DoD Awards $1.6B Cost-Plus Contract to Huntington Ingalls for CVN 79 IPPD
Contract Overview
Contract Amount: $16,015,941 ($16.0M)
Contractor: Huntington Ingalls Inc
Awarding Agency: Department of Defense
Start Date: 2006-11-15
End Date: 2008-01-31
Contract Duration: 442 days
Daily Burn Rate: $36.2K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: CVN 79 IPPD.
Place of Performance
Location: NEWPORT NEWS, NEWPORT NEWS (CITY) County, VIRGINIA, 23607
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $16.0 million to HUNTINGTON INGALLS INC for work described as: CVN 79 IPPD. Key points: 1. Significant investment in naval shipbuilding, focusing on the CVN 79 aircraft carrier. 2. Sole-source award to Huntington Ingalls Inc. raises questions about competition and potential cost efficiencies. 3. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed tightly. 4. Engineering services for a major defense platform represent a critical but complex sector.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee structure, while common for complex projects, offers less incentive for cost control compared to fixed-price contracts. Benchmarking is difficult without detailed cost breakdowns, but the scale suggests significant taxpayer exposure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs than if multiple vendors had competed. The justification for sole-sourcing is critical for assessing fairness.
Taxpayer Impact: The lack of competition for a $1.6 billion contract raises concerns about optimal use of taxpayer funds. Without competitive pressure, costs may be inflated, impacting overall defense budget efficiency.
Public Impact
Impacts the future capability of the U.S. Navy's carrier fleet. Supports jobs in the shipbuilding and engineering sectors. Represents a substantial allocation of federal defense spending. Potential for cost overruns could divert funds from other critical government programs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- Long duration of contract performance
Positive Signals
- Supports critical defense infrastructure
- Awarded to an experienced prime contractor
Sector Analysis
This contract falls within the Defense sector, specifically naval shipbuilding and engineering services. Spending in this area is typically high due to the complexity and long lifecycle of major defense assets. Benchmarks are difficult without specific project details, but large-scale shipbuilding contracts are inherently costly.
Small Business Impact
The data does not indicate any specific provisions or set-asides for small businesses in this contract. Large sole-source awards often bypass the small business contracting ecosystem, limiting their opportunities.
Oversight & Accountability
Oversight will be crucial given the sole-source nature and cost-plus structure. The Department of the Navy must ensure rigorous monitoring of costs and performance to prevent waste and ensure the project stays within projected budgets.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Potential for cost overruns due to CPFF structure
- Lack of competitive bidding may lead to inflated prices
- Long contract duration increases risk exposure
- Sole-source award limits market-based price discovery
Tags
engineering-services, department-of-defense, va, dca, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $16.0 million to HUNTINGTON INGALLS INC. CVN 79 IPPD.
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 $16.0 million.
What is the period of performance?
Start: 2006-11-15. End: 2008-01-31.
What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award is critical for understanding the rationale behind bypassing competition. Typically, such justifications cite unique capabilities, urgent needs, or lack of viable alternatives. Without this information, it's difficult to assess if the government secured the best possible value and price for taxpayers, or if competitive pressures were unnecessarily forgone.
How will the Department of Defense manage cost growth under this Cost Plus Fixed Fee contract to protect taxpayer interests?
Managing cost growth in CPFF contracts requires robust oversight, detailed cost tracking, and clear performance metrics. The DoD must implement stringent financial controls, regular audits, and performance reviews to identify potential overruns early. Incentive clauses, if present, can also help align contractor and government interests in cost containment, but their effectiveness depends on specific contract terms.
What are the key performance indicators (KPIs) for this contract, and how will their achievement be measured to ensure effective delivery of the CVN 79 IPPD?
Key performance indicators for a complex shipbuilding project like the CVN 79 IPPD would likely include schedule adherence, quality of construction, technical performance milestones, and safety records. The Department of the Navy must establish clear, measurable KPIs and a transparent system for tracking progress against them. Regular reporting and independent verification are essential to ensure the contractor is meeting obligations effectively.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
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 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
Financial Breakdown
Contract Ceiling: $24,955,771
Exercised Options: $24,141,108
Current Obligation: $16,015,941
Contract Characteristics
Cost or Pricing Data: YES
Timeline
Start Date: 2006-11-15
Current End Date: 2008-01-31
Potential End Date: 2008-01-31 00:00:00
Last Modified: 2015-02-24
More Contracts from Huntington Ingalls Inc
- CVN 80 Engineering Efforts and Steel — $11.9B (Department of Defense)
- CVN 78 Ship Construction — $6.6B (Department of Defense)
- Federal Contract — $4.6B (Department of Defense)
- CVN79 Construction Preparation Efforts FY09 — $4.5B (Department of Defense)
- Detail Design and Construction CVN 79 — $4.5B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)