Navy awards $1.05B contract for USS Harry S. Truman (CVN 75) advance planning to Huntington Ingalls Inc

Contract Overview

Contract Amount: $1,046,509,016 ($1.0B)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2023-12-01

End Date: 2029-07-31

Contract Duration: 2,069 days

Daily Burn Rate: $505.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CVN 75 RCOH ADVANCE PLANNING

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $1.05 billion to HUNTINGTON INGALLS INC for work described as: CVN 75 RCOH ADVANCE PLANNING Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Significant duration of over 2000 days suggests a complex, long-term project. 3. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not closely managed. 4. Advance planning for a major vessel like the USS Harry S. Truman is critical for future maintenance and modernization. 5. The award to a single, established shipyard highlights potential consolidation in the naval shipbuilding and repair sector. 6. The lack of competition may limit opportunities for innovative solutions or cost-saving proposals from other firms.

Value Assessment

Rating: fair

Benchmarking the value of advance planning for a specific aircraft carrier is challenging due to the unique nature of such projects. However, the total contract value of over $1 billion over approximately five years indicates a substantial investment. The Cost Plus Fixed Fee structure means that while the contractor's profit is fixed, the total cost to the government can fluctuate, necessitating rigorous oversight to ensure value for money. Without comparable sole-source advance planning contracts for other carriers, it's difficult to definitively assess if this pricing is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit bids from multiple potential contractors. This approach is typically used when only one source is capable of meeting the government's needs, often due to specialized expertise, proprietary technology, or urgent requirements. The lack of competition means that price discovery through market forces was bypassed, and the government relied on negotiation to establish terms.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the benefits of competitive bidding, such as lower prices and innovative solutions, are not realized. It also reduces the incentive for contractors to offer their most competitive pricing.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the long-term operational readiness and modernization of the USS Harry S. Truman (CVN 75). This contract supports specialized engineering, planning, and logistical services essential for complex naval vessel maintenance. The geographic impact is concentrated around the contractor's facilities, likely in shipyards capable of handling aircraft carriers. It sustains highly skilled jobs in naval architecture, engineering, project management, and skilled trades within the shipbuilding and repair industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee contract type carries inherent risk of cost escalation if not managed diligently.
Long contract duration increases exposure to changing economic conditions and technological advancements.
Lack of transparency in the sole-source justification process could obscure potential alternatives.

Positive Signals

Award to a single, experienced contractor (Huntington Ingalls Inc.) suggests a focus on specialized expertise crucial for aircraft carrier maintenance.
Advance planning is a proactive measure to ensure future operational readiness and reduce unexpected costs during major overhauls.
The contract's focus on planning indicates a structured approach to complex, long-term naval asset management.

Sector Analysis

The shipbuilding and repairing industry (NAICS 336611) is a critical sector for national defense, characterized by high capital investment, specialized labor, and long production cycles. Major naval contracts, particularly for aircraft carriers, are often concentrated among a few large, experienced shipbuilders. This contract fits within the broader context of the Navy's fleet maintenance and modernization strategy, ensuring the longevity and capability of its most significant assets. Comparable spending benchmarks are difficult to establish due to the unique nature of aircraft carrier planning, but overall defense shipbuilding and repair spending represents a significant portion of the defense budget.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the specialized nature of aircraft carrier advance planning and the sole-source award to a large prime contractor, the direct impact on small businesses is likely limited to potential subcontracting opportunities. The prime contractor's subcontracting plan, if any, will determine the extent to which small businesses can participate in fulfilling the contract requirements. Without specific subcontracting goals or data, it's difficult to assess the broader 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 responsible for naval shipbuilding and maintenance. The Cost Plus Fixed Fee structure necessitates close monitoring of costs and performance to ensure the fixed fee remains appropriate and that expenditures align with planned activities. Transparency may be limited due to the sole-source nature, but contract performance reviews and financial audits would be standard oversight mechanisms. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance and Modernization Programs
Aircraft Carrier Life Cycle Management
Defense Industrial Base Support
Shipbuilding and Repair Contracts
Fleet Readiness Programs

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration
Lack of direct competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.05 billion to HUNTINGTON INGALLS INC. CVN 75 RCOH ADVANCE PLANNING

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 $1.05 billion.

What is the period of performance?

Start: 2023-12-01. End: 2029-07-31.

What is Huntington Ingalls Inc.'s track record with similar advance planning contracts for naval vessels?

Huntington Ingalls Industries (HII) is a major U.S. defense contractor and the sole builder of nuclear-powered aircraft carriers for the U.S. Navy. Their track record with advance planning for aircraft carriers is extensive, as they are responsible for the construction and major maintenance of these complex vessels. HII has managed numerous complex projects, including refueling and complex overhauls (RCOH) and other major maintenance availabilities for Nimitz-class and Ford-class carriers. Their experience includes detailed planning, engineering, and execution of these multi-year, multi-billion dollar efforts. The "RCOH ADVANCE PLANNING" designation suggests this contract is a precursor to a larger overhaul, a process HII is uniquely positioned to manage due to its historical involvement and specialized facilities.

How does the $1.05 billion value compare to typical advance planning costs for aircraft carriers?

Directly comparing the $1.05 billion value solely for 'advance planning' to typical costs is challenging because advance planning is an integral part of a much larger, multi-year overhaul or construction project. Aircraft carrier overhauls, such as the Refueling and Complex Overhaul (RCOH), can cost several billion dollars. The advance planning phase, which involves detailed engineering, design, scheduling, and procurement preparation, represents a significant portion of the overall project lifecycle. While $1.05 billion seems substantial for 'planning,' it likely encompasses the initial, critical phases of a multi-year, potentially multi-billion dollar overhaul. Without a breakdown of what specific activities this 'advance planning' includes, a precise benchmark is difficult, but it reflects the immense complexity and cost associated with maintaining these capital-intensive assets.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for this type of service?

The primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for advance planning of an aircraft carrier overhaul are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to less favorable pricing and reduced incentive for the contractor to innovate or optimize costs. The government relies heavily on negotiation and its own cost estimation capabilities. Secondly, the CPFF structure, while providing the contractor with a guaranteed profit (the fixed fee), allows for the reimbursement of all allowable costs. This creates a risk of cost escalation if the contractor's cost control measures are insufficient or if unforeseen complexities arise during the planning phase. Rigorous government oversight is crucial to scrutinize costs and ensure the fixed fee remains justified throughout the contract's duration.

What is the expected impact of this contract on the USS Harry S. Truman's operational readiness?

This contract is crucial for ensuring the long-term operational readiness and extending the service life of the USS Harry S. Truman (CVN 75). Advance planning is the foundational step for major maintenance availabilities, such as a Refueling and Complex Overhaul (RCOH). Effective planning allows for efficient scheduling of work, timely procurement of materials and components, and coordination of specialized labor. By addressing potential issues and developing detailed execution plans upfront, this contract aims to minimize downtime during the actual overhaul, reduce the risk of unexpected delays or cost overruns during the overhaul itself, and ensure the carrier returns to service with upgraded capabilities and a fully functional nuclear propulsion plant, thereby maintaining its combat readiness.

How does this contract fit into the broader historical spending patterns for aircraft carrier maintenance and modernization?

This $1.05 billion contract for advance planning aligns with historical spending patterns for maintaining and modernizing U.S. Navy aircraft carriers. These vessels represent enormous capital investments, and their operational lifespan is extended through periodic, extensive overhauls like RCOH. Such overhauls are multi-year endeavors costing billions of dollars and require substantial upfront investment in planning, engineering, and design. Historically, the Navy has allocated significant portions of its shipbuilding and conversion budget to sustain its carrier fleet. Awards for advance planning, while a fraction of the total overhaul cost, are critical and represent a consistent element of the lifecycle management strategy for these high-value assets, reflecting the ongoing commitment to fleet readiness.

What are the potential implications of the long contract duration (2069 days) for cost and scope management?

The long contract duration of 2069 days (approximately 5.7 years) for advance planning presents both opportunities and challenges. On the positive side, it allows for a phased and detailed approach to planning complex tasks, potentially reducing the likelihood of rushed decisions or overlooked critical elements. It also provides stability for the contractor and workforce involved. However, a lengthy duration increases the risk of scope creep, where additional requirements or changes are introduced over time, potentially increasing costs beyond initial projections. Furthermore, extended periods can expose the contract to economic fluctuations (inflation, material cost changes) and technological obsolescence, requiring robust change management processes and potentially necessitating contract modifications to account for evolving requirements or market conditions.

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: N0002422R2106

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: $1,345,488,543

Exercised Options: $1,345,488,543

Current Obligation: $1,046,509,016

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline