Berg Manufacturing secures $14.3M contract for refrigeration equipment, highlighting strong competition

Contract Overview

Contract Amount: $14,283,987 ($14.3M)

Contractor: Berg Manufacturing, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-05-26

End Date: 2027-09-30

Contract Duration: 1,953 days

Daily Burn Rate: $7.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MTRCS PRODUCTION UNITS

Place of Performance

Location: NATICK, MIDDLESEX County, MASSACHUSETTS, 01760

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $14.3 million to BERG MANUFACTURING, INC. for work described as: MTRCS PRODUCTION UNITS Key points: 1. Contract awarded through full and open competition, suggesting a competitive pricing environment. 2. The firm fixed-price contract type shifts risk to the contractor, potentially stabilizing costs. 3. Long contract duration (1953 days) may indicate a need for sustained supply or complex integration. 4. Awarded by the Department of the Army, this contract supports critical operational needs. 5. The North American Industry Classification System (NAICS) code 33415 points to specialized manufacturing capabilities. 6. The contract's value is substantial within the specified equipment manufacturing sector.

Value Assessment

Rating: good

The contract value of $14.3 million over approximately five years appears reasonable for specialized refrigeration equipment. Benchmarking against similar large-scale defense contracts for industrial equipment suggests this falls within expected ranges. The firm fixed-price structure provides cost certainty for the government, assuming the contractor's pricing accurately reflects production costs and market conditions. Without specific per-unit data or detailed cost breakdowns, a precise value-for-money assessment is challenging, but the competitive award process lends confidence.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that multiple bidders were likely considered after an initial exclusion period. This approach generally fosters robust competition, driving down prices and encouraging innovation. The specific details of the exclusion period and the number of subsequent bidders would provide further insight into the intensity of the competition. However, the 'full and open' designation is a positive indicator for price discovery.

Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers, as it likely resulted in a more favorable price than a sole-source or limited competition scenario. This ensures that government funds are used efficiently for essential equipment.

Public Impact

The Department of the Army is the primary beneficiary, receiving essential refrigeration equipment for its operations. This contract supports the manufacturing sector, specifically companies involved in industrial refrigeration equipment. The contract's geographic impact is primarily centered around the manufacturing facilities of Berg Manufacturing, Inc. and its supply chain. It contributes to maintaining the operational readiness and logistical capabilities of military forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if production complexities are underestimated by the contractor.
Risk of supply chain disruptions impacting delivery timelines.
Dependence on a single contractor for a significant duration could limit flexibility.
Ensuring long-term maintenance and support compatibility with existing systems.

Positive Signals

Firm fixed-price contract mitigates budget uncertainty for the government.
Awarded through full and open competition, suggesting competitive pricing.
Long-term contract provides supply chain stability for critical equipment.
Berg Manufacturing, Inc. likely possesses specialized expertise for this equipment.

Sector Analysis

The contract falls within the industrial machinery and equipment manufacturing sector, specifically focusing on refrigeration and air conditioning units. This sector is characterized by significant capital investment, complex supply chains, and stringent quality control requirements, particularly for defense applications. The market size for such specialized industrial equipment is substantial, driven by both commercial and governmental demand. This contract represents a significant procurement within this niche, likely supporting critical infrastructure or operational needs for the Department of Defense.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). Berg Manufacturing, Inc. is likely a larger entity. There is no explicit information on subcontracting plans for small businesses within this award. Further analysis would be needed to determine if subcontracting opportunities exist and if they are being utilized to engage the small business ecosystem.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. The firm fixed-price nature provides a degree of financial oversight by limiting cost increases. The Department of Defense and Department of the Army have internal audit and compliance functions. Transparency is generally maintained through contract databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) procurements
Military Construction (MILCON) support equipment
Naval Sea Systems Command (NAVSEA) equipment contracts
Air Force Materiel Command (AFMC) procurements

Risk Flags

Potential for technological obsolescence due to long contract duration.
Risk of supply chain disruptions impacting delivery.
Need for robust quality assurance over the contract period.
Contractor performance monitoring is critical for long-term success.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.3 million to BERG MANUFACTURING, INC.. MTRCS PRODUCTION UNITS

Who is the contractor on this award?

The obligated recipient is BERG MANUFACTURING, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $14.3 million.

What is the period of performance?

Start: 2022-05-26. End: 2027-09-30.

What is Berg Manufacturing, Inc.'s track record with the Department of Defense for similar equipment?

A review of Berg Manufacturing, Inc.'s contract history with the Department of Defense would be necessary to assess their track record. This would involve examining past performance on similar contracts, including delivery timeliness, quality of goods provided, and any history of disputes or contract modifications. A long history of successful performance on comparable defense contracts would increase confidence in their ability to fulfill this current award. Conversely, a history of issues could indicate potential risks that warrant closer monitoring.

How does the per-unit cost of this equipment compare to commercial market rates?

Determining the per-unit cost requires access to the specific quantities and unit prices within the contract, which are not fully detailed in the provided data. If this information were available, it could be benchmarked against commercial off-the-shelf (COTS) refrigeration units of comparable specifications and capacity. Factors such as customization, specialized features for military environments (e.g., ruggedization, specific power requirements), and volume discounts would influence the comparison. A significant deviation from commercial rates, especially if higher, would necessitate justification based on unique military requirements or the competitive process.

What are the primary risks associated with the long duration of this contract?

The 1953-day duration (approximately 5.3 years) presents several risks. Firstly, technological obsolescence is a concern; refrigeration technology can evolve, potentially making the contracted equipment outdated before the contract ends. Secondly, market price fluctuations for raw materials and components could impact the contractor's profitability and potentially lead to requests for price adjustments, despite the firm fixed-price nature. Thirdly, long-term reliance on a single supplier can reduce flexibility for the government if needs change or if a better solution emerges. Finally, maintaining consistent quality and support over such an extended period requires robust contractor management.

How effective is the 'Full and Open Competition After Exclusion of Sources' method in ensuring value for money?

This method aims to balance the need for broad competition with potential efficiencies. Initially excluding certain sources might be done for specific technical reasons or to streamline the process. However, the subsequent 'full and open' phase is crucial. If a sufficient number of qualified bidders participate in this phase, it generally leads to competitive pricing and good value. The effectiveness hinges on the clarity of the solicitation, the responsiveness of bidders, and the government's evaluation process. If the exclusion phase significantly limits the pool of potential competitors, it could inadvertently reduce competitive pressure.

What is the historical spending trend for similar refrigeration equipment by the Department of Defense?

Analyzing historical spending data for similar refrigeration and climate control equipment by the Department of Defense would provide context for the $14.3 million award. This would involve looking at spending patterns over the last 5-10 years, identifying major contracts, key suppliers, and average contract values. Understanding these trends helps determine if this contract represents a typical procurement, an increase in demand, or a shift in supplier base. It also aids in identifying potential cost efficiencies or areas where spending has escalated.

What are the implications of the firm fixed-price (FFP) contract type for government oversight?

The FFP contract type simplifies government oversight regarding cost management, as the price is fixed regardless of the contractor's actual costs. This shifts the financial risk to the contractor. However, oversight must still focus on ensuring the contractor meets all performance, quality, and delivery requirements specified in the contract. The government needs to monitor progress, conduct inspections, and verify that the delivered goods conform to the contract's technical specifications. Effective oversight under FFP focuses on performance compliance rather than cost auditing.

Industry Classification

NAICS: Manufacturing › Ventilation, Heating, Air-Conditioning, and Commercial Refrigeration Equipment Manufacturing › Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing

Product/Service Code: REFRIG, AIR CONDIT/CIRCULAT EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W911QY15R0003

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Berg Manufacturing Inc.

Address: 6811 E MISSION AVE, SPOKANE VALLEY, WA, 99212

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $14,283,987

Exercised Options: $14,283,987

Current Obligation: $14,283,987

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W911QY16D0042

IDV Type: IDC

Timeline