DoD awards $394M for USS Bataan DSRA, with Metro Machine Corp. securing the definitive contract

Contract Overview

Contract Amount: $393,953,648 ($394.0M)

Contractor: Metro Machine Corp.

Awarding Agency: Department of Defense

Start Date: 2024-03-22

End Date: 2026-08-14

Contract Duration: 875 days

Daily Burn Rate: $450.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USS BATAAN (LHD 5)FY 24 DSRA

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $394.0 million to METRO MACHINE CORP. for work described as: USS BATAAN (LHD 5)FY 24 DSRA Key points: 1. Value for money assessed through benchmarking against similar naval repair contracts. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include contract duration and fixed-price nature, which can shift risk to the contractor. 4. Performance context relies on the contractor's historical success with naval vessels. 5. Sector positioning places this within the critical naval shipbuilding and repair industry.

Value Assessment

Rating: good

The contract value of $393,953,648 for the USS Bataan (LHD 5) FY24 DSRA appears reasonable when benchmarked against similar large-scale naval vessel repair and modernization projects. While specific cost breakdowns are not public, the firm-fixed-price structure suggests that the contractor, Metro Machine Corp., has assumed significant cost risk. The award amount is within the expected range for a comprehensive overhaul of a major amphibious assault ship, considering the complexity of systems involved and the extensive labor required.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this specialized service. While two bidders is not extensive, it does provide a basis for price comparison and ensures that the award was not made without considering alternatives. The competitive process aims to secure the best value for the government.

Taxpayer Impact: A full and open competition, even with two bidders, generally benefits taxpayers by fostering a more competitive environment that can lead to lower prices and better service quality compared to sole-source or limited competition scenarios.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring the USS Bataan is maintained in peak condition. Services delivered include extensive depot-level maintenance, repair, and modernization of the amphibious assault ship. The geographic impact is centered in Virginia, where Metro Machine Corp. is located, supporting local jobs and the maritime industrial base. Workforce implications include employment for skilled tradespeople, engineers, and support staff within the shipyard and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration of 875 days (approx. 2.4 years) presents a long-term commitment with potential for scope creep or unforeseen issues impacting final cost.
Firm-fixed-price contracts can sometimes lead to contractors cutting corners if not meticulously overseen, though this is less common in naval repair.
Dependence on a single contractor for such a critical asset necessitates robust oversight to ensure quality and timely completion.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process that should yield fair pricing.
The contractor, Metro Machine Corp., has a history of performing work for the Department of the Navy, indicating relevant experience.
The firm-fixed-price structure shifts cost overrun risk to the contractor, providing budget certainty for the government.
The contract is for a specific, well-defined scope (DSRA), reducing ambiguity.

Sector Analysis

The naval shipbuilding and repair sector is a critical component of national defense, characterized by high barriers to entry due to specialized facilities, skilled labor, and stringent regulatory requirements. This contract falls within the Ship Building and Repairing industry (NAICS 336611). The market is dominated by a few large, experienced firms capable of handling complex overhauls of capital-intensive naval assets. Spending in this sector is driven by military readiness requirements and the lifecycle management of aging fleets.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific small business subcontracting goals explicitly mentioned in the provided data. Given the scale and specialized nature of depot-level ship repair, prime contracts are typically awarded to large, established shipyards. However, the prime contractor will likely engage numerous small businesses within its supply chain for specialized parts, materials, and services, contributing indirectly to the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily be managed by the Department of the Navy, likely through contracting officers' representatives (CORs) and quality assurance personnel stationed at the contractor's facility. The firm-fixed-price nature necessitates close monitoring of progress, adherence to specifications, and quality control to ensure the vessel is returned to service on time and to required standards. Transparency is generally maintained through contract award databases and reporting requirements, though detailed performance metrics may not be publicly disclosed.

Related Government Programs

Naval Vessel Repair and Maintenance
Shipbuilding and Repair Contracts
Amphibious Assault Ship Maintenance
Department of Defense Shipyard Services
Fleet Readiness Programs

Risk Flags

Long contract duration
Potential for cost overruns (contractor risk)
Limited number of bidders for specialized service

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $394.0 million to METRO MACHINE CORP.. USS BATAAN (LHD 5)FY 24 DSRA

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 $394.0 million.

What is the period of performance?

Start: 2024-03-22. End: 2026-08-14.

What is Metro Machine Corp.'s track record with similar naval repair contracts?

Metro Machine Corp. has a documented history of performing maintenance and repair work for the U.S. Navy. While specific details on past contracts of identical scope and value are not publicly itemized here, their experience with naval vessels, including amphibious assault ships, is a key factor in their selection. Past performance reviews, typically part of the source selection process, would have assessed their ability to meet schedule, cost, and quality requirements on previous engagements. The Navy's continued awarding of contracts suggests a satisfactory performance history, though specific metrics like on-time completion rates or cost variance percentages are generally not public.

How does the $394 million award compare to historical spending on similar ship maintenance?

The $393,953,648 award for the USS Bataan (LHD 5) FY24 DSRA is substantial, reflecting the complexity and scope of depot-level maintenance for a large amphibious assault ship. Historical data indicates that such overhauls can range from tens to hundreds of millions of dollars, depending on the ship class, its age, the extent of modernization required, and prevailing labor and material costs. For instance, similar maintenance availabilities for other LHD or LHA class ships have often fallen within or exceeded this range. The firm-fixed-price nature of this contract provides a ceiling, but the actual cost to the government is fixed at this amount, assuming no change orders.

What are the primary risks associated with this firm-fixed-price contract?

The primary risk with a firm-fixed-price (FFP) contract, from the government's perspective, is that the contractor may be incentivized to reduce costs by potentially compromising quality or scope if oversight is insufficient. However, for complex naval repair, the risk is often shifted more towards the contractor. Metro Machine Corp. assumes the risk of cost overruns due to labor inefficiencies, material price increases, or unforeseen technical challenges discovered during the overhaul. If they exceed the fixed price, their profit margin shrinks or they incur a loss. The government's main risk is ensuring the contractor delivers the required quality and functionality within the agreed-upon price and schedule, necessitating robust government quality assurance and project management.

How effective is full and open competition in ensuring value for this type of specialized service?

Full and open competition is generally considered the most effective method for ensuring value, even in specialized sectors like naval repair. It allows a wider pool of qualified contractors to bid, fostering price competition and encouraging innovation. In this case, two bids were received, indicating a degree of competition. While more bidders could potentially drive prices lower, the specialized nature of ship repair limits the number of capable firms. The effectiveness hinges on the government's ability to clearly define requirements and evaluate bids comprehensively, considering not just price but also technical capability, past performance, and schedule adherence. The Navy's process aims to balance competitive pressure with the need for proven expertise.

What are the historical spending patterns for USS Bataan (LHD 5) maintenance?

Historical spending patterns for the USS Bataan (LHD 5) would show a recurring need for maintenance and repair services throughout its operational life. Major depot-level availabilities, like the DSRA awarded here, typically occur every few years to address significant maintenance, repair, and modernization needs. Prior to this $394 million award, the ship would have undergone various planned maintenance availabilities (PMAs) and potentially other depot-level work, each with associated costs. Analyzing past awards for LHD 5 would reveal trends in spending, the types of work performed, and the contractors utilized, providing context for the current contract's scale and necessity.

What is the significance of the 'Ship Building and Repairing' NAICS code (336611) in this context?

The NAICS code 336611, 'Ship Building and Repairing,' signifies the specific industrial sector this contract falls under. This classification is crucial for economic analysis, allowing comparison with industry benchmarks, market size estimations, and understanding the competitive landscape. Companies operating under this code possess specialized infrastructure, workforce expertise, and certifications required for maritime construction and maintenance. Contracts within this sector are often large-scale, long-duration, and critical to national security and economic activity, involving complex engineering and project management.

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: N0002423R4418

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wico Limited

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: $399,508,225

Exercised Options: $393,953,648

Current Obligation: $393,953,648

Subaward Activity

Number of Subawards: 77

Total Subaward Amount: $159,305,035

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline