DHS Awards $512M for National Security Cutter Production to Integrated Coast Guard Systems LLC

Contract Overview

Contract Amount: $511,962,459 ($512.0M)

Contractor: Integrated Coast Guard Systems LLC

Awarding Agency: Department of Homeland Security

Start Date: 2004-06-22

End Date: 2009-01-30

Contract Duration: 1,683 days

Daily Burn Rate: $304.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Official Description: PRODUCTION & DEPLOYMENT OF ICGS NATIONAL SECURITY CUTTER #1

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Homeland Security obligated $512.0 million to INTEGRATED COAST GUARD SYSTEMS LLC for work described as: PRODUCTION & DEPLOYMENT OF ICGS NATIONAL SECURITY CUTTER #1 Key points: 1. The contract value of $511.96M for a complex asset like a National Security Cutter is significant. 2. Competition was full and open, suggesting a potentially competitive pricing environment. 3. The cost-plus-incentive contract type introduces risk related to cost overruns. 4. This falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector.

Value Assessment

Rating: fair

The $511.96M award for a single cutter is substantial. Benchmarking against similar large naval vessel construction contracts would be necessary for a precise assessment, but the scale suggests a high per-unit cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically allows for the widest range of potential bidders and can drive competitive pricing. However, the specific nature of a National Security Cutter may limit the number of truly capable bidders.

Taxpayer Impact: The significant investment in a critical national security asset is a direct taxpayer expenditure aimed at enhancing maritime security capabilities.

Public Impact

Enhances U.S. Coast Guard's maritime security and interdiction capabilities. Supports national defense and border protection efforts. Represents a long-term investment in critical infrastructure. Potential for job creation in the shipbuilding and related industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-incentive contract type can lead to cost overruns.
Long contract duration (2004-2009) increases exposure to economic fluctuations.
Sole contractor for a specialized asset may limit future competition.

Positive Signals

Awarded under full and open competition.
Addresses critical national security needs.
Significant investment in advanced maritime technology.

Sector Analysis

This contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, specifically for large, complex maritime vessels. Spending in this sector is often characterized by high unit costs, long development cycles, and significant government investment due to national security requirements.

Small Business Impact

While the primary contractor is Integrated Coast Guard Systems LLC, the contract's scale likely involves numerous subcontracts. Analysis would be needed to determine the extent of small business participation in the supply chain for this complex shipbuilding project.

Oversight & Accountability

The contract was awarded by the Department of Homeland Security to the U.S. Coast Guard. Oversight would involve monitoring performance, cost, and schedule adherence throughout the production and deployment phases to ensure accountability and value for taxpayer money.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Homeland Security Contracting
U.S. Coast Guard Programs

Risk Flags

Cost Overruns Risk (CPIF contract)
Schedule Delays Risk
Technological Obsolescence Risk (long production cycle)
High Per-Unit Cost
Limited Competition Potential for Future Vessels

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $512.0 million to INTEGRATED COAST GUARD SYSTEMS LLC. PRODUCTION & DEPLOYMENT OF ICGS NATIONAL SECURITY CUTTER #1

Who is the contractor on this award?

The obligated recipient is INTEGRATED COAST GUARD SYSTEMS LLC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $512.0 million.

What is the period of performance?

Start: 2004-06-22. End: 2009-01-30.

What was the final cost compared to the initial target and incentives achieved?

The contract type is Cost Plus Incentive (CPIF), meaning the final cost is influenced by performance against targets. Without post-award data, it's impossible to know the final expenditure relative to the initial estimates and whether incentives were met or penalties incurred. This information is crucial for assessing the contractor's efficiency and the overall value realized.

What are the long-term maintenance and operational costs associated with this cutter?

The initial acquisition cost of $511.96M is only part of the total lifecycle expense. Understanding the projected long-term maintenance, repair, and operational costs is vital for a comprehensive assessment of the program's true financial burden on taxpayers. These ongoing costs can often exceed the initial procurement price over the vessel's lifespan.

How effectively did the 'full and open competition' process ensure competitive pricing for such a specialized asset?

While 'full and open competition' is the preferred method, the specialized nature of a National Security Cutter may have limited the number of truly capable bidders. Assessing the effectiveness requires examining the number of bids received, the price spread between bidders, and whether the final negotiated price reflected significant cost savings compared to a sole-source or limited competition scenario.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › General Science and Technology R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

Contractor Details

Address: 300 M ST SE STE 685, WASHINGTON, DC, 98

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $511,962,459

Exercised Options: $511,962,459

Current Obligation: $511,962,459

Parent Contract

Parent Award PIID: DTCG2302C2DW001

IDV Type: IDC

Timeline