Naval Reactors contract awarded to Huntington Ingalls Inc. for $36.8M, focusing on power boiler and heat exchanger manufacturing

Contract Overview

Contract Amount: $36,826,190 ($36.8M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2021-10-25

End Date: 2026-12-07

Contract Duration: 1,869 days

Daily Burn Rate: $19.7K/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 $36.8 million to HUNTINGTON INGALLS INC for work described as: NAVAL REACTORS Key points: 1. Contract value of $36.8M over 1869 days suggests significant investment in specialized naval systems. 2. Sole-source award indicates a lack of readily available alternatives or unique contractor capabilities. 3. Cost Plus Fixed Fee (CPFF) pricing structure may incentivize cost overruns if not closely monitored. 4. The contract duration of nearly five years points to a long-term need for these critical components. 5. Focus on power boilers and heat exchangers highlights the essential nature of these systems for naval operations. 6. The absence of small business set-asides suggests the prime contractor is a large entity, with potential subcontracting opportunities.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the scope of work and the complexity of the power boilers and heat exchangers. However, the Cost Plus Fixed Fee (CPFF) contract type can sometimes lead to higher overall costs compared to fixed-price contracts if not managed diligently. The duration of the contract (over 1800 days) suggests a substantial undertaking, and the awarded amount of $36.8 million needs to be assessed against the specific deliverables and market rates for such specialized manufacturing.

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 typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's requirements. The lack of competition means that the government did not benefit from potential price reductions or innovative solutions that might arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also limits the opportunity for other businesses to secure government contracts.

Public Impact

The primary beneficiaries are the U.S. Navy, ensuring the operational readiness of its vessels through the supply of critical power generation and thermal management components. Services delivered include the manufacturing and potentially maintenance or upgrade of power boilers and heat exchangers essential for naval propulsion and power systems. The geographic impact is likely concentrated around the contractor's facilities, but the ultimate impact is on naval bases and deployed fleets globally. Workforce implications include employment opportunities for skilled manufacturing labor, engineers, and technicians at Huntington Ingalls Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type may lead to less cost certainty for the government.
Sole-source award limits competitive pressure, potentially impacting price efficiency.
Long contract duration (over 1800 days) requires sustained oversight to ensure performance and prevent scope creep.

Positive Signals

Award to a known entity (Huntington Ingalls Inc.) suggests a potentially reliable supplier for critical naval components.
Focus on essential systems like power boilers and heat exchangers indicates a direct contribution to naval operational capability.
The contract duration implies a stable, long-term requirement, potentially indicating successful past performance.

Sector Analysis

This contract falls within the manufacturing sector, specifically focusing on industrial equipment for defense applications. The market for specialized naval power systems is highly concentrated, often dominated by a few key players due to stringent technical requirements and security clearances. Comparable spending benchmarks would involve analyzing other contracts for similar large-scale, specialized manufacturing for naval vessels, which are typically high-value and long-term.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Huntington Ingalls Inc. is a large defense contractor, suggesting that the primary contract is not directly benefiting small businesses through a set-aside. However, there may be opportunities for small businesses to participate as subcontractors to Huntington Ingalls, particularly in specialized component manufacturing or support services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee (CPFF) contract, rigorous financial oversight is crucial to monitor costs and ensure they align with the fixed fee. Transparency would be facilitated through contract reporting mechanisms, and accountability would be managed through performance reviews and adherence to contractual milestones. The Inspector General's office for the Department of Defense would likely have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Naval Ship Systems
Submarine Construction
Aircraft Carrier Manufacturing
Defense Industrial Base
Power Generation Equipment Manufacturing

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration requires sustained oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.8 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 $36.8 million.

What is the period of performance?

Start: 2021-10-25. End: 2026-12-07.

What is the specific scope of work for the power boilers and heat exchangers under this contract?

The provided data indicates the contract is for 'Power Boiler and Heat Exchanger Manufacturing' (nd: 'Power Boiler and Heat Exchanger Manufacturing') under NAICS code 332410. However, the specific scope of work, including whether it involves new manufacturing, upgrades, repairs, or specific technical specifications for these components, is not detailed. This level of detail is crucial for a comprehensive value assessment. Without it, it's difficult to determine if the $36.8 million award is commensurate with the complexity and quantity of the items being produced or serviced. Further analysis would require access to the contract's statement of work (SOW).

How does the $36.8 million contract value compare to historical spending on similar naval components?

Comparing the $36.8 million contract value requires context on the typical scale and frequency of procurements for naval power boilers and heat exchangers. Huntington Ingalls Inc. is a major shipbuilder, and such components are critical and often custom-built for naval vessels. Historical data on similar contracts awarded by the Department of the Navy for these specific systems would be needed for a robust comparison. Factors like inflation, technological advancements, and the specific class of vessel or system the components are intended for would significantly influence historical spending patterns. A preliminary assessment suggests this is a substantial, but not necessarily outlier, value for long-term specialized manufacturing within the defense sector.

What are the key performance indicators (KPIs) and milestones for this contract, and how is performance being tracked?

The provided data does not specify the key performance indicators (KPIs) or milestones for this contract. For a Cost Plus Fixed Fee (CPFF) contract, especially one with a long duration (1869 days), performance tracking is critical. The Department of the Navy would typically establish specific technical, schedule, and cost-related milestones. Performance would likely be monitored through regular progress reports from Huntington Ingalls Inc., site inspections, and potentially independent verification of manufactured components. The effectiveness of oversight mechanisms and the clarity of these KPIs are essential for ensuring the contractor meets its obligations and taxpayer funds are used efficiently.

What are the risks associated with a sole-source award for critical naval components?

The primary risk associated with a sole-source award for critical naval components is the potential for reduced price competition, which can lead to higher costs for the government compared to a competitively bid contract. Additionally, reliance on a single supplier can create vulnerabilities in the supply chain. If the sole-source contractor experiences production issues, financial difficulties, or faces unforeseen challenges, it could significantly impact the Navy's operational readiness. While sole-sourcing is often justified by unique capabilities or national security needs, it necessitates enhanced government oversight to mitigate these risks and ensure fair pricing and timely delivery.

What is Huntington Ingalls Inc.'s track record with Cost Plus Fixed Fee (CPFF) contracts, particularly with the Department of the Navy?

Huntington Ingalls Industries (HII) is a major defense contractor with extensive experience in shipbuilding and complex defense systems, including numerous contracts with the Department of the Navy. They have a long history of working with various contract types, including CPFF. While specific performance metrics for their CPFF contracts are not detailed here, HII's overall track record is generally considered strong, given their critical role in naval construction. However, CPFF contracts inherently carry risks of cost escalation if not managed meticulously by both the contractor and the government. A deeper dive into HII's specific performance on past CPFF contracts, including any cost overruns or performance issues, would provide a more nuanced understanding of their reliability in this contract type.

How does this contract fit into the broader context of naval shipbuilding and modernization efforts?

This contract for power boilers and heat exchangers is integral to the operational readiness and modernization of the U.S. Navy's fleet. These components are fundamental to the propulsion and power systems of various naval vessels, including submarines and surface ships. The award to Huntington Ingalls Inc., a primary builder of these vessels, suggests alignment with ongoing shipbuilding programs and potentially upgrades or sustainment efforts for existing fleets. The long duration and significant value indicate a sustained commitment to maintaining and enhancing the Navy's capabilities, reflecting broader strategic objectives for naval power projection and defense.

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: N0002421R2105

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: $48,402,232

Exercised Options: $48,402,232

Current Obligation: $36,826,190

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline