DoD's $12.5M overhaul parts contract awarded to Valley Machine Company shows fair value with 2 bidders
Contract Overview
Contract Amount: $12,513,424 ($12.5M)
Contractor: Valley Machine Company, Inc.
Awarding Agency: Department of Defense
Start Date: 2007-09-24
End Date: 2008-09-30
Contract Duration: 372 days
Daily Burn Rate: $33.6K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: OVERHAUL PARTS
Place of Performance
Location: ALEXANDRIA, CALHOUN County, ALABAMA, 36250
State: Alabama Government Spending
Plain-Language Summary
Department of Defense obligated $12.5 million to VALLEY MACHINE COMPANY, INC. for work described as: OVERHAUL PARTS Key points: 1. Contract value appears reasonable given the scope of armored vehicle component manufacturing. 2. Competition was robust, with two bidders vying for the award, suggesting a healthy market. 3. The firm-fixed-price structure mitigates cost overrun risks for the government. 4. This contract supports critical military readiness by ensuring availability of essential parts. 5. The award falls within the broader defense manufacturing sector, a key area for government spending. 6. Performance will be monitored to ensure parts meet stringent military specifications.
Value Assessment
Rating: good
The contract's value of approximately $12.5 million for overhaul parts seems aligned with industry standards for specialized military equipment. While direct comparisons are difficult without more granular data on the specific parts and services, the presence of two bidders suggests the pricing was competitive. The firm-fixed-price nature of the contract further supports its value by capping the government's financial exposure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded. With two bidders participating, the competition level was moderate. This suggests that while multiple companies could have bid, the specific requirements or pre-qualification processes may have narrowed the field, potentially impacting the ultimate price discovery.
Taxpayer Impact: A moderate level of competition means taxpayers likely benefited from a reasonably competitive price, though a broader competition might have yielded even greater savings.
Public Impact
The Department of Defense benefits from the availability of critical overhaul parts for its armored vehicles. This contract ensures the operational readiness of military equipment, supporting national security objectives. The services delivered are essential for maintaining and repairing tanks and other armored components. The geographic impact is primarily within the defense supply chain, potentially supporting specialized manufacturing workforces.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for limited competition due to exclusion of sources, which could impact long-term pricing.
- Dependence on a single contractor for critical overhaul parts could pose supply chain risks if not managed.
- Ensuring consistent quality and adherence to strict military specifications for all delivered parts is crucial.
Positive Signals
- Firm-fixed-price contract structure limits financial risk for the government.
- Award to Valley Machine Company, Inc. indicates a capable supplier was identified.
- The contract supports the maintenance of vital military assets, contributing to national defense readiness.
Sector Analysis
This contract falls within the broader defense manufacturing sector, specifically focusing on military vehicle components. The market for such specialized parts is often characterized by a limited number of highly qualified manufacturers capable of meeting stringent military specifications. Spending in this area is critical for maintaining the operational readiness of the armed forces and ensuring the longevity of expensive military hardware.
Small Business Impact
The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans. Therefore, the direct impact on the small business ecosystem is likely minimal unless Valley Machine Company, Inc. utilizes small businesses in its own supply chain. Further investigation into subcontracting would be needed to fully assess its impact.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of the Army contracting officers and program managers. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified parts. Transparency is generally maintained through contract databases, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud or significant mismanagement.
Related Government Programs
- Military Vehicle Maintenance and Repair
- Defense Logistics Agency Contracts
- Armored Vehicle Component Manufacturing
- Department of Defense Supply Chain Management
Risk Flags
- Potential for limited competition due to source exclusion.
- Dependence on specific contractor for critical parts.
- Ensuring adherence to stringent military specifications.
Tags
defense, department-of-defense, department-of-the-army, armored-vehicle-parts, overhaul-parts, firm-fixed-price, limited-competition, valley-machine-company-inc, alabama, defense-manufacturing
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $12.5 million to VALLEY MACHINE COMPANY, INC.. OVERHAUL PARTS
Who is the contractor on this award?
The obligated recipient is VALLEY MACHINE COMPANY, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $12.5 million.
What is the period of performance?
Start: 2007-09-24. End: 2008-09-30.
What is the track record of Valley Machine Company, Inc. with Department of Defense contracts, particularly for armored vehicle parts?
Valley Machine Company, Inc. has a history of performing contracts with the Department of Defense. While this specific contract focuses on overhaul parts for military armored vehicles, their broader experience would need to be assessed to understand their overall performance, on-time delivery rates, and quality control history. Analyzing past performance reviews and any documented issues or commendations would provide a clearer picture of their reliability and capability in fulfilling such critical defense requirements. Without access to detailed historical performance data, it's difficult to definitively assess their track record beyond the award of this specific contract.
How does the $12.5 million value compare to similar contracts for armored vehicle overhaul parts?
Benchmarking the $12.5 million value requires a detailed understanding of the specific overhaul parts included in this contract, the quantities, and the required specifications. Contracts for specialized military components can vary significantly in price based on complexity, materials, and manufacturing processes. Generally, a contract of this magnitude for overhaul parts suggests a substantial quantity or high-value components. Comparing it to other contracts for similar vehicle types (e.g., Abrams tanks, Bradley Fighting Vehicles) or component categories (e.g., engine parts, transmission components) would be necessary. The presence of two bidders suggests the price was deemed competitive within the market for these specific parts.
What are the primary risks associated with this contract, and how are they being mitigated?
The primary risks associated with this contract include potential quality issues with the overhaul parts, delivery delays impacting military readiness, and the possibility of price increases if the firm-fixed-price structure is not adequately managed. Mitigation strategies likely involve stringent quality assurance inspections by the Department of the Army, clear delivery schedules with defined milestones, and robust contract administration to ensure compliance. The firm-fixed-price nature itself is a risk mitigation tool, capping the government's financial exposure. However, ensuring the contractor has the capacity and expertise to meet all specifications and timelines is crucial.
How effective is the 'Full and Open Competition After Exclusion of Sources' approach in ensuring value for taxpayers?
The 'Full and Open Competition After Exclusion of Sources' approach aims to balance the need for competition with specific requirements that might limit the pool of eligible bidders. In this case, with two bidders, it suggests a moderate level of competition. While this approach can ensure that qualified sources are considered, the exclusion of certain sources might limit the potential for achieving the lowest possible price. The effectiveness for taxpayers hinges on whether the excluded sources were genuinely unable to meet the requirements or if their exclusion artificially constrained competition. A thorough justification for the exclusion is key to assessing value.
What is the historical spending pattern for armored vehicle overhaul parts by the Department of the Army?
Historical spending on armored vehicle overhaul parts by the Department of the Army is substantial, reflecting the ongoing need to maintain a large and aging fleet of vehicles. Annual expenditures can fluctuate based on modernization programs, operational tempo, and depot maintenance schedules. Analyzing past contract awards for similar parts and services over several fiscal years would reveal trends in spending, identify key contractors, and highlight any significant shifts in procurement strategies or pricing. This contract represents a portion of that ongoing investment in fleet readiness.
What are the implications of this contract for the specific sector of military armored vehicle component manufacturing?
This contract signifies continued government investment in the specialized sector of military armored vehicle component manufacturing. Awards like this provide revenue and support for companies like Valley Machine Company, Inc., enabling them to maintain skilled workforces and manufacturing capabilities. It also signals demand for specific types of parts, potentially influencing production levels and innovation within the sector. The competitive nature, even if limited, encourages efficiency and quality among manufacturers vying for these defense contracts.
Industry Classification
NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: W911KF06R0009
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 100 VMC DR, ALEXANDRIA, AL, 03
Business Categories: Category Business, Small Business
Financial Breakdown
Contract Ceiling: $12,513,424
Exercised Options: $12,513,424
Current Obligation: $12,513,424
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W911KF06D0009
IDV Type: IDC
Timeline
Start Date: 2007-09-24
Current End Date: 2008-09-30
Potential End Date: 2008-09-30 00:00:00
Last Modified: 2009-03-04
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)