DoD's $123M DDG 51 Yard Services Contract with Huntington Ingalls Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $122,862,573 ($122.9M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2018-04-16

End Date: 2024-01-15

Contract Duration: 2,100 days

Daily Burn Rate: $58.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: DDG 51 FOLLOW YARD SERVICES FY18-22

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $122.9 million to HUNTINGTON INGALLS INCORPORATED for work described as: DDG 51 FOLLOW YARD SERVICES FY18-22 Key points: 1. Significant contract value of $122.8M over five years. 2. Sole-source award to Huntington Ingalls raises competition concerns. 3. Potential for inflated costs due to limited price discovery. 4. Shipbuilding and Repair sector context is critical for understanding this award.

Value Assessment

Rating: questionable

The contract's cost-plus award fee structure, combined with a lack of competition, makes a direct pricing assessment difficult. Benchmarking against similar yard services for naval vessels is challenging without competitive bids.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits price discovery and may lead to higher costs for taxpayers.

Taxpayer Impact: The absence of competition likely results in a higher overall cost to taxpayers than if the contract had been competitively bid.

Public Impact

Taxpayers may be overpaying for essential yard services due to the lack of competitive bidding. The long duration of the contract (FY18-22) means sustained potential for cost inefficiencies. Dependence on a single contractor could impact future shipbuilding capabilities and innovation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of small business participation

Positive Signals

Essential services for naval readiness
Established contractor with relevant experience

Sector Analysis

The shipbuilding and repair sector is highly specialized and capital-intensive. This contract falls within the Navy's critical need for maintenance and support of its DDG 51 class destroyers, where specialized facilities and expertise are paramount.

Small Business Impact

The data indicates no specific small business set-aside or participation was noted for this contract. Given the specialized nature of large-scale shipbuilding and repair, opportunities for small businesses may be limited to subcontracting roles, if any.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight from the Department of Defense to ensure costs are reasonable and performance meets requirements. Robust auditing and performance reviews are essential.

Related Government Programs

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

Risk Flags

Sole-source award limits competition.
Cost-plus contract type can lead to cost overruns.
Lack of transparency in pricing due to no competition.
Potential for contractor complacency without competitive pressure.
Long contract duration may mask inefficiencies.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $122.9 million to HUNTINGTON INGALLS INCORPORATED. DDG 51 FOLLOW YARD SERVICES FY18-22

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 $122.9 million.

What is the period of performance?

Start: 2018-04-16. End: 2024-01-15.

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

The justification for a sole-source award typically centers on unique capabilities, urgent needs, or lack of viable alternatives. For the DDG 51 yard services, the Navy likely cited Huntington Ingalls' specific infrastructure, historical knowledge, and specialized workforce as critical factors. However, a thorough review would assess if market research was adequately conducted to confirm the absence of other capable sources or if phased approaches to competition could have been implemented.

How are cost efficiencies being monitored and enforced within this Cost Plus Award Fee (CPAF) contract, especially given the absence of competitive pressure?

In a CPAF contract without competition, cost efficiency relies heavily on robust government oversight, detailed performance metrics, and stringent auditing. The 'award fee' component incentivizes the contractor to meet or exceed specific performance targets, which should ideally include cost control measures. However, the government must actively manage the contract, scrutinize cost submissions, and ensure the fee structure truly drives value rather than simply covering costs.

What is the long-term strategy for ensuring competitive pricing and fostering innovation in DDG 51 class support services beyond this contract's duration?

The long-term strategy should involve proactive market research to identify and develop potential competitors. This could include breaking down future contracts into smaller, more manageable components to attract a wider range of bidders, or investing in training and infrastructure for emerging shipyards. Furthermore, exploring innovative contracting methods and incentivizing technological advancements within the current contract could lay the groundwork for future competition and efficiency gains.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002417R2312

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

Financial Breakdown

Contract Ceiling: $173,197,340

Exercised Options: $150,977,608

Current Obligation: $122,862,573

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $1,754,696

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline