DoD's $3.27B LHA 8 DD&C Contract Awarded to Huntington Ingalls Inc. Under Full and Open Competition

Contract Overview

Contract Amount: $3,274,417,897 ($3.3B)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2016-06-30

End Date: 2026-09-30

Contract Duration: 3,744 days

Daily Burn Rate: $874.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: DETAIL DESIGN AND CONSTRUCTION (DD&C) FOR LHA 8 (INITIAL EFFORT LIMITED TO PLANNING, ADVANCED ENGINEERING AND PROCUREMENT OF LONG LEAD TIME MATERIAL)

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $3.27 billion to HUNTINGTON INGALLS INCORPORATED for work described as: DETAIL DESIGN AND CONSTRUCTION (DD&C) FOR LHA 8 (INITIAL EFFORT LIMITED TO PLANNING, ADVANCED ENGINEERING AND PROCUREMENT OF LONG LEAD TIME MATERIAL) Key points: 1. The contract, valued at $3.27 billion, covers detail design and construction for LHA 8. 2. Awarded to Huntington Ingalls Incorporated, this represents a significant investment in naval shipbuilding. 3. The procurement method was 'Full and Open Competition After Exclusion of Sources', suggesting a competitive process with specific criteria. 4. The sector is dominated by large prime contractors, with limited opportunities for smaller specialized firms.

Value Assessment

Rating: good

The contract's fixed-price incentive structure aims to control costs while incentivizing performance. Benchmarking against similar naval construction projects is crucial for assessing value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The 'Full and Open Competition After Exclusion of Sources' indicates a competitive bidding process, likely resulting in a fair price discovery. However, the exclusion of certain sources warrants scrutiny.

Taxpayer Impact: Taxpayer funds are being utilized for a critical national defense asset, with the competitive award aiming for cost-effectiveness.

Public Impact

Enhances U.S. Navy's amphibious assault capabilities. Supports high-skilled jobs in shipbuilding and related industries. Represents a long-term commitment to naval modernization. Potential for technological advancements in ship design and construction.

Waste & Efficiency Indicators

Waste Risk Score: 85 / 10

Warning Flags

Complexity of large-scale naval construction projects.
Potential for cost overruns in fixed-price incentive contracts.
Long project duration increases exposure to economic fluctuations.

Positive Signals

Awarded under full and open competition.
Incentive contract structure.
Procurement of long-lead time material mitigates future delays.

Sector Analysis

This contract falls within the shipbuilding and repairing sector, a capital-intensive industry with high barriers to entry. Spending benchmarks are typically measured by cost per displacement ton or per vessel class.

Small Business Impact

While the prime contractor is a large entity, opportunities for small businesses may exist further down the supply chain in specialized component manufacturing or support services.

Oversight & Accountability

The Department of the Navy is responsible for oversight. Robust contract management and performance monitoring are essential given the contract's value and duration.

Related Government Programs

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

Risk Flags

Potential for cost overruns due to contract type and project complexity.
Long project duration increases risk exposure.
Dependence on a single prime contractor for a critical asset.
Supply chain disruptions impacting material procurement.
Technological obsolescence during the extended construction period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.27 billion to HUNTINGTON INGALLS INCORPORATED. DETAIL DESIGN AND CONSTRUCTION (DD&C) FOR LHA 8 (INITIAL EFFORT LIMITED TO PLANNING, ADVANCED ENGINEERING AND PROCUREMENT OF LONG LEAD TIME MATERIAL)

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 $3.27 billion.

What is the period of performance?

Start: 2016-06-30. End: 2026-09-30.

How does the final cost compare to initial estimates for LHA 8 construction, considering the fixed-price incentive structure?

Assessing the final cost against initial estimates requires access to detailed project financials and baseline projections. The fixed-price incentive (FPI) contract aims to share cost savings or overruns between the government and contractor. If the contractor achieves targets efficiently, taxpayers benefit from cost savings. Conversely, cost overruns beyond agreed thresholds will be shared, potentially increasing the final price above initial expectations.

What specific criteria led to the exclusion of certain sources in the 'Full and Open Competition After Exclusion of Sources' process?

The exclusion of sources typically occurs when specific technical capabilities, past performance, or security requirements are necessary and only met by a limited number of bidders. For complex naval vessels like LHA 8, this might involve specialized design expertise, existing shipyard infrastructure, or proven experience with similar large-scale military construction. Understanding these criteria is vital to ensure the competition remained fair and didn't unduly restrict viable alternatives.

What are the key performance indicators (KPIs) being tracked to ensure the effectiveness and timely delivery of LHA 8?

Key performance indicators likely include adherence to design milestones, quality control metrics during construction, timely procurement of long-lead items, and overall schedule adherence. For an FPI contract, cost control against target costs is also a critical KPI. The Department of the Navy's program management office will monitor these KPIs closely, with potential for award fees or penalties tied to performance outcomes.

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: N0002415R2427

Offers Received: 2

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $3,326,207,310

Exercised Options: $3,326,207,310

Current Obligation: $3,274,417,897

Actual Outlays: $55,325

Subaward Activity

Number of Subawards: 837

Total Subaward Amount: $544,686,952

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline