Naval Sea Systems Command awards $253M contract for aircraft carrier engineering services to Huntington Ingalls Inc

Contract Overview

Contract Amount: $253,175,143 ($253.2M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2003-07-02

End Date: 2006-10-15

Contract Duration: 1,201 days

Daily Burn Rate: $210.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200310!035939!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002403C2116 !A!N! !N! !20030702!20030930!001307495!149899957!016435559!N!NEWPORT NEWS SHIPBUILDING & DR!4101 WASHINGTON AVE !NEWPORT NEWS !VA!23607!56000!700!51!NEWPORT NEWS !NEWPORT NEWS (CITY) !VIRGINIA !+000010036841!N!N!000039369977!1901!AIRCRAFT CARRIERS !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!U!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: NEWPORT NEWS, NEWPORT NEWS CITY County, VIRGINIA, 23607

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $253.2 million to HUNTINGTON INGALLS INC for work described as: 200310!035939!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002403C2116 !A!N! !N! !20030702!20030930!001307495!149899957!016435559!N!NEWPORT NEWS SHIPBUILDING & DR!4101 WASHINGTON AVE !NEWPORT NEWS !VA!23607!56000!700!51!NEWPORT NEWS !NEWPORT NEWS (CITY) !VIRGINIA !+000010036841!N!N!0… Key points: 1. Contract awarded for specialized engineering services related to aircraft carriers. 2. Significant value suggests a critical role in naval aviation support. 3. Sole-source award indicates potential lack of market competition or unique capabilities. 4. Long duration of the contract implies a sustained need for these services. 5. The contract falls under the 'Engineering Services' NAICS code, highlighting its technical nature. 6. Virginia is the primary state for contract performance, suggesting a concentration of naval infrastructure.

Value Assessment

Rating: fair

The contract value of $253,175,143 for engineering services is substantial. Without specific benchmarks for aircraft carrier engineering, a direct value-for-money assessment is challenging. However, the sole-source nature of the award raises questions about whether competitive pricing was achieved. The contract type (Cost Plus Fixed Fee) can sometimes lead to higher costs if not managed tightly, but it is also appropriate for R&D or uncertain scope work. Further analysis would require comparing this to similar, competitively bid contracts for specialized naval engineering.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Huntington Ingalls Inc., was solicited. This typically occurs when a contractor possesses unique capabilities, proprietary data, or when urgent circumstances preclude full and open competition. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. This approach limits the government's ability to explore alternative solutions or pricing structures.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of achieving the lowest possible price. The government must rely on its negotiation skills and oversight to ensure fair pricing, which can be more challenging without competitive pressure.

Public Impact

The primary beneficiary is the U.S. Navy, specifically the Naval Sea Systems Command, which receives essential engineering support for its aircraft carrier fleet. The services delivered are critical for the maintenance, modernization, and operational readiness of nuclear-powered aircraft carriers. Contract performance is primarily located in Virginia, impacting the local economy and workforce in that region. The contract supports a highly specialized workforce in engineering and naval architecture, contributing to the skilled labor pool in the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not rigorously managed.
Lack of transparency in the procurement process due to sole-source nature.
Long contract duration may indicate a lack of agile acquisition strategies.
Dependence on a single contractor for critical engineering services poses a risk.

Positive Signals

Award to a known entity (Huntington Ingalls Inc.) suggests a contractor with established expertise in aircraft carrier programs.
The contract addresses a critical need for the U.S. Navy's power projection capabilities.
The specific NAICS code (541330) indicates a focus on specialized engineering services.
The contract is for a definitive contract, implying a clear scope and terms.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), which is a significant part of the broader aerospace and defense industry. The market for specialized naval engineering, particularly for complex platforms like aircraft carriers, is highly concentrated. Major defense contractors often dominate this space due to the high barriers to entry, including specialized knowledge, security clearances, and established relationships with the military. Comparable spending benchmarks are difficult to establish without detailed knowledge of the specific engineering tasks, but large-scale naval platform support contracts can run into hundreds of millions or even billions of dollars over their lifecycle.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss: false'. Furthermore, there is no explicit mention of subcontracting plans for small businesses. Given the specialized nature of aircraft carrier engineering and the sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal. However, the prime contractor may engage small businesses for specific components or support services, but this is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Naval Sea Systems Command (NAVSEA), a component of the Department of the Navy. As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring by the contracting officer and administrative contracting officer are crucial to manage costs and ensure deliverables are met. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Carrier Maintenance and Modernization Programs
Naval Shipyard Operations
Defense Engineering Services
Department of Defense Research and Development
Naval Aviation Support Contracts

Risk Flags

Sole-source award may limit price competition.
Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Potential for contractor lock-in due to specialized nature of services.
Long contract duration requires sustained performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $253.2 million to HUNTINGTON INGALLS INC. 200310!035939!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002403C2116 !A!N! !N! !20030702!20030930!001307495!149899957!016435559!N!NEWPORT NEWS SHIPBUILDING & DR!4101 WASHINGTON AVE !NEWPORT NEWS !VA!23607!56000!700!51!NEWPORT NEWS !NEWPORT NEWS (CITY) !VIRGINIA !+000010036841!N!N!000039369977!1901!AIRCRAFT CARRIERS !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!U!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Who is the contractor on this award?

The obligated recipient is HUNTINGTON INGALLS INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $253.2 million.

What is the period of performance?

Start: 2003-07-02. End: 2006-10-15.

What is the track record of Huntington Ingalls Inc. in performing similar engineering services for naval vessels?

Huntington Ingalls Industries (HII), the parent company of Newport News Shipbuilding, has an extensive and long-standing track record in the design, construction, and overhaul of U.S. Navy aircraft carriers and other complex naval vessels. Newport News Shipbuilding is the sole builder of U.S. aircraft carriers and has been involved in every carrier class since the end of World War II. Their expertise encompasses nuclear propulsion, advanced combat systems, and the intricate engineering required for these massive platforms. This specific contract likely leverages that deep institutional knowledge and specialized workforce, making them a logical, albeit sole-source, choice for critical engineering support.

How does the $253 million contract value compare to historical spending on aircraft carrier engineering services?

The $253 million contract value represents a significant investment in engineering services for aircraft carriers. While specific historical spending figures for comparable engineering contracts are not readily available in this dataset, it's important to note that aircraft carriers are among the most complex and expensive military assets in the world. Their maintenance, modernization, and sustainment require continuous, high-value engineering support over decades. This $253 million award, covering a period of approximately 3 years (based on start and end dates), aligns with the substantial and ongoing financial commitment required to keep these capital-intensive platforms operational and technologically relevant.

What are the primary risks associated with this sole-source, Cost Plus Fixed Fee contract?

The primary risks associated with this sole-source, Cost Plus Fixed Fee (CPFF) contract are twofold. Firstly, the sole-source nature means the government did not benefit from competitive bidding, potentially leading to a higher price than could have been achieved in a competitive environment. There's a risk of paying a premium due to the lack of market pressure. Secondly, the CPFF structure, while suitable for work with uncertain scope or R&D, carries inherent risks of cost escalation. The contractor is reimbursed for allowable costs plus a fixed fee, which can incentivize less cost-consciousness if not rigorously overseen. Effective government oversight is critical to mitigate these risks and ensure fair pricing and efficient performance.

How effective is the Cost Plus Fixed Fee contract type for ensuring program effectiveness in specialized engineering?

The Cost Plus Fixed Fee (CPFF) contract type can be effective for ensuring program effectiveness in specialized engineering when the scope of work is not fully defined at the outset, or when there is a significant research and development component, as is often the case with advanced naval systems. It allows the government to procure necessary services even with evolving requirements. However, its effectiveness hinges heavily on robust government oversight. Without stringent monitoring of costs, performance metrics, and adherence to the fixed fee, there's a risk that the contractor may not be incentivized to control expenses as tightly as in other contract types. When managed well, CPFF allows for flexibility crucial for complex engineering challenges.

What are the historical spending patterns for engineering services related to aircraft carriers by the Department of the Navy?

Historical spending patterns for aircraft carrier engineering services by the Department of the Navy are substantial and continuous, reflecting the long lifecycle of these vessels. While this specific contract is for $253 million over roughly three years, the Navy consistently allocates significant funds annually towards the sustainment, modernization, and upgrade of its carrier fleet. This includes design, planning, technical support, and systems integration engineering. Spending fluctuates based on major maintenance availabilities, refuelings, and upgrade cycles. Over the past decade, total obligations for aircraft carrier maintenance and repair, which include significant engineering components, have often been in the billions of dollars annually, underscoring the consistent and high-value nature of these services.

What are the implications of awarding this contract to Huntington Ingalls Inc. for future competition in naval engineering services?

Awarding this contract on a sole-source basis to Huntington Ingalls Inc. has limited implications for future competition in the broader naval engineering services market, as it does not preclude other firms from competing on different contracts. However, for highly specialized services directly tied to existing platforms like aircraft carriers, where HII holds unique expertise and potentially proprietary data, it reinforces their dominant position. This can create a barrier for new entrants or smaller firms seeking to gain a foothold in this specific niche. Future competition might be more robust for less specialized or newer platform engineering requirements where multiple firms possess relevant capabilities.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Huntington Ingalls Industries, Inc

Address: 4101 WASHINGTON AVE, NEWPORT NEWS, VA, 23607

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline