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: 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
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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