Navy awards $57.3M contract for ship repair, with 2 bids received

Contract Overview

Contract Amount: $57,317,618 ($57.3M)

Contractor: Metro Machine Corp.

Awarding Agency: Department of Defense

Start Date: 2016-09-13

End Date: 2018-01-25

Contract Duration: 499 days

Daily Burn Rate: $114.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF USS GONZALEZ (DDG 66) EDSRA

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $57.3 million to METRO MACHINE CORP. for work described as: IGF::OT::IGF USS GONZALEZ (DDG 66) EDSRA Key points: 1. Value appears reasonable given the scope of ship repair services. 2. Competition was limited, with only two bids submitted. 3. Contract type is firm fixed price, which transfers risk to the contractor. 4. Performance period is substantial, indicating a long-term need. 5. This contract falls within the shipbuilding and repair sector. 6. The award was made by the Department of the Navy.

Value Assessment

Rating: good

The contract value of $57.3 million for ship repair services seems within a reasonable range for a definitive contract of this duration. Benchmarking against similar contracts for destroyer repair would provide a more precise value-for-money assessment. The firm fixed-price nature of the contract helps control costs by shifting risk to the contractor, which is a positive indicator for value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is the preferred method for ensuring the widest possible participation and best pricing. However, only two bids were received, suggesting that the pool of qualified bidders for this specific type of repair might be limited, or that other potential bidders chose not to participate.

Taxpayer Impact: While full and open competition is ideal, the low number of bids could indicate less competitive pressure than anticipated, potentially impacting the final price achieved for taxpayers.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the operational readiness of the USS GONZALEZ (DDG 66). Services include essential ship repair and maintenance to keep the vessel in service. The geographic impact is likely focused on the East Coast, given the contractor's location in Virginia. This contract supports skilled labor in the maritime repair industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may reduce price pressure.
Long contract duration (499 days) could lead to scope creep if not managed tightly.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Full and open competition, even with few bidders, is a positive sign.
Contract awarded to a domestic entity, supporting U.S. industry.

Sector Analysis

The shipbuilding and repair sector is critical for maintaining naval fleets. This contract falls under the broader industrial base supporting defense readiness. Comparable spending benchmarks for destroyer repair can vary significantly based on the specific class of ship and the extent of work required. The market typically involves specialized shipyards capable of handling complex naval vessel maintenance.

Small Business Impact

The contract was not set aside for small businesses, and the data indicates no specific subcontracting requirements for small businesses were mandated. This suggests that the primary contractor, Metro Machine Corp., will likely perform the majority of the work, with potential for subcontracting to larger, specialized firms rather than a broad impact on the small business ecosystem for this specific award.

Oversight & Accountability

The contract is a definitive contract, likely subject to standard oversight by the Department of the Navy's contracting officers. The firm fixed-price structure provides a degree of cost control. Transparency is generally maintained through contract award databases, though specific performance details and oversight activities may not be publicly detailed. Inspector General jurisdiction would apply in cases of fraud or waste.

Related Government Programs

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

Risk Flags

Limited Competition
Potential for Unforeseen Discoveries during Repair

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.3 million to METRO MACHINE CORP.. IGF::OT::IGF USS GONZALEZ (DDG 66) EDSRA

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 $57.3 million.

What is the period of performance?

Start: 2016-09-13. End: 2018-01-25.

What is the track record of Metro Machine Corp. in performing similar naval repair contracts?

Metro Machine Corp. has a history of performing repair and maintenance services for naval vessels. Reviewing their past performance on similar contracts, particularly for destroyers or other Aegis-class ships, would be crucial. This includes examining past performance evaluations, any history of contract disputes or terminations, and their ability to meet schedule and quality requirements. A strong track record suggests a lower risk of performance issues on this current contract. Without specific past performance data for this contractor on similar DDG repairs, it's difficult to definitively assess their capability beyond the fact they were awarded this contract.

How does the awarded price compare to industry benchmarks for similar destroyer repair work?

Benchmarking this $57.3 million contract against similar destroyer repair work is challenging without detailed specifications of the work performed. However, major overhauls for Arleigh Burke-class destroyers can range from tens of millions to over a hundred million dollars, depending on the scope (e.g., docking, hull work, system upgrades, modernization). The fact that only two bids were received might suggest either a highly specialized scope that limited competition or potentially less aggressive pricing than if more bidders were involved. A more precise comparison would require access to the detailed scope of work and cost breakdowns from comparable contracts.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks include potential cost overruns (mitigated by the firm fixed-price structure), schedule delays (mitigated by contract clauses and oversight), and performance quality issues (mitigated by inspection, testing, and contractor's past performance). Given the age of naval vessels and the complexity of repairs, unforeseen issues discovered during the work are a common risk. The limited competition (two bidders) could also be seen as a risk if it implies less market pressure on pricing or if one of the bidders was a preferred or incumbent provider. The Navy's oversight and the contractor's experience are key mitigation factors.

What is the historical spending trend for ship repair services by the Department of the Navy?

The Department of the Navy consistently allocates significant portions of its budget to shipbuilding, conversion, and repair. Historical spending trends show billions of dollars annually dedicated to maintaining and modernizing its fleet. This includes routine maintenance, planned overhauls, and emergency repairs. Spending can fluctuate based on fleet size, aging assets requiring more maintenance, and specific modernization initiatives. Contracts like this one for the USS GONZALEZ represent a typical component of the Navy's overall maintenance and readiness budget, reflecting a sustained and substantial investment in fleet upkeep.

What does the limited number of bidders (2) suggest about the market for this specific type of repair?

A limited number of bidders, in this case two, for a full and open competition can suggest several market dynamics. It might indicate that the specific requirements of the repair are highly specialized, requiring unique facilities, certifications, or expertise that only a few companies possess. Alternatively, it could reflect the current workload and capacity of the available shipyards, or perhaps the perceived profitability or risk associated with this particular contract deterred broader participation. For taxpayers, fewer bidders generally translate to less competitive pressure, potentially leading to higher prices than if a larger pool of interested and capable firms had competed.

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: N0002416R4404

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

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: $57,328,231

Exercised Options: $57,317,618

Current Obligation: $57,317,618

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline