Naval Reactors contract awarded to Huntington Ingalls Inc. for $41.4M, highlighting engineering services for defense

Contract Overview

Contract Amount: $41,441,683 ($41.4M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2011-10-01

End Date: 2017-06-30

Contract Duration: 2,099 days

Daily Burn Rate: $19.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NAVAL REACTORS

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $41.4 million to HUNTINGTON INGALLS INC for work described as: NAVAL REACTORS Key points: 1. Contract awarded for specialized engineering services, crucial for naval nuclear propulsion. 2. The contractor, Huntington Ingalls Inc., is a significant player in shipbuilding and defense. 3. This contract falls under the broader category of engineering services, essential for complex government projects. 4. The duration of the contract suggests a long-term need for these specialized skills. 5. The award method indicates a specific requirement that may not have had readily available alternatives. 6. The cost-plus-fixed-fee structure implies that costs are reimbursed plus a fixed profit, common in complex projects where final costs are uncertain.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific deliverables or comparable engineering service contracts for naval reactors. The cost-plus-fixed-fee (CPFF) pricing structure can sometimes lead to higher costs if not managed tightly, as it reimburses the contractor for allowable costs plus a fixed fee. However, CPFF is often used for research and development or complex projects where the scope is not fully defined, making it a reasonable choice for specialized engineering services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's requirements. For specialized areas like naval nuclear propulsion, it's common to have limited competition due to the highly specialized nature of the work and security clearances required.

Taxpayer Impact: Sole-source awards can limit opportunities for cost savings through competition, potentially leading to higher costs for taxpayers if robust oversight is not in place.

Public Impact

This contract directly supports the U.S. Navy's nuclear propulsion programs, ensuring the operational readiness of its fleet. It provides essential engineering services that contribute to the safety, reliability, and maintenance of nuclear-powered vessels. The services delivered are critical for national security and maintaining U.S. naval dominance. The contract's impact is primarily on the defense sector and the specialized workforce involved in nuclear engineering and naval operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to less favorable pricing for the government.
Sole-source awards can reduce transparency and accountability compared to competed contracts.
The CPFF structure requires diligent oversight to control costs and prevent overruns.

Positive Signals

Contractor possesses unique expertise critical for naval nuclear programs.
Long-term contract duration suggests a stable and ongoing need for these services.
The award supports a vital national security mission.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting the defense industry's complex needs related to naval nuclear propulsion. The market for such specialized engineering services is highly concentrated, with a few key players possessing the necessary expertise and security clearances. Comparable spending benchmarks are difficult to establish due to the unique nature of naval nuclear engineering, but overall government spending on engineering services is substantial, reflecting the demand for technical expertise across various sectors.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting significant subcontracting opportunities for small businesses. The specialized nature of naval nuclear engineering typically requires large, established contractors with extensive experience and security clearances, which may limit the direct involvement of small businesses in prime contracting roles.

Oversight & Accountability

Oversight for this contract would likely be managed by the Department of the Navy, specifically within the Naval Reactors program. Given the sensitive nature of nuclear technology, oversight mechanisms are expected to be rigorous, focusing on safety, security, and compliance. Transparency may be limited due to national security considerations, but internal accountability measures would be paramount.

Related Government Programs

Naval Nuclear Propulsion Program
Defense Engineering Services
Shipbuilding and Repair Contracts
Department of the Navy Contracts

Risk Flags

Sole-source award may limit cost savings.
Cost-plus-fixed-fee requires diligent oversight to manage costs.
High degree of specialization limits contractor pool.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.4 million to HUNTINGTON INGALLS INC. NAVAL REACTORS

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 $41.4 million.

What is the period of performance?

Start: 2011-10-01. End: 2017-06-30.

What is the historical spending pattern for engineering services related to naval reactors?

Historical spending on engineering services for naval reactors is substantial and has been concentrated among a few key contractors due to the highly specialized and sensitive nature of the work. The Naval Reactors program, managed jointly by the Navy and the Department of Energy, requires continuous investment in design, maintenance, and modernization of nuclear propulsion systems. While specific dollar amounts for individual contracts fluctuate based on program needs, the overall trend indicates a consistent and significant allocation of resources to ensure the safety, reliability, and technological advancement of the U.S. nuclear-powered fleet. This sustained spending reflects the long-term commitment to maintaining a nuclear-capable navy and the unique expertise required for such operations.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for this type of service?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often employed for complex projects where the scope of work is not fully defined at the outset, such as research, development, or specialized engineering services like those for naval reactors. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set regardless of the actual costs incurred, offering greater cost certainty for the buyer but potentially higher risk for the contractor. CPFF can be advantageous when innovation or adaptation is required, as it incentivizes the contractor to perform the work without being overly constrained by a fixed budget. However, it necessitates robust government oversight to ensure costs remain reasonable and that the fixed fee adequately compensates the contractor for their efforts without being excessive.

What are the key performance indicators (KPIs) typically used to evaluate engineering services for naval reactors?

Key performance indicators (KPIs) for engineering services related to naval reactors typically focus on safety, reliability, schedule adherence, and technical performance. For safety, metrics might include incident rates, compliance with nuclear safety regulations, and successful completion of safety audits. Reliability KPIs would assess the performance and longevity of the systems designed or maintained, such as mean time between failures or operational availability. Schedule adherence is crucial, as delays in naval projects can have significant strategic implications; KPIs would track on-time completion of milestones and overall project delivery. Technical performance metrics could include adherence to design specifications, successful testing and validation of systems, and the effectiveness of engineering solutions in addressing operational challenges. Robust reporting and regular reviews are essential to monitor these KPIs and ensure the contractor's performance meets the stringent requirements of the Naval Reactors program.

What is the track record of Huntington Ingalls Inc. in managing large-scale defense engineering contracts?

Huntington Ingalls Industries (HII), the parent company of Huntington Ingalls Inc., has a long and extensive track record in managing large-scale defense contracts, particularly in shipbuilding and complex engineering projects for the U.S. Navy. HII is the sole builder of nuclear-powered aircraft carriers and a major builder of amphibious assault ships and destroyers. Their experience encompasses the full lifecycle of naval vessel construction and maintenance, including the integration of sophisticated systems and technologies. This includes significant involvement in programs requiring advanced engineering, project management, and adherence to stringent quality and safety standards. Their established presence and deep expertise in the defense sector, particularly with naval platforms, suggest a strong capability to handle complex engineering services contracts, such as those for naval reactors.

What are the potential risks associated with a sole-source award for critical defense engineering services?

Sole-source awards for critical defense engineering services, like those for naval reactors, carry several potential risks. Foremost among these is the risk of reduced price competition, which can lead to the government paying a premium compared to what might be achieved in a competitive bidding process. This necessitates stringent cost oversight and negotiation to ensure fair pricing. Another risk is contractor complacency; without the pressure of competition, a sole-source provider might be less motivated to innovate or improve efficiency. Furthermore, reliance on a single source can create vulnerabilities if the contractor experiences financial difficulties, operational issues, or faces challenges in maintaining necessary security clearances. This dependence also limits the government's flexibility to switch providers if performance issues arise or if new technologies emerge from other potential suppliers.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002411R2101

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $47,225,548

Exercised Options: $45,526,098

Current Obligation: $41,441,683

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $31,613

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline