Navy awards $14.7M contract for shipbuilding and repair services to Huntington Ingalls Inc

Contract Overview

Contract Amount: $14,693,528 ($14.7M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2003-10-29

End Date: 2008-02-29

Contract Duration: 1,584 days

Daily Burn Rate: $9.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $14.7 million to HUNTINGTON INGALLS INC for work described as: Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. The contract was not competed, raising questions about potential price efficiencies and market-driven value. 3. A single award contract suggests limited opportunities for broader market engagement and innovation. 4. The duration of the contract (1584 days) indicates a significant, long-term commitment from the Navy. 5. The North American Industry Classification System (NAICS) code 336611 points to a specialized sector with high barriers to entry. 6. The contract's value, while substantial, needs to be benchmarked against similar shipbuilding and repair services to assess value for money.

Value Assessment

Rating: fair

Benchmarking the value of this $14.7 million contract is challenging without specific details on the services rendered. However, cost-plus-fixed-fee contracts inherently carry a risk of exceeding initial estimates, as the contractor is reimbursed for allowable costs plus a fixed fee. Comparing this to similar shipbuilding and repair contracts awarded by the Department of the Navy or other branches would provide a clearer picture of whether the pricing is competitive and reflects fair market value for the scope of work. The absence of competition further complicates a direct value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. This approach is typically used when only one vendor possesses the necessary capabilities, proprietary technology, or when urgency dictates a rapid award. The lack of competition means that the Department of the Navy did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing the award, there is less assurance that the government secured the best possible price for the shipbuilding and repair services.

Public Impact

The primary beneficiary of this contract is Huntington Ingalls Inc., a major defense contractor. The services delivered are related to shipbuilding and repair, crucial for maintaining naval fleet readiness. The geographic impact is likely concentrated around naval shipyards where Huntington Ingalls Inc. operates. This contract supports jobs within the shipbuilding and repair industry, contributing to the defense industrial base workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost-plus-fixed-fee structure can incentivize cost overruns if not rigorously monitored.
Lack of competition may stifle innovation and efficiency gains that could arise from a competitive environment.

Positive Signals

Award to a known, established contractor like Huntington Ingalls Inc. may ensure continuity and expertise in critical shipbuilding and repair.
The contract supports a vital sector of the defense industrial base, contributing to national security.

Sector Analysis

The shipbuilding and repair sector is a critical component of the defense industrial base, characterized by high capital investment, specialized labor, and complex regulatory requirements. Companies operating in this space, such as Huntington Ingalls Inc., often hold significant contracts with government entities, particularly the Department of Defense. The NAICS code 336611 specifically covers establishments primarily engaged in building, repairing, and converting ships and barges. This contract fits within the broader landscape of defense procurement for naval assets, where specialized capabilities are paramount.

Small Business Impact

As this contract was awarded sole-source to Huntington Ingalls Inc., there is no explicit small business set-aside. Furthermore, without details on subcontracting plans, it is difficult to assess the direct impact on the small business ecosystem. Large prime contractors are often encouraged or required to subcontract portions of their work to small businesses, but the specifics of this contract's subcontracting provisions are not provided. The absence of competition might limit opportunities for small businesses that could have potentially bid as prime contractors or as part of a joint venture.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be defined within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is often limited for sole-source awards, as the justification for not competing is not publicly scrutinized in the same way as a competed contract. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Naval Ship Production
Ship Repair and Maintenance
Defense Procurement
Naval Vessel Construction
Department of Defense Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.7 million to HUNTINGTON INGALLS INC. See the official description on USAspending.

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 $14.7 million.

What is the period of performance?

Start: 2003-10-29. End: 2008-02-29.

What specific shipbuilding and repair services were procured under this contract?

The provided data indicates the contract falls under NAICS code 336611 (Ship Building and Repairing) and was awarded to Huntington Ingalls Inc. by the Department of the Navy. However, the specific services rendered are not detailed. These could range from the construction of new vessels, major overhauls, routine maintenance, or specialized repair work on existing naval ships. Understanding the precise nature of the services is crucial for a comprehensive assessment of the contract's value, performance, and necessity. Without this information, any analysis remains at a high level, focusing on the contract's structure and award process rather than its operational output.

How does the $14.7 million award compare to typical spending on similar shipbuilding and repair contracts by the Navy?

The $14.7 million award is a moderate-sized contract within the context of naval shipbuilding and repair, which often involves multi-billion dollar programs for major vessel construction. However, for specific repair, overhaul, or component manufacturing tasks, $14.7 million could represent a significant expenditure. To provide a meaningful comparison, one would need to analyze historical data for similar services (e.g., specific types of repairs, modernization efforts) awarded by the Department of the Navy or other relevant agencies. Factors such as vessel class, complexity of work, and duration of service significantly influence contract values. A direct comparison without these contextual details would be speculative.

What are the potential risks associated with a sole-source, cost-plus-fixed-fee contract in this sector?

Sole-source contracts, by definition, eliminate competitive pressure, which can lead to higher prices than might be achieved in a competitive environment. This lack of competition can also reduce the incentive for the contractor to innovate or operate with maximum efficiency. The cost-plus-fixed-fee (CPFF) structure reimburses the contractor for allowable costs plus a predetermined fixed fee. While the fee is fixed, the total cost to the government can escalate if the contractor's costs increase significantly. Risks include potential cost overruns, less rigorous cost control by the contractor, and a reduced focus on achieving the most economical outcome for the government. Effective government oversight is critical to mitigate these risks.

What is Huntington Ingalls Inc.'s track record with the Department of the Navy for shipbuilding and repair?

Huntington Ingalls Industries (HII), the parent company of Huntington Ingalls Inc., is a major and long-standing contractor for the U.S. Navy, particularly in shipbuilding. They are known for constructing aircraft carriers and amphibious assault ships, among other major naval platforms. Their track record includes delivering complex, large-scale vessels and performing significant maintenance and modernization work. While specific performance metrics for this particular $14.7 million contract are not detailed, HII generally possesses extensive experience and established relationships with the Navy in this domain. However, like any large contractor, they may have faced challenges or scrutiny on specific projects regarding cost, schedule, or performance over their history.

How has federal spending in the shipbuilding and repair sector (NAICS 336611) trended over the past decade?

Federal spending in the shipbuilding and repair sector, particularly by the Department of Defense, is heavily influenced by geopolitical factors, naval modernization priorities, and budget allocations. Over the past decade, spending has generally remained substantial due to the ongoing need to maintain and modernize a large fleet of naval vessels. While specific figures fluctuate annually based on appropriations and program starts/completions, the sector consistently represents a significant portion of the defense budget. Trends may show shifts towards specific types of vessels (e.g., submarines, unmanned systems) or increased focus on maintenance and lifecycle support for aging fleets. Analyzing historical spending patterns for NAICS 336611 would reveal cyclical trends and the impact of major shipbuilding programs.

Industry Classification

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

Product/Service Code: FURNACE/STEAM/DRYING; NUCL REACTOR

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 (UEI: 967362331)

Address: 4101 WASHINGTON AVE, NEWPORT NEWS, VA, 03

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline