U.S. Navy's fleet, ensuring operational readiness and capability. Services delivered include maintenance, repair, and modernization of naval vessels. The geographic impact is likely concentrated around naval bases and shipyards where VSE CORPORATION operates. The contract supports skilled labor in the maritime industry, including engineers, technicians, and tradespeople.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only two bidders could potentially lead to higher costs than a more robustly competed contract.
The cost-plus-award-fee (CPAF) contract type can sometimes lead to cost overruns if not managed carefully, though it also incentivizes performance.
The specific details of the 'award fee' criteria are not publicly available, making it difficult to assess the effectiveness of performance incentives.
The duration of the contract (nearly 5 years) means potential lock-in with a single provider, limiting flexibility for future needs.

Positive Signals

Awarded under full and open competition, ensuring a fair process.
VSE Corporation has a demonstrated track record with government contracts, suggesting reliability.
The contract aims to ensure the operational readiness of critical naval assets.
The CPAF structure provides an incentive for the contractor to meet or exceed performance expectations.
The contract value appears reasonable when benchmarked against similar services.

Sector Analysis

The shipbuilding and repairing sector (NAICS 336611) is a critical component of the U.S. industrial base, supporting both commercial and defense needs. This contract falls within the defense segment, specifically focusing on the maintenance and upkeep of naval vessels. Spending in this sector is often substantial due to the complexity and high cost of naval assets. Comparable spending benchmarks would typically involve other large-scale maintenance and repair contracts for naval destroyers, cruisers, or aircraft carriers, often running into tens or hundreds of millions of dollars.

Small Business Impact

The contract details indicate that small business participation was not a specific set-aside requirement (ss: false, sb: false). This suggests that the primary focus was on obtaining the best value from any responsible source. There is no explicit information regarding subcontracting plans for small businesses. Without specific set-aside goals or reporting requirements, the direct impact on the small business ecosystem for this particular contract is likely minimal, though VSE Corporation may engage small businesses as subcontractors based on their own procurement practices.

Oversight & Accountability

Oversight for this Department of the Navy contract would typically be managed by the contracting officer and their administrative team within the Department of Defense. Accountability measures are built into the Cost Plus Award Fee (CPAF) structure, which links a portion of the payment to performance against defined criteria. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Ship Maintenance and Repair Contracts
Department of Defense Shipyard Services
Fleet Readiness and Maintenance Programs
Indefinite Delivery/Indefinite Quantity (IDIQ) Vehicle Contracts
Cost Plus Award Fee Contracts

Risk Flags

Potential for cost overruns in CPAF contracts.
Limited competition may impact price.
Performance metrics for award fee clarity.
Dependence on contractor performance for fleet readiness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.0 million to VSE CORPORATION. FOTS ENGINEERING SERVICES (EG ICTAT)

Who is the contractor on this award?

The obligated recipient is VSE CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $73.0 million.

What is the period of performance?

Start: 2012-04-02. End: 2017-07-31.

What is the track record of VSE CORPORATION in performing similar ship repair and maintenance services for the Department of Defense?

VSE CORPORATION has a significant history of performing services for the Department of Defense, including ship repair, maintenance, and modernization. They are a well-established government contractor with numerous awards across various agencies, particularly within the naval sector. Their experience often includes complex overhauls, system upgrades, and routine maintenance for a wide range of naval vessels. Publicly available contract databases show a consistent pattern of awards for similar services, indicating a substantial level of experience and capability in meeting the requirements of naval operations. This established presence suggests a degree of reliability and familiarity with the stringent standards and operational tempo of the U.S. Navy.

How does the awarded price of $73,017,269 for this contract compare to similar ship repair contracts awarded by the Department of the Navy?

Benchmarking this contract's total value of approximately $73 million over nearly five years against similar Department of the Navy ship repair contracts reveals it to be within a reasonable range. Contracts for major overhauls or modernization of naval vessels can easily range from tens to hundreds of millions of dollars, depending on the ship class, scope of work, and duration. Given that this contract covers a significant period and likely involves substantial maintenance and repair activities for naval assets, the overall price appears competitive. Factors such as the specific types of vessels serviced, the complexity of repairs, and the geographic location of the work would influence precise comparisons, but the value here does not immediately suggest overpricing.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract structure for ship repair services?

The primary risks associated with a Cost Plus Award Fee (CPAF) contract structure, like the one awarded to VSE CORPORATION, revolve around cost control and the definition of performance metrics. While CPAF incentivizes the contractor to exceed performance standards by offering award fees, there's a risk that costs could escalate if the base cost-plus component is not tightly managed. If the criteria for earning the award fee are not clearly defined, measurable, and objectively assessed, it can lead to disputes or a perception of unfairness. Furthermore, the government bears the risk of paying higher total costs if the contractor successfully achieves high performance levels that warrant significant award fees, potentially exceeding the cost of a fixed-price contract if performance is exceptionally good.

What is the expected effectiveness of this contract in ensuring the operational readiness of the U.S. Navy's fleet?

This contract is expected to contribute significantly to the operational readiness of the U.S. Navy's fleet by ensuring that vessels receive necessary maintenance, repairs, and potentially upgrades. Timely and effective execution of these services is crucial for maintaining the seaworthiness, combat capability, and overall reliability of naval assets. The contract's duration of nearly five years suggests a commitment to ongoing support, which is vital for a fleet that requires continuous upkeep. The performance incentives embedded in the CPAF structure are designed to encourage VSE CORPORATION to deliver high-quality services, thereby directly supporting the Navy's mission readiness and minimizing downtime for critical ships.

How has federal spending in the ship building and repairing sector (NAICS 336611) trended over the past five years, and how does this contract fit into that trend?

Federal spending in the ship building and repairing sector (NAICS 336611) has historically been substantial, driven primarily by the Department of Defense's shipbuilding and maintenance requirements. Over the past five years, spending in this sector has generally remained robust, reflecting the ongoing need to modernize and maintain the naval fleet. While specific year-over-year fluctuations occur based on budget allocations and major program starts or completions, the overall demand for repair and maintenance services remains consistently high. This $73 million contract for VSE CORPORATION fits within this trend as a typical award for ongoing fleet support services. It represents a portion of the larger, continuous investment the government makes in sustaining its maritime capabilities, rather than a standalone, exceptionally large or small expenditure.

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: N0002410R4204

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 6348 WALKER LANE, ALEXANDRIA, VA, 22310

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $73,017,269

Exercised Options: $73,017,269

Current Obligation: $73,017,269

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002411D4229

IDV Type: IDC

Timeline