DoD's $40M Naval Reactors Contract with Huntington Ingalls Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $40,060,705 ($40.1M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2016-10-01

End Date: 2023-03-31

Contract Duration: 2,372 days

Daily Burn Rate: $16.9K/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 $40.1 million to HUNTINGTON INGALLS INC for work described as: NAVAL REACTORS Key points: 1. Significant spending on power boiler and heat exchanger manufacturing for naval applications. 2. Sole reliance on Huntington Ingalls Inc. raises questions about competitive pricing. 3. The contract's long duration and cost-plus structure may increase financial risk. 4. Limited transparency in pricing mechanisms for this specialized sector.

Value Assessment

Rating: questionable

The $40 million awarded to Huntington Ingalls Inc. for power boiler and heat exchanger manufacturing lacks clear benchmarks due to its specialized nature and sole-source award. Without competitive bids, assessing fair pricing is difficult, suggesting potential overpayment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating a lack of competition. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there are no competing offers to drive down the price.

Taxpayer Impact: The absence of competition in this sole-source contract likely results in higher costs for taxpayers compared to a competitively bid scenario.

Public Impact

Taxpayers may be overpaying for critical naval components due to the lack of competitive bidding. The long-term nature of the contract raises concerns about sustained cost-effectiveness. Dependence on a single supplier could create vulnerabilities in the supply chain for essential defense equipment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of competition
Long contract duration

Positive Signals

Essential defense procurement
Specialized manufacturing capability

Sector Analysis

This contract falls within the Power Boiler and Heat Exchanger Manufacturing sector, crucial for naval propulsion systems. Spending in this niche area is often characterized by high barriers to entry and specialized expertise, potentially limiting competition.

Small Business Impact

The data indicates no specific provisions or set-asides for small businesses in this contract. The nature of the work, involving large-scale naval components, typically favors larger, established prime contractors.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight to ensure fair pricing and prevent potential cost overruns. Accountability mechanisms should be robust given the lack of competitive pressure.

Related Government Programs

Power Boiler and Heat Exchanger Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competition
Sole-source award
Cost-plus contract type
Potential for cost overruns
Limited transparency in pricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.1 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 $40.1 million.

What is the period of performance?

Start: 2016-10-01. End: 2023-03-31.

What is the justification for the sole-source award, and how does the Navy ensure fair and reasonable pricing without competition?

The justification for a sole-source award typically rests on unique capabilities, proprietary technology, or urgent needs that only one contractor can meet. The Navy would likely rely on detailed cost analyses, historical pricing data for similar components (if available), and potentially independent cost estimates to ensure fair and reasonable pricing. However, without competitive bids, the assurance of optimal value is inherently reduced.

What are the risks associated with a long-term, cost-plus fixed fee contract for specialized defense manufacturing?

Long-term, cost-plus fixed fee contracts in specialized defense manufacturing carry risks of cost overruns, as the contractor is incentivized to incur costs to achieve the fixed fee. Scope creep can inflate expenses, and the lack of competitive pressure may reduce efficiency. For taxpayers, the primary risk is paying more than necessary for the goods or services, especially if the fixed fee is not adequately calibrated against market rates or performance.

How effective is this contract in ensuring the timely delivery of critical naval components, and what is the potential impact of supplier dependency?

The effectiveness in timely delivery depends on the contractor's performance history and the specific terms of the contract. However, sole-source dependency creates a significant risk. Any disruption at Huntington Ingalls Inc. could severely impact naval readiness. This reliance limits the government's leverage in negotiations and could lead to extended lead times or supply chain vulnerabilities if the sole provider faces operational challenges.

Industry Classification

NAICS: Manufacturing › Boiler, Tank, and Shipping Container Manufacturing › Power Boiler and Heat Exchanger Manufacturing

Product/Service Code: FURNACE/STEAM/DRYING; NUCL REACTOR

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002416R2103

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

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: $45,244,079

Exercised Options: $45,244,079

Current Obligation: $40,060,705

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $87,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline