Vigor Shipyards awarded $49.5M contract for U.S. Coast Guard Polar Class icebreaker maintenance

Contract Overview

Contract Amount: $49,486,879 ($49.5M)

Contractor: Vigor Shipyards, LLC

Awarding Agency: Department of Homeland Security

Start Date: 2004-02-27

End Date: 2007-09-30

Contract Duration: 1,311 days

Daily Burn Rate: $37.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE

Sector: Other

Official Description: AWARD PR FOR POLAR PHASED MAINTENANCE

Place of Performance

Location: SEATTLE, KING County, WASHINGTON, 98134

State: Washington Government Spending

Plain-Language Summary

Department of Homeland Security obligated $49.5 million to VIGOR SHIPYARDS, LLC for work described as: AWARD PR FOR POLAR PHASED MAINTENANCE Key points: 1. Contract awarded to Vigor Shipyards, LLC for essential maintenance of Polar Class icebreakers. 2. The contract type is Cost Plus Incentive Fee, suggesting shared risk and reward between government and contractor. 3. Awarded under Full and Open Competition after Exclusion of Sources, indicating a competitive process with specific justifications. 4. The contract duration is 1311 days, covering a significant period for vessel upkeep. 5. The North American Industry Classification System (NAICS) code 336611 points to shipbuilding and repairing services. 6. This award represents a substantial investment in maintaining critical national assets for polar operations.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar icebreaker maintenance contracts. The Cost Plus Incentive Fee structure means the final cost can fluctuate based on performance and cost control. However, the duration and scope suggest a significant investment in maintaining specialized assets. Further analysis would require access to the contractor's cost proposals and performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition after Exclusion of Sources.' This designation implies that while the competition was intended to be open, specific circumstances led to the exclusion of certain sources. The presence of two bidders suggests some level of competition, but the 'exclusion of sources' aspect warrants further investigation into the justification and its potential impact on the competitive landscape and pricing.

Taxpayer Impact: The limited competition, even if justified, may have resulted in less aggressive pricing than a truly unrestricted full and open competition. Taxpayers benefit from the competitive process, but the exclusion of sources could mean a higher price than might have been achieved otherwise.

Public Impact

The U.S. Coast Guard benefits directly through the maintenance of its Polar Class icebreakers, ensuring operational readiness. These icebreakers are critical for national security, scientific research, and economic activities in Arctic and Antarctic regions. The services delivered include essential repairs and maintenance to keep these specialized vessels functional. The geographic impact is global, supporting U.S. presence and operations in polar environments. The contract supports a skilled workforce in the shipbuilding and repairing sector, particularly in Washington state where Vigor Shipyards is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Exclusion of Sources' clause in the competition type requires scrutiny to ensure it was fully justified and did not unduly limit competition.
Cost Plus Incentive Fee contracts can lead to cost overruns if not closely monitored, requiring robust government oversight.
The long duration of the contract necessitates ongoing performance monitoring to ensure value for money throughout its life.

Positive Signals

Awarding to a known entity like Vigor Shipyards, LLC, suggests a level of confidence in their capability to perform complex maintenance.
The contract's focus on maintaining critical polar assets aligns with national strategic interests in the Arctic.
The competitive nature, even with exclusions, indicates an effort to secure services through a structured procurement process.

Sector Analysis

The shipbuilding and repairing industry (NAICS 336611) is a capital-intensive sector requiring specialized facilities and skilled labor. This contract falls within the defense and maritime support sub-sector, which often involves complex, high-value projects. Comparable spending benchmarks would typically involve other major vessel maintenance and construction contracts, particularly those for government fleets. The market for specialized icebreaker maintenance is limited due to the unique requirements and high barriers to entry.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). Vigor Shipyards, LLC is a large business. There is no explicit information on subcontracting plans for small businesses within this award notice. The impact on the small business ecosystem would depend on whether Vigor Shipyards engages small businesses for specialized services or supplies as part of fulfilling this contract.

Oversight & Accountability

Oversight for this Cost Plus Incentive Fee contract would primarily fall under the U.S. Coast Guard's contracting and program management offices. Accountability measures would be embedded in the contract's incentive clauses, performance metrics, and reporting requirements. Transparency is facilitated by the contract award notice, but detailed cost and performance data would likely be internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Polar Security Cutter Program
U.S. Coast Guard Fleet Modernization
Arctic Strategy Implementation
Naval Vessel Maintenance Contracts

Risk Flags

Potential for cost overruns due to CPIF structure
Justification for 'Exclusion of Sources' requires review
Long contract duration necessitates sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $49.5 million to VIGOR SHIPYARDS, LLC. AWARD PR FOR POLAR PHASED MAINTENANCE

Who is the contractor on this award?

The obligated recipient is VIGOR SHIPYARDS, 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 $49.5 million.

What is the period of performance?

Start: 2004-02-27. End: 2007-09-30.

What is the historical spending pattern for Polar Class icebreaker maintenance by the U.S. Coast Guard?

Analyzing historical spending for Polar Class icebreaker maintenance requires accessing detailed procurement data over several years. Typically, such maintenance involves significant, multi-year contracts due to the complexity and specialized nature of these vessels. Spending can fluctuate based on the operational tempo of the icebreakers, their age, and the specific maintenance cycles required. Without access to specific historical contract data for these vessels, it's difficult to provide precise figures. However, it is reasonable to assume that maintaining aging, specialized assets like the Polar Class icebreakers represents a consistent and substantial budgetary commitment for the U.S. Coast Guard, likely involving millions of dollars annually when considering all maintenance activities, both depot-level and operational.

How does the Cost Plus Incentive Fee (CPIF) structure impact the final cost and contractor performance for this contract?

The Cost Plus Incentive Fee (CPIF) contract structure is designed to incentivize the contractor (Vigor Shipyards, LLC) to control costs while achieving performance targets. Under CPIF, the final profit is adjusted based on the relationship between the final costs and the target costs, and the contractor's achievement of specific performance objectives. If the contractor completes the work under the target cost and meets performance standards, they earn a higher fee. Conversely, if costs exceed the target or performance is subpar, the fee is reduced. This structure encourages efficiency and cost-consciousness from the contractor, as their profit is directly linked to their ability to manage resources effectively and meet quality standards. For the government, it shares some risk but also provides a mechanism to achieve better value if the contractor performs well.

What specific justifications were provided for the 'Exclusion of Sources' in this Full and Open Competition?

The designation 'Full and Open Competition after Exclusion of Sources' implies that the contracting agency (U.S. Coast Guard) initially intended to compete the requirement broadly but subsequently excluded certain potential sources based on specific justifications. Common reasons for excluding sources include requirements for proprietary data, unique capabilities, essential follow-on support for previously provided equipment, or urgent and compelling needs where only one or a limited number of sources can meet the requirement within the necessary timeframe. Without access to the specific Justification for Other Than Full and Open Competition (JOFOC) document associated with this award, the precise reasons remain undisclosed. However, the fact that two bidders participated suggests that while some sources were excluded, the competition was not entirely sole-source.

What is the track record of Vigor Shipyards, LLC in performing complex maritime maintenance and construction contracts for the government?

Vigor Shipyards, LLC has a significant track record in the maritime industry, particularly in ship repair, conversion, and shipbuilding. They have been a major contractor for various U.S. government agencies, including the U.S. Navy and the U.S. Coast Guard. Their experience often involves complex projects such as major overhauls, modernization of vessels, and new construction. For instance, they have been involved in contracts for U.S. Navy destroyers, amphibious assault ships, and various Coast Guard cutters. Their ability to secure and execute large-scale contracts like the Polar Class icebreaker maintenance suggests a demonstrated capability to handle demanding technical requirements and manage large workforces. However, as with any large contractor, specific performance details and any past issues would require a deeper dive into contract performance reports and historical data.

How does the $49.5 million award compare to the estimated value or previous maintenance costs for Polar Class icebreakers?

Comparing the $49.5 million award to previous maintenance costs for Polar Class icebreakers requires access to historical contract data. The Polar Class icebreakers are aging assets, and their maintenance needs can be substantial and episodic. Major overhauls or complex repairs can easily run into tens of millions of dollars. Given the duration of this contract (1311 days, approximately 3.6 years), the $49.5 million figure suggests an average annual expenditure of roughly $13.7 million. This figure needs to be contextualized against the specific scope of work defined in the contract. If this award covers a comprehensive mid-life upgrade or a series of significant repair periods, it might be considered reasonable. If it represents routine maintenance, it could be on the higher side, underscoring the importance of the CPIF structure and oversight to manage costs effectively.

What are the potential risks associated with the long duration (1311 days) of this maintenance contract?

The long duration of this contract presents several potential risks. Firstly, there's the risk of scope creep, where the requirements might evolve over time, potentially leading to cost increases if not managed carefully through contract modifications. Secondly, technological advancements or changes in operational needs could make the planned maintenance less relevant or require adjustments. Thirdly, contractor performance can degrade over extended periods if oversight is not consistently rigorous. For the government, maintaining consistent oversight and ensuring value for money across such a long timeframe requires sustained effort and resources. Additionally, economic fluctuations or changes in budget priorities could impact the funding availability for the later stages of the contract. Finally, personnel turnover at both the government and contractor levels could lead to knowledge loss and impact project continuity.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: DTCG8503R625936

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vigor Industrial LLC (UEI: 153727818)

Address: 1801 16TH AVE SW, SEATTLE, WA, 07

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

Financial Breakdown

Contract Ceiling: $102,144,783

Exercised Options: $54,925,987

Current Obligation: $49,486,879

Contract Characteristics

Multi-Year Contract: Yes

Timeline