DoD's $6.62 Billion CVN 78 Ship Construction Contract with Huntington Ingalls Faces Scrutiny

Contract Overview

Contract Amount: $6,620,467,289 ($6.6B)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2008-08-01

End Date: 2022-09-30

Contract Duration: 5,173 days

Daily Burn Rate: $1.3M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: CVN 78 SHIP CONSTRUCTION

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $6.62 billion to HUNTINGTON INGALLS INC for work described as: CVN 78 SHIP CONSTRUCTION Key points: 1. Significant investment in a single, high-value asset. 2. Sole-source award to Huntington Ingalls Inc. raises competition concerns. 3. Cost-plus incentive fee structure may lead to cost overruns. 4. Long contract duration (2008-2022) suggests complex project management.

Value Assessment

Rating: questionable

The contract's total value of $6.62 billion for ship construction is substantial. Benchmarking is difficult without specific per-unit cost data for comparable aircraft carriers, but the cost-plus incentive fee structure warrants close monitoring for potential overruns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Huntington Ingalls Inc. The lack of competition limits price discovery and potentially increases costs for the government.

Taxpayer Impact: The absence of competition in such a large contract raises concerns about taxpayer value and the potential for inflated prices.

Public Impact

Impacts national defense capabilities through the acquisition of a major naval asset. Significant economic impact on the shipbuilding industry and associated supply chains. Potential for long-term maintenance and operational costs associated with the new vessel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

  • Lack of competition
  • Cost-plus contract type
  • High total contract value
  • Long contract duration

Positive Signals

  • Acquisition of critical defense asset
  • Potential for technological advancement in shipbuilding

Sector Analysis

This contract falls within the Defense sector, specifically shipbuilding and repairing. Defense spending on major platforms like aircraft carriers is a significant portion of the DoD budget, often involving complex, long-term, and high-value contracts.

Small Business Impact

The data indicates this contract was not awarded to small businesses. Large, complex defense contracts like this are typically awarded to major prime contractors, with subcontracting opportunities for small businesses potentially existing further down the supply chain.

Oversight & Accountability

The long duration and high value of this contract necessitate robust oversight from the Department of the Navy and DoD to ensure cost control, schedule adherence, and quality of construction. Regular audits and performance reviews are crucial.

Related Government Programs

  • Ship Building and Repairing
  • Department of Defense Contracting
  • Department of the Navy Programs

Risk Flags

  • Sole-source award limits competition and price discovery.
  • Cost-plus contract type carries inherent risk of cost overruns.
  • High total contract value represents significant financial exposure.
  • Long contract duration increases complexity and oversight challenges.
  • Lack of small business participation at the prime contract level.

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 $6.62 billion to HUNTINGTON INGALLS INC. CVN 78 SHIP CONSTRUCTION

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 $6.62 billion.

What is the period of performance?

Start: 2008-08-01. End: 2022-09-30.

What was the rationale for awarding this contract on a sole-source basis, and were alternative procurement strategies considered?

The rationale for a sole-source award typically stems from unique capabilities, specialized technology, or the absence of viable alternatives. For a complex asset like a CVN, the government may have determined that only Huntington Ingalls possessed the necessary expertise and infrastructure. However, a thorough justification and review of alternative strategies should have been conducted to ensure the best value for taxpayers.

How effectively has the cost-plus incentive fee structure managed costs and incentivized performance for this long-term project?

Cost-plus incentive fee contracts aim to share cost risks and rewards between the government and contractor. For a project spanning over a decade, the effectiveness hinges on clearly defined performance metrics, realistic cost targets, and diligent government oversight. Without detailed performance data, it's difficult to assess if the contractor was adequately incentivized to control costs or if the government bore excessive risk.

What are the projected long-term operational and maintenance costs associated with the CVN 78, and how do they compare to previous carrier classes?

The initial construction cost is only one part of the total lifecycle expense. Understanding the projected operational and maintenance costs is critical for assessing the true value of the CVN 78. Comparisons to previous carrier classes are essential to determine if technological advancements or design changes have led to efficiencies or increased long-term expenditures.

Industry Classification

NAICS: ManufacturingShip and Boat BuildingShip Building and Repairing

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002407R2110

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, NEWPORT NEWS, VA, 23607

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $6,694,560,201

Exercised Options: $6,694,560,201

Current Obligation: $6,620,467,289

Actual Outlays: $96,474,395

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $5,104,617

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline

Start Date: 2008-08-01

Current End Date: 2022-09-30

Potential End Date: 2022-09-30 00:00:00

Last Modified: 2025-06-26

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