Navy Awards $4.56 Billion Ship Building Contract to Huntington Ingalls Inc. in 1999
Contract Overview
Contract Amount: $4,563,665,299 ($4.6B)
Contractor: Huntington Ingalls Inc
Awarding Agency: Department of Defense
Start Date: 1999-11-03
End Date: 2023-05-17
Contract Duration: 8,596 days
Daily Burn Rate: $530.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Place of Performance
Location: NEWPORT NEWS, NEWPORT NEWS CITY County, VIRGINIA, 23607
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $4.56 billion to HUNTINGTON INGALLS INC for work described as: Key points: 1. The contract, awarded in 1999, has a significant value of over $4.5 billion. 2. This contract was not competed, raising questions about potential price discovery. 3. The long duration (8596 days) and Cost Plus Fixed Fee structure may present cost escalation risks. 4. The sector is Ship Building and Repairing, a critical area for national defense.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) contract type, especially with a long duration, can lead to cost overruns if not managed tightly. The lack of competition makes it difficult to benchmark pricing effectively against market alternatives.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The absence of competition for a contract of this magnitude likely results in a higher cost to taxpayers than if it had been competitively bid.
Public Impact
Significant taxpayer investment in naval shipbuilding. Impact on the defense industrial base and shipbuilding capacity. Long-term commitment to a single contractor for critical assets. Potential for cost overruns impacting future defense budgets.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost Plus Fixed Fee contract type
- Long contract duration
- High contract value
Positive Signals
- Supports critical defense capability
- Long-term relationship with a key defense contractor
Sector Analysis
This contract falls within the Ship Building and Repairing sector, which is a cornerstone of national defense. Spending in this sector is typically high and involves complex, long-term projects with significant technological requirements.
Small Business Impact
There is no indication in the provided data whether small businesses were involved as subcontractors. Sole-source contracts often provide fewer opportunities for small business participation compared to competitive procurements.
Oversight & Accountability
The long duration and sole-source nature of this contract warrant robust oversight to ensure cost control and adherence to contract terms. Regular reviews of performance and expenditures are crucial.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition may have led to inflated prices.
- Cost Plus Fixed Fee structure with long duration poses risk of cost overruns.
- Potential for contractor lock-in and reduced innovation.
- Limited transparency due to sole-source nature.
- Aging assets may require significant sustainment costs.
- Contract awarded over two decades ago, potentially outdated requirements.
Tags
ship-building-and-repairing, department-of-defense, va, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $4.56 billion to HUNTINGTON INGALLS INC. See the official description on USAspending.
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 $4.56 billion.
What is the period of performance?
Start: 1999-11-03. End: 2023-05-17.
What was the justification for awarding this contract on a sole-source basis, and were there any attempts to introduce competition later in the contract lifecycle?
The justification for a sole-source award typically stems from unique capabilities, urgent needs, or the unavailability of alternative sources. Without further details, it's impossible to ascertain the specific reasons. Subsequent attempts to introduce competition would depend on the contract's structure and evolving defense requirements, but often, long-term sole-source contracts are difficult to break apart for competitive bidding.
How have cost overruns been managed under this Cost Plus Fixed Fee contract, given its long duration and the potential for scope creep?
Managing cost overruns in a CPFF contract requires stringent oversight, detailed cost tracking, and effective negotiation of fixed fees. The long duration increases the risk of unforeseen economic changes or technical challenges impacting costs. Regular audits and performance reviews by the Department of the Navy are essential to control expenditures and ensure the contractor is operating efficiently within the agreed-upon fee structure.
What is the current operational status and effectiveness of the ships or services procured under this contract, and do they meet the Navy's evolving strategic needs?
Assessing the current operational status and effectiveness requires access to performance metrics, maintenance records, and fleet readiness reports. Given the contract's start date in 1999 and end date in 2023, the procured assets have likely undergone significant service life. Evaluating their alignment with current strategic needs would involve comparing their capabilities against contemporary threats and naval doctrine.
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
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, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 1999-11-03
Current End Date: 2023-05-17
Potential End Date: 2023-05-17 00:00:00
Last Modified: 2026-01-14
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