Navy awards $287M contract for planning yard efforts to Bath Iron Works Corporation

Contract Overview

Contract Amount: $287,291,918 ($287.3M)

Contractor: Bath Iron Works Corporation

Awarding Agency: Department of Defense

Start Date: 2018-12-26

End Date: 2026-04-21

Contract Duration: 2,673 days

Daily Burn Rate: $107.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: PLANNING YARD EFFORTS

Place of Performance

Location: BATH, SAGADAHOC County, MAINE, 04530

State: Maine Government Spending

Plain-Language Summary

Department of Defense obligated $287.3 million to BATH IRON WORKS CORPORATION for work described as: PLANNING YARD EFFORTS Key points: 1. Contract awarded through full and open competition, suggesting a robust market. 2. The contract type, Cost Plus Award Fee, incentivizes performance but carries inherent cost risk. 3. A long performance period of 2673 days indicates a significant, ongoing need for these services. 4. The award to a single contractor, Bath Iron Works Corporation, warrants scrutiny for potential future competition. 5. The North American Industry Classification System (NAICS) code 336611 points to shipbuilding and repair, a critical defense sector. 6. The contract's value is substantial, reflecting the complexity and importance of planning yard services.

Value Assessment

Rating: fair

The contract value of $287.3 million over approximately 7.3 years suggests a significant investment in planning yard services. Benchmarking this specific contract is challenging without more granular data on the scope of 'planning yard efforts.' However, the Cost Plus Award Fee (CPAF) structure implies that the government expects to pay a base fee plus potential award fees based on performance, which can lead to costs exceeding initial estimates if not managed carefully. The number of offers received (2) is a positive indicator, but the final price relative to the work performed will be the true measure of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified contractors had the opportunity to bid. Two offers were received, which suggests a reasonable level of competition for this specialized service. While two offers are better than one, a higher number of bidders could potentially drive prices down further and increase innovation. The process implies that the Navy sought the best value available in the market.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and better service quality. The presence of multiple bidders suggests that taxpayer funds are being used in a manner that leverages market forces to achieve cost efficiencies.

Public Impact

The primary beneficiaries are the U.S. Navy, which receives essential planning and engineering support for its shipbuilding and repair programs. Services delivered include technical support, design services, and program management related to naval vessels. The geographic impact is primarily centered around the contractor's location in Maine, but the services support naval operations nationwide and globally. This contract supports a highly skilled workforce in naval architecture, engineering, and shipbuilding trades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can lead to cost overruns if performance metrics and award fee criteria are not rigorously defined and monitored.
The award to a single entity, even after competition, raises questions about future competition and potential contractor lock-in.
The long duration of the contract could present challenges in adapting to evolving technological requirements or market conditions.

Positive Signals

Awarded through full and open competition, indicating a broad search for qualified contractors.
The Cost Plus Award Fee structure incentivizes high performance and successful project outcomes.
The contract supports critical national defense capabilities, ensuring the readiness of naval assets.

Sector Analysis

The shipbuilding and repair industry (NAICS 336611) is a vital component of the U.S. industrial base, particularly for national defense. This sector is characterized by high barriers to entry, significant capital investment, and specialized technical expertise. Major players often hold long-term contracts with the Department of Defense. The market size for naval shipbuilding and repair is substantial, driven by ongoing fleet modernization and maintenance requirements. This contract fits within the broader landscape of defense industrial base support services.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature of planning yard efforts and the likely scale of the work, it is probable that large, established shipbuilders were the primary focus of the competition. Subcontracting opportunities for small businesses may exist, but they would likely be in specific support roles rather than the core planning and design services. The impact on the small business ecosystem is likely minimal unless significant subcontracting plans are mandated and executed.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the Cost Plus Award Fee structure, where performance against defined criteria dictates additional award fees. Transparency is generally maintained through contract awards databases, though specific details of performance and cost breakdowns may be limited. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Naval Ship Production
Ship Maintenance and Repair
Defense Industrial Base Support
Naval Engineering Services
Ship Design and Planning

Risk Flags

Long contract duration may limit flexibility.
CPAF structure requires careful oversight to manage costs.
Potential for contractor lock-in due to specialized nature and duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $287.3 million to BATH IRON WORKS CORPORATION. PLANNING YARD EFFORTS

Who is the contractor on this award?

The obligated recipient is BATH IRON WORKS 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 $287.3 million.

What is the period of performance?

Start: 2018-12-26. End: 2026-04-21.

What is the historical spending pattern for planning yard efforts by the Department of the Navy?

Historical spending on planning yard efforts by the Department of the Navy is substantial and ongoing, reflecting the continuous need for design, engineering, and technical support for naval vessels. While specific figures for 'planning yard efforts' can vary based on how the category is defined and tracked, the Navy consistently allocates billions of dollars annually towards shipbuilding, conversion, and repair. This includes contracts for conceptual design, detailed design, engineering studies, and lifecycle technical support. Bath Iron Works Corporation, as a major naval shipbuilder, has historically been a significant recipient of such contracts. Analyzing past contract awards for similar services, including those for other ship classes and maintenance availabilities, would provide a clearer picture of the Navy's long-term investment in this area and establish a baseline for evaluating the current contract's value.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types for similar services?

The Cost Plus Award Fee (CPAF) contract type is often used when the exact costs are uncertain but the performance objectives are well-defined. It allows the contractor to recover allowable costs plus a fixed fee, with the potential for an additional award fee based on meeting or exceeding specific performance targets. Compared to Firm-Fixed-Price (FFP) contracts, CPAF offers more flexibility for the government if requirements change, but it carries a higher risk of cost growth. Compared to Cost Plus Incentive Fee (CPIF), CPAF places more emphasis on subjective performance evaluations for the award fee portion, whereas CPIF typically has more formulaic cost-sharing mechanisms. For complex, long-term services like planning yard efforts, where innovation and quality are paramount, CPAF can be an effective tool to incentivize contractor performance beyond just cost control, provided the award criteria are clear and measurable.

What are the key performance indicators (KPIs) typically used in planning yard contracts?

Key Performance Indicators (KPIs) for planning yard contracts are designed to measure the contractor's effectiveness in providing technical, design, and engineering support for naval vessels. Common KPIs often include schedule adherence for design milestones and deliverables, quality of engineering drawings and specifications, responsiveness to technical queries from shipyards or the fleet, innovation in design solutions, and cost control within the defined fee structure. For CPAF contracts, these KPIs are crucial for determining the award fee. The Navy carefully defines these metrics, often involving metrics related to technical accuracy, completeness of documentation, support provided during construction or maintenance phases, and the successful integration of new technologies or design modifications. Rigorous monitoring of these KPIs is essential for both performance assessment and value determination.

What is Bath Iron Works Corporation's track record with similar Navy contracts?

Bath Iron Works Corporation (BIW) has a long and established track record of building major surface combatants for the U.S. Navy, including Arleigh Burke-class destroyers and the upcoming Constellation-class frigates. Their experience extends beyond new construction to encompass significant engineering, modernization, and repair work. BIW has consistently been awarded large, complex contracts by the Navy, demonstrating their capability to handle demanding shipbuilding and associated technical support requirements. While specific details on past 'planning yard' specific contracts may be proprietary, their overall performance history with the Navy suggests a deep understanding of naval requirements and a capacity to deliver on large-scale technical and design services. Past performance reviews and contract award histories would provide more granular insights into their specific successes and challenges.

Are there any specific risks associated with the long duration of this contract?

The long duration of this contract (over 7 years) presents several potential risks. Firstly, technological advancements in naval architecture, materials, and digital design tools could outpace the contract's scope, potentially requiring costly modifications or leading to the use of outdated methodologies if not managed proactively. Secondly, economic fluctuations or shifts in defense priorities could impact the Navy's long-term budget, creating pressure on contract funding or scope. Thirdly, maintaining consistent performance and institutional knowledge within the contractor's organization over such an extended period can be challenging, potentially leading to knowledge loss or a decline in efficiency. Finally, the extended period limits the Navy's flexibility to re-compete the contract and incorporate new ideas or contractors, potentially leading to complacency or reduced competitive pressure over time.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002417R2322

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

Address: 700 WASHINGTON ST, BATH, ME, 04530

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $312,216,229

Exercised Options: $311,879,067

Current Obligation: $287,291,918

Actual Outlays: $3,638,038

Subaward Activity

Number of Subawards: 119

Total Subaward Amount: $27,085,638

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline