Naval Reactors contract awarded to Huntington Ingalls Inc. for $19.9M, focusing on power boiler and heat exchanger manufacturing

Contract Overview

Contract Amount: $19,943,488 ($19.9M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2018-10-31

End Date: 2024-12-31

Contract Duration: 2,253 days

Daily Burn Rate: $8.9K/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 $19.9 million to HUNTINGTON INGALLS INC for work described as: NAVAL REACTORS Key points: 1. Value for money assessed through comparison with similar contracts and market rates. 2. Competition dynamics indicate a sole-source award, potentially impacting price discovery. 3. Risk indicators include the sole-source nature and the long duration of the contract. 4. Performance context is tied to the critical function of naval propulsion systems. 5. Sector positioning is within the defense industrial base, specifically shipbuilding and maintenance. 6. The contract supports essential defense infrastructure and national security objectives.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its specialized nature and sole-source award. However, the total award amount of $19.9 million over approximately 6 years suggests a significant investment in critical naval infrastructure. Without comparable sole-source contracts for similar specialized components, a precise value-for-money assessment is difficult. The cost-plus-fixed-fee structure implies that costs are reimbursed, plus a negotiated fixed fee, which can lead to cost overruns if not managed tightly. Further analysis would require detailed cost breakdowns and comparison to industry standards for similar manufacturing processes.

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 vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids were solicited. The justification for a sole-source award needs to be robust to ensure taxpayer funds are used efficiently.

Taxpayer Impact: The sole-source nature of this award means taxpayers did not benefit from competitive pricing that could have potentially lowered the overall cost of the goods and services procured.

Public Impact

The primary beneficiaries are the U.S. Navy and its operational readiness, ensuring the functionality of critical propulsion systems. Services delivered include the manufacturing of power boilers and heat exchangers essential for naval vessels. The geographic impact is primarily centered around the contractor's facilities, likely in shipbuilding hubs. Workforce implications include the employment of skilled manufacturing labor in specialized roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost escalation due to the cost-plus-fixed-fee contract type.
Limited transparency and oversight inherent in sole-source procurements.
Dependency on a single contractor for critical components could pose supply chain risks.

Positive Signals

Ensures the availability of highly specialized manufacturing capabilities for national defense.
Supports the long-term operational readiness of the U.S. Navy's fleet.
Direct contribution to the defense industrial base and associated skilled workforce.

Sector Analysis

The contract falls within the manufacturing sector, specifically supporting the defense industrial base. Power boiler and heat exchanger manufacturing is a specialized niche within heavy industry, often requiring significant capital investment and technical expertise. The market for such components for naval applications is limited, with few companies possessing the necessary security clearances and technical qualifications. This contract's value of approximately $19.9 million over its duration is modest compared to larger shipbuilding contracts but critical for maintaining specialized manufacturing capabilities essential for national security.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' (small business subcontracting) flag is also false. This suggests that small businesses are unlikely to be directly involved as subcontractors on this specific award, potentially limiting opportunities for them within this particular procurement. The focus is on a large prime contractor for specialized manufacturing.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and potentially the Naval Reactors program office. Given the critical nature of naval propulsion systems, oversight is expected to be stringent, focusing on technical performance, safety, and cost control. Transparency may be limited due to the sole-source nature and the sensitive aspects of naval technology. Inspector General jurisdiction would apply to investigate fraud, waste, and abuse.

Related Government Programs

Naval Nuclear Propulsion Program
Shipbuilding and Repair Contracts
Defense Manufacturing Contracts
Power Generation Equipment Manufacturing

Risk Flags

Sole-source award may limit competitive pricing.
Cost-plus-fixed-fee contract type carries inherent cost overrun risk.
Long contract duration requires sustained oversight.
Specialized nature of components necessitates careful performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.9 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 $19.9 million.

What is the period of performance?

Start: 2018-10-31. End: 2024-12-31.

What is the historical spending trend for power boiler and heat exchanger manufacturing for Naval Reactors?

Analyzing historical spending for power boiler and heat exchanger manufacturing specifically for Naval Reactors requires access to detailed procurement data over multiple fiscal years. While the current contract is valued at approximately $19.9 million over its duration, understanding the trend involves examining if this represents an increase, decrease, or stable level of investment compared to previous periods. Factors influencing trends could include fleet modernization programs, maintenance cycles, and the introduction of new naval platforms. Without a longitudinal dataset, it's difficult to ascertain a precise trend, but the ongoing nature of naval operations suggests a consistent need for these components, implying a potentially stable or cyclical spending pattern.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar defense manufacturing procurements?

The Cost-Plus-Fixed-Fee (CPFF) contract type is common in defense manufacturing, especially for complex projects where the scope or costs are not fully defined at the outset. In CPFF, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This contrasts with Fixed-Price contracts, where the price is set regardless of actual costs, offering more cost certainty to the government but placing more risk on the contractor. CPFF is often used when research and development or unique manufacturing processes are involved, as seen with specialized naval components. While it allows for flexibility, it carries a higher risk of cost overruns for the government compared to fixed-price arrangements. Other variations like Cost Plus Incentive Fee (CPIF) can introduce performance incentives to manage costs more effectively.

What are the specific risks associated with a sole-source award for critical naval components like power boilers and heat exchangers?

Sole-source awards for critical naval components present several risks. Firstly, the absence of competition can lead to inflated prices, as the government lacks the leverage of multiple bids to negotiate the best possible value. Secondly, there's a reduced incentive for the sole-source contractor to innovate or improve efficiency, as they face no direct competitive pressure. Thirdly, it creates a dependency on a single supplier, making the supply chain vulnerable to disruptions caused by the contractor's financial instability, production issues, or geopolitical factors. Finally, oversight becomes more critical to ensure fair pricing and adequate performance, as the government cannot easily switch to an alternative provider if issues arise.

What is the track record of Huntington Ingalls Inc. in delivering complex defense manufacturing contracts?

Huntington Ingalls Industries (HII), the parent company of Huntington Ingalls Inc., has a long and extensive track record in delivering complex defense manufacturing contracts, particularly in shipbuilding and nuclear-related programs for the U.S. Navy. They are the sole builder of nuclear-powered aircraft carriers and a major builder of destroyers and amphibious assault ships. Their experience with nuclear propulsion systems, including boilers and related components, is substantial. While specific performance metrics for individual contracts are often proprietary or detailed in past performance reviews, HII's consistent role as a prime contractor for major naval platforms suggests a generally strong capability in managing large, technically demanding defense manufacturing projects.

How does the $19.9M award compare to the overall budget for Naval Reactors or similar defense manufacturing categories?

The $19.9 million award for power boiler and heat exchanger manufacturing represents a specific, albeit critical, component within the broader Naval Reactors program and the Department of Defense's overall budget. The Naval Reactors program itself is known for its significant, multi-billion dollar annual funding requirements due to the complexity and strategic importance of nuclear propulsion. Therefore, this $19.9 million contract, while substantial for the specific manufacturing task, is likely a relatively small fraction of the total program expenditure. Comparing it to 'similar defense manufacturing categories' is broad, but it falls within the specialized heavy manufacturing segment, where contract values can range widely from millions to billions depending on the scale and complexity of the end product.

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: N0002418R2122

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: $21,005,709

Exercised Options: $21,005,709

Current Obligation: $19,943,488

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline