Navy awards $212M+ to Huntington Ingalls for ship maintenance, with 2,557 days duration

Contract Overview

Contract Amount: $212,267,492 ($212.3M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2019-09-26

End Date: 2026-09-26

Contract Duration: 2,557 days

Daily Burn Rate: $83.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IN-SERVICE PROGRAM/PROJECTS SUPPORT

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $212.3 million to HUNTINGTON INGALLS INC for work described as: IN-SERVICE PROGRAM/PROJECTS SUPPORT Key points: 1. Contract awarded for essential in-service program support, indicating a critical need for ongoing maintenance. 2. The contract's duration of over 7 years suggests a long-term commitment to maintaining naval assets. 3. As a sole-source award, there's a potential for reduced price competition and less market pressure. 4. The Cost Plus Fixed Fee (CPFF) contract type may incentivize cost control by the contractor, but requires careful oversight. 5. The significant dollar value points to the high cost of maintaining complex naval vessels. 6. The contract is managed by the Department of the Navy, highlighting its focus on fleet readiness.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific deliverables or comparable sole-source contracts. However, the extensive duration and the nature of ship maintenance suggest significant resource allocation. The CPFF structure requires diligent oversight to ensure costs remain reasonable and that the fixed fee is appropriate for the scope of work. Without competitive bids, it's difficult to definitively assess if the pricing reflects optimal value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. This approach is typically used when only one vendor possesses the necessary capabilities, security clearances, or intellectual property to perform the required services. The lack of competition means that the government did not benefit from a bidding process that could drive down prices or foster innovation through multiple proposals.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the most economical price is achieved. This necessitates robust government negotiation and oversight to mitigate potential overspending.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring vessels are maintained and deployable. Services delivered include essential maintenance, repair, and support for naval vessels, crucial for national security. The geographic impact is likely concentrated around naval bases and shipyards where Huntington Ingalls operates. Workforce implications include sustained employment for skilled labor in shipbuilding and repair sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type requires stringent oversight to manage costs effectively.
Long contract duration (over 7 years) may reduce flexibility to adapt to changing needs or technologies.
Lack of transparency inherent in sole-source procurements can obscure true value for money.

Positive Signals

Award to a known, experienced contractor (Huntington Ingalls) suggests a focus on reliability and expertise.
The contract addresses critical 'in-service program support,' indicating a focus on maintaining operational readiness.
The significant investment signals a commitment to the long-term health and capability of the naval fleet.

Sector Analysis

The shipbuilding and repair sector is a critical component of the defense industrial base, characterized by high capital investment, specialized labor, and long production cycles. This contract falls within the broader defense sector, specifically supporting naval fleet maintenance. Comparable spending benchmarks in this area are often in the hundreds of millions or billions of dollars due to the complexity and cost of naval vessels. The market is dominated by a few large, experienced contractors capable of handling such extensive and specialized work.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the specialized requirements of naval ship maintenance, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available through this specific award. The focus is on the prime contractor's capabilities, potentially limiting the direct impact on the small business ecosystem for this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee (CPFF) agreement, requiring detailed reporting on costs incurred and progress made. Transparency is limited due to the sole-source nature, but contract performance reviews and audits by the Navy's Inspector General could be in place to ensure compliance and value.

Related Government Programs

Naval Ship Maintenance Contracts
Defense Logistics Agency Support
Shipbuilding and Repair Services
In-Service Engineering Support
Fleet Readiness Programs

Risk Flags

Sole Source Award
Cost Plus Fixed Fee Contract Type
Long Contract Duration
Potential for Limited Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $212.3 million to HUNTINGTON INGALLS INC. IN-SERVICE PROGRAM/PROJECTS SUPPORT

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 $212.3 million.

What is the period of performance?

Start: 2019-09-26. End: 2026-09-26.

What is Huntington Ingalls Inc.'s track record with the Department of Defense, particularly for similar ship maintenance contracts?

Huntington Ingalls Industries (HII) is a major U.S. defense contractor with a long and extensive history of supporting the U.S. Navy. They are one of the largest shipbuilders and have been involved in constructing, repairing, and modernizing a wide range of naval vessels, including aircraft carriers, submarines, and destroyers. Their track record with the DoD is generally strong, characterized by the ability to handle complex, large-scale projects. However, like many large defense contractors, they have also faced scrutiny regarding cost overruns and schedule delays on specific programs. For ship maintenance contracts, HII's experience is substantial, often involving critical repairs and upgrades necessary to maintain fleet readiness. Their performance on previous contracts would be a key factor in the Navy's decision to award this sole-source contract, assuming it aligns with their demonstrated capabilities and past performance evaluations.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing structures in terms of value for money for ship maintenance?

The Cost Plus Fixed Fee (CPFF) contract type is often used for complex projects where the scope of work is not precisely defined at the outset, or when there is significant uncertainty regarding costs. In this structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee, representing their profit. For ship maintenance, CPFF can be advantageous when unexpected issues arise during repairs that are difficult to estimate upfront. However, it places a greater burden on the government to meticulously track and audit costs to ensure they are reasonable and allocable. Compared to a Firm-Fixed-Price (FFP) contract, CPFF offers less cost certainty for the government and can potentially lead to higher overall costs if not managed rigorously, as the contractor has less incentive to control costs beyond what is necessary to complete the work. However, it can also be more flexible than FFP for evolving maintenance needs.

What are the primary risks associated with a sole-source award for a contract of this magnitude and duration?

The primary risks associated with a sole-source award for a contract of this magnitude and duration include a lack of competitive pricing, which can lead to inflated costs for taxpayers. Without competing bids, there is less incentive for the contractor to optimize efficiency or offer the most cost-effective solutions. Furthermore, sole-source awards can reduce innovation, as there is no pressure from competing proposals to introduce new technologies or methodologies. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider, potentially diminishing negotiating leverage in future procurements. Finally, the absence of a competitive process can sometimes mask inefficiencies or performance issues that might be exposed during a bidding process.

What are the potential implications of this contract's long duration (2,557 days) on the Navy's flexibility and future spending?

The long duration of this contract, exceeding seven years, implies a significant, long-term commitment by the Navy to Huntington Ingalls for in-service program support. This provides stability and ensures continuity of essential maintenance services, which is crucial for fleet readiness. However, it also reduces the Navy's flexibility to adapt to changing technological landscapes, evolving operational requirements, or shifts in strategic priorities. Locking in a single provider for such an extended period might mean missing out on potentially more cost-effective or technologically advanced solutions that could emerge from future competitive procurements. It also means that a substantial portion of the budget is committed, potentially impacting the allocation of funds for other critical naval programs or acquisitions.

How does the 'Ship Building and Repairing' (NAICS 336611) sector typically perform in terms of contract value and competition within the Department of Defense?

The 'Ship Building and Repairing' sector (NAICS 336611) within the Department of Defense is characterized by very high contract values and often limited competition. This is due to the immense complexity, specialized infrastructure, skilled workforce, and significant capital investment required to build and maintain naval vessels. The U.S. defense industrial base for shipbuilding and repair is concentrated among a few large, established companies, such as Huntington Ingalls Industries, General Dynamics, and BAE Systems. Consequently, many large contracts in this sector are awarded on a sole-source or limited-competition basis, particularly for major new constructions or extensive overhauls. While smaller repair and maintenance tasks might see more competition, the high-value, long-term support contracts often lean towards established prime contractors due to security clearances, existing infrastructure, and proven performance history.

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: N0002419R2100

Offers Received: 1

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: $213,281,162

Exercised Options: $213,281,162

Current Obligation: $212,267,492

Actual Outlays: $6,257,135

Subaward Activity

Number of Subawards: 38

Total Subaward Amount: $3,829,767

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline