The U.S. Navy has awarded eight contractors a combined $112.833 million cost-plus-fixed-fee, indefinite-delivery/indefinite-quantity contract to provide hull, mechanical and electrical, or HM&E, machinery and systems services across the fleet and supporting infrastructure. The Naval Surface Warfare Center Philadelphia Division, or NSWC Philadelphia, is the contracting activity.
Takeaways
Eight contractors receive a five-year Navy vehicle for HM&E machinery and systems support
1. $112.8 Million Contract Ceiling
The Navy has awarded eight cost-plus-fixed-fee, indefinite-delivery/indefinite-quantity contracts with a combined ceiling of $112.833 million over five years.
2. Eight Specialized Contractors
Amee Bay, Atlantic Fabrication & Boiler Services, AVMAC, Continental Tide Defense Systems, Delphinus Engineering, Epsilon Systems Solutions, La Playa and Q.E.D. Systems received awards.
3. Supports Ships, Submarines And Shore Sites
The vehicle covers hull, mechanical and electrical machinery and systems services for the surface fleet, submarines, shore installations and selected government and maritime agency platforms.
4. Task Orders Will Drive Spending
Only $4,000 in fiscal 2026 other procurement funding is obligated initially. The bulk of the ceiling will become available through future task orders.
5. Work Runs Through July 2031
Performance can occur at U.S. and overseas locations, including public and private shipyards, military installations and contractor facilities, with completion expected by July 2031.
The five-year vehicle covers work supporting surface ships, submarines, shore-based installations, other federal agency vessels, selected maritime agency vessels and land-based sites. The ordering period is scheduled to run through July 2031, with work potentially taking place both inside and outside the continental United States.
The awardees are Amee Bay LLC of Anchorage, Alaska; Atlantic Fabrication & Boiler Services Inc. of Portsmouth, Virginia; AVMAC LLC of Chesapeake, Virginia; Continental Tide Defense Systems Inc. of Wyomissing, Pennsylvania; Delphinus Engineering Inc. of Newtown Square, Pennsylvania; Epsilon Systems Solutions Inc. of Portsmouth, Virginia; La Playa Inc. of Chesapeake, Virginia; and Q.E.D. Systems Inc. of Virginia Beach, Virginia.
Why HM&E Support Matters To Fleet Readiness
HM&E systems form much of the machinery infrastructure that allows a naval platform to operate. The category encompasses systems associated with propulsion and auxiliary machinery, electrical generation and distribution, shipboard controls, ventilation, fluid systems, machinery automation and other equipment needed to keep ships and submarines operational.
NSWC Philadelphia is a major Navy engineering organization responsible for research, development, testing, evaluation and fleet engineering support involving ships, submarines and military watercraft. Its HM&E work includes machinery modernization, system integration, testing, installation support and life-cycle engineering.
That makes this contract less about procuring a single piece of equipment and more about maintaining an engineering capacity that can respond to different fleet requirements. Earlier Navy HM&E solicitations have included design and development, prototype engineering, technology insertion, testing, systems engineering, installation support, software engineering, logistics documentation, system certification and on-site technical support.
For a fleet operating across multiple ship classes and maintenance locations, that flexibility is important. HM&E modernization can involve relatively discrete equipment changes as well as larger alterations requiring engineering analysis, installation and subsequent testing. A multiple-award structure allows the Navy to compete individual requirements among qualified contractors rather than establishing a separate contract vehicle for every technical need.
Contract Breakdown & Financial Allocation
$112.833 Million Five-Year Ceiling
The eight contracts carry a combined maximum value of $112,833,317.
The ceiling should not be interpreted as $112.8 million in immediate Navy spending. Under an IDIQ structure, the government establishes a framework for future orders, with actual requirements and funding generally placed through individual task orders.
If the ceiling were divided evenly for comparison purposes, it would represent an average potential value of approximately $14.10 million per awardee. That is not an individual guaranteed allocation, however. Actual contractor revenue will depend on task orders issued during the ordering period.
Initial Funding Is Only $4,000
Each contractor receives a $500 minimum contract guarantee, resulting in a combined initial guarantee of $4,000 across all eight awards.
Fiscal 2026 other procurement, Navy funding totaling $4,000 is obligated at award. The funding expires at the end of the current fiscal year.
This means the initial obligation represents only about 0.0035% of the $112.833 million ceiling. The overwhelming majority of potential contract value remains contingent on future task-order requirements and appropriations.
Work Locations Are Not Assigned By Percentage
The contract allows work in the continental United States and overseas, including:
- Private shipyards
- Public Naval shipyards
- Military establishments
- Contractor facilities
- Other authorized maritime and land-based locations
The award announcement does not provide a percentage split between domestic and overseas work. Therefore, assigning a geographic percentage to the contract would not be supported by the available award data.
Previous NSWCPD HM&E vehicles have demonstrated that such work can span major U.S. naval locations and overseas operating areas. A 2021 HM&E contract, for example, projected work across the East Coast, West Coast and outside the continental United States.
No Separate FMS Funding Identified
The current award specifically identifies support for surface fleet and submarine requirements, shore installations, other federal agency vessels, selected maritime agency vessels and land-based sites.
The announcement does not identify Foreign Military Sales funding or a separate FMS funding stream. The article therefore does not treat foreign military work as a funded component of this award.
Industry Impact & Acquisition Insight
The contract uses a cost-plus-fixed-fee IDIQ structure, which is suited to technical work where the precise workload, engineering effort and timing cannot be established years in advance. Under a cost-plus-fixed-fee arrangement, the government generally reimburses allowable costs and pays a negotiated fixed fee, placing more cost risk on the government than a firm-fixed-price arrangement. The fixed fee itself does not automatically rise when contractor costs increase.
The IDIQ structure adds another layer of flexibility. The Navy establishes a group of qualified suppliers, then places orders as requirements emerge. This approach is particularly useful for HM&E engineering because requirements can arise from ship maintenance schedules, modernization programs, equipment failures, testing activities or installation projects.
The eight-company structure also gives NSWC Philadelphia access to a broader industrial base rather than depending on a single provider. Previous Navy HM&E vehicles have similarly used multiple awardees to provide engineering, technical, installation and modernization support.
The competition was conducted through the System for Award Management, with eight offers received under full and open competition. That competitive structure provides the Navy with multiple sources for future task orders while preserving the ability to match specialized technical capabilities to individual requirements.
For the Navy, the strategic value is therefore not simply the $112.8 million ceiling. The more significant element is the creation of a five-year contracting mechanism that can provide engineering and machinery expertise wherever fleet and shore requirements emerge.
