Vigor Marine LLC awarded $97.5M for USS John S. McCain DSRA, a definitive contract under full and open competition

Contract Overview

Contract Amount: $97,507,966 ($97.5M)

Contractor: Vigor Marine LLC

Awarding Agency: Department of Defense

Start Date: 2024-08-19

End Date: 2025-12-19

Contract Duration: 487 days

Daily Burn Rate: $200.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS JOHN S MCCAIN (DDG 56) DSRA

Place of Performance

Location: PORTLAND, MULTNOMAH County, OREGON, 97217

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $97.5 million to VIGOR MARINE LLC for work described as: USS JOHN S MCCAIN (DDG 56) DSRA Key points: 1. The contract value represents a significant investment in maintaining naval readiness. 2. Full and open competition suggests a potentially competitive bidding process. 3. The definitive contract type indicates a clear scope of work and pricing. 4. The duration of 487 days highlights the extensive nature of the required services. 5. Ship repair and maintenance are critical for extending the operational life of naval assets. 6. The fixed-price nature of the contract aims to control costs for the government.

Value Assessment

Rating: good

Benchmarking the exact value of this specific DSRA is challenging without detailed service breakdowns and historical data for this particular vessel. However, the $97.5 million award for a definitive contract of this duration (487 days) for a DDG-class destroyer suggests a comprehensive overhaul. Compared to other major ship repair contracts, this falls within a typical range for extensive maintenance and modernization efforts on naval vessels. The firm fixed-price structure is generally favorable for cost control, provided the scope was well-defined.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a degree of competition, though the specific number of bidders can vary widely for complex ship repair contracts. A higher number of bidders typically leads to more competitive pricing and better value for the government. The fact that it was competed openly is a positive sign for price discovery.

Taxpayer Impact: Full and open competition increases the likelihood that taxpayer funds are used efficiently by driving down prices through a competitive bidding process.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring the USS John S. McCain remains a capable asset. The services delivered include extensive depot-level scheduled repair and alterations (DSRA), crucial for maintaining the ship's structural integrity and combat systems. The geographic impact is centered around the awardee's location in Oregon, supporting regional maritime industrial capabilities. This contract will likely support a significant workforce of skilled tradespeople, including welders, pipefitters, electricians, and naval architects, within the ship repair industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if initial assessments of the ship's condition are incomplete, leading to cost overruns despite the fixed-price nature.
Dependence on a single contractor (Vigor Marine LLC) for this critical repair could pose risks if unforeseen issues arise with their performance or capacity.
The long duration of the contract increases the risk of material price fluctuations impacting the contractor's profitability and potentially leading to change orders.

Positive Signals

The award to Vigor Marine LLC, a known entity in ship repair, suggests a level of confidence in their capabilities.
The firm fixed-price contract structure provides cost certainty for the government, assuming the scope is well-defined.
The use of full and open competition indicates a commitment to achieving the best possible value through market forces.
The definitive contract type implies a clear understanding of the work required, reducing ambiguity.

Sector Analysis

The ship repair and shipbuilding industry is a vital component of the defense industrial base, characterized by specialized facilities and a highly skilled workforce. This contract falls within the broader 'Ship Building and Repairing' sector (NAICS 336611). The market for naval ship repair is substantial, with significant government spending dedicated to maintaining the fleet's readiness. Comparable spending benchmarks for major overhauls of destroyers can range from tens to hundreds of millions of dollars, depending on the scope and complexity of the work.

Small Business Impact

This contract was awarded under full and open competition and does not appear to have a specific small business set-aside. While Vigor Marine LLC is a large business, the contract's nature as a major ship repair may limit direct subcontracting opportunities for small businesses unless they possess highly specialized capabilities. The primary impact on the small business ecosystem would be indirect, through potential opportunities with Vigor Marine LLC if they choose to subcontract specialized services, or through the broader demand for materials and components that could be sourced from small businesses.

