Navy awards $252M contract to Vigor Shipyards for CVN 72 maintenance, highlighting shipbuilding and repair sector activity

Contract Overview

Contract Amount: $252,166,376 ($252.2M)

Contractor: Vigor Shipyards, LLC

Awarding Agency: Department of Defense

Start Date: 2008-08-25

End Date: 2014-08-28

Contract Duration: 2,194 days

Daily Burn Rate: $114.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: EXECUTION PLANNING FOR CVN 72 FY09 PIA. BASE AWARD FOR THE PLANNING AND ACCOMPLISHMENT OF 72 AND 74 PIAS; AND 68,74, AND DPIAS; AND INCREMENTAL AVAILABILITIES.

Place of Performance

Location: BREMERTON, KITSAP County, WASHINGTON, 98314

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $252.2 million to VIGOR SHIPYARDS, LLC for work described as: EXECUTION PLANNING FOR CVN 72 FY09 PIA. BASE AWARD FOR THE PLANNING AND ACCOMPLISHMENT OF 72 AND 74 PIAS; AND 68,74, AND DPIAS; AND INCREMENTAL AVAILABILITIES. Key points: 1. Contract focuses on planning and accomplishment of Planned Incremental Availabilities (PIAs) and Drydocking PIAs for a specific aircraft carrier. 2. The award type is a Cost Plus Award Fee, indicating performance incentives for the contractor. 3. This contract falls under the shipbuilding and repairing NAICS code, a critical segment of the defense industrial base. 4. The duration of the contract is substantial, spanning over 2000 days, suggesting a long-term maintenance requirement. 5. The presence of two bids indicates a degree of competition, though the specifics of the bidding process are not detailed. 6. The contract was awarded under full and open competition, suggesting broad market access for potential bidders.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without more detailed cost breakdowns and performance metrics. The Cost Plus Award Fee structure suggests that the final cost could vary based on performance. Comparing it to similar PIAs for other carriers would provide better context on whether the pricing is competitive for the scope of work.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. The data indicates there were two bids received. While two bids represent some level of competition, it is on the lower end for a contract of this magnitude and could potentially limit price discovery compared to a scenario with more bidders.

Taxpayer Impact: Taxpayers benefit from the competitive process, which aims to secure the best possible price and quality for the required services. However, with only two bids, there is a risk that the full cost-saving potential of robust competition may not have been realized.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the operational readiness of the USS Abraham Lincoln (CVN 72). The services delivered include essential maintenance, repair, and modernization activities for a major naval asset. The geographic impact is centered around the shipyard performing the work, likely in Washington state, supporting local economies. Workforce implications include employment for skilled tradespeople, engineers, and support staff within the shipbuilding and repair industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Award Fee contracts if performance targets are not met efficiently.
Limited competition (two bids) may have resulted in a higher price than if more bidders had participated.
Long contract duration could introduce risks related to material cost fluctuations and evolving technological requirements.

Positive Signals

Awarded under full and open competition, maximizing the pool of potential contractors.
Cost Plus Award Fee structure incentivizes contractor performance and efficiency.
Focus on critical naval asset maintenance ensures national security readiness.

Sector Analysis

This contract operates within the shipbuilding and repairing sector, a vital component of the U.S. defense industrial base. This sector is characterized by high capital investment, specialized labor, and long production cycles. The market size for naval ship maintenance and repair is substantial, driven by the extensive fleet operated by the U.S. Navy. Comparable spending benchmarks would involve analyzing other PIA contracts for similar aircraft carriers or major naval vessels.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. Given the scale and specialized nature of aircraft carrier maintenance, it is likely that the prime contractor, Vigor Shipyards, would engage subcontractors. Analysis of subcontracting plans would be necessary to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are built into the Cost Plus Award Fee structure, which links a portion of the payment to performance outcomes. Transparency is generally maintained through contract awards databases, though detailed performance reports may be less publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance Contracts
Aircraft Carrier Maintenance Programs
Defense Shipbuilding and Repair
Shipyard Industrial Base Support
Planned Incremental Availability Contracts

Risk Flags

Potential for cost growth due to CPAF structure and long duration.
Limited competition (two bidders) may impact price optimization.
Dependency on specialized shipyard infrastructure and workforce.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $252.2 million to VIGOR SHIPYARDS, LLC. EXECUTION PLANNING FOR CVN 72 FY09 PIA. BASE AWARD FOR THE PLANNING AND ACCOMPLISHMENT OF 72 AND 74 PIAS; AND 68,74, AND DPIAS; AND INCREMENTAL AVAILABILITIES.

Who is the contractor on this award?

The obligated recipient is VIGOR SHIPYARDS, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $252.2 million.

What is the period of performance?

Start: 2008-08-25. End: 2014-08-28.

What is Vigor Shipyards' track record with similar naval maintenance contracts?

Vigor Shipyards has a significant history of performing complex maintenance, repair, and overhaul work for various naval vessels, including aircraft carriers and other large fleet assets. Their experience often involves extensive dry-docking, modernization, and repair services. While specific details on past PIA performance for CVN 72 are not provided in this data snippet, their general portfolio suggests they possess the necessary infrastructure, expertise, and security clearances to undertake such demanding projects. A deeper dive into their contract performance history with the Navy, including any past award fee scores or performance evaluations on similar contracts, would offer a more precise assessment of their track record for this specific type of work.

How does the $252 million award compare to the cost of similar aircraft carrier maintenance contracts?

Directly comparing the $252 million award to other aircraft carrier maintenance contracts requires careful consideration of several factors, including the specific scope of work, the class of carrier, the duration of the availability, and the prevailing economic conditions at the time of award. Planned Incremental Availabilities (PIAs) can vary significantly in complexity and cost. For instance, a PIA focused solely on routine maintenance might cost less than one involving major upgrades or extensive hull repairs. Benchmarking against PIAs for other Nimitz-class carriers or even Ford-class carriers, while accounting for differences in technology and requirements, would be necessary. Without access to detailed cost breakdowns and the specific work packages included in this $252 million award, a precise value-for-money comparison remains challenging.

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

The primary risks associated with a Cost Plus Award Fee (CPAF) contract for ship maintenance revolve around cost control and performance definition. For the government, there's a risk that costs could escalate beyond initial projections if the contractor is not effectively managed or if unforeseen technical challenges arise, even with award fee incentives. Defining objective and measurable award fee criteria that accurately reflect desired performance without being overly prescriptive or easily manipulated can be difficult. For the contractor, the risk lies in not meeting the performance targets, which would reduce their overall profit margin. Ensuring that the 'award' portion of the fee truly reflects exceptional performance and not just satisfactory completion is crucial for maximizing value for the taxpayer.

How does the duration of this contract (2194 days) impact its overall value and risk profile?

The extended duration of 2194 days (approximately 6 years) for this contract significantly impacts its value and risk profile. On the value side, it suggests a long-term commitment to maintaining a critical asset, potentially offering stability and predictability for both the Navy and the contractor. This extended period allows for a phased approach to maintenance and modernization, which can be more cost-effective than undertaking all work in a single, shorter availability. However, the duration also introduces considerable risk. Market conditions, material costs, and labor rates can fluctuate significantly over six years, potentially leading to cost increases for the government if not adequately managed through contract clauses. Furthermore, technological advancements during this period might render certain planned upgrades less effective or necessitate scope changes, adding complexity and potential for disputes.

What is the significance of the NAICS code 336611 (Ship Building and Repairing) in the context of this contract?

The NAICS code 336611, 'Ship Building and Repairing,' is highly significant as it precisely categorizes the core industrial activity associated with this contract. This classification indicates that the contract falls within a specialized and strategically important sector of the U.S. economy, heavily tied to national defense. Companies operating under this code typically possess unique infrastructure, highly skilled labor forces (welders, pipefitters, electricians, engineers), and adhere to stringent quality and safety standards mandated by maritime and defense regulations. The presence of this code signals that the contract requires capabilities beyond general construction or manufacturing, focusing specifically on the complex engineering and fabrication involved in maintaining and building large marine vessels, particularly warships.

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: N0002407R4416

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vigor Industrial LLC

Address: 1801 16TH AVE SW, SEATTLE, WA, 98134

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business

Financial Breakdown

Contract Ceiling: $274,457,724

Exercised Options: $252,231,647

Current Obligation: $252,166,376

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline