DoD's $97.6M shipbuilding contract with Huntington Ingalls Inc. for infrastructure upgrades shows fair value

Contract Overview

Contract Amount: $97,658,444 ($97.7M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2007-07-12

End Date: 2013-08-30

Contract Duration: 2,241 days

Daily Burn Rate: $43.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 18

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: INFRASTRUCTURE IMPROVEMENTS TO NGSS SHIPYARDS PURSUANT TO SECTION 2203 P.L. 109-234.

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39568, UNITED STATES OF AMERICA

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $97.7 million to HUNTINGTON INGALLS INCORPORATED for work described as: INFRASTRUCTURE IMPROVEMENTS TO NGSS SHIPYARDS PURSUANT TO SECTION 2203 P.L. 109-234. Key points: 1. Contract awarded through full and open competition, suggesting a competitive pricing environment. 2. The fixed-price contract type mitigates cost overrun risks for the government. 3. Performance period of over 6 years indicates a long-term commitment to infrastructure development. 4. The contract aligns with the Navy's strategic shipbuilding and repair needs. 5. A significant portion of the contract value was allocated to infrastructure improvements, not direct vessel construction.

Value Assessment

Rating: good

The contract's value of $97.6 million for infrastructure improvements appears reasonable given the long performance period and the nature of shipyard upgrades. While direct comparisons are difficult without specific project details, the fixed-price nature suggests the government secured a defined scope at a negotiated price. The benchmarked value of $43.5 million for similar projects indicates this contract may be on the higher end, but this could be justified by the specific scope and scale of the NGSS shipyard improvements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This process is designed to foster price discovery and ensure the government receives competitive offers. The presence of multiple bidders typically leads to more favorable pricing for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best possible price for the required infrastructure improvements, reducing the risk of overpayment.

Public Impact

The primary beneficiaries are the Department of the Navy and its shipbuilding operations, ensuring modernized facilities. Services delivered include essential infrastructure improvements to support shipbuilding and repair capabilities at NGSS. The geographic impact is concentrated in Mississippi, where the NGSS shipyards are located. Workforce implications include potential job creation and retention in the shipbuilding and construction sectors in Mississippi.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost escalation if scope creep occurs despite fixed-price contract.
Long duration of the contract could lead to unforeseen technological obsolescence in infrastructure.
Dependence on a single large contractor for critical infrastructure upgrades.

Positive Signals

Fixed-price contract structure provides cost certainty.
Full and open competition suggests a robust market assessment.
Long-term investment in critical naval infrastructure.

Sector Analysis

This contract falls within the shipbuilding and repair sector, a critical component of the defense industrial base. The market is characterized by a few large, specialized firms capable of undertaking complex naval projects. Spending in this sector is often driven by national security requirements and fleet modernization programs. Comparable spending benchmarks would typically involve large-scale facility upgrades or new construction for naval facilities.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. Large defense contracts of this nature often involve prime contractors who may engage small businesses for specialized services or supplies, but the primary awardee is a large corporation. Further analysis would be needed to determine the extent of small business participation through subcontracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including performance standards and payment schedules tied to milestones. Transparency is facilitated through contract award databases, though detailed project-specific oversight information may be less publicly accessible.

Related Government Programs

Naval Shipyard Infrastructure Modernization Programs
Defense Industrial Base Infrastructure Investments
Shipbuilding and Repair Contracts
Public Law 109-234 Funding

Risk Flags

Potential for cost variance despite fixed-price contract due to long duration.
Benchmark value significantly lower than awarded amount requires justification.
Lack of explicit small business subcontracting details.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $97.7 million to HUNTINGTON INGALLS INCORPORATED. INFRASTRUCTURE IMPROVEMENTS TO NGSS SHIPYARDS PURSUANT TO SECTION 2203 P.L. 109-234.

Who is the contractor on this award?

The obligated recipient is HUNTINGTON INGALLS INCORPORATED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $97.7 million.

What is the period of performance?

Start: 2007-07-12. End: 2013-08-30.

What is the historical spending trend for shipbuilding and repair infrastructure at NGSS shipyards?

Analyzing historical spending for shipbuilding and repair infrastructure at NGSS shipyards requires access to detailed budget and contract data over multiple fiscal years. While this specific contract represents a significant investment of $97.6 million awarded in 2007, understanding the trend would involve examining prior and subsequent contracts for similar purposes. Factors such as fleet size, modernization needs, and available appropriations would influence these trends. Without a broader dataset, it's challenging to establish a definitive trend, but this contract indicates a substantial commitment to upgrading these critical facilities during its performance period.

How does the awarded amount compare to the estimated value or benchmark for similar infrastructure projects?

The awarded amount for this contract is $97.6 million. The provided data includes a benchmarked value of $43.5 million for comparable projects. This suggests that the awarded contract is significantly higher than the benchmark, more than double. While benchmarks offer a useful reference point, the difference could be attributed to various factors such as the specific scope of work, the complexity of the required improvements, the location, the duration of the contract, and prevailing market conditions at the time of award. A detailed review of the project's specific requirements would be necessary to fully justify this variance.

What are the key performance indicators (KPIs) used to assess the success of this infrastructure improvement contract?

Key Performance Indicators (KPIs) for infrastructure improvement contracts like this typically focus on schedule adherence, cost control (within the fixed-price framework), quality of work, and safety. For a shipbuilding and repair facility, specific KPIs might include the successful completion of upgrades to dry docks, piers, or production facilities, meeting specified technical standards, and minimizing disruptions to ongoing shipyard operations. The contract's duration of over 2200 days suggests that milestones related to phased completion of different infrastructure elements would be critical. The Department of the Navy would establish and monitor these KPIs throughout the contract's lifecycle.

What is the track record of Huntington Ingalls Incorporated in managing large-scale defense infrastructure contracts?

Huntington Ingalls Industries (HII), the parent company of Huntington Ingalls Incorporated, has a long and extensive track record in managing large-scale defense contracts, particularly in shipbuilding and repair for the U.S. Navy. They are a primary builder of naval vessels and manage complex industrial facilities. Their experience includes numerous contracts for fleet support, maintenance, modernization, and the construction of new infrastructure. While specific performance details for every contract are not always public, HII's position as a major defense contractor suggests a demonstrated capability in handling projects of this magnitude and complexity, including infrastructure development.

What are the potential risks associated with a long-duration contract (2241 days) for infrastructure improvements?

Long-duration contracts, such as this 2241-day (over 6 years) agreement, carry several potential risks. These include the possibility of scope creep if requirements evolve significantly over time, leading to potential disputes or change orders. Technological advancements could render some of the newly installed infrastructure partially obsolete before the contract concludes. Furthermore, economic fluctuations or changes in government funding priorities could impact the project's continuity or the contractor's ability to maintain resources. For a fixed-price contract, managing these risks requires robust contract administration and proactive communication between the government and the contractor to address any emerging issues.

How does this contract contribute to the overall modernization goals of the U.S. Navy's shipbuilding and repair capabilities?

This contract directly contributes to the U.S. Navy's modernization goals by investing in the physical infrastructure necessary for efficient and advanced shipbuilding and repair operations. Modernized shipyards can accommodate larger and more technologically complex vessels, improve production timelines, and enhance maintenance capabilities. Upgrades to facilities like dry docks, assembly areas, and support services are crucial for maintaining the fleet's readiness and for executing future shipbuilding programs. By ensuring that NGSS shipyards are equipped with state-of-the-art facilities, the Navy strengthens its industrial base and its capacity to meet long-term strategic objectives.

Industry Classification

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

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002406R2311

Offers Received: 18

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Huntington Ingalls Industries, Inc (UEI: 967362331)

Address: 1000 ACCESS RD, PASCAGOULA, MS, 39567

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

Financial Breakdown

Contract Ceiling: $110,053,116

Exercised Options: $97,658,444

Current Obligation: $97,658,444

Contract Characteristics

Cost or Pricing Data: NO

Timeline