Navy awards $116M contract for MCM USV Production to Bollinger Shipyards, emphasizing fixed-price incentive structure

Contract Overview

Contract Amount: $116,071,269 ($116.1M)

Contractor: Bollinger Shipyards Lockport, L.L.C.

Awarding Agency: Department of Defense

Start Date: 2022-04-08

End Date: 2028-09-22

Contract Duration: 2,359 days

Daily Burn Rate: $49.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: MCM USV PRODUCTION

Place of Performance

Location: LOCKPORT, LAFOURCHE County, LOUISIANA, 70374

State: Louisiana Government Spending

Plain-Language Summary

Department of Defense obligated $116.1 million to BOLLINGER SHIPYARDS LOCKPORT, L.L.C. for work described as: MCM USV PRODUCTION Key points: 1. Contract utilizes a fixed-price incentive structure, aiming to align contractor performance with government objectives. 2. Competition was full and open, suggesting a robust market for these specialized vessels. 3. The contract duration extends over five years, indicating a significant, long-term production commitment. 4. Awarded to Bollinger Shipyards, a key player in shipbuilding and repair. 5. The North American Industry Classification System (NAICS) code 336611 points to shipbuilding and repairing. 6. The contract's value of $116 million represents a substantial investment in naval capabilities.

Value Assessment

Rating: good

The contract's fixed-price incentive (FPI) structure is a positive sign for value, as it incentivizes cost control while allowing for adjustments based on performance. Benchmarking against similar MCM USV production contracts is difficult due to the specialized nature of this technology. However, the competitive award process suggests that the pricing is likely within a reasonable range for this type of advanced naval asset. The total award value of $116 million over approximately five years indicates a significant but potentially justifiable investment for acquiring critical defense capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple capable vendors were invited to bid. The presence of three bidders (as suggested by 'no': 3) signifies a healthy level of competition for this specialized defense requirement. A competitive process like this generally leads to better price discovery and ensures that the government receives the most advantageous terms possible from the available market.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and a wider range of innovative solutions being considered. This process helps prevent cost overruns and ensures that public funds are used efficiently.

Public Impact

The primary beneficiaries are the U.S. Navy, which will receive advanced Mine Countermeasures Unmanned Surface Vehicles (MCM USVs) to enhance its operational capabilities. The services delivered include the production and potentially the integration of these specialized vessels. The geographic impact is centered around Bollinger Shipyards' facilities in Louisiana (st: LA, sn: LOUISIANA), contributing to regional economic activity and employment. Workforce implications include job creation and skill development within the shipbuilding and defense manufacturing sectors, particularly in Louisiana.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if performance targets are not met under the FPI structure.
Dependence on a single contractor for a critical defense capability.
Long-term commitment may limit flexibility in adapting to future technological advancements.
Geographic concentration of production could pose supply chain risks.

Positive Signals

Fixed-price incentive contract structure encourages cost efficiency and performance.
Full and open competition suggests a competitive market and potentially favorable pricing.
Award to an established shipbuilder like Bollinger indicates experience and capability.
Long contract duration provides stability for production and planning.

Sector Analysis

The Mine Countermeasures Unmanned Surface Vehicle (MCM USV) production falls within the broader defense shipbuilding and repair sector. This sector is characterized by high barriers to entry, significant capital investment, and stringent regulatory requirements. The market size for specialized naval vessels is substantial, driven by national security needs and ongoing military modernization efforts. This contract represents a specific investment in advanced, unmanned maritime systems, a growing area within naval technology. Comparable spending benchmarks would typically involve other large naval vessel construction or modification contracts, which often run into tens or hundreds of millions of dollars.

Small Business Impact

The provided data indicates that small business participation (sb: false) was not a specific set-aside criterion for this contract. While Bollinger Shipyards is the prime contractor, there may be opportunities for small businesses to participate as subcontractors within the supply chain for components, materials, or specialized services. The extent of small business subcontracting will depend on Bollinger's procurement strategy and the specific requirements of the MCM USV production.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the fixed-price incentive contract terms, which link payment to performance and cost targets. Transparency is typically maintained through contract award notices and public reporting mechanisms, although specific production details may be sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Vessel Construction
Unmanned Maritime Systems
Mine Warfare Programs
Defense Manufacturing
Shipbuilding and Repair Contracts

Risk Flags

Technological Complexity
Long-Term Production Schedule
Supply Chain Dependencies
Performance Incentive Alignment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $116.1 million to BOLLINGER SHIPYARDS LOCKPORT, L.L.C.. MCM USV PRODUCTION

Who is the contractor on this award?

The obligated recipient is BOLLINGER SHIPYARDS LOCKPORT, L.L.C..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $116.1 million.

What is the period of performance?

Start: 2022-04-08. End: 2028-09-22.

What is the historical performance record of Bollinger Shipyards with the Department of Defense, particularly on contracts of similar scale and complexity?

Assessing Bollinger Shipyards' historical performance requires a detailed review of their contract history with the Department of Defense. While specific performance metrics are not publicly available in this dataset, Bollinger Shipyards is a known entity in the shipbuilding industry, with experience in constructing various types of vessels for government and commercial clients. For contracts of similar scale and complexity, it would be crucial to examine past delivery timelines, adherence to specifications, cost performance against initial estimates, and any documented issues or disputes. A positive track record on previous naval shipbuilding or repair contracts would indicate a lower risk profile for this MCM USV production award. Conversely, any history of significant delays, cost overruns, or quality issues would warrant closer scrutiny of the current contract's oversight and risk mitigation strategies.

How does the pricing structure of this $116 million contract compare to industry benchmarks for similar unmanned surface vehicle production?

Directly comparing the pricing of this $116 million contract to industry benchmarks for similar MCM USVs is challenging without specific technical details and production volumes. Unmanned Surface Vehicles (USVs) can vary significantly in size, capability, sensor suites, and autonomy levels, all of which heavily influence cost. The 'MCM USV Production' designation suggests a specialized capability for mine countermeasures, likely incorporating advanced sonar, navigation, and potentially mine neutralization systems. The fixed-price incentive (FPI) structure means the final price can fluctuate based on performance and cost targets. To benchmark effectively, one would need to identify comparable USV programs (e.g., other mine warfare USVs, reconnaissance USVs) from different countries or defense contractors, analyze their unit costs, and adjust for differences in technology, scale, and contract type. Given the full and open competition, it suggests the Navy sought competitive bids to ensure a reasonable price point for this advanced technology.

What are the primary risk indicators associated with this contract, and what mitigation strategies are likely in place?

Primary risk indicators for this MCM USV production contract include the inherent technological complexity of advanced unmanned systems, potential for schedule delays in a specialized manufacturing process, and the possibility of cost growth under the fixed-price incentive (FPI) structure if targets are missed. The long duration (2022-2028) also introduces risks related to supply chain disruptions, evolving threat environments, and potential obsolescence. Mitigation strategies likely involve robust program management by the Navy, clear performance metrics and incentive targets within the FPI contract, regular progress reviews, and potentially contingency planning for critical component sourcing. The selection of an experienced shipbuilder like Bollinger also serves as a risk mitigation factor, assuming a strong performance history. Furthermore, the full and open competition suggests a market assessment was conducted to ensure sufficient vendor capability, reducing the risk of sole-source dependency or contractor failure.

How effective is the fixed-price incentive (FPI) contract type likely to be in ensuring program effectiveness and cost control for MCM USV production?

The Fixed-Price Incentive (FPI) contract type is designed to be effective in balancing cost control with performance achievement, particularly for complex projects like MCM USV production where initial cost estimates can be uncertain. In an FPI contract, the final price is adjusted based on the contractor's performance relative to target cost and target profit goals. If the contractor achieves lower costs than targeted, both the government and contractor share in the savings (under certain limits). Conversely, if costs exceed targets, the contractor bears a larger share of the overrun up to a ceiling price. This structure incentivizes the contractor (Bollinger Shipyards) to manage costs diligently and meet performance specifications to maximize their profit. For MCM USV production, this means Bollinger is motivated to deliver effective vessels efficiently. The effectiveness hinges on realistic target setting and robust government oversight to ensure that performance metrics are meaningful and achievable.

What are the historical spending patterns for Mine Countermeasures (MCM) related programs within the Department of the Navy, and how does this award fit in?

Historical spending patterns for Mine Countermeasures (MCM) programs within the Department of the Navy have varied over time, often reflecting evolving threats and technological advancements. Historically, significant investments were made in manned MCM platforms and systems. More recently, there has been a strategic shift towards incorporating unmanned systems, such as Unmanned Surface Vehicles (USVs) and Unmanned Underwater Vehicles (UUVs), to enhance MCM capabilities while reducing risk to personnel. This $116 million contract for MCM USV Production represents a key component of this modernization effort, signaling a sustained and potentially increasing investment in unmanned MCM technology. It fits within a broader trend of the Navy seeking more agile, cost-effective, and technologically advanced solutions for mine warfare, moving away from traditional, larger platforms towards distributed, unmanned systems.

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: N0002421R6300

Offers Received: 3

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 8365 HIGHWAY 308, LOCKPORT, LA, 70374

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

Financial Breakdown

Contract Ceiling: $167,543,571

Exercised Options: $133,568,804

Current Obligation: $116,071,269

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline