DoD awards $28.9M for submarine propeller repair, raising questions about competition and value

Contract Overview

Contract Amount: $28,944,060 ($28.9M)

Contractor: Bird-Johnson Propeller Company, LLC

Awarding Agency: Department of Defense

Start Date: 2021-09-30

End Date: 2025-12-31

Contract Duration: 1,553 days

Daily Burn Rate: $18.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: VIRGINIA CLASS SUBMARINE ROTOR AND SCOOP BAR

Place of Performance

Location: WALPOLE, NORFOLK County, MASSACHUSETTS, 02081

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $28.9 million to BIRD-JOHNSON PROPELLER COMPANY, LLC for work described as: VIRGINIA CLASS SUBMARINE ROTOR AND SCOOP BAR Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure on pricing. 2. The fixed-price contract type offers some cost certainty but may not fully capture efficiencies. 3. The duration of the contract (over 3 years) suggests a long-term need for these specialized services. 4. The awardee has a history of providing similar components, indicating specialized capability. 5. The lack of competition raises concerns about whether the government secured the best possible price. 6. The specific nature of the 'rotor and scoop bar' suggests a critical, potentially unique component.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized component. Without competitive bids, it's difficult to definitively assess if the $28.9 million price represents fair market value. The firm-fixed-price structure provides some cost control, but the absence of competing offers means potential savings from a more open bidding process were likely forgone. Further analysis would require comparing this to historical sole-source awards for similar submarine components, if available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one vendor, Bird-Johnson Propeller Company, LLC, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or when only one responsible source exists. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. The rationale for sole-sourcing this critical submarine component needs to be thoroughly documented and justified.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without multiple offers, the government lacked leverage to negotiate the lowest possible price, potentially leading to higher overall expenditure for this essential repair work.

Public Impact

The primary beneficiaries are the U.S. Navy's submarine fleet, ensuring operational readiness and capability. Services delivered include the repair or replacement of critical 'rotor and scoop bar' components for Virginia-class submarines. The geographic impact is national, supporting naval operations across various deployment locations. Workforce implications include supporting specialized manufacturing and repair jobs within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the sole-source justification process could mask inefficiencies.
Long contract duration might not adapt well to potential technological advancements or cost-saving innovations.
Reliance on a single supplier for critical components poses a supply chain risk.

Positive Signals

Awardee has specialized expertise in propeller manufacturing, ensuring technical competence.
Firm-fixed-price contract provides budget certainty for the Department of Defense.
Contract supports the maintenance of critical naval assets, ensuring national security.
Long-term contract indicates a stable, ongoing requirement for these essential services.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically focusing on shipbuilding and repairing specialized naval components. The market for such highly specialized submarine parts is inherently limited, often dominated by a few firms with the requisite technical expertise and security clearances. The $28.9 million award is significant for a single component repair/replacement, reflecting the complexity and criticality of Virginia-class submarine systems. Comparable spending benchmarks would likely involve other sole-source or limited-competition contracts for major submarine components or repairs.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. Given the specialized nature of submarine propeller components, it is likely that the prime contractor possesses unique capabilities that are not readily available from small businesses. Further investigation into subcontracting plans would be necessary to determine any potential impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), responsible for ensuring compliance with contract terms and quality standards. The firm-fixed-price nature of the award provides a degree of accountability for the contractor to deliver the specified goods within the agreed budget. Transparency regarding the sole-source justification and the specific technical requirements would be key areas for oversight assessment. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Virginia-class Submarine Program
Naval Ship Systems
Defense Procurement
Submarine Maintenance and Repair
Propulsion Systems

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.9 million to BIRD-JOHNSON PROPELLER COMPANY, LLC. VIRGINIA CLASS SUBMARINE ROTOR AND SCOOP BAR

Who is the contractor on this award?

The obligated recipient is BIRD-JOHNSON PROPELLER COMPANY, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $28.9 million.

What is the period of performance?

Start: 2021-09-30. End: 2025-12-31.

What is the specific technical nature of the 'rotor and scoop bar' and why is it critical for Virginia-class submarines?

The 'rotor and scoop bar' likely refers to a critical component within the propulsion system of the Virginia-class submarines. While specific technical details are often classified or proprietary, these components are essential for the efficient and quiet operation of the submarine's main propeller. The rotor is the rotating part of the propeller assembly, and the scoop bar might be related to directing water flow or housing internal mechanisms. Their criticality stems from the fact that any defect or malfunction could severely impair the submarine's stealth, speed, maneuverability, and overall mission capability. Given the advanced nature of these submarines, the components require extremely precise engineering and manufacturing tolerances.

What was the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT COMPETED' and is a 'SOLE SOURCE'. The specific justification for this sole-source award is not detailed in the data snippet. Typically, sole-source contracts are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available, the property or services are unique, or in cases of urgent and compelling need where competition is not feasible. For a specialized component like a submarine propeller part, the justification likely centers on the unique manufacturing capabilities, proprietary technology, or specialized knowledge held by Bird-Johnson Propeller Company, LLC, making them the only viable option to meet the government's requirements without undue delay or cost.

How does the firm-fixed-price (FFP) contract type mitigate risk for the government in this sole-source scenario?

A firm-fixed-price (FFP) contract shifts the majority of the cost risk from the government to the contractor. This means the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. In a sole-source situation, where competitive pricing is absent, the FFP structure provides the government with a degree of budget certainty. It prevents cost overruns that could occur under cost-reimbursement contracts if the contractor's expenses exceed initial estimates. However, the government still bears the risk that the fixed price itself might be inflated due to the lack of competition, even though their final payment is capped.

What is the historical spending pattern for Virginia-class submarine propeller components, and how does this award compare?

Historical spending data for specific components like the 'rotor and scoop bar' for Virginia-class submarines is not provided in the current data. However, the award amount of $28.9 million suggests a significant investment. Virginia-class submarines are highly complex and expensive platforms, and their maintenance and component replacement costs are substantial. Without prior contract data for this specific part or similar propulsion components, it's difficult to establish a direct comparison. Generally, sole-source awards for specialized defense systems tend to be higher than competitively procured items due to the lack of market pressure. Further research into historical procurement actions for Virginia-class submarine parts would be needed for a robust comparison.

What are the potential implications of relying on a single contractor for such a critical submarine component?

Relying on a single contractor, Bird-Johnson Propeller Company, LLC, for critical Virginia-class submarine propeller components presents several potential implications. Firstly, it creates a single point of failure in the supply chain; any disruption to the contractor's operations (e.g., financial instability, labor disputes, natural disasters, or production issues) could directly impact the Navy's ability to maintain its submarine fleet. Secondly, the lack of competition can reduce the incentive for the contractor to innovate or improve efficiency, as they face limited market pressure. Lastly, it can lead to higher costs over time, as the government may not be able to leverage competitive bidding to secure better pricing or terms. This dependence underscores the importance of robust contract management and contingency planning.

Industry Classification

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

Product/Service Code: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002420R4104

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 110 NORFOLK ST, WALPOLE, MA, 02081

Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $36,464,237

Exercised Options: $28,944,060

Current Obligation: $28,944,060

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $51,602

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline