Navy awards $121.9M contract for LPD 17 Class ship support, raising questions on competition

Contract Overview

Contract Amount: $12,195,367 ($12.2M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 2025-12-10

End Date: 2030-12-31

Contract Duration: 1,847 days

Daily Burn Rate: $6.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: LPD 17 CLASS POST DELIVERY AND ENGINEERING SUPPORT (PD&ES)

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39567

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $12.2 million to HUNTINGTON INGALLS INCORPORATED for work described as: LPD 17 CLASS POST DELIVERY AND ENGINEERING SUPPORT (PD&ES) Key points: 1. Contract awarded on a cost-plus-award-fee basis, which can incentivize performance but also carries inherent cost risks. 2. The contract's duration of over 5 years suggests a long-term need for these specialized engineering services. 3. Sole-source award indicates a lack of competitive bidding, potentially leading to higher costs for taxpayers. 4. The specific nature of post-delivery and engineering support for a specialized ship class may limit available contractors. 5. Performance metrics and award fees will be critical to ensuring value for money in this non-competed contract. 6. The significant value of the contract warrants close scrutiny of cost controls and performance outcomes.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized focus on post-delivery engineering support for the LPD 17 class. The cost-plus-award-fee structure allows for flexibility but requires diligent oversight to ensure costs remain reasonable and that award fees are tied to demonstrable performance improvements. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or if there is an opportunity for cost savings through competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when only one contractor possesses the unique capabilities, technical knowledge, or proprietary data necessary to perform the required services. While this can ensure specialized expertise, it limits price discovery and may result in higher costs compared to a competitively bid contract.

Taxpayer Impact: The lack of competition means taxpayers may not be benefiting from the most cost-effective solution. Without competing offers, the government has less leverage to negotiate favorable pricing, potentially leading to an overpayment for these essential support services.

Public Impact

The U.S. Navy benefits from continued engineering and post-delivery support for its LPD 17 class amphibious transport dock ships. This contract ensures the operational readiness and sustainment of critical naval assets. The services provided are essential for maintaining the complex systems and structures of these large warships. The primary workforce impacted will be highly skilled engineers and technical specialists, likely concentrated in areas with defense industry presence.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Cost-plus-award-fee structure requires robust oversight to prevent cost overruns.
Lack of transparency in the sole-source justification could hide inefficiencies.
Long contract duration may reduce agility in adapting to new technologies or requirements.
Dependence on a single contractor for critical support poses a risk if performance falters.

Positive Signals

Award fee structure incentivizes contractor performance and quality.
Specialized nature of support suggests deep technical expertise from the contractor.
Long-term contract provides stability for essential, ongoing naval support.
Focus on post-delivery support ensures continued operational capability of the LPD 17 class.

Sector Analysis

The shipbuilding and repair industry, classified under NAICS code 336611, is a critical sector for national defense. This contract falls within the specialized segment of naval ship maintenance and modernization. The market for such highly technical, platform-specific support is often concentrated among a few large defense contractors with established relationships and intimate knowledge of the vessel class. Spending benchmarks for similar post-delivery support contracts can vary widely based on ship class complexity and required services, but significant investments are typical for maintaining capital-intensive naval assets.

Small Business Impact

There is no indication of a small business set-aside for this contract, nor is there information suggesting subcontracting opportunities for small businesses. Given the specialized nature of post-delivery engineering support for a specific naval platform like the LPD 17 class, it is likely that the prime contractor possesses unique capabilities that may not be readily available from smaller firms. This could limit the direct impact on the small business ecosystem unless the prime contractor actively engages in subcontracting.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy, specifically the Naval Sea Systems Command (NAVSEA) or a similar contracting activity. The cost-plus-award-fee structure necessitates rigorous monitoring of costs incurred and performance achieved against defined metrics. Transparency will depend on the Navy's reporting practices and any potential audits conducted by the Government Accountability Office (GAO) or the Department of Defense Inspector General (IG).

Related Government Programs

LPD 17 Class Amphibious Transport Dock Ships
Naval Ship Maintenance and Modernization Programs
Defense Contract Management Agency (DCMA) Oversight
Naval Sea Systems Command (NAVSEA) Contracts

Risk Flags

Sole-source award
Cost-plus-award-fee contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.2 million to HUNTINGTON INGALLS INCORPORATED. LPD 17 CLASS POST DELIVERY AND ENGINEERING SUPPORT (PD&ES)

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 $12.2 million.

What is the period of performance?

Start: 2025-12-10. End: 2030-12-31.

What is the track record of Huntington Ingalls Incorporated in providing post-delivery engineering support for naval vessels?

Huntington Ingalls Industries (HII), the parent company of Huntington Ingalls Incorporated, has a long and established history as a major U.S. defense contractor, particularly in shipbuilding and ship repair. They are the builder of the LPD 17 class ships themselves, which provides them with intimate knowledge of the platform's design, construction, and systems. Their track record includes extensive experience in delivering new vessels, performing maintenance, modernization, and providing lifecycle support for various naval platforms. This includes significant work on amphibious assault ships, aircraft carriers, and other surface combatants. Their expertise in post-delivery support is therefore expected to be substantial, given their role as the original shipbuilder and their ongoing involvement in naval fleet readiness.

How does the cost-plus-award-fee (CPAF) contract type typically perform in terms of cost control compared to other contract types?

Cost-plus-award-fee (CPAF) contracts are designed to provide flexibility and incentivize contractor performance on complex projects where the scope may evolve or is difficult to define precisely upfront. In CPAF, the contractor is reimbursed for allowable costs plus a fee that consists of a fixed base amount and an award amount based on meeting or exceeding performance objectives. While CPAF can be effective in driving desired outcomes, it carries a higher risk of cost growth compared to fixed-price contracts because the government assumes more of the cost risk. Effective cost control under CPAF relies heavily on robust government oversight, clearly defined performance metrics, and a well-structured award fee plan that genuinely rewards exceptional performance without inflating costs unnecessarily. Without stringent oversight, CPAF contracts can lead to higher overall expenditures than anticipated.

What are the potential risks associated with a sole-source award for critical ship support services?

Sole-source awards for critical services like post-delivery engineering support for naval vessels present several potential risks. Firstly, the absence of competition means the government cannot leverage market forces to achieve the lowest possible price, potentially leading to higher costs for taxpayers. Secondly, it can reduce the incentive for the sole contractor to innovate or improve efficiency, as there is no direct competitive pressure. Thirdly, it creates a dependency on a single provider; if the contractor experiences performance issues, financial instability, or decides to exit the market, the government has limited alternatives for continuity of service. Finally, sole-source justifications can sometimes be used to bypass competitive processes, raising concerns about fairness and the optimal use of public funds, although in cases of unique technical expertise, it may be the only viable option.

What is the historical spending pattern for LPD 17 Class post-delivery and engineering support?

Analyzing historical spending patterns for LPD 17 Class post-delivery and engineering support requires access to detailed contract databases and specific program information. However, it is generally understood that the sustainment and support of complex naval platforms like the LPD 17 class represent a significant, ongoing investment throughout their lifecycle. Initial post-delivery support often focuses on addressing design- or construction-related issues that emerge during initial operations. As the ships age, support shifts towards maintenance, repair, upgrades, and modernization. Given that the LPD 17 class entered service in the mid-2000s, the Navy has been incurring costs for its support for over a decade. The value of this specific contract ($121.9 million over approximately five years) suggests a substantial but likely recurring need for such specialized services, reflecting the complexity and operational tempo of these vessels.

How does the geographic location of the contractor (Mississippi) impact the delivery of services to naval bases?

The contractor, Huntington Ingalls Incorporated, is located in Mississippi, which is home to the Ingalls Shipbuilding division, a major facility for building and repairing naval vessels. This geographic proximity is highly advantageous for providing post-delivery and engineering support for the LPD 17 class ships, as these vessels are often based or dry-docked at shipyards where HII has a significant presence or established logistical support networks. While naval bases are located globally, having the primary engineering and support hub in Mississippi can streamline operations, reduce travel costs for technical personnel, and facilitate quicker access to specialized facilities and personnel. This location likely minimizes logistical challenges and enhances the responsiveness of the support services provided to the fleet.

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: N0002425R2443

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

Financial Breakdown

Contract Ceiling: $223,257,190

Exercised Options: $30,853,810

Current Obligation: $12,195,367

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline