Navy awards $1.51B contract for USS Columbus (SSN 762) overhaul, with significant work planned through 2026

Contract Overview

Contract Amount: $1,513,518,706 ($1.5B)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2015-08-14

End Date: 2026-03-22

Contract Duration: 3,873 days

Daily Burn Rate: $390.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: USS COLUMBUS (SSN 762) EOH PLANNING

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $1.51 billion to HUNTINGTON INGALLS INC for work described as: USS COLUMBUS (SSN 762) EOH PLANNING Key points: 1. The contract value of $1.51 billion indicates a substantial investment in maintaining critical naval assets. 2. The 'Full and Open Competition After Exclusion of Sources' suggests a competitive process with specific pre-qualification criteria. 3. The contract duration of over 3800 days highlights the long-term commitment and complexity of naval vessel maintenance. 4. The 'Cost Plus Fixed Fee' pricing structure implies potential for cost overruns, requiring close oversight. 5. The absence of small business set-asides suggests the primary contractor is a large entity, with potential subcontracting opportunities. 6. The focus on ship building and repairing (NAICS 336611) places this contract within a specialized industrial sector.

Value Assessment

Rating: fair

The contract value of $1.51 billion for the overhaul of a nuclear submarine is significant. Benchmarking against similar submarine maintenance contracts is challenging without more specific details on the scope of work. However, the 'Cost Plus Fixed Fee' (CPFF) contract type, while common for complex projects, carries inherent risks of cost escalation. The fixed fee component provides some incentive for the contractor to manage costs, but the government bears the majority of the direct costs. The awarded amount appears to be within the expected range for such extensive maintenance on a capital asset like a nuclear submarine.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be open, certain sources were excluded, likely due to specific technical capabilities, security clearances, or prior involvement required for this specialized work. The number of bidders is not explicitly stated, but the exclusion of sources suggests a potentially smaller pool of qualified competitors compared to a truly unrestricted full and open competition. This could impact price discovery, potentially leading to higher prices than if a broader range of companies could bid.

Taxpayer Impact: Taxpayers may face higher costs due to a potentially limited competitive landscape. While the exclusion of sources might ensure specialized expertise, it reduces the pressure on bidders to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Navy, ensuring the operational readiness of the USS Columbus (SSN 762). The contract delivers essential ship maintenance, repair, and overhaul services for a critical naval asset. The geographic impact is likely concentrated around the shipyard performing the work, potentially Huntington Ingalls Inc.'s facilities. The workforce implications include employment for skilled tradespeople, engineers, and support staff involved in shipbuilding and repair.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed diligently.
Limited competition due to source exclusion may result in less favorable pricing for the government.
The long contract duration increases the risk of unforeseen technical challenges or material cost fluctuations.
The exclusion of sources needs clear justification to ensure fairness and maximize competition where possible.

Positive Signals

Awarding to a known entity like Huntington Ingalls Inc. suggests confidence in their capability for complex naval projects.
The 'Full and Open Competition' aspect, even with exclusions, implies an effort to engage multiple qualified vendors.
The contract's long duration suggests a comprehensive plan for the vessel's lifecycle maintenance.
The specific focus on a named vessel indicates targeted investment in maintaining specific fleet capabilities.

Sector Analysis

This contract falls within the Ship Building and Repairing sector (NAICS 336611), a highly specialized and capital-intensive industry. The U.S. government, particularly the Department of Defense, is a major customer for this sector. The market is characterized by a limited number of large, experienced firms capable of undertaking complex naval construction and maintenance projects. Comparable spending benchmarks would involve other major naval vessel overhauls and construction projects, which typically run into hundreds of millions or billions of dollars due to the complexity and technological requirements.

Small Business Impact

The data indicates that small business participation was not a primary consideration for this specific contract, as 'ss' (small business set-aside) is false and 'sb' (small business) is false. This suggests the contract was awarded to a large prime contractor, likely Huntington Ingalls Inc. While there may be opportunities for small businesses to subcontract with the prime, there is no explicit requirement or set-aside for them in this award. The impact on the small business ecosystem is therefore indirect, relying on the prime contractor's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and potentially the Department of Defense's Inspector General. The 'Cost Plus Fixed Fee' structure necessitates rigorous financial oversight to monitor costs and ensure the fixed fee is justified. Performance metrics and milestones outlined in the contract would be key to accountability. Transparency would be facilitated through contract award databases and potentially public reporting on program progress, though specific operational details may remain classified.

Related Government Programs

Naval Ship Maintenance and Repair Programs
Submarine Fleet Modernization
Defense Procurement Contracts
Shipbuilding and Repair Industry Contracts
Major Defense Acquisition Programs

Risk Flags

Cost Overrun Risk (CPFF)
Limited Competition Impact
Long Duration Project Risks
Potential for Scope Creep

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.51 billion to HUNTINGTON INGALLS INC. USS COLUMBUS (SSN 762) EOH PLANNING

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 $1.51 billion.

What is the period of performance?

Start: 2015-08-14. End: 2026-03-22.

What is the historical spending pattern for the USS Columbus (SSN 762) and similar vessels?

Analyzing historical spending for the USS Columbus (SSN 762) and comparable submarines is crucial for context. While specific prior spending data for this exact vessel isn't provided, major overhauls for nuclear-powered submarines are multi-year, multi-hundred-million-dollar endeavors. For instance, similar Dockyard Availability (DYA) or Extended Refit Periods (ERP) for Los Angeles-class or Virginia-class submarines can range from $200 million to over $1 billion, depending on the scope, age, and specific upgrades required. The current $1.51 billion award suggests a comprehensive overhaul, potentially including life-extension modifications, system upgrades, and extensive maintenance, aligning with the typical lifecycle costs for such complex naval assets. Understanding past spending helps in evaluating if the current award represents a fair price for the services rendered and if it aligns with projected lifecycle cost models for the fleet.

How does the 'Cost Plus Fixed Fee' (CPFF) structure impact contractor incentives and government risk?

The 'Cost Plus Fixed Fee' (CPFF) contract structure means the government reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee. This structure is often used for research and development or complex projects where the scope is not fully defined at the outset, or where innovation is required. For the contractor, the fixed fee provides a guaranteed profit margin, incentivizing them to complete the work efficiently to maximize their return on investment. However, for the government, the primary risk is cost overrun. Unlike fixed-price contracts, the government bears the brunt of unexpected cost increases. Effective oversight, detailed cost tracking, and clear definition of allowable costs are paramount to mitigate this risk and ensure the government does not overpay. The fixed fee itself is negotiated and should reflect the complexity and risk involved.

What are the specific technical capabilities required for this overhaul, justifying the exclusion of certain sources?

The justification for excluding certain sources in a 'Full and Open Competition After Exclusion of Sources' award typically stems from highly specialized technical requirements, unique facilities, or specific security clearances necessary for the project. For a nuclear submarine overhaul like that of the USS Columbus (SSN 762), these requirements could include: expertise in nuclear reactor maintenance and safety protocols, advanced welding techniques for high-pressure hull systems, specialized diagnostic equipment for complex electronic and mechanical systems, experience with specific submarine class designs, and stringent security clearances for personnel accessing sensitive areas and information. Companies lacking these specific, often certified, capabilities would be excluded. This ensures that only vendors demonstrably capable of meeting the demanding technical and safety standards can compete, thereby reducing risk to the vessel and crew.

What is the track record of Huntington Ingalls Inc. in performing similar naval vessel overhauls?

Huntington Ingalls Industries (HII), through its Newport News Shipbuilding division, has a long and extensive track record in building and servicing U.S. Navy vessels, including nuclear-powered submarines. They are one of the primary shipbuilders for the U.S. Navy and have been responsible for constructing numerous Virginia-class and older attack submarines, as well as aircraft carriers. Their experience includes performing complex maintenance, repairs, and overhauls on these sophisticated platforms. Given their role as a major naval contractor, HII possesses the specialized facilities, skilled workforce, and established processes required for such demanding projects. The Navy's decision to award this significant contract to HII suggests confidence in their past performance and capability to execute the USS Columbus overhaul successfully.

How does the geographic location of the contractor impact logistics and potential costs?

The geographic location of the contractor, Huntington Ingalls Inc. (likely Newport News Shipbuilding in Virginia), plays a significant role in the logistics and overall cost of this contract. Proximity to naval bases and the established infrastructure for large-scale naval repair operations in regions like Hampton Roads, Virginia, can streamline the process. It reduces the need for extensive transportation of components and personnel over long distances. However, the concentration of major naval shipyards in specific areas can also lead to higher labor costs due to demand and the cost of living. Furthermore, the location dictates the availability of specialized subcontractors and support services. For a project of this magnitude, the contractor's established presence and integrated supply chain in their home region are likely key factors in managing the complex logistical requirements efficiently.

What are the potential risks associated with the long duration (3873 days) of this contract?

The extended duration of 3873 days (over 10 years) for the USS Columbus (SSN 762) overhaul presents several potential risks. Firstly, **cost escalation** is a significant concern; material prices, labor rates, and overhead costs can fluctuate considerably over such a long period. The CPFF structure means the government absorbs much of this fluctuation. Secondly, **scope creep** is a risk, where unforeseen issues discovered during the overhaul may necessitate additional work not originally planned, potentially increasing costs and extending timelines further. Thirdly, **technological obsolescence** could become a factor; systems or components planned for integration might be superseded by newer technologies during the overhaul period. Finally, **workforce stability** can be a challenge, ensuring a consistent pool of skilled labor remains available and motivated throughout the project's lifecycle. Robust contract management and contingency planning are essential to mitigate these risks.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002415R4300

Offers Received: 2

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: $1,541,078,645

Exercised Options: $1,533,923,800

Current Obligation: $1,513,518,706

Actual Outlays: $484,229,254

Subaward Activity

Number of Subawards: 939

Total Subaward Amount: $189,056,452

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline