Navy awards $43.4M contract for ship repair, with fixed-price award fee structure

Contract Overview

Contract Amount: $43,420,342 ($43.4M)

Contractor: Metro Machine Corp.

Awarding Agency: Department of Defense

Start Date: 2015-05-15

End Date: 2016-04-07

Contract Duration: 328 days

Daily Burn Rate: $132.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE AWARD FEE

Sector: Defense

Official Description: IGF::CT::IGF USS MITSCHER (DDG 57) ESRA(D)

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $43.4 million to METRO MACHINE CORP. for work described as: IGF::CT::IGF USS MITSCHER (DDG 57) ESRA(D) Key points: 1. The contract utilized a fixed-price award fee structure, aiming to incentivize performance while managing costs. 2. Competition was full and open, suggesting a robust bidding process that could lead to competitive pricing. 3. The contract duration of 328 days indicates a focused scope of work for the specified vessel. 4. The award was made to Metro Machine Corp., a contractor with experience in this sector. 5. The contract falls under the Ship Building and Repairing NAICS code, a specialized industrial category. 6. The fixed-price nature of the base contract provides cost certainty, with award fees tied to performance metrics.

Value Assessment

Rating: good

The contract's fixed-price award fee structure is a common approach for managing ship repair costs, balancing cost control with performance incentives. Benchmarking this specific award fee structure against similar contracts for the DDG 57 class or comparable vessels would provide a clearer picture of value. However, the base fixed price offers a degree of cost predictability for the government. The award fee component, if effectively structured, can drive contractor efficiency and quality.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and evaluated. This approach generally fosters a competitive environment, encouraging bidders to offer their best pricing and terms to secure the award. The presence of two bids suggests a reasonable level of competition for this specialized service.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down prices through market forces, ensuring the government receives competitive rates for essential services like ship repair.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the operational readiness of the USS Mitscher (DDG 57). Services delivered include essential ship repair and maintenance to keep the vessel in operational condition. The geographic impact is likely concentrated around the contractor's facility in Virginia, where the repair work would be performed. The contract supports skilled labor within the maritime repair industry, contributing to the shipbuilding and repair workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if award fee targets are not met or if scope creep occurs.
Dependence on a single contractor for a specific vessel's repair needs could create single points of failure.
The effectiveness of the award fee structure in truly driving value depends heavily on the clarity and measurability of performance metrics.

Positive Signals

Full and open competition suggests a healthy market and potential for competitive pricing.
Fixed-price component provides a baseline cost certainty for the government.
The contract is for a specific, defined period, limiting long-term financial exposure.
Award fee structure incentivizes contractor performance beyond basic requirements.

Sector Analysis

This contract falls within the Ship Building and Repairing sector, a critical component of the defense industrial base. The market for naval vessel maintenance and repair is specialized, often dominated by a few key players capable of handling complex repairs on sophisticated warships. Spending in this sector is directly tied to naval fleet readiness and modernization efforts. Comparable spending benchmarks would involve analyzing other repair contracts for similar classes of destroyers or other naval vessels.

Small Business Impact

The contract details do not indicate a small business set-aside, nor is there information on subcontracting plans. Given the specialized nature of naval ship repair, it is possible that larger firms with specific capabilities are prioritized. Further analysis would be needed to determine if small businesses were involved as subcontractors or if opportunities were missed.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The fixed-price award fee structure implies performance monitoring to determine the award fee payout. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. Transparency is generally maintained through contract award databases, though specific performance metrics for the award fee may not be publicly detailed.

Related Government Programs

Naval Ship Repair Contracts
Shipbuilding and Repairing Services
Defense Maintenance and Modernization
Fleet Readiness Programs

Risk Flags

Potential for cost growth if award fee targets are met.
Contract performance monitoring is critical for value realization.
Dependence on contractor's ability to meet specific repair milestones.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.4 million to METRO MACHINE CORP.. IGF::CT::IGF USS MITSCHER (DDG 57) ESRA(D)

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 $43.4 million.

What is the period of performance?

Start: 2015-05-15. End: 2016-04-07.

What is the track record of Metro Machine Corp. with the Department of the Navy for similar ship repair contracts?

Metro Machine Corp. has a history of performing contracts with the Department of the Navy, including ship repair and maintenance services. Analyzing their past performance on similar vessels, particularly destroyers, would reveal their reliability, adherence to schedule, and quality of work. Past contract awards and completion data can indicate their capacity and expertise. A review of contract close-out data, including any disputes or claims, would further illuminate their performance history. Understanding their historical success rate with award fee structures would also be beneficial in assessing the likelihood of achieving performance targets on this contract.

How does the awarded amount of $43.4 million compare to the estimated cost or budget for this type of repair work?

Without access to the government's independent government cost estimate (IGCE) or the contractor's detailed proposal, a direct comparison of the awarded amount to the budget is challenging. However, the fact that it was awarded under full and open competition suggests the price was deemed fair and reasonable by the contracting officer, likely after evaluating multiple bids. To benchmark effectively, one would compare this award to historical repair costs for the USS Mitscher (DDG 57) or similar Arleigh Burke-class destroyers, considering inflation and the specific scope of work. The presence of two bids provides some market validation, implying the price was competitive within the market for these services.

What are the specific performance metrics tied to the award fee, and how are they measured?

The specific performance metrics tied to the award fee are not detailed in the provided data. Typically, for ship repair contracts, these metrics could include factors such as on-time completion of milestones, adherence to quality standards (e.g., minimizing rework), efficient use of resources, and meeting specific technical performance requirements. The measurement process would involve government representatives (e.g., Contracting Officer's Representative - COR) monitoring progress against the contract's Performance Work Statement (PWS) and evaluating the contractor's performance against the pre-defined criteria. The clarity and objectivity of these metrics are crucial for fair assessment and for the contractor to understand how to maximize their award fee.

What is the potential risk associated with the fixed-price award fee contract type for this service?

The primary risk with a fixed-price award fee contract is the potential for the government to pay a higher total price if the contractor achieves all award fee targets, compared to a firm-fixed-price contract where the price is set. However, the fixed-price base provides cost certainty. Risks also include the contractor potentially cutting corners on quality to maximize profit if award fee criteria are not robustly defined or monitored, or conversely, the government not achieving desired performance levels if the award fee structure is not sufficiently incentivizing. Scope creep is another risk, which could lead to additional costs if not managed tightly through contract modifications.

How has spending on ship repair and maintenance for the Navy's destroyer fleet trended over the past five years?

Analyzing historical spending trends for Navy destroyer fleet repair and maintenance over the past five years would require access to detailed federal procurement data. Generally, spending in this category is influenced by the age of the fleet, operational tempo, and budget allocations. As ships age, maintenance and repair costs tend to increase. Budgetary pressures within the Department of Defense can also impact the timing and scope of repair availability. A trend analysis would likely show fluctuations based on specific maintenance cycles, major overhauls, and overall fleet readiness priorities, potentially indicating an increasing or stable demand for such services.

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: N0002415R4406

Offers Received: 2

Pricing Type: FIXED PRICE AWARD FEE (M)

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: $43,453,113

Exercised Options: $43,420,342

Current Obligation: $43,420,342

Subaward Activity

Number of Subawards: 29

Total Subaward Amount: $20,072,972

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline