DoD's $1.63B Ship Repair Contract Awarded to Huntington Ingalls Inc. in 2005
Contract Overview
Contract Amount: $1,957,373,076 ($2.0B)
Contractor: Huntington Ingalls Inc
Awarding Agency: Department of Defense
Start Date: 2005-11-29
End Date: 2009-03-13
Contract Duration: 1,200 days
Daily Burn Rate: $1.6M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE 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 $1.96 billion to HUNTINGTON INGALLS INC for work described as: Key points: 1. Significant contract value of $1.63 billion for ship building and repair. 2. Awarded to a single large business, Huntington Ingalls Inc. 3. Contract type is Cost Plus Incentive Fee, indicating shared risk and potential for cost overruns. 4. The sector is Defense, specifically ship building and repair, a critical but often high-cost area.
Value Assessment
Rating: questionable
The Cost Plus Incentive Fee (CPIF) contract type can lead to higher final costs than fixed-price contracts if not managed carefully. The benchmark for similar contracts is not readily available, but CPIF awards often carry a risk of exceeding initial estimates.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, suggesting a sole-source award. Lack of competition limits price discovery and potentially leads to higher costs for taxpayers. The rationale for sole-sourcing is not provided.
Taxpayer Impact: The absence of competition likely resulted in a higher price for taxpayers than if the contract had been competitively bid.
Public Impact
Taxpayers may have paid more due to the lack of competitive bidding. The long duration (1200 days) and CPIF structure could lead to cost escalations. Dependence on a single contractor for critical naval repair services poses a strategic risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Incentive Fee contract type
- Lack of transparency on justification for sole-sourcing
Positive Signals
- Awarded to a major defense contractor with established capabilities
Sector Analysis
This contract falls within the Defense sector, specifically ship building and repair. Spending in this area is substantial and critical for national security, but often characterized by complex, high-value, and long-term contracts.
Small Business Impact
The contract was awarded to a large business (Huntington Ingalls Inc.) and there is no indication of small business participation. This suggests a missed opportunity for small business engagement in this significant defense expenditure.
Oversight & Accountability
The sole-source nature of this award warrants scrutiny regarding the justification for not competing the contract. Oversight would be crucial to ensure cost controls and performance under the CPIF structure.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Potential for cost overruns due to CPIF
- No clear justification for sole-sourcing provided
- Long contract duration
- No small business participation indicated
Tags
ship-building-and-repairing, department-of-defense, va, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.96 billion 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 $1.96 billion.
What is the period of performance?
Start: 2005-11-29. End: 2009-03-13.
What was the final cost of this contract, and how did it compare to the initial estimate and similar contracts?
The initial award was for $1.63 billion, with a duration of 1200 days. Without knowing the final obligated amount and comparing it to the target cost and incentive fee structure, it's difficult to assess the final value. Benchmarking against similar ship repair contracts awarded competitively during that period would provide further insight into whether the government received fair pricing.
What specific circumstances justified the sole-source award for this critical ship repair service?
The justification for a sole-source award typically involves factors like urgency, unique capabilities, or lack of available competition. For a contract of this magnitude and duration in ship repair, a thorough review of the contracting officer's justification is necessary to ensure it was indeed the only viable option and not a result of poor planning or contractor influence.
How effectively was the Cost Plus Incentive Fee structure managed to control costs and incentivize performance?
The CPIF structure aims to align contractor and government interests by sharing cost savings or overruns. Effective management requires clear performance metrics, robust oversight of contractor expenditures, and timely adjustments to incentive targets. Without post-award data on cost performance and incentive payouts, it's challenging to evaluate the efficiency and effectiveness of this specific CPIF implementation.
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
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Huntington Ingalls Industries, Inc
Address: 4101 WASHINGTON AVE BLDG 520/3, NEWPORT NEWS, VA, 23607
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2005-11-29
Current End Date: 2009-03-13
Potential End Date: 2009-03-13 00:00:00
Last Modified: 2025-11-07
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