Navy awards $196M DDG 1000 planning yard follow-on contract to Bath Iron Works

Contract Overview

Contract Amount: $196,308,186 ($196.3M)

Contractor: Bath Iron Works Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-01

End Date: 2029-03-22

Contract Duration: 1,816 days

Daily Burn Rate: $108.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: DDG 1000 PLANNING YARD FOLLOW ON

Place of Performance

Location: BATH, SAGADAHOC County, MAINE, 04530

State: Maine Government Spending

Plain-Language Summary

Department of Defense obligated $196.3 million to BATH IRON WORKS CORPORATION for work described as: DDG 1000 PLANNING YARD FOLLOW ON Key points: 1. This contract represents a significant investment in specialized shipbuilding support services. 2. The sole-source nature of the award warrants scrutiny of price reasonableness and justification. 3. Long-term contract duration suggests a critical, ongoing need for these services. 4. The cost-plus award fee structure incentivizes performance but requires careful oversight to manage costs. 5. Bath Iron Works, as the incumbent, likely possesses unique institutional knowledge for this specialized role. 6. The contract's focus on planning yard services is crucial for the sustainment and modernization of the DDG 1000 class.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its specialized, sole-source nature. The cost-plus award fee (CPAF) structure allows for flexibility but can lead to higher costs if not managed diligently. Without competitive bids, it's difficult to definitively assess if the pricing reflects optimal value for money. However, the long duration and critical nature of the services suggest a recognized need and potentially a fair price for specialized expertise.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Bath Iron Works Corporation. This indicates that the Navy determined only one responsible source was capable of meeting the requirement. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than a competed contract. The justification for sole-source procurement would need to be thoroughly reviewed to understand the specific circumstances.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The justification for sole-source procurement needs to ensure that the selected contractor's pricing is fair and reasonable.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring continued planning and technical support for the DDG 1000 class destroyers. Services delivered include essential planning, engineering, and technical support critical for the lifecycle management of these advanced warships. The geographic impact is primarily centered around Bath, Maine, where Bath Iron Works is located, supporting local employment and the regional economy. Workforce implications include the retention and utilization of highly skilled engineers, naval architects, and technical specialists within Bath Iron Works.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus award fee structure requires robust oversight to prevent cost overruns.
Lack of transparency in the sole-source justification could obscure potential alternatives or cost savings.
Dependence on a single contractor for critical planning services creates a potential single point of failure.
The long contract duration may reduce flexibility for the Navy to adapt to changing requirements or technologies.

Positive Signals

Bath Iron Works possesses unique, specialized knowledge of the DDG 1000 class, ensuring continuity of essential services.
The contract aims to maintain critical infrastructure and technical expertise vital for national defense.
The award supports a significant industrial base in Maine, preserving skilled jobs.
The cost-plus award fee structure can incentivize high performance and quality outcomes.
The long-term nature of the contract provides stability for both the Navy and the contractor.

Sector Analysis

This contract falls within the shipbuilding and repair sector, specifically focusing on the specialized planning yard services for the DDG 1000 class destroyers. The market for such highly specialized, platform-specific support is limited, often dominated by the original shipbuilder due to the deep technical knowledge required. Comparable spending benchmarks are difficult to establish due to the unique nature of these vessels and the planning yard role.

Small Business Impact

This contract does not appear to involve a small business set-aside. Given the specialized nature of planning yard services for a complex warship class and the sole-source award to a large prime contractor, subcontracting opportunities for small businesses may be limited or dependent on the prime contractor's internal policies and existing supply chains. Further analysis would be needed to determine if any small business subcontracting plan is in place.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. The cost-plus award fee structure necessitates rigorous financial and performance monitoring to ensure costs are reasonable and performance targets are met. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by relevant oversight bodies, potentially including the Government Accountability Office (GAO) or the Inspector General, would be expected.

Related Government Programs

DDG 1000 Class Destroyer Program
Naval Shipbuilding and Repair Contracts
Ship Maintenance and Modernization Programs
Defense Industrial Base Support

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Critical infrastructure support

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $196.3 million to BATH IRON WORKS CORPORATION. DDG 1000 PLANNING YARD FOLLOW ON

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 $196.3 million.

What is the period of performance?

Start: 2024-04-01. End: 2029-03-22.

What is the historical spending pattern for DDG 1000 planning yard services, and how does this award compare?

Historical spending data for DDG 1000 planning yard services prior to this award would provide crucial context. If this is a follow-on contract, previous award amounts, contract types, and performance history are key indicators. Without specific prior award data, it's difficult to definitively state how this $196 million award compares. However, the duration of 1816 days (approximately 5 years) suggests a substantial, ongoing requirement. If previous contracts were significantly lower or higher, it would indicate a change in scope, service level, or market conditions. The cost-plus award fee structure also suggests a potential for costs to fluctuate based on performance and incurred expenses, making direct year-over-year comparisons challenging without detailed breakdowns.

What specific justification was provided for the sole-source award to Bath Iron Works?

The justification for a sole-source award typically stems from unique capabilities, proprietary data, or urgent and compelling needs where only one contractor can fulfill the requirement. For Bath Iron Works (BIW), the justification likely centers on their intimate knowledge of the DDG 1000 class design, construction, and unique systems, having built the vessels. This specialized institutional knowledge, often considered proprietary or not readily transferable, is critical for effective planning yard services. The Navy would need to demonstrate that no other shipyard or entity possesses the necessary technical data, expertise, and facilities to perform these complex planning and engineering support functions without significant delay and cost to the government.

How does the Cost Plus Award Fee (CPAF) structure influence contractor behavior and government oversight for this contract?

The Cost Plus Award Fee (CPAF) structure is designed to incentivize contractor performance by allowing them to earn an additional fee based on achieving specific performance objectives set by the government, in addition to covering their allowable costs. For this DDG 1000 planning yard contract, BIW's behavior would be influenced by the defined award criteria, which could include factors like schedule adherence, technical quality, cost control, and responsiveness. The government's role involves establishing clear, measurable performance metrics and diligently evaluating BIW's performance against these metrics to determine the award fee. This requires robust oversight mechanisms, including regular performance reviews, technical assessments, and financial audits, to ensure that the fee is earned appropriately and that costs remain controlled.

What are the potential risks associated with relying on a single contractor for critical planning yard services?

Relying on a single contractor, like Bath Iron Works, for critical DDG 1000 planning yard services presents several potential risks. Firstly, there's a 'single point of failure' risk; if BIW experiences significant operational disruptions (e.g., labor disputes, financial instability, natural disasters), the Navy's ability to support the DDG 1000 class could be severely impacted. Secondly, the lack of competition inherent in a sole-source award can reduce the incentive for the contractor to innovate or aggressively control costs, potentially leading to inefficiencies or higher prices over the contract's life. Thirdly, the government may have less leverage in negotiating future contract terms or scope changes due to the contractor's unique position and the difficulty of transitioning services to another provider.

What is the estimated total value of the contract over its duration, and how is it broken down?

The provided data indicates a total award amount of $196,308,186. This figure likely represents the estimated cost plus an initial target fee, or potentially the total value including maximum potential award fee. The contract type is Cost Plus Award Fee (CPAF), meaning the final amount paid could vary. The base cost covers the contractor's allowable expenses, while the award fee is contingent upon meeting specific performance criteria outlined in the contract. Without the detailed contract schedule, it's impossible to provide a precise breakdown of costs versus fees or how the total value is distributed across the contract's 1816-day duration (approximately 5 years). The Navy's contracting office would manage the allocation and payment based on performance.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002424R2331

Offers Received: 1

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: $265,865,566

Exercised Options: $205,031,789

Current Obligation: $196,308,186

Actual Outlays: $137,624

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline