Integrated Coast Guard Systems LLC awarded $397.5M for NSC 3 Production and Deployment

Contract Overview

Contract Amount: $397,544,149 ($397.5M)

Contractor: Integrated Coast Guard Systems LLC

Awarding Agency: Department of Homeland Security

Start Date: 2007-08-08

End Date: 2013-06-30

Contract Duration: 2,153 days

Daily Burn Rate: $184.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: NSC 3 PRODUCTION AND DEPLOYMENT ASSOCIATED CLIN: 0030CD

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Homeland Security obligated $397.5 million to INTEGRATED COAST GUARD SYSTEMS LLC for work described as: NSC 3 PRODUCTION AND DEPLOYMENT ASSOCIATED CLIN: 0030CD Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Incentive Fee (CPIF), which incentivizes cost control. 3. Delivery Order indicates this is part of a larger contract vehicle. 4. The contract duration of 2153 days spans over 5 years. 5. The North American Industry Classification System (NAICS) code 334511 points to a manufacturing focus for navigation and guidance systems. 6. The contract was awarded by the Department of Homeland Security, specifically the U.S. Coast Guard. 7. The base award amount is $18.46M, with the total award reaching $397.5M, indicating significant potential for growth or cost overruns. 8. The contract is not set aside for small businesses.

Value Assessment

Rating: fair

The total award of $397.5M for the NSC 3 Production and Deployment project appears substantial. Benchmarking this against similar large-scale defense or maritime system production contracts would be necessary for a definitive value assessment. The Cost Plus Incentive Fee (CPIF) structure aims to align contractor and government interests in managing costs, but the significant difference between the base award ($18.46M) and the total award ($397.5M) suggests considerable potential for cost escalation. Without detailed cost breakdowns and performance metrics, it is difficult to definitively assess value for money at this stage.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bidders (no: 2) suggests a moderate level of competition for this specialized manufacturing requirement. While two bidders are better than one, a higher number of bidders typically leads to more robust price discovery and potentially lower costs for the government. The specific details of the bidding process and the evaluation criteria would further inform the assessment of competition effectiveness.

Taxpayer Impact: A competitive bidding process, even with two bidders, generally provides taxpayers with a better opportunity for cost savings compared to sole-source or limited competition awards. This helps ensure that the government is not overpaying for the required goods and services.

Public Impact

The U.S. Coast Guard is the primary beneficiary, receiving assets crucial for its operational missions. The contract supports the production and deployment of National Security Cutter (NSC) 3, a key component of the Coast Guard's fleet modernization. These cutters are vital for maritime security, drug interdiction, search and rescue, and law enforcement operations. The geographic impact is national, as the Coast Guard operates across U.S. waters and international maritime domains. The contract likely supports a specialized manufacturing workforce in the shipbuilding and defense technology sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns given the large delta between base and total award amounts under a CPIF contract.
Limited competition with only two bidders could impact price competitiveness.
The long contract duration increases the risk of scope creep or changing requirements.
Reliance on a single contractor for production could pose supply chain risks if not managed carefully.

Positive Signals

The CPIF contract type incentivizes the contractor to manage costs effectively.
Awarded under full and open competition, which generally promotes better value.
The U.S. Coast Guard's acquisition of advanced National Security Cutters is a strategic investment in national security.
The contractor, Integrated Coast Guard Systems LLC, is likely experienced in complex maritime systems.

Sector Analysis

This contract falls within the defense and maritime security sector, specifically focusing on the manufacturing of advanced navigation and guidance systems for large vessels. The market for such specialized systems is typically dominated by a few large defense contractors due to high barriers to entry, including technological expertise, regulatory compliance, and significant capital investment. Comparable spending benchmarks would involve looking at other major naval or coast guard vessel construction and systems integration contracts, which often run into hundreds of millions or billions of dollars.

Small Business Impact

The contract data indicates that this was not a small business set-aside (ss: false, sb: false). Therefore, there are no direct subcontracting requirements mandated for small businesses within this specific award. However, the prime contractor, Integrated Coast Guard Systems LLC, may voluntarily engage small businesses in its supply chain for components or services, which would contribute to the small business ecosystem indirectly. Further investigation into the contractor's subcontracting plan would be needed to assess the full impact.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Coast Guard contracting officers and program managers within the Department of Homeland Security. The Cost Plus Incentive Fee (CPIF) structure necessitates close monitoring of costs and performance to ensure the incentive goals are met and that the contract remains within budget. Transparency would be facilitated through contract reporting requirements and potentially through the Department of Homeland Security's Inspector General's office, which has jurisdiction over federal spending and program effectiveness.

Related Government Programs

National Security Cutter Program
U.S. Coast Guard Fleet Modernization
Maritime Domain Awareness Systems
Defense Manufacturing Contracts
Naval Systems Integration

Risk Flags

Potential Cost Overruns
Schedule Delays
Limited Competition
Contract Type Risk (CPIF)

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $397.5 million to INTEGRATED COAST GUARD SYSTEMS LLC. NSC 3 PRODUCTION AND DEPLOYMENT ASSOCIATED CLIN: 0030CD

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 $397.5 million.

What is the period of performance?

Start: 2007-08-08. End: 2013-06-30.

What is the track record of Integrated Coast Guard Systems LLC with similar large-scale maritime contracts?

Integrated Coast Guard Systems LLC, a joint venture often involving major defense contractors like Bollinger Shipyards and General Dynamics Bath Iron Works, has a significant history with the National Security Cutter (NSC) program. They have been involved in the production and delivery of previous NSCs. Their track record includes navigating complex shipbuilding processes, integrating sophisticated systems, and meeting stringent performance requirements. However, like many large defense programs, the NSC program has faced challenges related to cost growth and schedule delays across its various contracts. Assessing their specific performance on prior NSC production runs, including adherence to budget and timelines, would provide crucial context for this current award.

How does the per-unit cost of NSC 3 compare to previous National Security Cutters?

Determining the precise per-unit cost for NSC 3 requires access to detailed cost breakdowns and the final negotiated prices for each cutter. The provided data shows a total award of $397.5M for 'NSC 3 PRODUCTION AND DEPLOYMENT ASSOCIATED CLIN: 0030CD', with a base award of $18.46M. This suggests the $397.5M figure might represent the total potential value over the contract's life, including options or incentives, rather than the cost of a single unit. Previous NSCs have experienced significant cost fluctuations, with unit costs often exceeding initial estimates due to program complexities and evolving requirements. A comprehensive comparison would necessitate analyzing the total contract value for each cutter, adjusted for inflation and scope differences, and comparing it against the final cost of NSC 3 once fully realized.

What are the primary risks associated with the Cost Plus Incentive Fee (CPIF) contract type for this project?

The primary risks with a CPIF contract for a project like NSC 3 production revolve around cost control and the definition of performance targets. While CPIF aims to incentivize cost savings by sharing savings with the contractor, it also requires clearly defined target costs and performance metrics. If these targets are poorly defined or unrealistic, the incentive structure may not effectively drive desired outcomes. There's a risk that the contractor might focus on achieving incentive targets at the expense of other critical factors like quality or long-term maintainability. Furthermore, the government must diligently monitor costs to ensure they do not escalate beyond reasonable bounds, even with the shared savings mechanism. The significant difference between the base award ($18.46M) and the total award ($397.5M) highlights the potential for cost growth that the incentive fee structure aims to manage.

What is the expected impact of this contract on the U.S. Coast Guard's operational capabilities?

The production and deployment of National Security Cutter (NSC) 3 are critical for enhancing the U.S. Coast Guard's operational capabilities. NSCs are the largest and most technologically advanced cutters in the Coast Guard fleet, designed for extended offshore patrols in harsh environments. Their capabilities include advanced command and control, flight operations for helicopters and drones, and robust capabilities for maritime law enforcement, homeland security missions, counter-narcotics operations, and search and rescue. Acquiring NSC 3 directly strengthens the Coast Guard's ability to maintain a persistent presence in vital maritime regions, respond to emerging threats, and fulfill its diverse mission set, thereby bolstering national security and maritime safety.

How has historical spending on the National Security Cutter program evolved, and what does this suggest for NSC 3?

Historical spending on the National Security Cutter (NSC) program has been characterized by significant cost growth and schedule adjustments since its inception. The program, intended to replace aging high-endurance cutters, has faced challenges in managing the complexity of integrating advanced systems into a large vessel platform. Initial cost estimates were often exceeded, leading to substantial increases in the overall program budget. This evolution suggests that while the strategic need for the NSCs remains high, the acquisition process for these complex assets is prone to cost escalation. Therefore, for NSC 3, it is reasonable to anticipate that the final costs may deviate from initial projections, underscoring the importance of robust oversight and the effectiveness of the CPIF structure in managing these potential increases.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 300 M ST SE STE 685, WASHINGTON, DC, 20003

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $728,587,646

Exercised Options: $728,587,646

Current Obligation: $397,544,149

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: DTCG2302C2DW001

IDV Type: IDC

Timeline