Navy awards $35.2M ship repair contract to Metro Machine Corp, highlighting potential value in specialized services

Contract Overview

Contract Amount: $35,254,165 ($35.3M)

Contractor: Metro Machine Corp

Awarding Agency: Department of Defense

Start Date: 2023-11-08

End Date: 2024-06-23

Contract Duration: 228 days

Daily Burn Rate: $154.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: EXECUTION COST

Place of Performance

Location: BREMERTON, KITSAP County, WASHINGTON, 98314

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $35.3 million to METRO MACHINE CORP for work described as: EXECUTION COST Key points: 1. Contract value suggests significant investment in maintaining naval assets. 2. Competition dynamics for this specialized service area warrant further examination. 3. Performance risk indicators will be crucial given the cost-plus contract type. 4. The duration of the contract points to a long-term need for these services. 5. This contract positions the awardee within a critical segment of the defense industrial base.

Value Assessment

Rating: good

The contract's execution cost of $35.2 million for ship repair services appears reasonable given the specialized nature of naval vessel maintenance. Benchmarking against similar contracts for complex repairs on comparable vessels would provide a more precise value assessment. The Cost Plus Incentive Fee (CPIF) structure suggests an effort to balance cost control with contractor performance, which can be effective if incentives are well-aligned with desired outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This approach is generally favorable for price discovery and ensuring fair market value. The number of bidders is not specified, but the full and open nature suggests a competitive environment that should theoretically drive down costs and improve service quality.

Taxpayer Impact: Taxpayers benefit from the assurance that the government sought the best possible offer through a transparent and competitive process, maximizing the value of public funds.

Public Impact

Naval operations are supported through the maintenance and repair of critical vessels. The contract ensures the readiness of the U.S. Navy's fleet. Work is likely to be performed in the Washington, D.C. metropolitan area, supporting the local economy. Skilled labor in shipbuilding and repair trades will be engaged, potentially creating or sustaining jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus contracts can lead to cost overruns if not managed diligently.
The specific performance incentives within the CPIF structure need careful monitoring to ensure they drive desired outcomes.
Reliance on a single awardee for a significant duration may limit future competitive opportunities if performance is suboptimal.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process.
The CPIF contract type aims to incentivize efficient performance and cost management.
The contract duration indicates a sustained need and potential for a stable relationship with a capable provider.

Sector Analysis

The ship building and repairing sector (NAICS 336611) is a critical component of the defense industrial base, supporting naval readiness and national security. This contract falls within a specialized niche focused on maintaining and repairing complex naval vessels. Spending in this sector is often characterized by high technical requirements, long contract durations, and significant capital investment by contractors. Comparable spending benchmarks would typically involve analyzing the total defense budget allocated to ship maintenance and repair across different naval platforms.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While this specific award may not directly benefit small businesses through a set-aside, large prime contractors are often required to subcontract portions of their work to small businesses. The extent of small business participation will depend on the prime contractor's subcontracting plan and the availability of qualified small businesses for specific tasks within the repair process.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates close monitoring of costs and performance against established metrics. Transparency is facilitated through the Federal Procurement Data System (FPDS), where contract awards are reported. The Inspector General for the Department of Defense may also have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance and Repair
Defense Contract Awards
Shipbuilding and Repair Services
Department of Defense Procurement

Risk Flags

Cost-plus contract type requires diligent oversight to prevent cost overruns.
Performance metrics for incentive fee must be clearly defined and monitored.
Potential for schedule delays in complex ship repair operations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.3 million to METRO MACHINE CORP. EXECUTION COST

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 $35.3 million.

What is the period of performance?

Start: 2023-11-08. End: 2024-06-23.

What is the historical performance record of Metro Machine Corp with the Department of Defense, particularly on similar ship repair contracts?

A review of Metro Machine Corp's historical performance with the Department of Defense is essential for assessing their reliability and capability. This would involve examining past contract awards, on-time delivery rates, quality of work, and any past performance issues or disputes. Data from sources like the Contractor Performance Assessment Reporting System (CPARS) would be invaluable. Understanding their track record on similar ship repair projects, especially those involving Cost Plus Incentive Fee (CPIF) contracts, can provide insights into their ability to manage complex projects within budget and schedule constraints. A history of successful, on-time, and within-budget performance would be a strong positive indicator for this current $35.2 million award.

How does the awarded amount of $35.2 million compare to the estimated value or typical costs for similar ship repair services in the market?

To benchmark the value of this $35.2 million contract, it's crucial to compare it against similar ship repair services. This involves identifying contracts awarded to other entities for the repair of comparable naval vessels, considering factors like vessel class, age, condition, and the scope of work (e.g., routine maintenance vs. major overhauls). Market research reports on the ship repair industry, including average labor rates and material costs for naval vessels, would also be beneficial. The Cost Plus Incentive Fee (CPIF) nature of this contract adds complexity, as the final cost can vary based on performance. A thorough comparison would assess if the initial estimated cost, leading to this award, aligns with industry standards and if the incentive structure is likely to yield a cost-effective outcome for the Navy.

What are the primary risk indicators associated with this Cost Plus Incentive Fee (CPIF) contract for ship repair?

The primary risk indicator for this Cost Plus Incentive Fee (CPIF) contract is the potential for cost overruns, a common concern with cost-reimbursement contracts. While the incentive fee aims to mitigate this by rewarding efficient performance, poorly defined targets or inadequate oversight can still lead to increased costs. Another risk is the contractor's ability to meet the specific performance metrics tied to the incentive fee; failure to do so could result in lower profits for the contractor but may also indicate underlying performance issues. Furthermore, the complexity of ship repair can introduce unforeseen technical challenges, material delays, or labor shortages, all of which pose risks to schedule and budget adherence. Robust government oversight, clear communication, and well-defined performance metrics are critical to managing these risks effectively.

What is the expected impact of this contract on the operational readiness of the specific naval assets being serviced?

This contract is directly tied to ensuring the operational readiness of specific naval assets serviced by Metro Machine Corp. By providing necessary repairs and maintenance, the contract aims to keep these vessels in optimal condition, capable of fulfilling their intended missions. The timely completion of repairs is crucial; delays could result in extended periods where vessels are unavailable for deployment or training, thereby impacting fleet readiness. The scope of work will determine the extent of the impact, with major overhauls having a more significant effect on availability than routine maintenance. Successful execution of this contract should translate to a more reliable and capable naval fleet.

How does the $35.2 million award compare to the Navy's historical spending on ship repair and maintenance over the past five years?

To contextualize the $35.2 million award, it should be compared against the Department of the Navy's historical spending on ship repair and maintenance. This analysis would involve examining annual budgets and actual expenditures for ship maintenance, repair, and overhaul services over the last five fiscal years. Understanding the overall trend in Navy shipbuilding and repair spending—whether it's increasing, decreasing, or stable—provides a broader picture. This specific contract's value can then be assessed relative to the total annual spending and the average value of individual repair contracts. For instance, if the Navy's annual ship repair budget is in the billions, $35.2 million represents a specific, albeit significant, allocation for a particular set of services, potentially indicating a focus on specialized repairs or a specific class of vessels.

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 PLUS INCENTIVE FEE (V)

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: $35,254,165

Exercised Options: $35,254,165

Current Obligation: $35,254,165

Actual Outlays: $9,018,467

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $14,743,994

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