Navy awards $6.9M contract for miscellaneous marine equipment to Sumitomo Heavy Industries

Contract Overview

Contract Amount: $10,000,000 ($10.0M)

Contractor: Sumitomo Heavy Industries, Ltd.

Awarding Agency: Department of Defense

Start Date: 2006-03-30

End Date: 2008-12-31

Contract Duration: 1,007 days

Daily Burn Rate: $9.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE

Sector: Construction

Official Description: 200606!007065!1700!N40084!NAVAL FAC ENG CMD FAR EAST !N4008406C0105 !A!N! !N! ! !20060330!20070610!690536396!690536396!690536396!N!SUMITOMO HEAVY INDUSTRIES LTD.!5-9-11, KITASHINAGAWA !SHINAGAWA-KU !JA!141-0!00000! !JA! ! !JAPAN !+000010000000!N!N!000000000000!2090!MISCELLANEOUS SHIP AND MARINE EQUIPMENT !C2 !CONSTRUCTION !000 !NOT DISCERNABLE !332999!E! !3! ! ! ! ! !99990909!B! ! !N!Z!A!U!J!2!003!B! !Z!N!Z!B!JA!N!L!N! ! ! ! ! !A!A!000!A!B!N! ! ! ! !1700!N61028!0001! !

Plain-Language Summary

Department of Defense obligated $10.0 million to SUMITOMO HEAVY INDUSTRIES, LTD. for work described as: 200606!007065!1700!N40084!NAVAL FAC ENG CMD FAR EAST !N4008406C0105 !A!N! !N! ! !20060330!20070610!690536396!690536396!690536396!N!SUMITOMO HEAVY INDUSTRIES LTD.!5-9-11, KITASHINAGAWA !SHINAGAWA-KU !JA!141-0!00000! !JA! ! … Key points: 1. Contract awarded for specialized marine equipment, indicating a need for unique or hard-to-source components. 2. The fixed-price contract type suggests a defined scope of work and predictable costs for the government. 3. Awarded to a foreign entity, raising potential considerations for supply chain resilience and geopolitical factors. 4. The contract duration of approximately 2.5 years aligns with the delivery timeline for complex equipment. 5. The North American Industry Classification System (NAICS) code 332999 points to a niche manufacturing sector.

Value Assessment

Rating: fair

The contract value of $6.9 million for miscellaneous ship and marine equipment appears reasonable given the specialized nature of the goods. Without specific details on the equipment, direct benchmarking is challenging. However, the fixed-price nature of the contract suggests that the government has a clear understanding of the costs involved, which can be a positive indicator of value. Further analysis would require comparing the specific items procured against similar market offerings or historical Navy procurements of comparable equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were likely solicited and had the opportunity to bid. The presence of three bids suggests a moderate level of competition for this specialized equipment. While full and open competition is generally preferred for ensuring fair pricing and access to the widest range of capabilities, the specific number of bidders can influence the intensity of price negotiation.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it promotes a competitive environment, which typically leads to more favorable pricing and a wider selection of qualified suppliers.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive miscellaneous ship and marine equipment to support its operations. The services delivered involve the provision of specialized fabricated metal products for marine applications. The geographic impact is primarily related to the contractor's location in Japan, with potential implications for logistics and delivery. Workforce implications are likely concentrated within Sumitomo Heavy Industries' manufacturing facilities in Japan.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Reliance on a foreign contractor for critical marine equipment could pose supply chain risks.
Limited competition (3 bidders) might indicate a specialized market where fewer companies possess the required capabilities.

Positive Signals

Awarded under full and open competition, ensuring a broad solicitation process.
Fixed-price contract type provides cost certainty for the government.

Sector Analysis

This contract falls within the 'Construction' sector, specifically related to miscellaneous ship and marine equipment manufacturing, classified under NAICS code 332999. This code covers establishments primarily engaged in manufacturing fabricated metal products, except machinery, equipment, and supplies. The market for specialized marine equipment is often niche, with a limited number of manufacturers possessing the technical expertise and certifications required for defense applications. Comparable spending benchmarks would depend heavily on the specific type and quantity of equipment procured.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature of marine equipment and the contractor's foreign location, it is unlikely that small businesses were directly involved as prime contractors. Subcontracting opportunities for U.S. small businesses are not explicitly detailed but could potentially exist if Sumitomo Heavy Industries sources any components or services domestically.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the fixed-price contract terms, requiring delivery of specified equipment. Transparency is facilitated by the contract award data being publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval shipbuilding and repair contracts
Defense procurement of specialized equipment
Fabricated metal product manufacturing contracts

Risk Flags

Potential supply chain risk due to foreign vendor
Limited competition may impact price optimization
Lack of specific equipment details hinders detailed value analysis

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.0 million to SUMITOMO HEAVY INDUSTRIES, LTD.. 200606!007065!1700!N40084!NAVAL FAC ENG CMD FAR EAST !N4008406C0105 !A!N! !N! ! !20060330!20070610!690536396!690536396!690536396!N!SUMITOMO HEAVY INDUSTRIES LTD.!5-9-11, KITASHINAGAWA !SHINAGAWA-KU !JA!141-0!00000! !JA! ! !JAPAN !+000010000000!N!N!000000000000!2090!MISCELLANEOUS SHIP AND MARINE EQUIPMENT !C2 !CONSTRUCTION !000 !NOT DISCERNABLE !332999!E! !3! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is SUMITOMO HEAVY INDUSTRIES, LTD..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $10.0 million.

What is the period of performance?

Start: 2006-03-30. End: 2008-12-31.

What specific types of miscellaneous ship and marine equipment were procured under this contract?

The provided data indicates the contract is for 'MISCELLANEOUS SHIP AND MARINE EQUIPMENT' under NAICS code 332999 (All Other Miscellaneous Fabricated Metal Product Manufacturing). However, the specific details of the equipment, such as pumps, valves, propulsion components, or specialized hull structures, are not itemized in the available data. This level of detail is typically found in the contract's statement of work or technical specifications, which are not included here. Understanding the exact nature of the equipment is crucial for a comprehensive value assessment and for identifying comparable procurements.

How does the $6.9 million contract value compare to similar procurements for marine equipment by the Navy or other defense agencies?

Benchmarking the $6.9 million contract value requires identifying comparable procurements. Given the 'miscellaneous' nature, it's difficult without knowing the specific items. However, if this contract involved major components or systems for a vessel, it could be considered moderate. For smaller, standardized parts, it might be substantial. Historical data from the Federal Procurement Data System (FPDS) or other contract databases would be necessary to find contracts with similar NAICS codes, descriptions, and award amounts. The fact that it was competitively awarded with three bids suggests the price was considered fair by the Navy, but external validation against market rates for similar specialized equipment would provide a more robust comparison.

What are the potential risks associated with awarding a contract for marine equipment to a foreign entity like Sumitomo Heavy Industries?

Awarding contracts to foreign entities can introduce several risks. These include potential supply chain disruptions due to geopolitical events, trade disputes, or logistical challenges. There may also be concerns regarding intellectual property protection and adherence to U.S. security standards. Furthermore, reliance on foreign suppliers for critical defense components can impact long-term readiness and strategic autonomy. However, for highly specialized equipment where only a few global manufacturers exist, such awards may be unavoidable. The Navy likely assessed these risks and determined that Sumitomo Heavy Industries offered the best value and capability.

What is the track record of Sumitomo Heavy Industries in fulfilling defense contracts, particularly for the U.S. Navy?

Sumitomo Heavy Industries, Ltd. is a large, established Japanese conglomerate with diverse business interests, including heavy industries and shipbuilding. While specific details on their past performance with the U.S. Navy for 'miscellaneous marine equipment' are not provided in this data snippet, their general reputation in heavy manufacturing suggests a capacity for complex projects. A thorough assessment would involve reviewing their contract history, past performance evaluations (if publicly available), and any reported issues or successes in fulfilling similar defense contracts globally or specifically for U.S. military branches.

How does the fixed-price contract type influence the risk allocation between the government and the contractor for this marine equipment procurement?

A fixed-price contract (likely Fixed-Price Incentive or Fixed-Price with Economic Price Adjustment, given the duration and foreign vendor, though the data just says 'FIXED PRICE') generally shifts more risk to the contractor. The contractor agrees to a set price for the goods or services, and is responsible for managing costs to remain profitable. If costs exceed the agreed price, the contractor absorbs the loss (unless specific clauses allow for adjustments). Conversely, if costs are lower, the contractor retains the profit. This contract type provides cost certainty for the government, making budgeting more predictable. However, it can also incentivize contractors to cut corners if not properly monitored, or lead to higher initial bids to account for contractor risk.

What is the significance of the NAICS code 332999 (All Other Miscellaneous Fabricated Metal Product Manufacturing) in understanding this contract?

The NAICS code 332999 signifies that the procured items are fabricated metal products that do not fit into more specific manufacturing categories. This suggests the equipment is likely custom-made or highly specialized, rather than a standard, mass-produced item. For the Navy, this implies a need for unique components essential for specific vessel functions or modifications. For analysts, it highlights that finding direct market comparables might be challenging, and the value assessment should focus on the complexity, materials, and specialized labor involved in the fabrication process rather than off-the-shelf pricing.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › All Other Miscellaneous Fabricated Metal Product Manufacturing

Product/Service Code: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5-9-11, KITASHINAGAWA, SHINAGAWA-KU

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline