DoD's $428M Ship Repair Contract with Huntington Ingalls Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $427,981,199 ($428.0M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2017-09-28

End Date: 2021-07-31

Contract Duration: 1,402 days

Daily Burn Rate: $305.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CL::IGF DDG62 REPAIR, RESTORATION, AND MODERNIZATION

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $428.0 million to HUNTINGTON INGALLS INCORPORATED for work described as: IGF::CL::IGF DDG62 REPAIR, RESTORATION, AND MODERNIZATION Key points: 1. The contract awarded to Huntington Ingalls Incorporated for ship repair, restoration, and modernization is a significant expenditure. 2. The lack of competition raises concerns about potential overpricing and reduced value for taxpayer dollars. 3. The sector, Ship Building and Repairing, often involves complex projects where competition can be challenging but is crucial for cost control. 4. The contract's duration and cost-plus-fixed-fee structure warrant close examination for efficiency and effectiveness.

Value Assessment

Rating: questionable

The contract's total value of $427,981,199.35 for ship repair, restoration, and modernization is substantial. Without competitive bidding, it is difficult to benchmark pricing against similar contracts to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not competed, indicating a limited competition approach. This method can lead to higher prices and reduced innovation as there is no market pressure to offer the best value.

Taxpayer Impact: The absence of competition for a contract of this magnitude means taxpayers may not be receiving the most cost-effective solution, potentially leading to wasted funds.

Public Impact

Taxpayers are funding a large contract for naval ship maintenance and upgrades. The Department of the Navy relies on this contract to maintain its fleet's operational readiness. The shipbuilding and repair industry's dynamics are impacted by large, non-competed awards.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus-fixed-fee contract type
Long contract duration

Positive Signals

Essential service for naval readiness
Awarded to a known industry leader

Sector Analysis

The Ship Building and Repairing sector is critical for national defense, involving complex and specialized services. Benchmarks for such extensive repair and modernization contracts are often project-specific, but competitive processes are standard for ensuring fiscal responsibility.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. This represents a missed opportunity to support small business participation in defense contracting.

Oversight & Accountability

The non-competed nature of this significant contract warrants robust oversight to ensure the contractor is delivering services efficiently and that costs are reasonable. Accountability mechanisms should be in place to track performance and expenditures.

Related Government Programs

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

Risk Flags

Lack of competitive bidding
Potential for inflated costs due to non-competition
Cost-plus-fixed-fee structure may reduce incentive for cost control
Limited transparency on pricing benchmarks
No apparent small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $428.0 million to HUNTINGTON INGALLS INCORPORATED. IGF::CL::IGF DDG62 REPAIR, RESTORATION, AND MODERNIZATION

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 $428.0 million.

What is the period of performance?

Start: 2017-09-28. End: 2021-07-31.

What specific justifications were provided for not competing this contract, and do they align with federal procurement regulations for limited competition?

Federal procurement regulations allow for limited competition under specific circumstances, such as when only one responsible source can provide the required supplies or services. A thorough review of the justification documentation is necessary to determine if the rationale for awarding this contract to Huntington Ingalls Incorporated without full and open competition was valid and adequately documented according to FAR Part 6.

How does the cost-plus-fixed-fee structure impact the government's ability to control costs and ensure contractor efficiency on this long-term project?

The Cost-Plus-Fixed-Fee (CPFF) structure reimburses the contractor for allowable costs plus a fixed fee representing profit. While it allows for flexibility in complex projects, it can incentivize cost overruns as the contractor is guaranteed their fee regardless of final project cost. Robust oversight and clear performance metrics are essential to mitigate risks and ensure efficiency.

What measures are in place to ensure the quality and effectiveness of the repair, restoration, and modernization services provided under this contract?

Ensuring quality and effectiveness requires stringent government oversight, including regular inspections, performance reviews, and adherence to technical specifications. The contract should include clear deliverables, acceptance criteria, and remedies for non-performance. The government's quality assurance personnel play a critical role in monitoring progress and verifying that the work meets all required standards.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › NON-NUCLEAR SHIP REPAIR

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $431,472,584

Exercised Options: $431,472,584

Current Obligation: $427,981,199

Actual Outlays: $-13,081,687

Subaward Activity

Number of Subawards: 246

Total Subaward Amount: $28,943,212

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline