Navy Awards $620M+ for Ship Availability Work to Huntington Ingalls, Undermining Competition

Contract Overview

Contract Amount: $620,343,964 ($620.3M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2012-09-14

End Date: 2020-01-31

Contract Duration: 2,695 days

Daily Burn Rate: $230.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: SHIP AVAILABILITY WORK-SEVERABLE

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39568

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $620.3 million to HUNTINGTON INGALLS INCORPORATED for work described as: SHIP AVAILABILITY WORK-SEVERABLE Key points: 1. Significant contract value exceeding $620 million awarded to a single entity. 2. Lack of competition raises concerns about potential overspending and reduced innovation. 3. The contract's duration and cost-plus structure may increase financial risk. 4. Focus on shipbuilding and repair highlights a critical defense sector.

Value Assessment

Rating: questionable

The contract's cost-plus award fee structure, combined with a lack of competition, makes a definitive value assessment difficult. Without competitive bids, it's challenging to benchmark pricing against market rates for similar ship availability services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition award. This significantly limits price discovery and may lead to higher costs for taxpayers as there is no market pressure to offer competitive pricing.

Taxpayer Impact: The absence of competition likely results in higher costs for taxpayers, as the government may not be securing the best possible price for these essential ship availability services.

Public Impact

Taxpayers may be overpaying for critical naval maintenance and repair services. Reduced competition could stifle innovation in shipbuilding and repair technologies. Dependence on a single contractor for essential services poses a strategic risk.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Cost-Plus Contract Type
Long Contract Duration
Sole-Source Award

Positive Signals

Essential Service Provision
Established Contractor Relationship

Sector Analysis

This contract falls within the shipbuilding and repair sector, a critical component of national defense. Spending benchmarks in this area are often high due to the complexity and specialized nature of naval vessels, but competition is key to managing costs.

Small Business Impact

The data does not indicate any specific provisions or considerations for small businesses in this contract award. The focus appears to be on a large, established prime contractor.

Oversight & Accountability

The lack of competition raises questions about the effectiveness of the procurement process and whether adequate oversight was in place to ensure fair pricing and value for taxpayer dollars. Further review of the justification for a sole-source award is warranted.

Related Government Programs

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

Risk Flags

Lack of Competition
Sole-Source Award
Cost-Plus Contract Type
Potential for Overpricing
Limited Innovation Incentive

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $620.3 million to HUNTINGTON INGALLS INCORPORATED. SHIP AVAILABILITY WORK-SEVERABLE

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 $620.3 million.

What is the period of performance?

Start: 2012-09-14. End: 2020-01-31.

What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The justification for a sole-source award is crucial for understanding the rationale behind bypassing the competitive bidding process. Agencies typically require a compelling reason, such as the unavailability of other sources or urgent and compelling needs. Without this justification, it's difficult to assess if the government adequately explored options to foster competition and achieve better value.

How does the cost-plus award fee structure impact the contractor's incentive to control costs and deliver value efficiently?

Cost-plus award fee contracts allow the contractor to recover allowable costs plus a fee that is composed of a fixed base and an award amount based on performance. While intended to incentivize performance, this structure can reduce the contractor's inherent motivation to minimize costs, as a significant portion of costs are reimbursed. The award fee component is critical for driving efficiency.

What are the long-term implications of relying on a single contractor for such a significant portion of ship availability services?

Long-term reliance on a single contractor can lead to a loss of institutional knowledge within the government, increased contractor leverage, and potential vulnerabilities if the contractor faces financial or operational difficulties. It also limits opportunities for other capable firms to develop expertise and compete, potentially impacting future readiness and cost-effectiveness.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002411R4312

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

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: $760,728,192

Exercised Options: $739,775,177

Current Obligation: $620,343,964

Actual Outlays: $-107,237

Subaward Activity

Number of Subawards: 636

Total Subaward Amount: $217,467,965

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline