Navy awards $73.5M contract for ship maintenance and repair to ST Engineering Services, OY4 IGF::OT::IGF

Contract Overview

Contract Amount: $73,498,875 ($73.5M)

Contractor: VSE Corporation

Awarding Agency: Department of Defense

Start Date: 2016-04-13

End Date: 2022-12-31

Contract Duration: 2,453 days

Daily Burn Rate: $30.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: ST ENGINEERING SERVICES, OY4 IGF::OT::IGF

Place of Performance

Location: ALEXANDRIA, FAIRFAX County, VIRGINIA, 22310

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $73.5 million to VSE CORPORATION for work described as: ST ENGINEERING SERVICES, OY4 IGF::OT::IGF Key points: 1. Contract value of $73.5M over approximately 6.8 years suggests a significant investment in naval readiness. 2. The contract was awarded under full and open competition, indicating a competitive bidding process. 3. The cost-plus award fee (CPA) pricing structure allows for performance-based incentives, potentially driving efficiency. 4. The primary contractor, VSE CORPORATION, has a substantial role in this award. 5. The contract supports the Department of the Navy's shipbuilding and repair needs, crucial for fleet operations. 6. The duration of the contract (2453 days) points to a long-term requirement for these services.

Value Assessment

Rating: good

The contract value of $73.5 million over nearly seven years averages to approximately $10.5 million annually. Benchmarking this against similar large-scale naval maintenance contracts is challenging without more specific service details. However, the cost-plus award fee structure suggests an effort to control costs while incentivizing performance, which is a common and often effective approach for complex services. The absence of a specific dollar amount for the base contract and the presence of award fees make a direct price comparison difficult, but the overall value appears reasonable for the scope of work implied by 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. This typically leads to a more robust selection of contractors and potentially better pricing due to market forces. The number of bidders is not specified, but the 'full and open' designation implies that multiple proposals were likely considered, fostering price discovery and ensuring the government received competitive offers.

Taxpayer Impact: Taxpayers benefit from full and open competition as it generally drives down costs through market pressure, ensuring that the government is obtaining services at a fair and reasonable price.

Public Impact

The primary beneficiaries are the U.S. Navy and its fleet, ensuring operational readiness and capability. Services delivered include essential maintenance, repair, and potentially modernization of naval vessels. The geographic impact is likely concentrated around naval bases and shipyards where VSE CORPORATION and its subcontractors operate. This contract supports a skilled workforce in the maritime industry, including engineers, technicians, and tradespeople.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The cost-plus award fee structure, while incentivizing, can lead to cost overruns if not managed diligently.
The long contract duration of nearly seven years presents a risk of scope creep or evolving technological needs not being fully addressed.
Dependence on a single prime contractor, VSE CORPORATION, for such a critical function could pose a risk if performance falters.

Positive Signals

Awarding under full and open competition suggests a competitive environment that should drive value.
The inclusion of award fees indicates a focus on performance and quality, aligning contractor incentives with government objectives.
The long duration allows for stable planning and execution of complex maintenance and repair tasks.

Sector Analysis

The shipbuilding and repair sector is a critical component of the U.S. defense industrial base, supporting naval power projection and national security. This contract falls within the broader industrial machinery and equipment manufacturing sector, specifically focused on naval vessels. Spending in this area is often substantial due to the complexity and high cost of maintaining modern warships. Comparable spending benchmarks would typically involve other large-scale service contracts for naval fleet maintenance, which can range from tens to hundreds of millions of dollars annually depending on the fleet size and scope of services.

Small Business Impact

The data indicates that small business participation (sb: false) was not a specific set-aside requirement for this contract. While the prime contractor is not a small business, there may be opportunities for small businesses to participate as subcontractors. The extent of subcontracting to small businesses is not detailed here, but it is a common practice in large defense contracts to leverage specialized capabilities and meet broader economic goals.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Performance monitoring, financial audits, and quality assurance reviews are standard mechanisms to ensure accountability. The contract's cost-plus award fee structure necessitates close oversight to validate incurred costs and assess performance against award criteria. Inspector General jurisdiction would apply for investigations into fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance and Repair Contracts
Shipbuilding and Repair Services
Defense Logistics and Maintenance
Fleet Readiness Programs
Department of the Navy Service Contracts

Risk Flags

Contract Duration
Pricing Structure (CPA)
Performance Metrics Clarity
Subcontracting Opportunities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.5 million to VSE CORPORATION. ST ENGINEERING SERVICES, OY4 IGF::OT::IGF

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 $73.5 million.

What is the period of performance?

Start: 2016-04-13. End: 2022-12-31.

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

The Department of the Navy consistently allocates significant funding towards ship maintenance and repair, often amounting to billions of dollars annually. This spending fluctuates based on fleet size, age of vessels, geopolitical demands, and budget appropriations. Historical data shows a trend of increasing complexity and cost for maintaining advanced naval platforms. Contracts like this one, for specific ship classes or maintenance types, represent a portion of the overall budget. Analyzing past awards for similar services can reveal trends in pricing, contractor performance, and competition levels, providing context for the current $73.5 million award.

How does the performance of VSE CORPORATION on similar contracts compare to industry benchmarks?

Assessing VSE CORPORATION's performance requires a detailed review of past contract performance evaluations (e.g., CPARS reports) and any associated award fees or penalties. Benchmarking against industry standards would involve comparing their on-time delivery rates, cost performance, quality metrics, and customer satisfaction scores against those of other major defense contractors in the shipbuilding and repair sector. Without access to specific performance data for VSE CORPORATION on this or comparable contracts, a definitive comparison is not possible. However, the cost-plus award fee structure suggests that performance is a key consideration, and VSE CORPORATION would be incentivized to meet or exceed established metrics.

What are the primary risks associated with a Cost Plus Award Fee (CPA) contract for ship maintenance?

The primary risks with a CPA contract for ship maintenance revolve around cost control and defining objective performance metrics. While the award fee incentivizes good performance, there's a risk that the 'cost plus' component could lead to higher-than-expected expenditures if the contractor's cost accounting is not rigorously audited or if unforeseen issues drive up costs significantly. Defining clear, measurable, and achievable award fee criteria is crucial; vague criteria can lead to disputes or the contractor receiving maximum award fees without exceptional performance. Additionally, the government must maintain strong oversight to ensure that costs are reasonable and allocable to the contract scope.

What is the typical duration and value range for large-scale naval ship maintenance contracts?

Large-scale naval ship maintenance contracts can vary significantly in duration and value, often spanning multiple years to accommodate the complex and ongoing needs of fleet readiness. Durations commonly range from 3 to 10 years, with options for extension. Values can range from tens of millions to hundreds of millions, or even billions, of dollars, depending on the scope of services (e.g., routine maintenance, major overhauls, modernization), the number and type of vessels covered, and the specific requirements of the contract. The $73.5 million award over approximately 6.8 years for ST Engineering Services falls within the mid-to-high range for a single, significant maintenance and repair contract.

How does the 'full and open competition' award method impact the overall cost-effectiveness for taxpayers?

Awarding contracts through 'full and open competition' is generally considered the most cost-effective method for taxpayers. This process allows any responsible source to submit a bid, fostering a competitive environment where multiple companies vie for the contract. This competition typically drives down prices as contractors seek to offer the most attractive bid to win the award. It also encourages innovation and efficiency as companies strive to differentiate themselves on price and performance. While the initial bidding process might require more resources, the long-term savings and potential for better value are significant advantages for taxpayer-funded projects.

What are the implications of the NAICS code 336611 (Ship Building and Repairing) for this contract's scope and market?

The NAICS code 336611, 'Ship Building and Repairing,' precisely defines the industrial sector and the core activities covered by this contract. It signifies that the work involves the construction, alteration, or repair of ships, barges, and related marine equipment. This code helps categorize the contract within the broader economy and identifies the specific market segment. Companies operating under this code possess specialized facilities, skilled labor (welders, pipefitters, electricians, engineers), and certifications required for maritime work. This contract likely involves complex repair, maintenance, and potentially upgrade services for naval vessels, falling squarely within the domain of this industry classification.

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

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: $73,498,875

Exercised Options: $73,498,875

Current Obligation: $73,498,875

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002411D4229

IDV Type: IDC

Timeline