DoD's $4.5B CVN79 Construction Prep Contract Awarded to Huntington Ingalls Inc. in 2009
Contract Overview
Contract Amount: $4,499,210,345 ($4.5B)
Contractor: Huntington Ingalls Inc
Awarding Agency: Department of Defense
Start Date: 2009-01-15
End Date: 2025-07-31
Contract Duration: 6,041 days
Daily Burn Rate: $744.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: CVN79 CONSTRUCTION PREPARATION EFFORTS FY09
Place of Performance
Location: NEWPORT NEWS, NEWPORT NEWS CITY County, VIRGINIA, 23607
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $4.50 billion to HUNTINGTON INGALLS INC for work described as: CVN79 CONSTRUCTION PREPARATION EFFORTS FY09 Key points: 1. Significant investment in a major naval asset. 2. Sole-source award to Huntington Ingalls Inc., a dominant player in shipbuilding. 3. Long contract duration (2009-2025) suggests complex, multi-year project. 4. Cost-plus fixed fee contract type carries potential for cost overruns. 5. Sector: Defense - Shipbuilding and Repair.
Value Assessment
Rating: questionable
The contract's cost-plus fixed fee structure, awarded in 2009, raises concerns about potential cost escalation over its long duration. Benchmarking against similar large-scale shipbuilding contracts is difficult due to the unique nature of aircraft carrier construction.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, indicating a lack of competition. This approach may limit price discovery and potentially lead to higher costs for taxpayers compared to a competitive bidding process.
Taxpayer Impact: The absence of competition for such a large contract raises concerns about the optimal use of taxpayer funds, potentially leading to inflated costs.
Public Impact
Supports national defense capabilities through the construction of a new aircraft carrier. Creates and sustains high-skilled jobs in the shipbuilding industry. Impacts the defense industrial base and supply chains. Long-term commitment of significant federal resources.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition.
- Cost-plus fixed fee contract type can lead to cost overruns.
- Long contract duration increases risk exposure.
- Lack of clear performance metrics for early prep efforts.
Positive Signals
- Essential for national security and naval power projection.
- Supports a critical segment of the defense industrial base.
- Long-term planning for a major capital asset.
Sector Analysis
This contract falls within the Defense sector, specifically shipbuilding and repairing. The US Navy's aircraft carrier program represents a significant portion of defense spending, with costs often running into billions of dollars per vessel.
Small Business Impact
The contract was awarded to Huntington Ingalls Inc., a large prime contractor. There is no indication of specific provisions or subcontracts aimed at engaging small businesses in this particular award, which is typical for large, specialized defense contracts.
Oversight & Accountability
Given the sole-source nature and long duration, robust oversight is crucial to manage costs and ensure performance. The Department of the Navy is responsible for monitoring this contract, but the lack of competition necessitates vigilant scrutiny.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- Potential for cost overruns
- Lack of upfront competition
- Complexity of aircraft carrier construction
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 $4.50 billion to HUNTINGTON INGALLS INC. CVN79 CONSTRUCTION PREPARATION EFFORTS FY09
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 $4.50 billion.
What is the period of performance?
Start: 2009-01-15. End: 2025-07-31.
What specific justification was provided for the sole-source award, and how was the fixed fee determined to ensure fairness?
Sole-source awards typically require a justification based on factors like unique capabilities, urgent need, or lack of viable alternatives. The fixed fee in a CPFF contract is negotiated and aims to provide a reasonable profit margin for the contractor while incentivizing efficient performance. Detailed justification documents and fee negotiation records would be necessary to fully assess fairness.
How are cost overruns managed and mitigated under this Cost Plus Fixed Fee (CPFF) contract structure for such a long-duration project?
CPFF contracts allow the government to reimburse the contractor's actual costs plus a fixed fee. Mitigation strategies for cost overruns include stringent cost controls, regular audits, performance reviews, and potentially contract modifications or incentives. However, the inherent nature of CPFF carries a higher risk of cost growth compared to fixed-price contracts, especially over extended periods.
What mechanisms are in place to ensure the effectiveness and efficiency of the construction preparation efforts over the 16-year period?
Effectiveness and efficiency are typically ensured through detailed work breakdown structures, performance metrics, milestone tracking, and regular progress reports. The Navy's program management team would oversee these aspects, conducting reviews and potentially adjusting plans based on performance. However, the long timeframe necessitates adaptive management and continuous evaluation to maintain focus and control.
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: N0002408R2116
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: $4,513,437,213
Exercised Options: $4,513,437,213
Current Obligation: $4,499,210,345
Actual Outlays: $72,620,471
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2009-01-15
Current End Date: 2025-07-31
Potential End Date: 2025-07-31 00:00:00
Last Modified: 2025-12-11
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