Oversight & Accountability

Oversight for this contract will primarily be managed by the Department of the Navy, likely through contracting officers and technical representatives who will monitor performance against the contract requirements and schedule. Accountability measures are embedded in the firm fixed-price contract terms, with penalties or incentives potentially tied to performance milestones. Transparency is facilitated through contract award databases, though detailed performance metrics are typically not publicly disclosed. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Ship Repair and Maintenance Programs
Destroyer Class Ship Sustainment
Defense Industrial Base Support
Fleet Readiness Programs

Risk Flags

Long contract duration increases risk of cost escalation.
Potential for unforeseen repair requirements impacting scope and cost.
Dependence on contractor's capacity and performance over extended period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $97.5 million to VIGOR MARINE LLC. USS JOHN S MCCAIN (DDG 56) DSRA

Who is the contractor on this award?

The obligated recipient is VIGOR MARINE 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 $97.5 million.

What is the period of performance?

Start: 2024-08-19. End: 2025-12-19.

What is Vigor Marine LLC's track record with similar naval repair contracts?

Vigor Marine LLC has a history of performing complex repair and maintenance work for the U.S. Navy and other maritime clients. They have previously secured contracts for various vessel types, including other naval ships, indicating experience with the rigorous standards and requirements of military shipbuilding and repair. Analyzing their past performance on similar definitive contracts, particularly those involving extensive depot-level work on guided-missile destroyers, would provide further insight into their capabilities and reliability. Specific details on past contract values, durations, and any performance issues or commendations would be necessary for a comprehensive assessment of their track record for this specific award.

How does the $97.5 million award compare to historical spending on DSRA for DDG-51 class destroyers?

The $97.5 million award for the USS John S. McCain (DDG 56) DSRA falls within the expected range for major depot-level maintenance on a modern destroyer. Historical data indicates that such comprehensive overhauls for Arleigh Burke-class (DDG-51) destroyers can vary significantly based on the specific maintenance cycle, required upgrades, and the condition of the vessel. Costs can range from tens of millions to well over $100 million for extensive modernization and repair efforts. This particular award, for a 487-day period, suggests a substantial scope of work, making the $97.5 million figure a reasonable, albeit significant, investment for ensuring the vessel's long-term operational readiness and capability.

What are the primary risks associated with a firm fixed-price contract for a long-duration ship repair?

The primary risk with a firm fixed-price (FFP) contract for a long-duration ship repair, such as this 487-day DSRA, is the potential for the contractor to incur losses if costs escalate beyond initial estimates. While FFP contracts offer cost certainty to the government, they place the cost risk on the contractor. Risks include unforeseen material price increases, labor cost fluctuations, and the discovery of unexpected structural or system issues during the repair process that were not fully anticipated in the initial scope. If the scope is not meticulously defined, or if significant unforeseen conditions arise, the contractor may seek change orders, potentially increasing the total cost, or face financial strain if unable to secure them.

What does the 'definitive contract' type imply about the scope and predictability of this repair work?

A 'definitive contract' signifies that the contract has a clearly defined scope of work, a fixed price or ceiling, and a specified period of performance. For a ship repair like the DSRA of the USS John S. McCain, this implies that the Department of the Navy had a detailed understanding of the required maintenance, repairs, and potential alterations at the time of award. This contrasts with 'letter contracts' or 'undefinitized contract actions' which are used when the government needs work to begin before the full scope and price can be negotiated. The definitive nature suggests that the bidding process was based on a well-established set of requirements, leading to greater predictability in terms of cost and schedule for the government.

How does the geographic location of the awardee (Oregon) impact the logistics and cost of this naval repair?

The award to Vigor Marine LLC in Oregon places the repair facility on the West Coast of the United States. This location is strategically significant for the Pacific Fleet. Logistically, it means the USS John S. McCain will likely need to transit to Oregon for the repair period. The cost implications include the transit costs for the vessel, potential disruption to its operational schedule, and the availability of specialized labor and facilities in the Pacific Northwest region. While West Coast shipyards are well-equipped for naval repairs, the specific cost structure and availability of resources in Oregon compared to other potential locations (e.g., San Diego, Bremerton) would have been factors considered during the competition.

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: N0002424R4407

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vigor Industrial LLC

Address: 5555 N CHANNEL AVE BLDG 71, PORTLAND, OR, 97217

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $98,141,133

Exercised Options: $97,507,966

Current Obligation: $97,507,966

Actual Outlays: $19,521,490

Subaward Activity

Number of Subawards: 23

Total Subaward Amount: $18,573,823

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline