DHS awards $1.46B for National Security Cutter long lead time material to Huntington Ingalls

Contract Overview

Contract Amount: $1,460,701,663 ($1.5B)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Homeland Security

Start Date: 2016-08-30

End Date: 2028-07-31

Contract Duration: 4,353 days

Daily Burn Rate: $335.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LONG LEAD TIME MATERIAL (LLTM) FOR NATIONAL SECURITY CUTTER (NSC) 9

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Homeland Security obligated $1.46 billion to HUNTINGTON INGALLS INCORPORATED for work described as: LONG LEAD TIME MATERIAL (LLTM) FOR NATIONAL SECURITY CUTTER (NSC) 9 Key points: 1. Significant investment in critical national security assets. 2. Sole-source award raises questions about price discovery. 3. Long-term contract duration presents potential for cost overruns. 4. Shipbuilding sector is highly consolidated, limiting competition.

Value Assessment

Rating: questionable

The contract value of $1.46 billion for long lead time material is substantial. Without competitive bidding, it's difficult to assess if this price represents fair value compared to potential alternatives or market rates for similar specialized components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and may result in higher costs for taxpayers as there was no market pressure to drive down the price.

Taxpayer Impact: The lack of competition on this large contract likely means taxpayers are paying a premium for the long lead time material.

Public Impact

Ensures continued production of vital National Security Cutters. Supports jobs in the shipbuilding industry. Potential for delays if material procurement is mismanaged. Taxpayer funds are committed for an extended period.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Lack of transparency in pricing

Positive Signals

Critical national security asset
Supports domestic industry

Sector Analysis

The shipbuilding and repairing sector (NAICS 336611) is characterized by high barriers to entry and significant consolidation. Major contracts often go to a few large prime contractors, especially for specialized defense or security vessels.

Small Business Impact

This contract was awarded to Huntington Ingalls Incorporated, a large prime contractor. There is no indication of subcontracting opportunities for small businesses within this specific award notice.

Oversight & Accountability

The long duration and sole-source nature of this contract warrant close oversight from the Department of Homeland Security and the U.S. Coast Guard to ensure efficient use of funds and timely delivery.

Related Government Programs

Ship Building and Repairing
Department of Homeland Security Contracting
U.S. Coast Guard Programs

Risk Flags

Sole-source award
Long contract duration (over 10 years)
Potential for cost growth
Lack of competitive pressure
Dependency on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $1.46 billion to HUNTINGTON INGALLS INCORPORATED. LONG LEAD TIME MATERIAL (LLTM) FOR NATIONAL SECURITY CUTTER (NSC) 9

Who is the contractor on this award?

The obligated recipient is HUNTINGTON INGALLS INCORPORATED.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $1.46 billion.

What is the period of performance?

Start: 2016-08-30. End: 2028-07-31.

What is the justification for the sole-source award, and what steps were taken to ensure fair pricing?

The justification for a sole-source award typically involves unique capabilities or circumstances where only one source can fulfill the requirement. For this contract, the specific rationale needs to be detailed in the contract award documentation. Steps to ensure fair pricing might include historical cost analysis, independent government cost estimates, or benchmarking against similar, albeit not identical, procurements, though these are less effective than true competition.

What are the risks associated with the long lead time and extended contract duration for this material?

The primary risks include potential cost escalation due to market fluctuations over the contract period, technological obsolescence of the material by the time it's integrated, and contractor performance issues that could lead to schedule delays. Managing these risks requires robust contract surveillance, clear performance metrics, and contingency planning for unforeseen challenges.

How does this procurement align with the Coast Guard's long-term fleet readiness goals?

Procuring long lead time material is essential for maintaining the production schedule of National Security Cutters, which are critical for the Coast Guard's operational capabilities. Ensuring timely delivery of these specialized components directly supports fleet readiness and the ability to replace aging vessels, thereby fulfilling strategic objectives.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HSCG23-16-R-NSC009

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Huntington Ingalls Industries, Inc

Address: 1000 ACCESS RD, PASCAGOULA, MS, 39567

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $1,480,701,663

Exercised Options: $1,480,701,663

Current Obligation: $1,460,701,663

Subaward Activity

Number of Subawards: 679

Total Subaward Amount: $490,275,177

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline