Navy awards $130M for DDG 51 Class follow yard services to Huntington Ingalls

Contract Overview

Contract Amount: $129,777,963 ($129.8M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2012-06-07

End Date: 2018-04-16

Contract Duration: 2,139 days

Daily Burn Rate: $60.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: DDG 51 CLASS FOLLOW YARD SERVICES

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $129.8 million to HUNTINGTON INGALLS INCORPORATED for work described as: DDG 51 CLASS FOLLOW YARD SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Services include engineering and technical support for a critical naval shipbuilding program. 3. The contract duration of over 2000 days suggests a long-term need for these specialized services. 4. The cost-plus award fee structure incentivizes performance but can lead to higher final costs. 5. This contract supports the sustainment and modernization of a key fleet asset. 6. The absence of small business set-asides indicates a focus on large, specialized contractors.

Value Assessment

Rating: fair

The total award amount of $129,777,963 for engineering services over approximately five years represents a significant investment. Benchmarking this specific contract is challenging due to its sole-source nature and specialized scope. However, the cost-plus award fee (CPAF) structure, while common for complex services, inherently carries a risk of cost overruns compared to fixed-price contracts. The value proposition hinges on the contractor's ability to deliver critical technical expertise efficiently, which is not fully quantifiable without detailed performance metrics and cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Huntington Ingalls Incorporated, was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and fosters innovation. While sole-source awards are sometimes justified for unique capabilities or urgent needs, they reduce transparency and limit the government's ability to secure the best possible pricing through market forces.

Taxpayer Impact: The lack of competition means taxpayers may not have received the most cost-effective solution, as there was no pressure from competing bids to optimize pricing.

Public Impact

The primary beneficiaries are the U.S. Navy, ensuring continued support for the DDG 51 class destroyers. Services delivered include essential engineering, technical, and logistical support for shipbuilding and maintenance. The geographic impact is concentrated around Huntington Ingalls' facilities, primarily in Mississippi. This contract supports a highly skilled workforce in specialized naval engineering and shipbuilding trades.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus award fee structure can lead to higher final costs if not managed tightly.
Long contract duration may indicate potential for scope creep or evolving requirements.
Lack of small business participation limits opportunities for smaller firms in this segment.

Positive Signals

Supports a critical naval shipbuilding program, ensuring fleet readiness.
Contractor has a long-standing relationship with the Navy for these services.
Award fee structure incentivizes contractor performance and quality.
Services are essential for maintaining advanced naval capabilities.

Sector Analysis

This contract falls within the broader defense industrial base, specifically supporting naval shipbuilding and sustainment. The market for specialized yard services for major naval vessels is highly concentrated, with a few large prime contractors dominating. Spending in this sector is driven by national security priorities and the need to maintain a technologically advanced fleet. Comparable spending benchmarks are difficult to establish due to the unique nature of each class of vessel and the specific services required.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. The nature of the services, requiring highly specialized engineering and shipyard capabilities, typically favors large, established defense contractors. This limits the direct participation of small businesses in this specific contract, although they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. The cost-plus award fee structure necessitates robust monitoring of costs and performance to ensure the contractor meets objectives and earns award fees appropriately. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

DDG 51 Class Destroyer Program
Naval Shipbuilding and Repair
Defense Engineering Services
Shipyard Operations Support

Risk Flags

Sole-source award
Cost-plus award fee structure
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $129.8 million to HUNTINGTON INGALLS INCORPORATED. DDG 51 CLASS FOLLOW YARD SERVICES

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 $129.8 million.

What is the period of performance?

Start: 2012-06-07. End: 2018-04-16.

What is Huntington Ingalls Incorporated's track record with the Navy for DDG 51 class services?

Huntington Ingalls Incorporated (HII), through its Ingalls Shipbuilding division, has a long and established history as the prime contractor for the construction and post-delivery support of the DDG 51 Arleigh Burke-class destroyers. They have been instrumental in building a significant portion of the fleet. This specific contract for follow yard services builds upon that extensive relationship, indicating a deep understanding of the class's technical requirements and operational needs. Their track record suggests a high degree of familiarity and capability in providing the necessary engineering and technical support, which likely contributed to the sole-source award.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types for similar services?

The Cost Plus Award Fee (CPAF) structure is common for complex, high-risk, or R&D-intensive contracts where the final cost is difficult to predict. Unlike fixed-price contracts, CPAF allows the contractor to recover allowable costs plus a base fee, with an additional award fee determined by the government based on performance against defined criteria. This differs from Cost Plus Fixed Fee (CPFF), where the fee is fixed, or firm-fixed-price (FFP) contracts, which offer the most cost certainty but are less suitable for uncertain scopes. While CPAF incentivizes performance, it can lead to higher overall costs than FFP if performance targets are met or exceeded, and requires diligent government oversight to manage costs effectively.

What are the primary risks associated with a sole-source award for these services?

The primary risks associated with a sole-source award for these services include a lack of price competition, potentially leading to higher costs for taxpayers. Without competing bids, there is less incentive for the contractor to optimize efficiency or offer the lowest possible price. Furthermore, it can limit opportunities for innovation that might arise from a competitive environment. There's also a risk of complacency or reduced urgency from the contractor, as they face no direct threat from competitors. Finally, it reduces transparency in the procurement process, making it harder to benchmark pricing against market alternatives.

How does this contract contribute to the overall effectiveness and readiness of the DDG 51 class fleet?

This contract is crucial for maintaining the operational effectiveness and readiness of the DDG 51 class destroyers, which form a significant part of the U.S. Navy's surface combatant fleet. The engineering and technical services provided ensure that these complex vessels receive necessary maintenance, upgrades, and repairs. This support is vital for addressing obsolescence, incorporating new technologies, and ensuring the ships can perform their missions reliably in demanding operational environments. Without consistent and expert follow yard services, the lifespan and combat capability of these destroyers would be compromised, impacting overall fleet readiness.

What are the historical spending patterns for DDG 51 class follow yard services?

Historical spending on DDG 51 class follow yard services has been substantial, reflecting the ongoing need to support a large and aging fleet of destroyers. These contracts are typically long-term and awarded to the prime shipbuilder due to the specialized knowledge required. Over the years, the Navy has awarded numerous contracts for various aspects of support, including maintenance, modernization, and technical services, often in the tens to hundreds of millions of dollars per contract, depending on the scope and duration. Spending patterns are influenced by fleet size, ship age, modernization requirements, and budget allocations, often showing consistent, significant investment in this critical asset class.

What are the implications of the contract's duration (2139 days) on cost and performance?

The contract's duration of 2139 days (approximately 5.8 years) suggests a long-term, sustained need for the services provided. This extended period allows for greater planning and integration of services, potentially leading to efficiencies and a deeper understanding of the DDG 51 class systems by the contractor. However, it also increases the risk of cost escalation due to inflation, potential changes in requirements, and the inherent uncertainties of long-term projects. For the contractor, it provides revenue stability. For the government, it necessitates robust oversight throughout the contract's life to manage costs and ensure performance remains aligned with evolving needs and objectives.

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: N0002411R2303

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Huntington Ingalls Industries, Inc (UEI: 967362331)

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: $212,049,608

Exercised Options: $141,540,789

Current Obligation: $129,777,963

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $6,820,307

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline