Navy Awards $1.22B for LPD 33, 34, 35 DD&CS to Huntington Ingalls

Contract Overview

Contract Amount: $1,222,000,000 ($1.2B)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2024-09-20

End Date: 2035-09-01

Contract Duration: 3,998 days

Daily Burn Rate: $305.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: LPD 33, 34, AND 35 DD&CS

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $1.22 billion to HUNTINGTON INGALLS INCORPORATED for work described as: LPD 33, 34, AND 35 DD&CS Key points: 1. Significant investment in naval shipbuilding, impacting the defense sector. 2. Sole-source award to a major defense contractor raises competition concerns. 3. Long-term contract duration presents potential for cost overruns and scope creep. 4. Fixed-price incentive contract type aims to balance cost control with performance.

Value Assessment

Rating: questionable

The $1.22 billion award for three LPD ships is a substantial sum. Without competitive bidding, it's difficult to benchmark pricing against similar contracts. The fixed-price incentive structure suggests an attempt to manage costs, but the lack of competition is a primary concern.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Huntington Ingalls Incorporated. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition in this large contract means taxpayers may not be receiving the best possible price for these critical naval assets.

Public Impact

Enhances U.S. Navy's amphibious assault capabilities with new LPD vessels. Supports shipbuilding jobs and economic activity in the Mississippi region. Long-term commitment to a specific platform may influence future naval strategy. Potential for technological advancements in ship design and construction.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Long contract duration
Potential for cost growth
Sole-source award

Positive Signals

Critical naval asset acquisition
Fixed-price incentive contract
Supports shipbuilding industry

Sector Analysis

This award falls within the defense shipbuilding sector, characterized by large, complex contracts often awarded to a limited number of prime contractors. Spending benchmarks in this area are typically high due to the specialized nature of naval vessels.

Small Business Impact

The data indicates this contract was awarded directly to Huntington Ingalls Incorporated and does not specify any subcontracting requirements for small businesses. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

The Department of the Navy is responsible for overseeing this contract. Given the sole-source nature and long duration, robust oversight will be crucial to ensure cost control, adherence to specifications, and timely delivery.

Related Government Programs

Ship Building and Repairing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award lacks competitive pricing.
Extended contract duration increases risk of cost escalation.
Potential for scope creep over the contract's lifespan.
Limited transparency on specific performance metrics and incentives.
No clear indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.22 billion to HUNTINGTON INGALLS INCORPORATED. LPD 33, 34, AND 35 DD&CS

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 $1.22 billion.

What is the period of performance?

Start: 2024-09-20. End: 2035-09-01.

What is the justification for awarding this contract on a sole-source basis instead of through a competitive process?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or a lack of viable alternative sources. For naval shipbuilding, specific designs or existing industrial base considerations might lead to such decisions. However, without detailed documentation, it's difficult to ascertain the precise rationale and whether it truly serves the best interest of the government and taxpayers.

How will the fixed-price incentive contract structure mitigate risks associated with cost overruns over the 13-year period?

The fixed-price incentive (FPI) contract aims to share cost savings or overruns between the government and the contractor based on achieving target cost and performance objectives. While FPI provides an incentive for the contractor to control costs, the long duration of this contract (nearly 14 years) still presents significant risks. Market fluctuations, material cost increases, and unforeseen technical challenges could still lead to substantial cost growth, even with the incentive mechanism.

What are the long-term strategic implications of investing $1.22 billion in these specific LPD vessels for the U.S. Navy's fleet modernization?

This significant investment in three LPDs (Landing Platform Dock) vessels indicates a continued strategic focus on amphibious assault and power projection capabilities. These ships are crucial for deploying Marines and their equipment for various missions. The long-term commitment suggests these platforms will remain central to naval strategy for decades, potentially influencing the design and procurement of future amphibious and expeditionary warfare assets.

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: N0002423R2473

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $5,798,767,376

Exercised Options: $5,798,767,376

Current Obligation: $1,222,000,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline