Navy awards $390.7M for supervisor of shipbuilding services, extending contract to 2023

Contract Overview

Contract Amount: $390,708,621 ($390.7M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 1999-10-01

End Date: 2023-05-17

Contract Duration: 8,629 days

Daily Burn Rate: $45.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 200007!1700!001023!BS793 !SUPERVISOR SHIPBUILDING CONVERSI!N0002495C2106 !A!*!A00237 !19981023!20021231!001307495!001307495!149899957!N!1LPJ0!NEWPORT NEWS SHIPBUILDING & DR!4101 WASHINGTON AVE !NEWPORT NEWS !VA!23607!56000!700!51!NEWPORT NEWS !NEWPORT NEWS (CITY) !VIRGINIA !0001!+000000065594!N!N!000000000000!1901!AIRCRAFT CARRIERS !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !3731!3!*!*!C!B!N!Z!D !U!L!1!001!N!1A!A!N!Z!* !* !N!C!*!A!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 $390.7 million to HUNTINGTON INGALLS INC for work described as: 200007!1700!001023!BS793 !SUPERVISOR SHIPBUILDING CONVERSI!N0002495C2106 !A!*!A00237 !19981023!20021231!001307495!001307495!149899957!N!1LPJ0!NEWPORT NEWS SHIPBUILDING & DR!4101 WASHINGTON AVE !NEWPORT NEWS !VA!23607!56000!700!51!NEWPORT NEWS !NEW… Key points: 1. Contract value of $390.7M suggests significant long-term support needs. 2. Sole-source award indicates potential lack of market competition or specialized requirements. 3. Long contract duration (1998-2023) may point to stable, ongoing program support. 4. Fixed Price Incentive contract type aims to balance cost control with performance incentives. 5. High contract value could indicate a critical role in naval operations or shipbuilding oversight. 6. Geographic concentration in Virginia suggests a strong regional industrial base for this service.

Value Assessment

Rating: fair

The contract value of $390.7 million over its extended period appears substantial, but without specific performance metrics or comparable contract data, a precise value-for-money assessment is challenging. The fixed-price incentive structure suggests an attempt to manage costs while encouraging contractor performance. However, the lack of competition raises questions about whether the government achieved the most favorable pricing possible. Benchmarking against similar supervisory or program management contracts for large naval platforms would be necessary for a more definitive evaluation.

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 among multiple potential offerors. This approach is typically justified when only one source is capable of meeting the government's needs, often due to unique capabilities, proprietary technology, or urgent requirements. The lack of competition means that price discovery through market forces was limited, potentially leading to higher costs for the government compared to a fully competed scenario.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure to drive down prices. This can result in a higher overall expenditure for the services rendered, as the government relies on negotiation rather than market forces to determine fair pricing.

Public Impact

The primary beneficiaries are the Department of the Navy and its shipbuilding programs, ensuring effective oversight and management. Services delivered likely include technical expertise, program management, quality assurance, and contract administration for naval vessels. The geographic impact is concentrated in Virginia, supporting the significant naval shipbuilding industrial base in the region. Workforce implications include the employment of skilled personnel in program management, engineering, and technical support roles within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Long contract duration without clear performance benchmarks makes ongoing value assessment difficult.
Lack of transparency in the sole-source justification process could obscure potential alternatives.
Fixed Price Incentive contracts can lead to cost overruns if not carefully managed and monitored.

Positive Signals

Contract provides essential, long-term support for critical naval shipbuilding programs.
Fixed Price Incentive structure aims to align contractor and government interests on cost and performance.
Contractor has a long-standing relationship, suggesting established expertise and reliability.
Concentration in Virginia supports a key regional defense industrial base.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically supporting naval shipbuilding and program management. The market for such specialized supervisory and program support services is often concentrated among a few large, experienced defense contractors. The value of this contract, at over $390 million, is significant and reflects the complexity and scale of managing major naval platforms like aircraft carriers. Comparable spending benchmarks would likely be found in other large-scale defense acquisition programs requiring extensive oversight.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the specialized nature of supervisory shipbuilding services and the sole-source award, it is unlikely that subcontracting opportunities for small businesses were a primary consideration or requirement within the contract's structure. The focus appears to be on securing specialized expertise from a single, established provider.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the Fixed Price Incentive contract terms, linking payment to performance and cost targets. Transparency may be limited due to the sole-source nature, but contract modifications, performance reports, and financial audits would serve as key oversight mechanisms. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Aircraft Carrier Construction
Naval Ship Acquisition
Defense Program Management
Shipbuilding Industrial Base Support
Naval Vessel Maintenance and Modernization

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may obscure current market value.
Potential for cost overruns in FPI contracts.
Limited public information on specific performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $390.7 million to HUNTINGTON INGALLS INC. 200007!1700!001023!BS793 !SUPERVISOR SHIPBUILDING CONVERSI!N0002495C2106 !A!*!A00237 !19981023!20021231!001307495!001307495!149899957!N!1LPJ0!NEWPORT NEWS SHIPBUILDING & DR!4101 WASHINGTON AVE !NEWPORT NEWS !VA!23607!56000!700!51!NEWPORT NEWS !NEWPORT NEWS (CITY) !VIRGINIA !0001!+000000065594!N!N!000000000000!1901!AIRCRAFT CARRIERS !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !3731!3!*!*!C!B!N!Z!D !U!L!

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 $390.7 million.

What is the period of performance?

Start: 1999-10-01. End: 2023-05-17.

What is the specific nature of the 'supervision' provided under this contract, and how is performance measured?

The contract data indicates the service is 'SUPERVISOR SHIPBUILDING CONVERSI'. This typically involves providing technical, administrative, and management expertise to oversee the construction, conversion, and repair of naval vessels. Performance is likely measured through adherence to contract specifications, delivery schedules, quality standards, and cost targets, as defined within the Fixed Price Incentive (FPI) contract. The FPI structure suggests that performance incentives are tied to achieving specific cost and schedule goals, with shared savings or overruns between the government and the contractor. Detailed performance metrics are usually outlined in the contract's Statement of Work (SOW) and are subject to government inspection and acceptance.

How does the $390.7 million contract value compare to similar supervisory shipbuilding contracts?

Directly comparing the $390.7 million value is challenging without access to a comprehensive database of all supervisory shipbuilding contracts, especially those awarded on a sole-source basis. However, given that this contract supports aircraft carriers (CVAN), which are among the most complex and expensive naval platforms, the value appears commensurate with the scale and criticality of the services required. Contracts for overseeing the construction of such capital-intensive assets often run into hundreds of millions of dollars over their lifecycle. To provide a more precise benchmark, one would need to analyze contracts for similar oversight roles on other major naval programs (e.g., submarines, amphibious assault ships) or compare it to the total cost of the vessels being supervised.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($390.7 million) include potential lack of price competition, leading to inflated costs for the government. There's also a risk of complacency from the contractor, as there is no immediate competitive threat to drive innovation or efficiency. Furthermore, if the sole-source justification is based on unique capabilities that degrade over time or are replicated by others, the government may be locked into a suboptimal arrangement. Ensuring robust oversight and negotiation becomes critical to mitigate these risks, focusing on verifying the necessity of the sole-source status and scrutinizing pricing and performance.

What is the historical spending pattern for this specific contract or service category?

The provided data indicates the contract was awarded in 1998 and extended until 2023, with a total value of $390.7 million. This suggests a consistent, long-term requirement for supervisory shipbuilding services. The annual spending would average approximately $15.6 million ($390.7M / 25 years), although actual spending likely varied year-to-year based on program milestones and funding allocations. Without access to historical obligation data for each fiscal year, it's difficult to detail specific spending patterns. However, the sustained duration and significant total value point to a stable and ongoing need for these services within the Navy's shipbuilding enterprise.

What is the contractor's track record with the government, particularly in similar contracts?

The contractor is identified as HUNTINGTON INGALLS INC (HII), a major player in the defense industry, particularly in shipbuilding. HII is the builder of U.S. Navy aircraft carriers and other major warships. Their track record with the government in this specific area is extensive, as they are the prime contractor for building these vessels. This contract, however, is for 'SUPERVISOR SHIPBUILDING CONVERSI,' which implies an oversight or support role, potentially distinct from their primary construction role, or perhaps an internal oversight function. Given HII's central role in naval shipbuilding, their track record in managing large, complex programs and adhering to government requirements is generally well-established, though specific performance details on this particular contract would require deeper analysis of performance reviews and award histories.

Does the contract's fixed-price incentive structure adequately incentivize cost savings and performance?

The Fixed Price Incentive (FPI) contract structure is designed to incentivize both cost control and performance. It establishes target costs, target profits, 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-negotiated formula. Conversely, if the final cost exceeds the target but remains below the ceiling, the contractor absorbs a larger portion of the overrun. If the cost exceeds the ceiling, the contractor is responsible for the entire excess. This structure aims to motivate the contractor to manage costs effectively while meeting performance specifications. The adequacy of the incentive depends heavily on the realism of the target cost, the fairness of the sharing formula, and the stringency of the performance requirements defined in the contract.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Contractor Details

Parent Company: Huntington Ingalls Industries, Inc

Address: 4101 WASHINGTON AVE BLDG 520/3, NEWPORT NEWS, VA, 23607

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

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline