Navy Awards $170M Ship Construction Contract to Todd Shipyards in 1999 for Carrier Aircraft Nuclear Support

Contract Overview

Contract Amount: $170,051,101 ($170.1M)

Contractor: Puget Sound Commerce Center, Inc.

Awarding Agency: Department of Defense

Start Date: 1999-01-19

End Date: 2007-09-20

Contract Duration: 3,166 days

Daily Burn Rate: $53.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 199904!1700!1189!BZ008!NAVAL SEA SYSTEMS COMMAND !N0002499C8503 !A!*!* !19990119!20040604!001288828!001288828!001288828!N!4P759!TODD SHIPYARDS CORPORATION !1801 16TH AVE SW !SEATTLE !WA!98134!63000!033!53!SEATTLE !KING !WASHINGTON!0001!+000000399351!N!N!000000000000!Y154!SHIP CONSTRUCTION & REPAIR FACILITIES !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !3731!3!*!*!*!B!A!*!A !N!R!2!002!B!* !Z!N!Z!* !* !N!B!*!A!*!A!A!A!*!* !*!N!A!B!N!*!*!*!*!*!

Place of Performance

Location: BREMERTON, KITSAP County, WASHINGTON, 98314

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $170.1 million to PUGET SOUND COMMERCE CENTER, INC. for work described as: 199904!1700!1189!BZ008!NAVAL SEA SYSTEMS COMMAND !N0002499C8503 !A!*!* !19990119!20040604!001288828!001288828!001288828!N!4P759!TODD SHIPYARDS CORPORATION !1801 16TH AVE SW !SEATTLE !WA!98134!63000!033!53!SEATTLE !KING … Key points: 1. Contract awarded in 1999 for ship construction and repair facilities. 2. The contract was for Carrier Aircraft Nuclear-CVAN support. 3. Todd Shipyards Corporation received the award. 4. The contract had a base value of $63,000 and a total value of $170,005,110.86. 5. The contract was awarded under full and open competition.

Value Assessment

Rating: fair

The contract's final value of $170M significantly exceeded its initial base value of $63K, suggesting substantial cost growth or scope changes over its 8-year duration. Benchmarking is difficult without specific unit costs for ship construction and repair.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded using full and open competition, indicating a competitive bidding process. However, the significant cost growth over time raises questions about the effectiveness of price discovery and cost control mechanisms during the contract's execution.

Taxpayer Impact: The substantial cost overruns suggest taxpayers may have paid more than initially anticipated for the services rendered, impacting the overall value for money.

Public Impact

Supports critical naval aviation capabilities, specifically nuclear-powered aircraft carriers. The long duration (8 years) indicates a significant, ongoing need for these services. Awarded to a specific shipyard, impacting regional employment and the defense industrial base. The contract's cost growth highlights potential inefficiencies in long-term defense procurements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth from base value to final value.
Long contract duration (8 years) may indicate scope creep or evolving requirements.
Lack of detailed per-unit cost data makes precise value assessment challenging.

Positive Signals

Awarded under full and open competition, promoting market participation.
Supports a critical national defense capability (nuclear aircraft carriers).
Contract was ultimately completed, fulfilling its intended purpose.

Sector Analysis

This contract falls within the Ship Construction & Repair Facilities sector, specifically supporting naval aviation. Defense sector spending on shipbuilding and maintenance is substantial, with contracts often being long-term and complex due to specialized requirements and high costs.

Small Business Impact

The data does not indicate whether small businesses were involved as subcontractors. The primary awardee, Todd Shipyards Corporation, is a large entity, suggesting limited direct benefit to small businesses from this specific prime contract award.

Oversight & Accountability

The significant cost growth over the contract's life warrants further review to understand the oversight mechanisms in place and whether they were effective in managing expenditures and ensuring accountability for the final cost.

Related Government Programs

Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Significant cost growth over contract duration.
Long contract performance period (8 years).
Cost Plus Award Fee contract type can lead to higher costs if not managed tightly.
Lack of detailed per-unit cost data for benchmarking.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $170.1 million to PUGET SOUND COMMERCE CENTER, INC.. 199904!1700!1189!BZ008!NAVAL SEA SYSTEMS COMMAND !N0002499C8503 !A!*!* !19990119!20040604!001288828!001288828!001288828!N!4P759!TODD SHIPYARDS CORPORATION !1801 16TH AVE SW !SEATTLE !WA!98134!63000!033!53!SEATTLE !KING !WASHINGTON!0001!+000000399351!N!N!000000000000!Y154!SHIP CONSTRUCTION & REPAIR FACILITIES !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !3731!3!*!*!*!B!A!*!A !N!R!2!0

Who is the contractor on this award?

The obligated recipient is PUGET SOUND COMMERCE CENTER, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $170.1 million.

What is the period of performance?

Start: 1999-01-19. End: 2007-09-20.

What specific factors contributed to the significant cost growth from the initial base value to the final award amount over the contract's 8-year duration?

The substantial cost growth likely resulted from a combination of factors inherent in long-term, complex shipbuilding and repair contracts. These could include evolving technical requirements, unforeseen material cost increases, labor rate adjustments, extended performance periods, and potential scope expansions. Detailed contract modifications and performance reports would be necessary to pinpoint the exact drivers.

How effectively did the 'full and open competition' process ensure competitive pricing and cost control given the eventual cost escalation?

While 'full and open competition' ensures a broad initial bidding pool, its effectiveness in controlling costs over an extended period depends on contract type and ongoing oversight. For Cost Plus Award Fee contracts, incentives and rigorous monitoring are crucial. The significant cost growth suggests that either the initial estimates were inadequate, or post-award management and oversight were insufficient to curb escalating expenses throughout the contract's lifecycle.

What was the ultimate impact on the Navy's readiness and budget due to the $170M expenditure on Carrier Aircraft Nuclear-CVAN support?

The $170M expenditure was intended to ensure the operational readiness of critical naval assets – nuclear-powered aircraft carriers. While the cost growth is notable, the successful completion of the contract implies that the required support was delivered. The true impact hinges on whether the final cost represented fair value for the services rendered and if the expenditure aligned with the Navy's strategic budget priorities for maintaining its carrier fleet.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vigor Industrial LLC

Address: 1801 16TH AVE SW, SEATTLE, WA, 98134

Business Categories: Category Business, Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline