Navy awards $32.3M contract for USS Michael Murphy shipbuilding and repair services

Contract Overview

Contract Amount: $32,265,432 ($32.3M)

Contractor: Pacific Shipyards International, LLC

Awarding Agency: Department of Defense

Start Date: 2019-09-03

End Date: 2020-04-27

Contract Duration: 237 days

Daily Burn Rate: $136.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS MICHAEL MURPHY

Place of Performance

Location: HONOLULU, HONOLULU County, HAWAII, 96819

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $32.3 million to PACIFIC SHIPYARDS INTERNATIONAL, LLC for work described as: USS MICHAEL MURPHY Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is a firm fixed price, which shifts cost risk to the contractor. 3. The duration of the contract is 237 days, indicating a focused scope of work. 4. The award was made by the Department of the Navy, a major defense spender. 5. The North American Industry Classification System (NAICS) code 336611 points to shipbuilding and repair activities. 6. The contract value is substantial, reflecting the complexity of naval vessel maintenance or construction.

Value Assessment

Rating: good

The contract value of $32.3 million for shipbuilding and repair services appears reasonable given the nature of naval vessel work. Benchmarking against similar contracts for ship maintenance or construction would provide a more precise assessment of value for money. The firm fixed price structure indicates that the contractor bears the risk of cost overruns, which can be beneficial for the government if managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. This approach typically fosters a competitive environment, encouraging multiple bidders to offer their best pricing and technical solutions. The number of bidders is not specified, but the open competition suggests a robust process aimed at achieving fair market value.

Taxpayer Impact: Full and open competition generally benefits taxpayers by promoting lower prices and higher quality services through a wider pool of potential contractors vying for the work.

Public Impact

The primary beneficiary is the U.S. Navy, which receives essential services for the USS Michael Murphy. Services delivered likely include maintenance, repair, or potentially new construction related to the vessel. The geographic impact is centered in Hawaii, where the contract was awarded. This contract supports jobs within the shipbuilding and repair industry, particularly in Hawaii.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the fixed-price contract does not adequately account for unforeseen complexities in shipbuilding/repair.
Dependence on a single contractor for a critical naval asset could pose a risk if performance issues arise.

Positive Signals

Firm fixed price contract shifts cost risk to the contractor.
Awarded through full and open competition, indicating a competitive process.
The contract is for a specific vessel, suggesting a defined scope of work.

Sector Analysis

The shipbuilding and repair sector is a critical component of the defense industrial base, involving complex engineering and manufacturing processes. This contract falls under NAICS code 336611. Spending in this sector is often characterized by large, long-term contracts due to the high cost and specialized nature of naval vessels. Comparable spending benchmarks would involve analyzing other contracts for similar naval ship maintenance or construction projects.

Small Business Impact

Information regarding small business set-asides or subcontracting plans was not provided in the data. Without this information, it is difficult to assess the impact on the small business ecosystem. Typically, large defense contracts may include provisions for small business participation, but this specific award's details are unknown.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which incentivizes contractor performance. Transparency is generally maintained through contract award databases, though specific performance metrics and oversight reports may not always be publicly available.

Related Government Programs

Naval Ship Maintenance Contracts
Shipbuilding and Repair Services
Defense Procurement
Department of the Navy Contracts

Risk Flags

Potential for cost overruns if estimates are inaccurate.
Dependence on contractor performance for critical naval asset.
Geographic location may increase logistical costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.3 million to PACIFIC SHIPYARDS INTERNATIONAL, LLC. USS MICHAEL MURPHY

Who is the contractor on this award?

The obligated recipient is PACIFIC SHIPYARDS INTERNATIONAL, 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 $32.3 million.

What is the period of performance?

Start: 2019-09-03. End: 2020-04-27.

What is the track record of PACIFIC SHIPYARDS INTERNATIONAL, LLC in fulfilling similar naval shipbuilding and repair contracts?

Assessing the track record of PACIFIC SHIPYARDS INTERNATIONAL, LLC requires a review of their past performance on contracts with the Department of Defense and other government agencies. Key indicators include on-time delivery, adherence to budget, quality of work, and any history of disputes or contract terminations. A thorough analysis would involve examining contract databases for past awards, performance evaluations, and any publicly available information on the company's project history. Without specific data on their past performance related to naval vessels of this scale, it is difficult to definitively assess their capability and reliability for the USS Michael Murphy contract.

How does the $32.3 million award compare to the average cost of similar naval vessel repair or construction contracts?

To benchmark the $32.3 million award, one would need to compare it against historical data for similar naval vessel repair or construction contracts. Factors influencing cost include the size and class of the vessel, the scope of work (e.g., routine maintenance vs. major overhaul or new construction), the specific shipyard's overhead and labor rates, and the prevailing market conditions at the time of award. A comprehensive comparison would involve analyzing contracts for vessels of comparable size and complexity awarded over the past few years. Without access to such a detailed comparative dataset, it's challenging to definitively state whether this contract represents excellent, fair, or questionable value for money.

What are the primary risks associated with a firm fixed-price contract for shipbuilding and repair?

The primary risk associated with a firm fixed-price (FFP) contract for shipbuilding and repair is the potential for the contractor to incur significant losses if costs exceed the agreed-upon price. This can lead to pressure on the contractor to cut corners on quality, use substandard materials, or delay work to manage expenses, potentially impacting the vessel's integrity and operational readiness. Conversely, if the contractor accurately estimates costs and manages the project efficiently, the government benefits from cost certainty. For the government, risks include the contractor potentially going out of business if they mismanage costs, leading to contract termination and the need to re-compete or find an alternative. Effective government oversight is crucial to mitigate these risks by ensuring adherence to specifications and quality standards.

What is the historical spending pattern for shipbuilding and repair services by the Department of the Navy?

The Department of the Navy historically spends billions of dollars annually on shipbuilding and repair services, reflecting its large fleet size and the demanding operational environment. Spending patterns are influenced by shipbuilding programs, fleet modernization efforts, maintenance schedules, and geopolitical factors. Major ship classes, such as destroyers, aircraft carriers, and submarines, represent significant portions of this spending. The Navy often utilizes a mix of contract types, including firm fixed-price for well-defined scopes and cost-plus contracts for research and development or complex new construction where risks are higher and less defined. Analyzing historical spending data reveals trends in investment in new platforms versus sustainment of the existing fleet.

How does the geographic location of the award (Hawaii) potentially impact the cost and logistics of this contract?

Awarding a shipbuilding and repair contract in Hawaii, such as for the USS Michael Murphy, can introduce specific cost and logistical considerations. Hawaii's remote island location often leads to higher costs for materials, equipment, and specialized labor due to transportation expenses and potentially limited local availability. Furthermore, the availability of skilled labor experienced in naval shipbuilding and repair might be more constrained compared to mainland U.S. locations with established naval shipyards. This could necessitate higher wages or travel allowances for personnel. While the specific shipyard, PACIFIC SHIPYARDS INTERNATIONAL, LLC, is based in Hawaii, the overall cost structure may reflect these geographic factors compared to contracts awarded in regions with a denser concentration of defense industrial capabilities.

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: N0002419R4404

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 705 N NIMITZ HWY, HONOLULU, HI, 96817

Business Categories: Asian Pacific American Owned Business, Category Business, Limited Liability Corporation, Manufacturer of Goods, Minority Owned Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $33,257,851

Exercised Options: $32,265,432

Current Obligation: $32,265,432

Actual Outlays: $3,409,044

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline