Vigor Works LLC awarded $61.5M for Navy shipbuilding, highlighting a competitive market for vessel construction

Contract Overview

Contract Amount: $61,451,667 ($61.5M)

Contractor: Vigor Works LLC

Awarding Agency: Department of Defense

Start Date: 2023-09-29

End Date: 2027-10-01

Contract Duration: 1,463 days

Daily Burn Rate: $42.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LOW-RATE INITIAL PRODUCTION (LRIP) - 2 VESSEL

Place of Performance

Location: CLACKAMAS, CLACKAMAS County, OREGON, 97015

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $61.5 million to VIGOR WORKS LLC for work described as: LOW-RATE INITIAL PRODUCTION (LRIP) - 2 VESSEL Key points: 1. The contract value represents a significant investment in naval capabilities. 2. Full and open competition suggests a healthy market with multiple potential suppliers. 3. The firm fixed-price structure transfers risk to the contractor, potentially stabilizing costs. 4. The duration of the contract indicates a long-term commitment to vessel production. 5. This award fits within the broader context of national defense spending on maritime assets.

Value Assessment

Rating: good

Benchmarking this specific contract is challenging without more detailed cost breakdowns or comparable LRIP contracts for similar vessels. However, the firm fixed-price nature suggests that the government has secured a predictable cost ceiling. The award to Vigor Works LLC, a known entity in shipbuilding, implies a level of confidence in their ability to deliver within the negotiated price. Further analysis would require comparing the per-vessel cost against industry averages for similar naval platforms.

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 specific number of bidders is not provided, but this procurement method generally fosters a competitive environment, which can lead to better pricing and innovation. The government likely sought proposals from multiple shipbuilders to ensure they received the best value.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for cost savings through a robust bidding process and encourages market efficiencies.

Public Impact

The U.S. Navy will benefit from the acquisition of two new vessels, enhancing its operational capacity. This contract supports the shipbuilding and repair industry, a critical sector for national security. The primary geographic impact will be in Oregon, where Vigor Works LLC is located, potentially creating or sustaining jobs. The award contributes to the defense industrial base and the skilled workforce required for complex vessel construction.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific bidder count limits full assessment of competitive intensity.
Firm fixed-price contracts can sometimes lead to scope creep if not managed carefully.
Long-term nature of the contract requires ongoing performance monitoring.

Positive Signals

Awarded under full and open competition, suggesting a competitive process.
Firm fixed-price contract aligns incentives for contractor efficiency.
Vigor Works LLC has a track record in shipbuilding, indicating experience.
Contract supports critical national defense needs.

Sector Analysis

The shipbuilding and repair sector is a vital component of the defense industrial base, characterized by high capital investment, specialized labor, and long production cycles. This contract falls within the broader category of defense procurement for naval assets. The market is often dominated by a few large prime contractors, but competition for specific vessel types and components can be robust. Spending in this sector is heavily influenced by geopolitical factors and national security priorities.

Small Business Impact

While this contract was awarded under full and open competition and does not appear to have a specific small business set-aside, it's possible that Vigor Works LLC will engage small businesses as subcontractors. The extent of small business participation will depend on Vigor Works' subcontracting plan and the availability of qualified small businesses within the supply chain for shipbuilding components and services. Further analysis of subcontracting reports would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Army and potentially the Department of the Navy, given the nature of the vessels. Mechanisms would include contract performance reviews, milestone tracking, and quality assurance inspections. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Vessel Construction
Shipbuilding and Repair Services
Defense Procurement
Low-Rate Initial Production (LRIP)

Risk Flags

Potential for cost overruns in LRIP phase
Schedule adherence risk
Supply chain vulnerability
Long-term contract management complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.5 million to VIGOR WORKS LLC. LOW-RATE INITIAL PRODUCTION (LRIP) - 2 VESSEL

Who is the contractor on this award?

The obligated recipient is VIGOR WORKS LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $61.5 million.

What is the period of performance?

Start: 2023-09-29. End: 2027-10-01.

What is Vigor Works LLC's track record with similar naval shipbuilding contracts?

Vigor Works LLC has a history of performing shipbuilding and repair work for the U.S. government, including contracts with the Navy and Coast Guard. Their experience often involves vessel construction, conversion, and repair. Specific details on past LRIP contracts for vessels of this size and type would require a deeper dive into their contract history. However, their established presence in the industry suggests a foundational capability. Assessing their performance on previous contracts, including adherence to schedule, budget, and quality standards, is crucial for understanding their reliability on this new award. Publicly available data may highlight past successes and any challenges encountered, providing context for this current $61.5 million award.

How does the per-vessel cost compare to similar naval shipbuilding contracts?

Without specific cost breakdowns for the two vessels and comparable data on recent LRIP contracts for similar naval platforms, a precise per-vessel cost benchmark is difficult to establish. The total award of $61.5 million for two vessels equates to approximately $30.75 million per vessel. This figure needs to be contextualized against the complexity, size, and technological capabilities of the vessels. For instance, smaller patrol craft would have a significantly lower per-unit cost than larger combatants or specialized support vessels. Benchmarking would involve comparing this figure to the cost of similar vessels procured by the Navy or other allied nations, considering factors like inflation, technological advancements, and the specific requirements of the LRIP phase, which often involves higher initial unit costs due to production ramp-up.

What are the primary risks associated with this Low-Rate Initial Production (LRIP) contract?

The primary risks associated with this LRIP contract include production inefficiencies during the initial ramp-up phase, potential for cost overruns if the firm fixed-price contract doesn't fully account for unforeseen production challenges, and schedule delays. LRIP contracts are designed to establish a production baseline, and deviations can be costly. Technical risks related to integrating new systems or manufacturing processes for these specific vessels also exist. Furthermore, the long-term nature of the contract (ending in 2027) introduces risks related to supply chain disruptions, labor availability, and potential changes in government requirements or funding priorities. Effective risk mitigation will depend on robust contractor performance management and proactive government oversight.

How effective is the firm fixed-price contract type in managing costs for naval shipbuilding?

A firm fixed-price (FFP) contract type is generally considered effective in managing costs for naval shipbuilding when the scope of work is well-defined and the contractor possesses the necessary expertise and risk management capabilities. Under an FFP contract, the contractor assumes the primary risk of cost overruns, providing a strong incentive for efficiency and cost control. This can lead to predictable final costs for the government. However, if the initial cost estimates are inaccurate or unforeseen technical challenges arise, the contractor might face significant financial strain, potentially impacting quality or leading to disputes. For LRIP, where production processes are being established, the FFP structure requires careful negotiation and a thorough understanding of potential production variables to ensure the price accurately reflects the anticipated costs and risks.

What is the historical spending trend for naval vessel construction by the Department of the Army/Navy?

Historical spending on naval vessel construction by the Department of the Navy (and by extension, the Department of Defense, which includes the Army's role in certain maritime assets) has been substantial and fluctuates based on strategic priorities, fleet modernization plans, and geopolitical events. The Navy's shipbuilding budget is a significant portion of its overall budget, allocated across various programs including aircraft carriers, submarines, destroyers, frigates, and auxiliary vessels. Spending trends are influenced by multi-year procurement strategies, the introduction of new ship classes, and the need to replace aging platforms. Analyzing historical data reveals periods of increased investment during times of heightened global tension or strategic shifts, and periods of consolidation or focus on maintenance and upgrades during more stable times. This specific contract, while awarded via the Army, likely supports Navy requirements, reflecting ongoing investment in expanding or modernizing the fleet.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vigor Industrial LLC

Address: 9700 SE LAWNFIELD RD, CLACKAMAS, OR, 97015

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: $61,451,667

Exercised Options: $61,451,667

Current Obligation: $61,451,667

Subaward Activity

Number of Subawards: 46

Total Subaward Amount: $21,259,641

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W56HZV17D0086

IDV Type: IDC

Timeline