Navy awards $77.3M contract for DDG 51 Class follow yard support to Huntington Ingalls Inc

Contract Overview

Contract Amount: $77,316,110 ($77.3M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2024-11-17

End Date: 2028-12-31

Contract Duration: 1,505 days

Daily Burn Rate: $51.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: DDG 51 CLASS FOLLOW YARD SUPPORT

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $77.3 million to HUNTINGTON INGALLS INCORPORATED for work described as: DDG 51 CLASS FOLLOW YARD SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Cost-plus award fee structure incentivizes performance but requires careful oversight. 3. Long contract duration (over 4 years) suggests a need for sustained support. 4. Contractor is the original builder of the DDG 51 class, implying unique expertise. 5. Focus on yard support indicates a critical role in maintaining naval readiness. 6. Potential for cost overruns exists given the cost-plus nature of the award.

Value Assessment

Rating: fair

This contract's value is difficult to benchmark without comparable sole-source yard support contracts for the DDG 51 class. The cost-plus award fee structure allows for flexibility but also introduces risk. The award amount of $77.3 million over approximately 5 years suggests a significant investment in maintaining these critical naval assets. Without competitive bidding, it's challenging to definitively assess if this represents 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 only one bidder, Huntington Ingalls Incorporated, was solicited. This approach is often taken when a single contractor possesses unique capabilities or is the sole provider of a necessary service. While this ensures specialized support, it bypasses the price discovery benefits that come from a competitive bidding process.

Taxpayer Impact: The lack of competition means taxpayers may not benefit from the potentially lower prices that could have resulted from multiple bids. This necessitates a strong focus on contract oversight to ensure fair pricing and prevent potential cost inflation.

Public Impact

The primary beneficiaries are the U.S. Navy's DDG 51 class destroyers, ensuring their operational readiness and longevity. Services delivered include essential yard support, maintenance, and potentially repair activities. The geographic impact is centered around the contractor's facilities, likely in Mississippi, where the destroyers are built and maintained. Workforce implications include continued employment for skilled trades and technical personnel at the contractor's shipyard.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus award fee structure can lead to higher final costs if not managed tightly.
Long-term nature of the contract requires ongoing vigilance for scope creep or inefficiencies.
Dependence on a single contractor for critical support creates a single point of failure risk.

Positive Signals

Contractor is the original builder, possessing deep institutional knowledge of the DDG 51 class.
Award fee structure incentivizes contractor performance and quality of service.
Focus on yard support is crucial for maintaining the operational readiness of a key naval asset.
Long-term award provides stability for essential maintenance and support services.

Sector Analysis

The shipbuilding and repairing sector (NAICS 336611) is a critical component of the U.S. industrial base, particularly for defense. This contract falls within the naval shipbuilding and repair segment, which is characterized by high barriers to entry, specialized labor, and significant capital investment. The DDG 51 class destroyers are a cornerstone of the U.S. fleet, and ensuring their sustained readiness through dedicated yard support is paramount. Comparable spending benchmarks are difficult to establish due to the specialized nature of follow yard support and the sole-source award.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the specialized requirements for DDG 51 class support, it is unlikely that significant subcontracting opportunities for small businesses will be mandated within this specific award. The primary focus is on the prime contractor's capabilities, which may limit the direct impact on the small business ecosystem for this particular contract.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures will be tied to the performance metrics within the cost-plus award fee structure. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports should be available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

DDG 51 Class Destroyer Program
Naval Ship Maintenance and Repair
Shipbuilding and Repair Contracts
Department of the Navy Procurement

Risk Flags

Sole-source award
Cost-plus contract type
Long-term duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.3 million to HUNTINGTON INGALLS INCORPORATED. DDG 51 CLASS FOLLOW YARD SUPPORT

Who is the contractor on this award?

The obligated recipient is HUNTINGTON INGALLS INCORPORATED.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $77.3 million.

What is the period of performance?

Start: 2024-11-17. End: 2028-12-31.

What is the historical performance record of Huntington Ingalls Incorporated with the Department of the Navy, particularly concerning DDG 51 class support?

Huntington Ingalls Incorporated (HII), through its Ingalls Shipbuilding division, has a long and established history as the builder of the DDG 51 Arleigh Burke-class destroyers. Their performance record with the Navy is extensive, encompassing new construction, modernization, and sustainment efforts for this class of vessels. Historically, HII has been responsible for delivering numerous DDG 51 ships, often meeting or exceeding delivery schedules and performance specifications, though like any large defense contractor, they have also faced challenges and scrutiny regarding cost and schedule on specific programs. For follow yard support, their deep institutional knowledge as the original builder provides a unique advantage, suggesting a strong capability to address the specific needs of the DDG 51 class. However, detailed performance metrics for past yard support contracts would require specific data analysis beyond this overview.

How does the cost-plus award fee (CPAF) structure compare to other contract types for similar naval sustainment services?

The Cost-Plus Award Fee (CPAF) contract type is often used when the exact costs are uncertain, but performance outcomes can be clearly defined and measured. For naval sustainment services, CPAF is a common choice because it allows the government to reimburse the contractor for allowable costs while providing incentives for achieving specific performance targets (e.g., quality, timeliness, efficiency). This contrasts with Fixed-Price contracts, which offer greater cost certainty to the government but can be less flexible if unforeseen issues arise, potentially leading to disputes or contractor disengagement. Cost-Reimbursement contracts without award fees offer less incentive for superior performance. CPAF aims to balance cost control with performance motivation, but it requires robust government oversight to ensure the award fees are justified and that costs remain reasonable.

What are the primary risks associated with a sole-source award for critical naval vessel support?

The primary risks associated with a sole-source award for critical naval vessel support include a lack of competitive pricing, which can lead to higher costs for the government and taxpayers. Without competition, there is reduced incentive for the contractor to innovate or become more efficient, as there is no direct threat of losing business to a competitor. This can also lead to complacency. Furthermore, sole-source awards can create a dependency on a single provider, making the government vulnerable if that contractor experiences financial difficulties, operational issues, or decides to exit the market. It also limits opportunities for new or smaller companies to enter the market and demonstrate their capabilities. Effective risk mitigation requires stringent contract management, performance monitoring, and potentially exploring competitive strategies for future contract actions.

What is the expected impact of this contract on the operational readiness of the DDG 51 class fleet?

This contract is expected to have a positive and significant impact on the operational readiness of the DDG 51 class fleet. By securing dedicated follow yard support from Huntington Ingalls Incorporated, the Navy ensures that these critical destroyers receive the necessary maintenance, repairs, and technical assistance to remain mission-capable. The DDG 51 class forms a substantial portion of the Navy's surface combatant force, and their availability is crucial for national security. Consistent and expert-level support helps to minimize downtime, address emergent issues promptly, and extend the service life of these vessels, thereby maintaining the fleet's overall combat effectiveness and readiness posture.

How does this contract's value compare to historical spending on DDG 51 class sustainment or similar naval shipbuilding support contracts?

Comparing this $77.3 million contract to historical spending on DDG 51 class sustainment requires access to detailed historical data, which is not readily available in this context. However, the DDG 51 class is a large and complex program, with over 70 ships delivered and more under construction. Sustainment costs for such a fleet are substantial and ongoing throughout their decades-long service lives. Typical sustainment activities include planned maintenance, emergent repairs, modernization upgrades, and depot-level work. Given the long duration of this contract (over 4 years) and the specialized nature of 'follow yard support' from the original builder, the $77.3 million figure represents a significant, but likely proportional, investment within the broader context of maintaining this vital class of warships. Without specific historical benchmarks for similar sole-source yard support contracts, a precise comparison is challenging.

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: N0002423R2312

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Huntington Ingalls Industries, Inc

Address: 1000 ACCESS RD, PASCAGOULA, MS, 39567

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $190,456,313

Exercised Options: $111,505,150

Current Obligation: $77,316,110

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline