DoD's $367M shipbuilding contract with Metro Machine Corp. shows fair value despite limited competition

Contract Overview

Contract Amount: $366,770,928 ($366.8M)

Contractor: Metro Machine Corp.

Awarding Agency: Department of Defense

Start Date: 2010-12-07

End Date: 2019-03-15

Contract Duration: 3,020 days

Daily Burn Rate: $121.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: PLANNING

Place of Performance

Location: PORTSMOUTH, PORTSMOUTH CITY County, VIRGINIA, 23709

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $366.8 million to METRO MACHINE CORP. for work described as: PLANNING Key points: 1. Contract value of $367M over 9 years suggests significant investment in naval readiness. 2. The award was made under full and open competition, indicating broad market access. 3. A high number of bids (2) suggests a competitive but potentially concentrated market. 4. The contract type (Cost Plus Award Fee) incentivizes performance but requires careful oversight. 5. This contract supports critical shipbuilding and repair capabilities for the U.S. Navy. 6. The duration of 3020 days highlights the long-term nature of naval sustainment.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the services rendered. However, the total award of $367 million over approximately 8 years (December 2010 to March 2019) averages to roughly $45.9 million per year. This figure needs to be assessed against the complexity and scope of shipbuilding and repair services provided. Given the nature of defense contracts, especially for specialized vessels, this annual spend may be within a reasonable range, but a detailed cost breakdown would be necessary for a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive indicator for market engagement. While the data indicates two bids were received, the specific number of bidders does not inherently determine the quality of competition. A higher number of bidders generally leads to better price discovery and potentially lower costs for the government. However, in specialized sectors like shipbuilding, the pool of qualified bidders might be limited, making two bids a reasonable outcome.

Taxpayer Impact: Full and open competition is designed to ensure the government receives the best possible value by encouraging a wide range of offers. Even with two bids, the competitive process aims to drive down costs and improve service offerings for taxpayers.

Public Impact

The primary beneficiaries are the U.S. Navy, ensuring operational readiness and maintenance of its fleet. Services delivered include shipbuilding and repair, crucial for maintaining naval assets. The geographic impact is likely concentrated around naval shipyards and repair facilities, primarily in Virginia. This contract supports a skilled workforce in the shipbuilding and repair industry, contributing to specialized technical employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can lead to cost overruns if not managed diligently.
Limited number of bidders (2) might indicate a concentrated market, potentially impacting future competition.
The long contract duration (3020 days) requires sustained oversight to ensure ongoing value and performance.
Lack of specific details on the scope of work makes a precise value-for-money assessment difficult.

Positive Signals

Awarded under full and open competition, maximizing potential bidder pool.
The contract supports critical national defense infrastructure and readiness.
Metro Machine Corp. is a significant player in the shipbuilding and repair sector, suggesting established capabilities.
The contract's duration indicates a stable, long-term relationship for essential services.

Sector Analysis

The shipbuilding and repair sector is a critical component of the defense industrial base, characterized by high capital investment, specialized labor, and long production cycles. This contract falls within the broader industrial manufacturing and defense services market. Comparable spending benchmarks would typically involve analyzing other large-scale naval vessel construction and maintenance contracts, which often run into hundreds of millions or billions of dollars over their lifecycles. The North American Industry Classification System (NAICS) code 336611 for Ship Building and Repairing indicates a highly specialized industry.

Small Business Impact

The provided data does not indicate any specific small business set-asides for this contract, nor does it detail subcontracting plans. Given the scale and specialized nature of shipbuilding and repair, large prime contractors often handle the core work, with opportunities for small businesses potentially arising in specific component supply chains or specialized repair services. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

The contract type, Cost Plus Award Fee (CPA F), necessitates robust oversight to ensure costs are reasonable and award fees are justified by performance. The Department of Defense employs various oversight mechanisms, including contract officers, program managers, and Defense Contract Audit Agency (DCAA) reviews, to monitor spending and performance. Transparency is typically managed through contract reporting systems, though detailed performance metrics and cost breakdowns may not always be publicly available.

Related Government Programs

Naval Ship Repair Contracts
Shipbuilding and Conversion Contracts
Defense Industrial Base Contracts
Fleet Readiness Contracts

Risk Flags

Potential for cost overruns inherent in CPA F contracts.
Limited competition (2 bidders) may reduce price discovery.
Long contract duration requires sustained oversight.
Lack of detailed service scope hinders precise value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $366.8 million to METRO MACHINE CORP.. PLANNING

Who is the contractor on this award?

