Navy awards $28.1M contract for shipbuilding and repair to Huntington Ingalls Inc

Contract Overview

Contract Amount: $28,165,724 ($28.2M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2020-05-27

End Date: 2022-12-31

Contract Duration: 948 days

Daily Burn Rate: $29.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FSST OPN FUNDED PRICED SLIN

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $28.2 million to HUNTINGTON INGALLS INC for work described as: FSST OPN FUNDED PRICED SLIN Key points: 1. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. Significant duration of 948 days suggests a substantial and ongoing need. 3. Cost-plus-fixed-fee structure may incentivize cost overruns. 4. The contract falls under the Ship Building and Repairing NAICS code, a critical defense sector. 5. Awarded by the Department of the Navy, indicating a focus on naval readiness. 6. The contract value is substantial, reflecting the complexity of shipbuilding and repair.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the services rendered. However, the cost-plus-fixed-fee (CPFF) pricing structure, while common in complex shipbuilding, carries inherent risks of cost escalation. Comparing it to similar sole-source contracts for specialized naval vessels or repair services would be necessary for a more precise assessment of value for money. The fixed fee component provides some cost control, but the variable cost component requires careful monitoring.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from a range of proposals and potentially lower prices that could arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not achieve the most favorable pricing achievable through open competition.

Public Impact

The primary beneficiary is the Department of the Navy, which receives essential shipbuilding and repair services. This contract supports the maintenance and readiness of naval assets. The services are likely performed in Virginia, where the contractor is located. It sustains jobs within the shipbuilding and repair industry, particularly at Huntington Ingalls Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Cost-plus-fixed-fee contract type can lead to cost overruns if not managed tightly.
Lack of detailed performance metrics in the provided data makes assessing efficiency difficult.

Positive Signals

Award to a large, established defense contractor suggests capability and experience.
Contract duration indicates a long-term need and commitment to naval assets.
The contract supports critical defense infrastructure and readiness.

Sector Analysis

The shipbuilding and repair sector is a vital component of the defense industrial base, characterized by high barriers to entry, significant capital investment, and specialized labor requirements. This contract falls within the broader defense sector, specifically supporting naval fleet maintenance and construction. Comparable spending benchmarks would involve analyzing other large-scale naval vessel construction or repair contracts, which often run into hundreds of millions or billions of dollars.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, it is unlikely to have direct subcontracting opportunities specifically mandated for small businesses within the contract terms, though the prime contractor may engage small businesses in their supply chain. The impact on the small business ecosystem is minimal in terms of direct set-asides for this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee (CPFF) contract, including adherence to cost ceilings and delivery schedules. Transparency is limited due to the sole-source nature and the proprietary aspects of shipbuilding, but contract awards are generally reported in federal databases.

Related Government Programs

Naval Ship Building
Ship Repair Services
Defense Procurement
Naval Fleet Modernization
Military Sealift Command Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns
Limited price competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.2 million to HUNTINGTON INGALLS INC. FSST OPN FUNDED PRICED SLIN

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 $28.2 million.

What is the period of performance?

Start: 2020-05-27. End: 2022-12-31.

What is the historical spending pattern for shipbuilding and repair contracts awarded by the Department of the Navy to Huntington Ingalls Inc. over the past five years?

Analyzing historical spending patterns for shipbuilding and repair contracts awarded by the Department of the Navy to Huntington Ingalls Inc. over the past five years reveals a consistent and substantial allocation of funds. Huntington Ingalls, as a primary builder of naval vessels, typically secures multi-year, high-value contracts for aircraft carriers, submarines, and other major surface combatants. Spending in this category often fluctuates based on the defense budget, shipbuilding plans, and the lifecycle of naval assets requiring major overhauls or new construction. For instance, contracts for new carrier construction can alone amount to billions of dollars. The $28.1 million awarded in this specific instance appears to be for a more defined scope, possibly a specific repair, modernization, or a component of a larger program, rather than a full vessel construction. Detailed analysis would require accessing contract databases like FPDS-NG or USASpending.gov to aggregate awards by fiscal year, contract type, and specific vessel class or repair type.

How does the Cost Plus Fixed Fee (CPFF) pricing structure for this contract compare to other shipbuilding and repair contracts awarded by the Navy?

The Cost Plus Fixed Fee (CPFF) pricing structure is a common choice for complex, high-risk, and long-duration projects like shipbuilding and repair, where the total cost is difficult to estimate accurately upfront. In a CPFF contract, the contractor is reimbursed for allowable costs incurred, plus a fixed fee representing profit. This structure aims to provide flexibility while offering some cost control through the fixed fee. Compared to other shipbuilding contracts, CPFF is prevalent, especially for new construction or major overhauls where design changes or unforeseen technical challenges are likely. Other contract types, such as Firm-Fixed-Price (FFP), might be used for more standardized repairs or components with well-defined scopes, offering greater price certainty but potentially higher initial bids to account for contractor risk. Incentive fee contracts (CPIF) are also used to motivate performance. The Navy's choice of CPFF for this $28.1 million award suggests the perceived complexity and uncertainty associated with the specific shipbuilding or repair task.

What are the specific risks associated with a sole-source award for shipbuilding and repair services, and how are they mitigated?

Sole-source awards in shipbuilding and repair carry inherent risks, primarily related to price and potential lack of innovation. Without competition, the government may pay a premium, as the contractor faces less pressure to offer the most competitive pricing. There's also a risk that the contractor may become complacent or less efficient due to the absence of competitive threats. Mitigation strategies employed by the government include rigorous negotiation of contract terms, detailed cost analysis, and robust oversight. For CPFF contracts, this involves scrutinizing the contractor's proposed costs, negotiating a fair fixed fee, and implementing stringent monitoring of actual costs incurred. The government may also conduct market research to ensure no other sources truly exist or to identify potential future competitors. Furthermore, strong contract administration and performance management are crucial to ensure the contractor delivers quality services within agreed-upon parameters, even without direct price competition.

What is the track record of Huntington Ingalls Inc. in delivering complex shipbuilding and repair projects for the Department of the Navy?

Huntington Ingalls Industries (HII), through its Newport News Shipbuilding and Ingalls Shipbuilding divisions, has a long and extensive track record of delivering complex shipbuilding and repair projects for the Department of the Navy. They are the sole builder of nuclear-powered aircraft carriers and a major builder of amphibious assault ships, destroyers, and submarines. Their experience spans decades and encompasses the construction of some of the Navy's most technologically advanced and largest vessels. HII is also involved in the maintenance, overhaul, and modernization of existing fleet assets. While specific performance metrics for individual contracts are often not publicly detailed, HII's continued selection for critical naval shipbuilding programs indicates a generally positive assessment of their capabilities, capacity, and past performance by the Navy. However, like any large defense contractor, they may have faced challenges or delays on specific complex projects, which are typically managed through contract modifications and performance reviews.

How does the $28.1 million contract value compare to the overall annual spending on shipbuilding and repair by the Department of the Navy?

The $28.1 million contract value represents a relatively small fraction of the Department of the Navy's overall annual spending on shipbuilding and repair. The Navy's shipbuilding and conversion budget alone typically runs into tens of billions of dollars annually, funding the construction of new vessels such as carriers, submarines, destroyers, and frigates. Ship repair and maintenance budgets are also substantial, often in the billions, covering routine maintenance, modernization, and major overhauls. Therefore, this $28.1 million award is likely for a specific, discrete task, such as the repair or upgrade of a particular ship or class of ships, or perhaps a component of a larger, multi-year program. It is not indicative of the total shipbuilding and repair expenditure but rather a single contractual action within that broader spending category.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002417R4320

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: $28,165,724

Exercised Options: $28,165,724

Current Obligation: $28,165,724

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0002419D4306

IDV Type: IDC

Timeline