DoD's $200M Ship Building Contract with Metro Machine Corp: A Cost Plus Incentive Fee Award
Contract Overview
Contract Amount: $199,981,111 ($200.0M)
Contractor: Metro Machine Corp
Awarding Agency: Department of Defense
Start Date: 2014-03-13
End Date: 2020-11-07
Contract Duration: 2,431 days
Daily Burn Rate: $82.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: IGF::CT::IGF PLANNING
Place of Performance
Location: BREMERTON, KITSAP County, WASHINGTON, 98314
Plain-Language Summary
Department of Defense obligated $200.0 million to METRO MACHINE CORP for work described as: IGF::CT::IGF PLANNING Key points: 1. The contract value is substantial at $199,981,111.11. 2. Awarded under full and open competition, indicating a competitive bidding process. 3. The contract type is Cost Plus Incentive Fee (CPIF), which can incentivize cost savings but also carries inherent risks. 4. The sector is Ship Building and Repairing, a critical defense industry.
Value Assessment
Rating: fair
The Cost Plus Incentive Fee (CPIF) structure allows for shared savings, but the final cost is subject to performance. Without specific benchmarks for similar ship repair contracts, it's difficult to definitively assess if the final price was optimal.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded through full and open competition, suggesting a robust price discovery process. However, the CPIF structure means the final price is not fixed and depends on contractor performance and negotiated incentives.
Taxpayer Impact: Taxpayer funds are utilized for this significant defense expenditure. The CPIF contract type aims to balance cost control with contractor motivation, potentially leading to efficient use of funds if incentives are well-structured.
Public Impact
Ensures readiness of naval assets through essential ship maintenance and repair. Supports jobs within the shipbuilding and repairing industry. Contributes to the Department of Defense's operational capabilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns with CPIF contracts if incentives are not effectively managed.
- Long contract duration (2431 days) increases exposure to market fluctuations and unforeseen issues.
- Lack of specific performance metrics or benchmarks makes definitive value assessment challenging.
Positive Signals
- Awarded through full and open competition, promoting market participation.
- CPIF structure can incentivize cost efficiency and performance.
- Contract supports critical defense infrastructure.
Sector Analysis
The shipbuilding and repairing sector is vital for national security, involving complex and high-value contracts. Spending in this sector is often driven by defense needs and technological advancements, with significant capital investment required.
Small Business Impact
This contract does not appear to have specific set-asides for small businesses, as indicated by 'sb': false. The primary contractor, Metro Machine Corp, is likely a larger entity, and opportunities for small businesses would typically be through subcontracting.
Oversight & Accountability
The contract's duration and complexity necessitate ongoing oversight to ensure adherence to terms, cost control, and quality of work. The CPIF structure requires careful monitoring of performance against incentive targets.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Cost overrun potential with CPIF.
- Long contract duration.
- Lack of specific performance benchmarks.
- Potential for scope creep over the contract's life.
Tags
ship-building-and-repairing, department-of-defense, wa, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $200.0 million to METRO MACHINE CORP. IGF::CT::IGF 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 $200.0 million.
What is the period of performance?
Start: 2014-03-13. End: 2020-11-07.
What was the final negotiated price and how did it compare to the initial target cost, considering the CPIF structure?
The provided data does not include the final negotiated price or details on how it deviated from the target cost. Analyzing the incentive fee structure and actual performance against targets would be crucial to determine if the CPIF mechanism effectively controlled costs and rewarded efficiency for this $200M contract.
What specific risks were identified during the full and open competition process for this ship building and repairing contract?
While awarded under full and open competition, specific risks associated with this contract could include technical complexity of the repairs, potential for unforeseen structural issues discovered during the work, supply chain disruptions for specialized parts, and the inherent risks of a Cost Plus Incentive Fee (CPIF) contract where final costs are not fixed upfront.
How effectively did the Cost Plus Incentive Fee (CPIF) structure contribute to the overall value and efficiency of this contract?
The effectiveness of the CPIF structure hinges on the clarity and attainability of the incentive targets and the rigor of cost accounting. If well-defined and monitored, it can drive cost savings and performance. However, without detailed performance data and final cost analysis, it's difficult to ascertain the true value and efficiency realized from this specific $200M contract.
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: N0002412R4321
Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: General Dynamics Corp
Address: 423 PACIFIC AVE, STE 200, BREMERTON, WA, 98337
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $225,846,484
Exercised Options: $200,002,975
Current Obligation: $199,981,111
Actual Outlays: $14,548,493
Subaward Activity
Number of Subawards: 18
Total Subaward Amount: $22,752,623
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2014-03-13
Current End Date: 2020-11-07
Potential End Date: 2020-11-07 00:00:00
Last Modified: 2022-04-02
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