DoD awards $49.3M for ship maintenance, with limited competition raising cost concerns

Contract Overview

Contract Amount: $49,331,639 ($49.3M)

Contractor: Huntington Ingalls Inc

Awarding Agency: Department of Defense

Start Date: 2020-11-26

End Date: 2022-03-01

Contract Duration: 460 days

Daily Burn Rate: $107.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY21 PIA PLANNING FUNDED BY TYCOM

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $49.3 million to HUNTINGTON INGALLS INC for work described as: FY21 PIA PLANNING FUNDED BY TYCOM Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs than fixed-price contracts. 2. Limited competition suggests potential for reduced price discovery and less favorable terms for the government. 3. The contract duration of 460 days indicates a significant maintenance or repair effort. 4. The specific nature of the work (PIA Planning) suggests specialized technical requirements. 5. The award was a delivery order under an existing contract, implying a pre-established relationship. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee structure warrants scrutiny, as it shifts cost risk to the government. Without detailed breakdowns of labor hours, material costs, and overhead, it's difficult to benchmark the value effectively against similar ship maintenance contracts. The absence of a fixed price makes direct comparison challenging, but the overall award amount suggests a substantial investment in maintaining naval assets.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not competed openly, but rather awarded as a delivery order under an existing contract. The specific details regarding the limited competition, such as the number of bidders considered or the justification for not pursuing full and open competition, are not provided. This limited competition may have restricted the government's ability to secure the most competitive pricing.

Taxpayer Impact: Limited competition can result in higher prices for taxpayers as the government may not benefit from the full range of market-driven cost reductions.

Public Impact

Naval operations in the Pacific region are supported through the maintenance of critical assets. The services delivered ensure the operational readiness of a key naval vessel. The geographic impact is primarily within the operational theater of the U.S. Navy's Pacific Fleet. The contract supports specialized technical labor within the shipbuilding and repair sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can incentivize cost overruns.
Limited competition may lead to suboptimal pricing for the government.
Lack of transparency on specific performance metrics makes assessing effectiveness difficult.

Positive Signals

Award supports critical naval readiness, a key government function.
Contract addresses a specific planning need for a significant naval asset.
Delivery order mechanism suggests an existing, potentially efficient, contracting vehicle.

Sector Analysis

This contract falls within the broader shipbuilding and repair sector, a critical component of national defense. The market is characterized by a limited number of highly specialized large contractors capable of undertaking complex naval maintenance and modernization projects. Spending in this sector is heavily influenced by defense budgets and geopolitical considerations. Comparable spending benchmarks would typically involve other large-scale naval vessel maintenance or upgrade contracts.

Small Business Impact

The contract data indicates that this was not a small business set-aside. Given the specialized nature of naval ship maintenance and repair, it is common for larger prime contractors to be awarded these types of contracts. There is no explicit information provided regarding subcontracting plans or opportunities for small businesses within this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The cost-plus-fixed-fee structure necessitates robust financial oversight to monitor expenditures and ensure compliance with the contract terms. Transparency regarding the specific planning activities and their outcomes would be subject to standard government reporting and auditing procedures.

Related Government Programs

Naval Ship Maintenance and Repair
Defense Procurement
Shipbuilding and Repair Services
Naval Vessel Readiness

Risk Flags

Cost-Plus-Fixed-Fee contract type
Limited competition
Lack of detailed performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.3 million to HUNTINGTON INGALLS INC. FY21 PIA PLANNING FUNDED BY TYCOM

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 $49.3 million.

What is the period of performance?

Start: 2020-11-26. End: 2022-03-01.

What is the specific nature of the 'PIA PLANNING' and how does it contribute to the operational readiness of the vessel?

PIA Planning likely refers to 'Program Information Assurance' or 'Platform Information Assurance' planning, which is crucial for ensuring the cybersecurity and data integrity of naval systems. This planning phase would involve assessing vulnerabilities, developing security protocols, and outlining strategies to protect sensitive information and operational technology aboard the vessel. Its contribution to operational readiness is indirect but vital, as robust cybersecurity prevents disruptions, protects critical data, and ensures the secure functioning of onboard systems, which are essential for mission success in modern naval operations.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar naval maintenance services?

The Cost-Plus-Fixed-Fee (CPFF) structure is often used when the scope of work is not precisely defined or when there is significant uncertainty in the costs involved, such as in research and development or complex repair scenarios. Unlike fixed-price contracts, where the contractor agrees to a set price regardless of actual costs, CPFF allows the contractor to recover all allowable costs plus a predetermined fixed fee. While this provides flexibility for the government in evolving situations, it shifts cost risk to the government and can incentivize higher spending compared to fixed-price contracts, which offer greater cost certainty and encourage contractor efficiency.

What are the potential risks associated with limited competition for a contract of this magnitude?

Limited competition for a contract of this magnitude, approximately $49.3 million, carries several risks. Primarily, it can lead to reduced price competition, potentially resulting in the government paying higher prices than if a broader range of bidders were involved. This can also limit innovation, as contractors may feel less pressure to offer novel solutions or efficiencies. Furthermore, a lack of robust competition can sometimes indicate barriers to entry for other qualified firms, potentially concentrating market power among a few large players and impacting long-term availability of services.

Can the value for money be assessed without knowing the specific deliverables or performance metrics?

Assessing the value for money for this contract is challenging without specific details on deliverables and performance metrics. The $49.3 million award represents the government's investment, but the 'value' is realized through the successful completion of the 'PIA Planning' and its contribution to the vessel's readiness and security. Without defined outputs, quality standards, or key performance indicators (KPIs), it's difficult to benchmark whether the cost incurred was commensurate with the achieved benefits. The cost-plus-fixed-fee nature further complicates this, as the focus is on cost recovery plus a fee, rather than a fixed outcome for a set price.

What is Huntington Ingalls Inc.'s track record with similar naval maintenance contracts?

Huntington Ingalls Industries (HII) is a major player in the defense sector, particularly in shipbuilding and complex naval services. They have a long history of performing maintenance, repair, and overhaul (MRO) services for a wide range of U.S. Navy vessels, including aircraft carriers, submarines, and surface combatants. Their track record typically involves large, complex contracts often awarded on a sole-source or limited-competition basis due to the specialized facilities and expertise required. While specific performance data for individual contracts is often proprietary, HII is generally recognized as a capable provider of these critical services, though like many large defense contractors, they may face scrutiny regarding cost efficiency and contract management on large, long-term projects.

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 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: $49,331,639

Exercised Options: $49,331,639

Current Obligation: $49,331,639

Actual Outlays: $31,829,394

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