The obligated recipient is METRO MACHINE CORP..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $366.8 million.

What is the period of performance?

Start: 2010-12-07. End: 2019-03-15.

What specific types of shipbuilding and repair services were included under this contract?

The provided data indicates the contract falls under NAICS code 336611 (Ship Building and Repairing) and was awarded by the Department of the Navy. However, the specific services rendered are not detailed. Typically, such contracts could encompass a wide range of activities including routine maintenance, major overhauls, modernization programs, and potentially new construction or conversion of naval vessels. The 'Cost Plus Award Fee' structure suggests that performance metrics related to quality, timeliness, and cost control were established, and the contractor could earn additional fees based on meeting or exceeding these targets. Without access to the contract's statement of work, a precise understanding of the services remains elusive.

How does the $367 million contract value compare to similar shipbuilding and repair contracts awarded by the Navy during that period?

Comparing the $367 million total award value requires context regarding the specific types of vessels and the scope of work. Naval shipbuilding and repair contracts can vary dramatically in cost. For instance, a contract for routine maintenance on a destroyer would be significantly less expensive than a contract for the overhaul and modernization of an aircraft carrier or the construction of a new amphibious assault ship. The period of performance (December 2010 to March 2019) spans several fiscal years. To provide a meaningful comparison, one would need to identify contracts with similar vessel classes (e.g., destroyers, cruisers, carriers) and similar service scopes (e.g., scheduled maintenance, major repair, modernization). Anecdotally, large-scale naval repair and sustainment contracts often reach hundreds of millions of dollars, making this contract appear within a plausible range for significant fleet support.

What are the key performance indicators (KPIs) associated with the 'Award Fee' component of this contract?

The 'Award Fee' component of a Cost Plus Award Fee (CPA F) contract is designed to incentivize contractor performance beyond minimum requirements. While the specific KPIs for this Metro Machine Corp. contract are not publicly detailed, they typically revolve around objective and subjective criteria established in the contract's 'schedule'. Common KPIs in shipbuilding and repair include on-time delivery of milestones, adherence to quality standards (e.g., defect rates, rework required), cost control (staying within or below target costs), safety performance, and responsiveness to government requests. The government evaluates the contractor's performance against these criteria periodically and assigns a rating, which then determines the amount of award fee earned, up to a pre-defined maximum. Effective oversight is crucial to ensure these fees are awarded appropriately based on demonstrable performance.

What is the historical spending trend for Metro Machine Corp. with the Department of Defense, particularly in shipbuilding and repair?

Analyzing the historical spending trend for Metro Machine Corp. with the Department of Defense requires access to comprehensive contract databases covering multiple years. This $367 million contract represents a significant award. To understand the trend, one would need to aggregate all contracts awarded to Metro Machine Corp. by DoD agencies, filter them by the relevant NAICS codes (like 336611), and examine the award amounts and durations over time. This would reveal whether this contract is an anomaly, part of a consistent pattern of large awards, or indicative of a growing or shrinking relationship. Without that broader dataset, it's difficult to establish a definitive historical trend solely based on this single contract.

What risks are associated with a 'Cost Plus Award Fee' contract structure in the context of naval shipbuilding?

Cost Plus Award Fee (CPA F) contracts, while offering flexibility and incentivizing performance, carry inherent risks. For the government, the primary risk is potential cost growth, as the contractor is reimbursed for allowable costs. If cost controls are weak or the scope expands unexpectedly, the total cost can exceed initial estimates. The 'Award Fee' component introduces subjectivity; if not clearly defined and objectively measured, it can lead to disputes or perceptions of unfairness. For naval shipbuilding, where projects are complex and long-duration, effective government oversight is paramount to scrutinize costs, validate performance against award criteria, and prevent potential contractor 'gold plating' (incurring unnecessary costs to maximize award fees). The risk is mitigated by robust contract administration and clear performance metrics.

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: N0002410R4303

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 200 LIGON ST, NORFOLK, VA, 23523

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

Financial Breakdown

Contract Ceiling: $407,683,717

Exercised Options: $366,770,928

Current Obligation: $366,770,928

Subaward Activity

Number of Subawards: 107

Total Subaward Amount: $35,937,024

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline