Naval Sea Systems Command awarded $193.5M for ship maintenance and repair, with a 4-year duration

Contract Overview

Contract Amount: $193,529,668 ($193.5M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 1997-05-30

End Date: 2001-06-30

Contract Duration: 1,492 days

Daily Burn Rate: $129.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199712!1700!7770!BZ002!NAVAL SEA SYSTEMS COMMAND !N0002494C2105 !A!*!P00013 !19970530!19980330!001307495!001307495!149899957!N!43689!NEWPORT NEWS SHIPBUILDING AND !4101 WASHINGTON AVE !NEWPORT NEWS !VA!23607!56000!700!51!NEWPORT NEWS !NEWPORT NEWS (CITY) !VIRGINIA !0001!+000175971933!N!N!000000000000!J019!MAINT & REPAIR OF EQ/SHIPS-SML CRAFT-DOCKS !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !3731!3!*!*!A!B!A!*!D !Y!U!1!001!N!1A!A!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $193.5 million to HUNTINGTON INGALLS INC for work described as: 199712!1700!7770!BZ002!NAVAL SEA SYSTEMS COMMAND !N0002494C2105 !A!*!P00013 !19970530!19980330!001307495!001307495!149899957!N!43689!NEWPORT NEWS SHIPBUILDING AND !4101 WASHINGTON AVE !NEWPORT NEWS !VA!23607!56000!700!51!NEWPORT NEWS !NEWPOR… Key points: 1. Contract awarded for maintenance and repair of ships, specifically nuclear aircraft carriers. 2. The contract was not competed, raising questions about potential cost efficiencies. 3. A significant portion of the contract value was obligated at award. 4. The contractor, Huntington Ingalls Inc., is a major player in shipbuilding and repair. 5. The contract was a definitive contract type, indicating a long-term agreement. 6. The contract was awarded in 1997 and completed in 2001.

Value Assessment

Rating: fair

The total award amount was $193.5 million over a period of approximately 4 years. Without specific benchmarks for nuclear aircraft carrier maintenance and repair, it's difficult to definitively assess value for money. However, the lack of competition suggests potential for higher costs than if multiple bids were solicited. The contract type (Cost Plus Fixed Fee) can sometimes lead to cost overruns if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source is available or authorized by statute. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: For taxpayers, a sole-source award means there was no opportunity to benefit from competitive bidding, which could have potentially driven down the price for these critical ship maintenance services.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the operational readiness of its nuclear aircraft carriers. Services delivered include essential maintenance and repair for complex naval vessels. The geographic impact is centered around naval facilities and shipyards capable of handling such large-scale maintenance, likely in Virginia. Workforce implications include employment for skilled tradespeople in shipbuilding and repair sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to suboptimal pricing.
Cost Plus Fixed Fee contracts can incentivize contractors to increase costs if not closely monitored.
Long-term maintenance contracts require robust oversight to ensure continued value.

Positive Signals

Awarded to a known and experienced contractor in the shipbuilding industry.
The contract duration suggests a planned, long-term need for these services.
The contract was for essential maintenance of critical naval assets.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on naval shipbuilding and repair. This is a highly specialized and capital-intensive industry. The market is dominated by a few large prime contractors capable of handling the complexity and scale of naval vessel maintenance, particularly nuclear-powered carriers. Benchmarking is challenging due to the unique nature of these assets and the limited number of qualified providers.

Small Business Impact

There is no indication that this contract involved small business set-asides. Given the specialized nature of nuclear aircraft carrier maintenance, it is unlikely that small businesses would be the primary contractors. However, the prime contractor would likely engage small businesses for subcontracting opportunities in various support roles.

Oversight & Accountability

Oversight for this contract would have been primarily managed by the Naval Sea Systems Command (NAVSEA). As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing would be expected to ensure costs are reasonable and allocable. Inspector General involvement is standard for Department of Defense contracts to investigate fraud, waste, and abuse.

Related Government Programs

Shipbuilding and Repair Contracts
Naval Vessel Maintenance
Aircraft Carrier Maintenance
Defense Procurement

Risk Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type requires diligent oversight to control costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $193.5 million to HUNTINGTON INGALLS INC. 199712!1700!7770!BZ002!NAVAL SEA SYSTEMS COMMAND !N0002494C2105 !A!*!P00013 !19970530!19980330!001307495!001307495!149899957!N!43689!NEWPORT NEWS SHIPBUILDING AND !4101 WASHINGTON AVE !NEWPORT NEWS !VA!23607!56000!700!51!NEWPORT NEWS !NEWPORT NEWS (CITY) !VIRGINIA !0001!+000175971933!N!N!000000000000!J019!MAINT & REPAIR OF EQ/SHIPS-SML CRAFT-DOCKS !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !3731!3!*!*!A!B!A!*!D !Y!U!1!0

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 $193.5 million.

What is the period of performance?

Start: 1997-05-30. End: 2001-06-30.

What is the track record of Huntington Ingalls Inc. in fulfilling similar naval maintenance contracts?

Huntington Ingalls Industries (HII), the parent company of Newport News Shipbuilding, has a long and extensive history of supporting the U.S. Navy, particularly with aircraft carrier construction and maintenance. They are the sole builder of nuclear-powered aircraft carriers and have been involved in numerous maintenance, overhaul, and modernization programs for these complex vessels. Their track record generally indicates a high level of technical capability and experience in handling these critical, long-term contracts. However, like any large defense contractor, they have also faced scrutiny over cost and schedule performance on specific projects, underscoring the need for robust government oversight.

How does the awarded amount compare to similar contracts for aircraft carrier maintenance?

Direct comparison of this $193.5 million award is difficult without knowing the specific scope of work (e.g., routine maintenance vs. major overhaul, specific systems addressed) and the duration it covered. Aircraft carrier maintenance is exceptionally complex and costly due to the nuclear propulsion systems and advanced technology involved. Contracts can range from tens of millions for routine work to billions for major refuelings and modernization programs. Given this contract's duration of approximately four years and its award in the late 1990s, the $193.5 million figure likely represents a significant but not necessarily outlier amount for a substantial maintenance period, especially considering it was a sole-source award.

What are the primary risks associated with this type of sole-source maintenance contract?

The primary risks associated with this sole-source contract are related to cost and performance. Without competition, there's a reduced incentive for the contractor to minimize costs, potentially leading to higher prices than a competed contract might yield. The government relies heavily on its ability to negotiate effectively and monitor the contractor's performance closely. Risks also include potential schedule delays and the possibility that the contractor may not have the same urgency to innovate or improve efficiency as they might under competitive pressure. Ensuring adequate government oversight and robust contract administration is crucial to mitigate these risks.

How effective was the Cost Plus Fixed Fee (CPFF) contract structure in managing costs for this program?

The effectiveness of a CPFF contract structure in managing costs is highly dependent on the government's oversight and the contractor's cost control measures. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. While this structure allows for flexibility in scope changes and is suitable for research and development or when costs are uncertain, it can incentivize contractors to incur higher costs, as their profit (the fixed fee) remains constant. For a maintenance contract, effective management requires detailed cost tracking, audits, and negotiation to ensure that costs are reasonable and allocable. Without detailed performance data post-award, it's challenging to definitively state its effectiveness in this specific instance, but the structure itself carries inherent risks of cost escalation if not managed diligently.

What were the historical spending patterns for ship maintenance and repair around the time this contract was awarded?

In the late 1990s, federal spending on defense, including ship maintenance and repair, was substantial, though potentially subject to post-Cold War budget adjustments. The Department of the Navy consistently represents a significant portion of the Department of Defense budget. Spending on maintenance and repair for major assets like aircraft carriers is a recurring and critical requirement. Historical data would show a consistent allocation of billions of dollars annually towards maintaining the fleet's readiness. Contracts like this one, even if sole-source, reflect the ongoing necessity and cost associated with preserving these high-value, long-lifecycle assets within the broader defense spending landscape.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline