DoD's $107.8M contract for USS Bataan availability awarded to Metro Machine Corp. amid 2 bids

Contract Overview

Contract Amount: $107,799,444 ($107.8M)

Contractor: Metro Machine Corp.

Awarding Agency: Department of Defense

Start Date: 2020-09-14

End Date: 2022-01-21

Contract Duration: 494 days

Daily Burn Rate: $218.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS BATAAN (LHD-5) FY20 SELECTED RESTRICTED AVAILABILITY

Place of Performance

Location: PORTSMOUTH, PORTSMOUTH CITY County, VIRGINIA, 23705

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $107.8 million to METRO MACHINE CORP. for work described as: USS BATAAN (LHD-5) FY20 SELECTED RESTRICTED AVAILABILITY Key points: 1. Contract value represents a significant investment in naval readiness. 2. Limited competition suggests potential for higher pricing or specialized capabilities. 3. Performance period spans over a year, indicating a complex scope of work. 4. The contract is a definitive contract, implying a clear statement of work and price. 5. Awarded by the Department of the Navy, it aligns with strategic fleet maintenance goals. 6. The firm-fixed-price structure shifts cost risk to the contractor.

Value Assessment

Rating: fair

The contract value of $107.8 million for a selected restricted availability of the USS Bataan (LHD-5) appears substantial. Benchmarking against similar availability contracts for amphibious assault ships is challenging without more specific details on the scope of work. However, the number of bids (2) suggests a potentially limited competitive environment, which could influence pricing. The firm-fixed-price nature of the contract provides cost certainty but requires careful oversight to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under full and open competition, but only two bids were received. This limited number of bidders could indicate a specialized market or high barriers to entry for potential competitors. While competition existed, the low number of offers may have reduced the downward pressure on pricing that is typically seen in more robustly competed solicitations. Further analysis would be needed to understand if the solicitation was structured in a way that inadvertently limited participation.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the most competitive pricing possible. The government may have paid a premium due to the restricted competition, although the firm-fixed-price contract provides a ceiling on costs.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring a key asset is maintained. Services delivered include critical repairs and maintenance for the USS Bataan (LHD-5). The geographic impact is centered around the contractor's facility in Virginia, where the work will be performed. Workforce implications include employment for skilled tradespeople in shipbuilding and repair within the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bids) may have resulted in a higher price than if more bidders had participated.
The firm-fixed-price contract places the risk of cost overruns on the contractor, but requires careful monitoring to ensure quality and scope are met.
The duration of the contract (494 days) is substantial, increasing the potential for unforeseen issues or scope creep if not managed tightly.

Positive Signals

The contract was awarded under full and open competition, allowing any responsible source to submit an offer.
The firm-fixed-price contract provides cost certainty for the government.
The contractor, Metro Machine Corp., has experience in ship repair, suggesting a likelihood of successful performance.

Sector Analysis

The shipbuilding and repair sector is a critical component of national defense, supporting the maintenance and modernization of naval fleets. This contract falls within the broader industrial base supporting naval vessels. Spending in this sector is often characterized by large, complex contracts requiring specialized facilities and expertise. Comparable spending benchmarks would typically involve other availability or overhaul contracts for similar classes of naval ships.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and there is no explicit information regarding subcontracting plans for small businesses. Given the specialized nature of naval ship repair, it is possible that larger firms like Metro Machine Corp. are the primary entities capable of performing such extensive work. Further investigation into subcontracting goals would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract, which incentivizes the contractor to complete the work within budget. Transparency is facilitated by the public nature of contract awards, though specific performance details and cost breakdowns may be proprietary. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance Contracts
Amphibious Assault Ship Overhauls
Defense Readiness Contracts
Shipbuilding and Repair Services

Risk Flags

Limited competition (2 bids)
Potential for cost overruns if scope is not tightly managed under FFP
Long contract duration increases risk exposure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $107.8 million to METRO MACHINE CORP.. USS BATAAN (LHD-5) FY20 SELECTED RESTRICTED AVAILABILITY

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 $107.8 million.

What is the period of performance?

Start: 2020-09-14. End: 2022-01-21.

What is the historical spending pattern for USS Bataan (LHD-5) availability contracts?

Analyzing historical spending for the USS Bataan (LHD-5) availability contracts requires access to historical contract data. Without specific historical data points, it's difficult to establish a precise pattern. However, naval vessel availability contracts are typically recurring, driven by maintenance schedules and operational tempo. The frequency and cost of these availabilities can fluctuate based on the ship's age, condition, and the complexity of required maintenance. For instance, major overhauls or upgrades would command higher costs and potentially longer durations than routine maintenance availabilities. Comparing the current $107.8 million contract to previous ones would reveal trends in cost escalation, scope changes, and the number of bidders over time, providing context for the current award's value and competitive landscape.

How does the number of bids (2) compare to similar naval ship availability contracts?

A limited number of bids, such as the two received for the USS Bataan (LHD-5) availability contract, can be indicative of several factors within the naval ship repair market. For complex availabilities of large vessels like an LHD, the pool of qualified contractors with the necessary facilities, security clearances, and specialized expertise might be inherently small. This contrasts with more common or less complex procurements where a larger number of bidders might be expected. If similar contracts for comparable vessels (e.g., other LHDs or LPDs) typically receive a higher number of bids (e.g., 3-5 or more), then this specific award might suggest a less competitive environment. Conversely, if 2-3 bids are standard for this type of specialized availability, then the competition level might be considered typical, though still potentially limiting price discovery.

What is Metro Machine Corp.'s track record with the Department of the Navy?

Metro Machine Corp. has a significant track record with the Department of the Navy, primarily in ship repair and maintenance services. Their history includes numerous contracts for availabilities, overhauls, and repairs of various naval vessels, including amphibious assault ships, destroyers, and cruisers. Examining their past performance on similar contracts would provide insight into their ability to meet schedule, cost, and quality requirements. Positive past performance indicators would include timely completion, adherence to budget, and successful execution of complex repair tasks. Conversely, any history of performance issues, contract disputes, or cost overruns on prior Navy contracts would be a flag for potential risk in this current award.

What are the potential risks associated with a firm-fixed-price contract for a long-duration availability?

Firm-fixed-price (FFP) contracts are generally preferred for their cost certainty. However, for long-duration availabilities like the 494-day contract for the USS Bataan (LHD-5), several risks can emerge. The primary risk is that the contractor may cut corners on quality or scope to maintain profitability if costs escalate unexpectedly due to unforeseen technical challenges, material price increases, or labor issues. Conversely, if the initial price was set too high due to contractor optimism or a lack of robust competition, the government might overpay. Effective government oversight is crucial to monitor progress, ensure adherence to specifications, and manage any necessary change orders, which can significantly impact the final cost and schedule under an FFP arrangement.

How does the $107.8 million cost compare to the total lifecycle cost or annual maintenance budget for an LHD-class ship?

Placing the $107.8 million contract value into the broader context of an LHD-class ship's lifecycle or annual maintenance budget is crucial for assessing value. LHDs are large, complex vessels with significant operational and maintenance demands. Their total lifecycle costs, spanning decades of service, run into billions of dollars. Annual maintenance budgets for such ships can also be substantial, encompassing routine upkeep, planned maintenance, and periodic major availabilities. A single availability contract of $107.8 million represents a significant portion of a ship's annual maintenance expenditure and a smaller, but still considerable, fraction of its overall lifecycle cost. Without specific figures for the annual maintenance budget or total lifecycle cost for an LHD-5, it's difficult to definitively benchmark this contract's cost-effectiveness, but it clearly represents a major investment in maintaining the ship's operational readiness.

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: N0002420R4467

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

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: $126,230,904

Exercised Options: $107,799,444

Current Obligation: $107,799,444

Subaward Activity

Number of Subawards: 42

Total Subaward Amount: $35,244,920

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline