Navy awards $31.4M contract for CVN69 FY21 PIA Execution to Huntington Ingalls Inc

Contract Overview

Contract Amount: $31,382,860 ($31.4M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2021-08-25

End Date: 2024-05-31

Contract Duration: 1,010 days

Daily Burn Rate: $31.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CVN69 FY21 PIA EXECUTION

Place of Performance

Location: PORTSMOUTH, PORTSMOUTH CITY County, VIRGINIA, 23709

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $31.4 million to HUNTINGTON INGALLS INC for work described as: CVN69 FY21 PIA EXECUTION Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award raises concerns about price discovery and potential lack of competitive pressure. 3. Long contract duration (1010 days) may increase exposure to market fluctuations and scope creep. 4. The contract is for a specific fiscal year's program execution, suggesting it's part of a larger, ongoing effort. 5. Awarded by the Department of the Navy, a major defense spender with complex procurement needs. 6. The contractor, Huntington Ingalls Inc., is a significant player in the shipbuilding and repair industry.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without detailed cost breakdowns and comparisons to similar program execution contracts. The cost-plus-fixed-fee structure inherently carries more risk for the government compared to fixed-price contracts, as costs can escalate. However, for complex, specialized work like naval vessel program execution, this structure might be necessary to incentivize contractor performance and manage unforeseen technical challenges. Further analysis would require access to detailed cost reports and comparisons with other CVN program execution contracts.

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 vendors. Sole-source awards are typically justified when only one vendor possesses the necessary capabilities, technology, or when urgency precludes a competitive process. The lack of competition means the government did not benefit from potential price reductions or innovative solutions that might have emerged from a bidding process. This can lead to higher costs for taxpayers.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price and value, potentially increasing the financial burden on taxpayers due to the absence of competitive negotiation.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the continued execution of programs related to the USS Dwight D. Eisenhower (CVN69). Services delivered include program execution support, likely encompassing project management, engineering, logistics, and technical services. The geographic impact is primarily centered around the contractor's facilities and Navy operational bases, likely in Virginia. Workforce implications include employment for skilled engineers, technicians, project managers, and support staff at Huntington Ingalls Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs.
Cost-plus-fixed-fee contract structure carries inherent risk of cost escalation for the government.
Long contract duration increases exposure to potential scope changes and market volatility.
Lack of transparency on specific program execution details makes independent value assessment difficult.

Positive Signals

Award to a known, experienced contractor (Huntington Ingalls Inc.) in the naval shipbuilding sector.
Contract supports critical Navy fleet readiness and program execution.
Fixed fee component provides some level of cost certainty for contractor profit.

Sector Analysis

The shipbuilding and repair industry is a critical component of the defense industrial base, characterized by high barriers to entry, significant capital investment, and long production cycles. This contract falls within the naval shipbuilding and repair sub-sector, which is dominated by a few large prime contractors. The market size is substantial, driven by government defense spending. Comparable spending benchmarks would involve analyzing other contracts for aircraft carrier program execution and maintenance, which are typically multi-million dollar, long-term agreements.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the nature of the work and the sole-source award to a large prime contractor, the direct impact on small businesses is likely limited. However, Huntington Ingalls Inc. may engage small businesses as subcontractors for specialized services or supplies, contributing indirectly to the small business ecosystem. Further investigation into subcontracting plans would be needed to fully assess the impact.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the cost-plus-fixed-fee structure, requiring the contractor to justify costs and achieve performance milestones. Transparency is limited due to the sole-source nature and the proprietary details of program execution. The Inspector General for the Department of Defense may have jurisdiction for audits and investigations into fraud, waste, or abuse.

Related Government Programs

Naval Ship Building and Repair Contracts
Aircraft Carrier Maintenance and Modernization Programs
Defense Program Execution Support
Department of the Navy Procurement

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.4 million to HUNTINGTON INGALLS INC. CVN69 FY21 PIA EXECUTION

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 $31.4 million.

What is the period of performance?

Start: 2021-08-25. End: 2024-05-31.

What is the specific scope of 'PIA Execution' for the CVN69?

PIA Execution, likely standing for Program Integration and Activation or a similar designation, refers to the comprehensive set of activities required to manage, coordinate, and execute specific phases or tasks within the lifecycle of the USS Dwight D. Eisenhower (CVN69). This could encompass a range of services such as detailed planning, engineering support, logistical coordination, technical oversight, risk management, and ensuring compliance with Navy requirements for a particular program or upgrade. The exact scope would be detailed in the contract's Statement of Work (SOW), which is not publicly available in this data snippet. Without the SOW, it's difficult to ascertain the precise deliverables and objectives beyond general program execution.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for this type of work?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used for research and development or complex services where the scope is not well-defined or subject to change. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set upfront, and cost savings benefit the contractor while cost overruns are their responsibility. For complex naval program execution, CPFF can incentivize the contractor to perform the work diligently while allowing flexibility to adapt to unforeseen technical challenges. However, it shifts more cost risk to the government compared to fixed-price contracts, as the final cost is not known until completion. Other contract types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) offer more performance-based incentives.

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

Sole-source awards, by definition, eliminate competition, which is a primary mechanism for ensuring fair and reasonable pricing. The key risks include: 1. Inflated Pricing: Without competitive bids, the contractor may not feel pressured to offer the lowest possible price, potentially leading to higher costs for the government. 2. Reduced Innovation: The absence of multiple bidders can stifle innovation, as there's less incentive for contractors to propose novel or more efficient approaches. 3. Lack of Transparency: It can be harder to scrutinize the justification for the award and the pricing structure when there's no competitive benchmark. 4. Contractor Dependence: It can foster a reliance on a single provider, potentially weakening the government's negotiating position in future procurements. For a contract of this size ($31.4M), these risks are significant and warrant careful justification by the awarding agency.

What is Huntington Ingalls Inc.'s track record with the Department of the Navy?

Huntington Ingalls Industries (HII), parent company of Huntington Ingalls Inc., is a major U.S. defense contractor and the sole designer, builder, and refueler of U.S. Navy aircraft carriers and one of two providers of destroyers. They have an extensive and long-standing track record with the Department of the Navy, consistently securing large contracts for shipbuilding, maintenance, and modernization of naval vessels, including carriers and submarines. Their performance history with the Navy is generally considered strong, given their critical role in fleet readiness and their specialized capabilities. However, like any large contractor, specific contract performance can vary, and detailed reviews of past performance would be necessary for a comprehensive assessment.

How does this contract's duration (1010 days) impact its risk profile?

A contract duration of 1010 days (approximately 3 years and 4 months) is substantial for a program execution contract. This extended period increases the risk profile in several ways: 1. Cost Volatility: Over such a long timeframe, economic factors like inflation, material cost fluctuations, and labor rate changes can significantly impact the actual costs incurred, especially under a cost-reimbursable contract. 2. Scope Creep: The longer the contract, the higher the likelihood that requirements may evolve or expand, leading to scope creep if not managed rigorously. 3. Technological Obsolescence: Depending on the nature of the 'PIA Execution,' there's a risk that the technology or methods employed could become outdated before the contract concludes. 4. Contractor Performance Drift: Maintaining consistent high performance over several years can be challenging; performance may degrade without continuous oversight and management.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N4215821R0001

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,382,860

Exercised Options: $31,382,860

Current Obligation: $31,382,860

Actual Outlays: $26,632,348

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline