Navy awards $25M contract to Huntington Ingalls for shipbuilding services, highlighting long-term industrial base support

Contract Overview

Contract Amount: $25,005,504 ($25.0M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 1999-10-01

End Date: 1998-12-31

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Place of Performance

Location: PASCAGOULA, JACKSON County, MISSISSIPPI, 39568

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $25.0 million to HUNTINGTON INGALLS INCORPORATED for work described as: Key points: 1. Contract supports critical shipbuilding and repair capabilities, essential for naval readiness. 2. Long-standing relationship with contractor suggests established performance and understanding of requirements. 3. Fixed-price incentive contract structure aims to balance cost control with contractor performance. 4. Awarded under full and open competition, indicating a broad market search. 5. Contract duration and value align with typical large-scale defense shipbuilding efforts. 6. Geographic concentration in Mississippi points to regional economic impact and specialized workforce.

Value Assessment

Rating: good

The contract value of $25 million appears reasonable for specialized shipbuilding services, especially considering the complexity and long-term nature of naval vessel maintenance and construction. Benchmarking against similar contracts for fleet support and new construction would provide a more precise value-for-money assessment. The fixed-price incentive (FPI) structure suggests an effort to incentivize cost efficiency while ensuring quality, though the specific incentive targets are not detailed here. Without direct cost breakdowns or comparisons to industry standards for specific labor hours or materials, a definitive value assessment is challenging, but the award to a major shipyard indicates a recognized capability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple capable vendors were solicited and evaluated. The presence of two bids indicates a degree of competition, though the exact number of solicitations and the extent of outreach are not specified. A competitive process for such a significant defense contract is generally positive for price discovery and ensures the government receives offers from a wide range of potential providers. The specific details of the bidding process, including the number of proposals received beyond the two awards, would offer further insight into the robustness of the competition.

Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers by fostering a competitive environment where contractors strive to offer the most cost-effective solutions.

Public Impact

The U.S. Navy benefits from continued access to essential shipbuilding and repair services, ensuring fleet readiness and operational capability. The contract supports the maintenance and potential construction of naval vessels, contributing to national security. The award has a significant economic impact on the Mississippi region, supporting jobs in a highly specialized industrial sector. The workforce involved includes skilled tradespeople, engineers, and support staff crucial for complex maritime projects. This contract contributes to the sustainment of the U.S. industrial base for shipbuilding and defense manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if incentive targets are not met or if unforeseen technical challenges arise in shipbuilding.
Dependence on a single large contractor for critical naval assets could pose risks if performance falters or capacity is strained.
Long lead times and complex supply chains inherent in shipbuilding can introduce schedule and cost risks.

Positive Signals

Award to a major, established shipbuilding company with a proven track record in supporting naval requirements.
Fixed-price incentive contract structure aims to align contractor and government interests for cost and performance.
Full and open competition suggests a thorough vetting of available market capabilities.
Contract supports a critical national security function, ensuring the readiness of the U.S. fleet.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on shipbuilding and repair. The U.S. shipbuilding industry is a critical component of national security, characterized by high capital investment, specialized labor, and long production cycles. Major players like Huntington Ingalls Industries are essential for maintaining the U.S. Navy's fleet. Spending in this sector is often characterized by large, long-term contracts awarded through competitive processes, reflecting the complexity and strategic importance of naval assets. Comparable spending benchmarks would typically involve analyzing the total budget allocated to naval ship maintenance, modernization, and new construction.

Small Business Impact

While this contract was awarded under full and open competition and does not appear to be a small business set-aside, large defense contracts often have subcontracting requirements. It is probable that Huntington Ingalls Incorporated will engage numerous small businesses as subcontractors for specialized components, materials, and services. The extent of small business participation will depend on the specific subcontracting plan negotiated as part of this award. Analysis of past performance and future plans for small business utilization would be necessary to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the contract's terms, including performance metrics and the fixed-price incentive structure, which links payment to achieving specific cost and performance targets. Transparency is facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Naval Ship Maintenance Contracts
Shipbuilding and Repair Services
Defense Procurement
Fleet Readiness Programs
Major Defense Acquisition Programs

Risk Flags

Potential for cost growth in complex shipbuilding projects.
Dependence on a single large contractor for critical naval assets.
Schedule delays are common in large-scale construction and repair projects.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.0 million to HUNTINGTON INGALLS INCORPORATED. See the official description on USAspending.

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 $25.0 million.

What is the period of performance?

Start: 1999-10-01. End: 1998-12-31.

What is the historical spending pattern for shipbuilding and repair services by the Department of the Navy with Huntington Ingalls Incorporated?

Analyzing historical spending requires access to detailed contract databases. However, Huntington Ingalls Incorporated (HII) is a primary contractor for the U.S. Navy, consistently receiving substantial funding for aircraft carrier and submarine construction, as well as ship maintenance and modernization. Their annual contract awards typically run into billions of dollars, reflecting their critical role in the naval industrial base. This specific $25 million award represents a fraction of HII's overall contract portfolio with the Navy, likely supporting a specific project or a defined period of service rather than a broad platform. Trends in Navy shipbuilding budgets, influenced by geopolitical factors and strategic priorities, directly impact the volume and value of contracts awarded to companies like HII.

How does the pricing structure of this Fixed Price Incentive (FPI) contract compare to other Navy shipbuilding contracts?

The Fixed Price Incentive (FPI) contract structure is common in complex defense procurements like shipbuilding, where cost targets can be uncertain. It establishes a target cost, a target profit, and a price ceiling. If the final cost is below the target, both the government and contractor share in the savings based on a pre-defined formula. If the cost exceeds the target but remains below the ceiling, the contractor absorbs a portion of the overrun. The FPI structure aims to provide the government with cost control while incentivizing the contractor to perform efficiently. Compared to Firm Fixed Price (FFP) contracts, FPI offers more flexibility for the government if costs escalate unexpectedly, while compared to Cost Plus contracts, it places more cost risk on the contractor. The specific incentive targets and sharing ratios determine the precise balance of risk and reward.

What are the key performance indicators (KPIs) typically associated with shipbuilding contracts of this nature?

Key performance indicators (KPIs) for shipbuilding contracts like this typically revolve around schedule adherence, cost control, quality of work, and safety. For an FPI contract, meeting or beating the target cost is a primary KPI. Schedule milestones, such as the completion of specific construction phases or delivery dates, are also critical. Quality is assessed through inspections, testing, and adherence to technical specifications, often measured by the number of defects or rework required. Safety performance, indicated by metrics like lost time injury frequency rates, is paramount in industrial environments. Compliance with environmental regulations and successful integration of new technologies or systems can also be key performance areas.

What is Huntington Ingalls Industries' track record with the Department of Defense, particularly regarding shipbuilding and repair?

Huntington Ingalls Industries (HII) has an extensive and generally strong track record with the Department of Defense, particularly the U.S. Navy. As the sole builder of nuclear-powered aircraft carriers and one of two builders of nuclear-powered submarines, HII is indispensable to naval aviation and strategic deterrence. They also perform significant work in ship maintenance, overhaul, and modernization across various naval platforms. While large, complex programs inevitably face challenges, HII has a history of delivering major capital assets. Their performance is often evaluated based on meeting delivery schedules, staying within budget constraints (though large programs often see cost adjustments), and maintaining high quality standards essential for naval operations. HII is a cornerstone of the U.S. defense industrial base for shipbuilding.

Are there any specific risks associated with the 'FULL AND OPEN COMPETITION' award type for this contract?

The 'FULL AND OPEN COMPETITION' award type is generally considered a positive indicator for value and market reach. However, for complex, specialized procurements like shipbuilding, it can present certain risks. One risk is that the broad solicitation might attract bidders who lack the highly specialized expertise or capacity required, potentially leading to performance issues down the line. Another consideration is the administrative burden and cost associated with managing a wide-open competition, including evaluating numerous proposals. While it aims for the best value, ensuring that all bidders truly understand the intricate technical requirements and long-term implications of naval shipbuilding is crucial. The government must have robust evaluation criteria to effectively differentiate truly capable bidders from those who may overpromise.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE (L)

Contractor Details

Parent Company: Huntington Ingalls Industries, Inc (UEI: 967362331)

Address: 1000 ACCESS RD, PASCAGOULA, MS, 04

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

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