DoD awards $794M for DDG 51 Class Destroyer construction to Huntington Ingalls Inc

Contract Overview

Contract Amount: $794,237,018 ($794.2M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2011-06-15

End Date: 2024-04-30

Contract Duration: 4,703 days

Daily Burn Rate: $168.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: CONSTRUCT DDG 113 DDG 51 CLASS DESTROYER

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $794.2 million to HUNTINGTON INGALLS INCORPORATED for work described as: CONSTRUCT DDG 113 DDG 51 CLASS DESTROYER Key points: 1. Significant investment in naval shipbuilding capacity. 2. Sole-source award to incumbent prime contractor. 3. Long-term contract with potential for cost overruns. 4. High-value contract within the shipbuilding sector.

Value Assessment

Rating: questionable

The contract value of $794.2 million for a destroyer is substantial. Without comparable fixed-price incentive contracts for similar vessels, it's difficult to definitively assess pricing efficiency. The long duration and fixed-price incentive structure suggest potential for cost growth if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Huntington Ingalls Incorporated. This limits price discovery and competitive pressure, potentially leading to higher costs than if the contract had been open to multiple bidders.

Taxpayer Impact: Taxpayer funds are committed to a single provider without competitive bidding, raising concerns about value for money and the potential for inflated prices.

Public Impact

Supports national defense by funding critical naval assets. Ensures continued operation and employment at a major shipyard. Impacts the supply chain for shipbuilding materials and components. Contributes to the technological advancement of naval vessels.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price discovery.
Long contract duration increases risk of cost escalation.
Fixed-price incentive contract can lead to cost overruns.
Lack of clear performance metrics for incentive portion.

Positive Signals

Supports critical defense capability.
Maintains established shipbuilding expertise.
Long-term planning for fleet modernization.

Sector Analysis

This contract falls within the shipbuilding and repair sector, a capital-intensive industry with long production cycles. Defense shipbuilding contracts are often sole-sourced due to specialized capabilities and existing platforms, making direct cost comparisons challenging.

Small Business Impact

While the prime contractor is a large business, the contract may indirectly benefit small businesses through subcontracts for components, materials, and specialized services within the shipbuilding supply chain.

Oversight & Accountability

The Department of the Navy is responsible for oversight. The long duration and sole-source nature necessitate robust program management and regular audits to ensure cost control and adherence to contract terms.

Related Government Programs

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

Risk Flags

Sole-source award
Long contract duration
Fixed-price incentive contract type
Potential for cost overruns
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $794.2 million to HUNTINGTON INGALLS INCORPORATED. CONSTRUCT DDG 113 DDG 51 CLASS DESTROYER

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 $794.2 million.

What is the period of performance?

Start: 2011-06-15. End: 2024-04-30.

What is the historical cost performance of similar DDG 51 class destroyer contracts awarded to Huntington Ingalls Inc. under fixed-price incentive arrangements?

Analyzing historical cost performance on similar contracts is crucial for assessing the value of this award. Past projects with fixed-price incentive structures can reveal trends in cost overruns or savings, providing a benchmark against which the current contract's potential financial trajectory can be evaluated. This data would inform whether the current pricing is reasonable or indicative of future cost challenges.

What specific risks are associated with the long duration (4703 days) of this contract, and how are they being mitigated?

The extended duration of this contract introduces risks such as inflation impacting material costs, potential design obsolescence, and workforce stability challenges. Mitigation strategies likely include economic price adjustment clauses, phased funding, and robust program management to adapt to evolving requirements and maintain cost control throughout the project lifecycle.

How does the lack of competition in this sole-source award impact the government's ability to ensure the most effective and cost-efficient outcome for this destroyer construction?

A sole-source award inherently limits competitive pressure, which is a primary driver for cost efficiency and innovation. The government must rely heavily on strong negotiation, detailed cost analysis, and rigorous oversight to ensure effectiveness and value. Without competition, there's a reduced incentive for the contractor to aggressively seek cost savings or implement novel, more efficient construction methods.

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: N0002410R2309

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Huntington Ingalls Industries, Inc

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: $805,180,196

Exercised Options: $797,158,037

Current Obligation: $794,237,018

Subaward Activity

Number of Subawards: 226

Total Subaward Amount: $24,635,943

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline