DoD awards $1.64B engineering services contract to Huntington Ingalls Inc. for naval support

Contract Overview

Contract Amount: $164,177,736 ($164.2M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2021-02-11

End Date: 2026-09-30

Contract Duration: 2,057 days

Daily Burn Rate: $79.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY21 CONFORM

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $164.2 million to HUNTINGTON INGALLS INC for work described as: FY21 CONFORM Key points: 1. Contract value represents significant investment in naval engineering capabilities. 2. Sole-source award raises questions about competition and potential cost efficiencies. 3. Long contract duration (2026) suggests a sustained need for these services. 4. Focus on engineering services indicates a critical support role for naval operations. 5. Virginia location of the contractor may align with naval base proximity.

Value Assessment

Rating: fair

The contract's value of $1.64 billion over its period of performance is substantial. Without comparable sole-source contracts for similar naval engineering services, a precise value-for-money assessment is challenging. However, the cost-plus-fixed-fee structure allows for cost reimbursement plus a predetermined profit, which can incentivize efficiency but also carries risk if costs escalate beyond projections. Benchmarking against industry standards for engineering services of this scale and complexity would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This limits the opportunity for price discovery through competitive bidding. While sole-source awards can be justified for specialized capabilities or urgent needs, they typically result in higher prices compared to fully competed contracts. The absence of competition here means taxpayers may not be receiving the most cost-effective solution.

Taxpayer Impact: The lack of competition for this significant contract means taxpayers are potentially paying a premium, as there was no pressure from competing bids to drive down costs.

Public Impact

Naval operations and readiness are directly supported by the engineering services provided. The Department of the Navy benefits from specialized technical expertise for its fleet. Workforce in Virginia may see employment opportunities in engineering and related fields. Long-term sustainment and modernization of naval assets are facilitated by this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee structure can lead to cost overruns if not managed tightly.
Long contract duration may reduce flexibility to adapt to changing technological needs.

Positive Signals

Award to a large, established contractor like Huntington Ingalls Inc. suggests access to significant resources and expertise.
Focus on engineering services indicates a commitment to maintaining critical naval infrastructure.
Contract duration provides stability for planning and execution of essential naval support.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the defense industrial base. The market for defense engineering services is substantial, driven by the ongoing need for design, development, and sustainment of complex military platforms. Huntington Ingalls Inc. is a major player in this sector, particularly in shipbuilding and naval systems. This contract represents a significant portion of spending within this specialized niche, supporting the U.S. Navy's extensive fleet requirements.

Small Business Impact

The contract data indicates that small business participation (sb) is false, and it is not a small business set-aside (ss). This suggests that small businesses are unlikely to be direct prime contractors on this award. However, there may be opportunities for small businesses to participate as subcontractors to Huntington Ingalls Inc., depending on the company's subcontracting plan and the nature of the engineering services required. Further analysis of subcontracting goals would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy, likely through contracting officers and program managers. The cost-plus-fixed-fee structure necessitates robust financial oversight to monitor expenditures and ensure the fixed fee is earned appropriately. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) would be standard oversight mechanisms. The Inspector General of the Department of Defense may also conduct audits or investigations.

Related Government Programs

Naval Ship Systems Engineering
Defense Engineering Services
Naval Vessel Maintenance and Repair
Military Engineering Support
Department of Defense Professional Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Large contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $164.2 million to HUNTINGTON INGALLS INC. FY21 CONFORM

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 $164.2 million.

What is the period of performance?

Start: 2021-02-11. End: 2026-09-30.

What is Huntington Ingalls Inc.'s track record with similar sole-source engineering contracts for the Department of Defense?

Huntington Ingalls Industries (HII) has a long history of large-scale contracts with the Department of Defense, particularly in shipbuilding and naval support. While specific data on their sole-source engineering services contracts is not provided here, HII is a primary contractor for major naval programs, including aircraft carriers and submarines. Their extensive experience suggests a strong capability to execute complex engineering tasks. However, the absence of competition in sole-source awards means that direct comparisons of their pricing and efficiency against other bidders for this specific service are not publicly available. Past performance reviews and contract close-outs for HII would offer more insight into their execution on similar sole-source agreements.

How does the $1.64 billion contract value compare to historical spending on naval engineering services by the Department of the Navy?

The $1.64 billion awarded to Huntington Ingalls Inc. represents a significant investment in naval engineering services. To contextualize this, one would need to examine historical spending data for the Department of the Navy's engineering services contracts, particularly those classified under NAICS code 541330. Annual reports from the Navy or DoD spending databases would provide this information. If this contract is for a new class of vessel or a major modernization effort, its value might be higher than routine maintenance contracts. Conversely, if it's a continuation of existing services, it could indicate an increase in the cost or scope of those services over time. Without specific historical benchmarks for comparable naval engineering efforts, it's difficult to definitively state if this value is high or low relative to past spending.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to seek cost efficiencies. Taxpayers may end up paying more than necessary. Secondly, the cost-plus-fixed-fee (CPFF) pricing model reimburses the contractor for allowable costs incurred, plus a fixed fee representing profit. While the fixed fee provides some cost control, there's a risk of cost overruns if the contractor's actual costs exceed estimates. If not managed diligently, this can lead to significant budget increases beyond the initial projections. Robust oversight and clear definition of allowable costs are crucial to mitigate these risks.

What specific engineering services are being procured under this contract, and how do they contribute to naval program effectiveness?

The contract specifies 'Engineering Services' under NAICS code 541330. While the exact nature of these services is not detailed in the provided data, they typically encompass a broad range of technical support critical to naval operations. This could include design, development, testing, integration, and sustainment engineering for naval platforms, systems, and equipment. These services are essential for ensuring the operational readiness, modernization, and lifecycle support of the Navy's fleet. Effective engineering support directly impacts the reliability, performance, and safety of warships, contributing to overall mission effectiveness and national security.

What is the expected impact of this contract on the Virginia economy and the defense industrial base in the region?

Given that Huntington Ingalls Inc. is headquartered in Virginia (ST: VA, SN: VIRGINIA), this substantial $1.64 billion contract is likely to have a significant positive impact on the state's economy. It will support numerous high-skilled jobs in engineering, technical support, and program management within the company and its supply chain. This contract reinforces Virginia's position as a major hub for the defense industrial base, particularly for naval-related activities. The sustained award also contributes to the stability and growth of the regional defense sector, potentially attracting further investment and talent to the area.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002420R2104

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: $248,775,577

Exercised Options: $233,025,680

Current Obligation: $164,177,736

Actual Outlays: $362,803

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $373,041

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline