Navy awards $43M for ship repair, with 2 bids received for this delivery order

Contract Overview

Contract Amount: $42,968,763 ($43.0M)

Contractor: Metro Machine Corp.

Awarding Agency: Department of Defense

Start Date: 2017-08-10

End Date: 2018-07-20

Contract Duration: 344 days

Daily Burn Rate: $124.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::CT::IGF USS TRUXTUN (DDG 103) DSRA

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23523

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $43.0 million to METRO MACHINE CORP. for work described as: IGF::CT::IGF USS TRUXTUN (DDG 103) DSRA Key points: 1. Value for money assessed against comparable ship repair contracts. 2. Competition dynamics indicate a moderate level of market interest. 3. Risk indicators include fixed-price contract type and delivery order structure. 4. Performance context is a single delivery order for a specific vessel. 5. Sector positioning within naval shipbuilding and repair services.

Value Assessment

Rating: good

The contract value of $42.97 million for the USS Truxtun (DDG 103) DSRA appears reasonable when benchmarked against similar complex ship repair availabilities. While specific per-unit cost data is not provided, the firm-fixed-price nature of the contract suggests that the contractor assumed the risk for cost overruns. The award to Metro Machine Corp. reflects a competitive process, which generally leads to better pricing. Further analysis would require detailed cost breakdowns and comparison to historical repair costs for this class of vessel.

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. Two bids were received for this specific delivery order. While two bidders suggest some level of competition, it is on the lower end for a contract of this magnitude and complexity. This could imply that the market for such specialized services is limited, or that other potential bidders chose not to participate for various reasons. The limited number of bids may have had a marginal impact on price discovery.

Taxpayer Impact: With two bids, taxpayers likely benefited from a competitive price, though a higher number of bidders could have potentially driven the price down further.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring the USS Truxtun is maintained. Services delivered include dry-docking, ship repair, and maintenance critical for naval vessel functionality. Geographic impact is centered around the shipyard location in Virginia. Workforce implications include employment for skilled tradespeople in the shipbuilding and repair sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen issues arise beyond the scope of the fixed-price contract.
Dependence on a single contractor for a critical repair task.
Limited competition may not have secured the absolute lowest price possible.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Awarded under full and open competition, allowing broad market participation.
Delivery order structure allows for specific tasking and management.

Sector Analysis

The naval shipbuilding and repair sector is a highly specialized and capital-intensive industry. This contract falls within the broader maritime defense industrial base, which is crucial for national security. The market is characterized by a limited number of highly skilled shipyards capable of performing complex repairs on naval vessels. Spending in this sector is often driven by defense budgets and the lifecycle maintenance needs of the fleet. Comparable spending benchmarks would involve analyzing other major repair availabilities for destroyers and similar naval platforms.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses, nor is there information suggesting significant subcontracting opportunities for small businesses. The nature of major ship repair typically involves large prime contractors with the infrastructure and expertise to handle such complex projects. The impact on the small business ecosystem is likely minimal unless specific components or specialized services were subcontracted to them.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules and performance standards. Transparency is facilitated through contract award databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Vessel Repair Contracts
Shipbuilding and Repair Services
Defense Maintenance and Modernization
Fleet Readiness Programs

Risk Flags

Limited competition (2 bidders)
Potential for unforeseen repair issues under fixed-price contract

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.0 million to METRO MACHINE CORP.. IGF::CT::IGF USS TRUXTUN (DDG 103) 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 $43.0 million.

What is the period of performance?

Start: 2017-08-10. End: 2018-07-20.

What is the track record of Metro Machine Corp. in performing similar naval repair contracts?

Metro Machine Corp. has a history of performing ship repair and maintenance services for the U.S. Navy. Analyzing their past performance on similar contracts, particularly for destroyers or vessels of comparable size and complexity, would provide insight into their capabilities and reliability. This includes reviewing past contract awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any history of disputes or contract modifications. A strong track record suggests a lower risk of performance issues and potential cost overruns for this current contract. Conversely, a history of delays, cost overruns, or quality issues would raise concerns about the contractor's ability to meet the requirements of the USS Truxtun repair.

How does the awarded price compare to the Independent Government Cost Estimate (IGCE) for this repair?

The provided data does not include the Independent Government Cost Estimate (IGCE). However, the fact that the contract was awarded under full and open competition with two bids suggests that the awarded price of $42.97 million was likely competitive and potentially within or below the government's estimated cost. A significant difference between the awarded price and the IGCE could indicate either an overly optimistic estimate by the government or an aggressive bid by the contractor. Ideally, the awarded price should represent a fair and reasonable cost for the work performed, reflecting market conditions and the contractor's assessed risk. Without the IGCE, a direct comparison of value for money based on cost estimation is not possible.

What are the primary risks associated with a firm-fixed-price contract for complex ship repair?

The primary risk associated with a firm-fixed-price (FFP) contract for complex ship repair is the potential for unforeseen issues that significantly increase costs beyond the contractor's initial estimate. While FFP shifts cost overrun risk to the contractor, major discoveries during the repair process (e.g., extensive corrosion, unexpected structural damage, or system failures not apparent during inspection) can lead to costly change orders or disputes. If the contractor underestimated the complexity or scope, they might seek to cut corners on quality to maintain profitability, or request significant modifications. Conversely, the government risks paying a premium if the contractor's bid includes a large contingency for unknown risks. Effective oversight and clear contract scope definition are crucial to mitigate these risks.

What is the historical spending trend for USS Truxtun (DDG 103) repair and maintenance?

Historical spending data specifically for USS Truxtun (DDG 103) repair and maintenance is not provided in the given data. To assess historical spending patterns, one would need to access contract databases and financial records to identify all previous repair availabilities, their scope, duration, and cost. Analyzing this data would reveal trends in maintenance costs, frequency of major repairs, and potential increases in repair needs as the vessel ages. Comparing this contract's value to previous availabilities for DDG-103 or similar Arleigh Burke-class destroyers would help determine if current spending is consistent with historical patterns or represents an anomaly. This context is vital for long-term budget planning and assessing the overall cost of ownership for the vessel.

How does the number of bidders (2) impact the potential for price discovery and taxpayer value in this contract?

Having two bidders for this contract provides a degree of price discovery, as it introduces competition between at least two entities. This generally leads to a more competitive price than a sole-source award. However, the optimal number of bidders for robust price discovery is often considered to be three or more. With only two bidders, there's a possibility that the competition might not be as intense as it could be with a larger pool of interested and capable contractors. This could mean that the price achieved, while likely reasonable, might not be the absolute lowest possible. Taxpayers benefit from competition, but the value could potentially be enhanced with a broader range of bids, encouraging more aggressive pricing strategies from multiple firms.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002415R4405

Offers Received: 2

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: $44,464,841

Exercised Options: $42,968,763

Current Obligation: $42,968,763

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002416D4408

IDV Type: IDC

Timeline