Navy Contract Change Eliminates Pearl Harbor Shipyard Jobs

Dec 23, 2019

New U.S. Navy contracting terms have resulted in a pullout by a major contractor that is expected to result in the loss of hundreds of jobs at Pearl Harbor Naval Shipyard, officials said.

BAE Systems PLC will no longer perform Navy surface ship repair at Pearl Harbor, eliminating about 325 jobs, The Honolulu Star-Advertiser reported.

The Navy contracts with private shipyards and other firms for maintenance on non-nuclear surface ships.

The multinational security, aerospace and ship repair firm was the prime contractor for repair projects through which subcontractor surface ship work was funneled.

BAE announced a five-year multi-ship, multi-option contract in 2014 for modernization and maintenance on nine destroyers and cruisers at Pearl Harbor.

But multi-ship, multi-option contracts using cost-reimbursement have been replaced nationally by a Navy strategy called “multiple award contract-multi order,” officials said.

The new system uses firm-fixed-price contracts that do no allow adjustments for cost overruns, officials said.

BAE cannot bid on smaller, $1 million to $2 million contracts under the new Navy format, but can seek major ship projects that can be $50 million to $100 million, officials said.

BAE’s decision not to tender a new bid resulted from analysis of the Pearl Harbor business environment under the new contracting structure, spokesman Karl Johnson said.

More than 6,000 civilian and military personnel primarily work on submarines at Pearl Harbor. BAE was assigned the use of pier-side space and Dry Dock 4 and expanded its surface ship workforce using hundreds of subcontracted workers.

Under the new construct, the Navy will earmark the smaller jobs for small businesses, “so the big guys like BAE cannot bid on the smaller work, which kept them busy between the big jobs,” said John Stewart of the Ship Repair Association of Hawaii.