Navy awards $33.1M contract for engineering services to Huntington Ingalls Inc

Contract Overview

Contract Amount: $33,115,113 ($33.1M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2006-10-11

End Date: 2011-09-30

Contract Duration: 1,815 days

Daily Burn Rate: $18.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: STANDARD NAVY VALVE YARD (SNVY)

Place of Performance

Location: NEWPORT NEWS, NEWPORT NEWS CITY County, VIRGINIA, 23601

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $33.1 million to HUNTINGTON INGALLS INC for work described as: STANDARD NAVY VALVE YARD (SNVY) Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not managed carefully. 2. The contract was not competed, raising questions about potential price efficiencies and market responsiveness. 3. Long duration of 1815 days suggests a significant, ongoing need for these engineering services. 4. The contract falls under the Engineering Services NAICS code (541330), a common category for defense support. 5. Awarded by the Department of the Navy, indicating a focus on naval platform sustainment or development. 6. The contractor, Huntington Ingalls Inc., is a major player in the defense industrial base.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the engineering services provided. However, the cost-plus-fixed-fee structure, while common for complex projects, carries inherent risks of cost overruns if not rigorously overseen. Comparing this to similar engineering service contracts for naval platforms would be necessary to determine if the pricing is competitive. The total award amount of $33.1 million over approximately five years suggests a substantial but not exceptionally large contract in the defense sector.

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 a specific contractor possesses unique capabilities, proprietary technology, or when urgency precludes a competitive process. The lack of competition means that the government did not benefit from the price discovery and potential cost savings that a competitive bidding process could have provided.

Taxpayer Impact: Taxpayers may have paid a higher price than necessary due to the absence of competitive pressure. Without multiple bids, it's harder to ensure the most cost-effective solution was secured.

Public Impact

The primary beneficiaries are the Department of the Navy, which receives essential engineering support for its operations. Services delivered likely include design, analysis, testing, and technical support for naval systems or platforms. The geographic impact is centered around naval facilities and operations, primarily in Virginia where the contractor is located. Workforce implications include employment for engineers and technical staff at Huntington Ingalls Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts require diligent oversight to prevent cost overruns.
Sole-source awards can limit opportunities for other capable firms.

Positive Signals

Award to a major, established defense contractor suggests a high likelihood of successful execution.
Long contract duration indicates a stable, ongoing requirement that the contractor is expected to meet.
Focus on engineering services is critical for maintaining and advancing naval capabilities.

Sector Analysis

The defense engineering services sector is a critical component of the broader aerospace and defense industry. This contract falls within the engineering services category (NAICS 541330), which encompasses firms providing specialized engineering expertise for complex projects. The market is characterized by high barriers to entry, significant R&D investment, and long-term relationships between contractors and government agencies. Spending in this sector is driven by national security requirements and the need for technological advancement in military platforms and systems.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. As a sole-source award to a large prime contractor, Huntington Ingalls Inc., the direct impact on small businesses is likely minimal unless they are part of the contractor's established supply chain. There is no indication of specific efforts to engage small businesses in this particular procurement.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Accountability measures would be embedded in the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award; however, contract award data is publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Ship Systems Engineering
Defense Engineering Support Services
Naval Platform Modernization
Cost-Plus-Fixed-Fee Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.1 million to HUNTINGTON INGALLS INC. STANDARD NAVY VALVE YARD (SNVY)

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 $33.1 million.

What is the period of performance?

Start: 2006-10-11. End: 2011-09-30.

What specific engineering services were provided under this contract, and how do they align with the Department of the Navy's strategic objectives?

The provided data indicates the contract is for 'Engineering Services' under NAICS code 541330. While the specific services are not detailed, this category typically includes activities such as design, development, testing, analysis, and technical support for complex systems. For the Department of the Navy, these services are crucial for maintaining the readiness and modernizing its fleet of ships, submarines, and aircraft. This could encompass areas like structural integrity analysis, propulsion system engineering, combat system integration, or lifecycle support for existing platforms. The strategic alignment would depend on which specific naval programs or platforms this contract supported, contributing to areas like fleet modernization, operational efficiency, or enhanced warfighting capabilities.

How does the cost-plus-fixed-fee (CPFF) pricing structure compare to other contract types used for similar engineering services in the defense sector?

The Cost-Plus-Fixed-Fee (CPFF) structure is common for research and development or complex engineering efforts where the scope of work is not fully defined at the outset, or where innovation is a key objective. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This differs from fixed-price contracts, where the price is set regardless of actual costs, offering greater cost certainty to the government but placing cost risk on the contractor. It also differs from cost-plus-incentive-fee (CPIF) or cost-plus-award-fee (CPAF) contracts, which include mechanisms to incentivize contractor performance and cost control. While CPFF provides flexibility, it requires robust government oversight to manage costs effectively, as the contractor has less inherent incentive to control expenses compared to fixed-price arrangements.

What are the potential risks associated with awarding a contract of this duration (1815 days) on a sole-source basis?

Awarding a long-duration contract (over 1800 days) on a sole-source basis presents several risks. Firstly, the absence of competition means the government may not be achieving the best possible price or value, as market forces are not engaged to drive down costs or encourage innovation. Secondly, over such an extended period, the contractor's capabilities or the market landscape could change, potentially making the sole-source provider less optimal or more expensive than alternatives that might emerge. Thirdly, long-term sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future. Finally, without periodic re-competition, there's a reduced incentive for the incumbent contractor to continuously improve efficiency and service quality beyond the minimum required by the contract terms.

What is Huntington Ingalls Inc.'s track record with the Department of the Navy, particularly concerning contracts of similar scope and value?

Huntington Ingalls Industries (HII), the parent company of Huntington Ingalls Inc., is a major U.S. defense contractor with a long and extensive history of working with the Department of the Navy. They are one of the largest builders of ships for the Navy, including aircraft carriers and submarines. Their portfolio includes a wide range of services beyond shipbuilding, such as fleet support, naval systems integration, and advanced technologies. Given their significant presence and established relationship, HII likely has a substantial track record with numerous contracts of varying scopes and values, including engineering services. Assessing their specific performance on contracts similar to this $33.1 million, 5-year engineering services award would require a detailed review of past performance evaluations and contract histories, but their overall standing as a key naval supplier suggests a generally positive, albeit complex, relationship.

How does the $33.1 million award amount compare to historical spending patterns for engineering services by the Department of the Navy?

The $33.1 million award for engineering services represents a moderate-sized contract within the vast spending of the Department of the Navy. The Navy's annual budget runs into the tens of billions of dollars, with significant allocations for research, development, and acquisition, which often include substantial engineering service components. Contracts for engineering services can range from a few million dollars for specialized tasks to hundreds of millions or even billions for large-scale platform development or sustainment programs. Therefore, this specific award appears to be a typical, perhaps slightly above average for a single definitive contract, allocation for ongoing engineering support rather than a flagship program initiation or a massive overhaul project. Historical data would show numerous similar or larger contracts supporting various naval systems and infrastructure.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

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

Financial Breakdown

Contract Ceiling: $37,676,078

Exercised Options: $37,676,078

Current Obligation: $33,115,113

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline