DoD's $153M Ship Repair Contract with Metro Machine Corp Faces Scrutiny Over Cost Sharing and Competition
Contract Overview
Contract Amount: $153,281,135 ($153.3M)
Contractor: Metro Machine Corp
Awarding Agency: Department of Defense
Start Date: 2021-08-10
End Date: 2023-03-17
Contract Duration: 584 days
Daily Burn Rate: $262.5K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST SHARING
Sector: Defense
Official Description: SHIP REPAIR
Place of Performance
Location: BREMERTON, KITSAP County, WASHINGTON, 98314
Plain-Language Summary
Department of Defense obligated $153.3 million to METRO MACHINE CORP for work described as: SHIP REPAIR Key points: 1. The contract awarded to Metro Machine Corp for ship repair totals over $153 million. 2. Competition was full and open, but the cost-sharing arrangement warrants further examination. 3. Potential risks include cost overruns due to the cost-sharing model and the duration of the contract. 4. The sector is critical for national defense, with significant taxpayer investment.
Value Assessment
Rating: fair
The contract's cost-sharing model (PT) makes direct pricing assessment difficult without further detail on cost breakdowns and profit margins. Benchmarking is challenging due to the variable nature of ship repair.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the cost-sharing arrangement may obscure the true final cost to the government.
Taxpayer Impact: The cost-sharing model introduces uncertainty in the final taxpayer burden, potentially leading to higher costs than a fixed-price contract if costs escalate.
Public Impact
Naval readiness and fleet maintenance are directly impacted by this significant repair contract. Taxpayer funds are allocated for essential defense infrastructure, highlighting the need for cost efficiency. The duration of the contract (584 days) suggests complex or extensive repair work is involved.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-sharing model introduces uncertainty
- Long contract duration
- Potential for cost escalation
Positive Signals
- Full and open competition utilized
- Awarded by Department of the Navy
Sector Analysis
This contract falls within the shipbuilding and repairing sector, a critical component of national defense. Spending in this area is substantial and directly tied to maintaining naval assets.
Small Business Impact
Analysis does not indicate specific involvement or benefit to small businesses in this particular contract award.
Oversight & Accountability
The contract's cost-sharing structure necessitates robust oversight to ensure costs are managed effectively and that the government receives fair value for its investment.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Cost-sharing model lacks transparency
- Extended contract duration increases risk
- Potential for cost overruns
- Complexity of ship repair services
Tags
ship-building-and-repairing, department-of-defense, wa, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $153.3 million to METRO MACHINE CORP. SHIP REPAIR
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 $153.3 million.
What is the period of performance?
Start: 2021-08-10. End: 2023-03-17.
What specific cost-sharing mechanisms are in place, and how do they ensure value for the taxpayer?
The contract utilizes a 'Cost Sharing' (PT) model. This implies that both the government and the contractor bear a portion of the project costs. Detailed breakdowns of the cost-sharing percentages and the rationale behind them are crucial for assessing value. Without this information, it's difficult to determine if the government is adequately protected against cost overruns or if the contractor has sufficient incentive to control expenses.
Given the 584-day duration, what are the primary risks associated with potential cost escalations?
The extended duration of 584 days significantly increases the risk of cost escalations due to factors like inflation, unforeseen technical challenges, or changes in material costs. The cost-sharing model, while potentially encouraging efficiency, can also lead to higher final costs if not meticulously managed and overseen. Robust change order management and continuous cost monitoring are essential to mitigate these risks.
How does the 'full and open competition' translate into effective price discovery for complex ship repair services?
While 'full and open competition' is a strong indicator of a competitive bidding process, the nature of ship repair, with its inherent complexities and potential for emergent issues, can still make precise price discovery challenging. The effectiveness relies on the clarity of the initial bid requirements and the government's ability to evaluate bids comprehensively, considering not just the initial price but also the contractor's technical approach and risk mitigation strategies.
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: N0002418R4300
Pricing Type: COST SHARING (T)
Evaluated Preference: NONE
Contractor Details
Parent Company: Wico Limited
Address: 423 PACIFIC AVE STE 200, BREMERTON, WA, 98337
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $153,281,135
Exercised Options: $153,281,135
Current Obligation: $153,281,135
Actual Outlays: $142,865,302
Subaward Activity
Number of Subawards: 3
Total Subaward Amount: $175,876
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0002419D4310
IDV Type: IDC
Timeline
Start Date: 2021-08-10
Current End Date: 2023-03-17
Potential End Date: 2023-03-17 00:00:00
Last Modified: 2024-05-23
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