DoD's $74.4M contract for USNS Mercy repairs awarded to Vigor Marine LLC under full and open competition

Contract Overview

Contract Amount: $74,409,036 ($74.4M)

Contractor: Vigor Marine LLC

Awarding Agency: Department of Defense

Start Date: 2020-06-05

End Date: 2021-03-27

Contract Duration: 295 days

Daily Burn Rate: $252.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: N104B2/PM4 C EDICK USNS MERCY CATEGORY FY20 ROH/DD

Place of Performance

Location: PORTLAND, MULTNOMAH County, OREGON, 97217

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $74.4 million to VIGOR MARINE LLC for work described as: N104B2/PM4 C EDICK USNS MERCY CATEGORY FY20 ROH/DD Key points: 1. The contract value represents a significant investment in maintaining the readiness of a key naval asset. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The firm fixed-price contract type shifts performance risk to the contractor, Vigor Marine LLC. 4. The contract duration of 295 days indicates a substantial scope of work for ship repair. 5. The award is part of broader Department of the Navy shipbuilding and repair efforts. 6. The specific NAICS code 336611 points to the specialized nature of shipbuilding and repairing.

Value Assessment

Rating: good

Benchmarking the $74.4 million cost for the USNS Mercy repairs against similar naval vessel maintenance contracts is challenging without specific details on the scope of work. However, the firm fixed-price nature of the contract suggests that the government has secured a defined cost for the services. The award to Vigor Marine LLC, a known entity in shipbuilding and repair, implies a level of confidence in their ability to deliver value within the agreed-upon price. Further analysis would require comparing the specific repair tasks and their associated costs to industry standards and historical data for similar vessel classes.

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 fact that it was competed suggests that multiple companies likely vied for the opportunity to perform the repairs on the USNS Mercy. A competitive bidding process generally fosters price discovery and can lead to more favorable pricing for the government compared to sole-source or limited competition awards.

Taxpayer Impact: Taxpayers benefit from full and open competition as it typically drives down costs through market forces, ensuring that the government receives the best possible value for its investment in essential naval asset maintenance.

Public Impact

The primary beneficiaries are the U.S. Navy and the Department of Defense, ensuring the operational readiness of the USNS Mercy, a critical hospital ship. The services delivered include extensive repairs and maintenance to keep the vessel in optimal condition for its humanitarian and medical support missions. The geographic impact is primarily centered around the shipyard where the repairs are conducted, likely supporting local economies and skilled labor. Workforce implications include employment opportunities for skilled tradespeople, engineers, and support staff involved in complex ship repair operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise during repairs, despite the firm fixed-price contract.
Dependence on Vigor Marine LLC's capacity and expertise for timely and quality completion of complex repairs.
Risk of schedule delays impacting the USNS Mercy's availability for its intended missions.

Positive Signals

Award to an established contractor (Vigor Marine LLC) suggests a degree of reliability and experience.
Firm fixed-price contract structure provides cost certainty for the government.
Full and open competition indicates a thorough vetting of potential contractors and pricing.

Sector Analysis

The shipbuilding and repairing sector (NAICS 336611) is a critical component of the defense industrial base, supporting naval fleet readiness. This contract for the USNS Mercy falls within the broader category of defense procurement, specifically focusing on maintenance and repair services for specialized vessels. The market for large-scale ship repair is concentrated among a few key players capable of handling the complexity and scale of naval assets. Spending in this sector is often driven by fleet modernization, maintenance schedules, and national security requirements.

Small Business Impact

This contract was awarded under full and open competition and does not indicate a specific small business set-aside. While Vigor Marine LLC is the prime contractor, there may be opportunities for small businesses to participate as subcontractors, particularly in specialized areas of repair or supply. The extent of small business subcontracting would depend on Vigor Marine's own procurement practices and the specific requirements of the repair work. Further analysis would be needed to determine the actual impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Accountability measures are embedded in the firm fixed-price contract terms, requiring Vigor Marine LLC to deliver specified repairs within the agreed budget and timeframe. Transparency is generally maintained through contract award notices and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Ship Maintenance Contracts
Shipbuilding and Repair Services
Defense Logistics Agency Contracts
Military Sealift Command Contracts
Fleet Readiness Programs

Risk Flags

Potential for schedule slippage
Risk of cost escalation if unforeseen issues arise
Contractor performance variability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.4 million to VIGOR MARINE LLC. N104B2/PM4 C EDICK USNS MERCY CATEGORY FY20 ROH/DD

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 $74.4 million.

What is the period of performance?

Start: 2020-06-05. End: 2021-03-27.

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

Vigor Marine LLC has a significant history of performing complex shipbuilding and repair work for the U.S. Navy and other government agencies. They have been involved in numerous contracts for maintenance, repair, and overhaul of various naval vessels, including aircraft carriers, amphibious assault ships, and auxiliary ships. Their experience often includes major overhauls, modernization projects, and emergency repairs. While specific performance metrics for past contracts are not detailed here, their continued success in winning competitive bids for substantial naval projects suggests a generally positive track record and demonstrated capability in meeting the demanding requirements of naval fleet maintenance.

How does the $74.4 million cost compare to similar repairs on hospital ships?

Directly comparing the $74.4 million cost for the USNS Mercy repairs to similar contracts is difficult without a precise breakdown of the work performed and the specific class of hospital ship. Hospital ships like the USNS Mercy are complex medical facilities integrated into a naval platform, requiring specialized maintenance. Factors such as the age of the vessel, the extent of planned upgrades, the specific systems requiring repair (e.g., medical equipment, propulsion, hull integrity), and the prevailing market rates for specialized shipyard labor all influence the total cost. However, given the scale and complexity typically associated with maintaining such a unique asset, $74.4 million represents a substantial but potentially justifiable investment for comprehensive repairs and readiness assurance.

What are the primary risks associated with this firm fixed-price contract?

The primary risk with a firm fixed-price (FFP) contract, while beneficial for cost certainty, lies in the potential for unforeseen issues arising during the repair process. If Vigor Marine LLC encounters unexpected technical challenges, material defects, or scope creep not explicitly covered by the contract's contingency clauses, they bear the financial burden of addressing these. This could lead to pressure on the contractor to cut corners on quality or delay completion if their cost estimates were too low. For the government, the risk is primarily that the contractor may not be able to deliver the full scope of work as intended within the fixed price, potentially leading to disputes or a less-than-optimal repair outcome if the contractor faces significant financial strain.

How effective is full and open competition in ensuring value for money in naval repair contracts?

Full and open competition is generally considered a highly effective mechanism for ensuring value for money in naval repair contracts. By allowing all responsible sources to bid, it fosters a competitive environment where contractors are incentivized to offer their most competitive pricing and most efficient solutions to win the award. This process helps to establish a market-based price for the services, reducing the likelihood of overpayment. Furthermore, competition can drive innovation and encourage contractors to develop more cost-effective repair methods. While effective, the ultimate value for money also depends on the clarity of the solicitation, the thoroughness of the evaluation process, and the government's ability to accurately define the scope of work.

What is the historical spending pattern for the USNS Mercy's maintenance and repair?

Historical spending data for the USNS Mercy's maintenance and repair would reveal a pattern of significant, periodic investments required to keep this complex hospital ship operational. Such vessels undergo extensive maintenance cycles, including dry-docking for hull work, major system overhauls (propulsion, power generation, medical facilities), and regulatory compliance updates. Spending can fluctuate year-to-year based on the vessel's maintenance schedule, operational tempo, and any emergent repair needs. Contracts for these types of services are typically large, often awarded through competitive processes, and reflect the specialized nature of maintaining a hospital ship. Analyzing past contract awards for the USNS Mercy would likely show a consistent need for substantial funding to ensure its readiness for its critical missions.

What are the implications of the 'OR' (Oregon) state code for this contract?

The 'OR' state code, along with 'OREGON' (SN), indicates the state where the contractor, Vigor Marine LLC, is located or where a significant portion of the work may be performed. Vigor Marine has shipyards in Oregon, which is a key hub for shipbuilding and repair activities on the West Coast. This suggests that the contract may leverage the infrastructure and skilled workforce available in Oregon for the execution of the USNS Mercy repairs. The geographic location can influence logistical considerations, labor costs, and the availability of specialized facilities, all of which are factored into the overall contract performance and cost.

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: N3220520R6500

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Carlyle Group Management L.L.C.

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $78,504,637

Exercised Options: $74,409,036

Current Obligation: $74,409,036

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline