Navy awards $144.6M contract for transport vessels, with a significant portion for supervisor shipbuilding

Contract Overview

Contract Amount: $67,207,493 ($67.2M)

Contractor: Huntington Ingalls Incorporated

Awarding Agency: Department of Defense

Start Date: 1996-12-05

End Date: 2016-12-15

Contract Duration: 7,315 days

Daily Burn Rate: $9.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 199712!1700!C363!BS124!SUPERVISOR SHIPBUILDING CONVERSI!N0002493C2205 !A!*!A00104 !19961205!20000430!144620747!144620747!144620747!N!1CC97!AVONDALE INDUSTRIES INC !5100 RIVER RD !WESTWEGO !LA!70094!55000!071!22!NEW ORLEANS !ORLEANS !LOUISIANA !0001!+000000084650!N!N!000000000000!1910!TRANSPORT VESSELS, PASSENGER AND TROOP !A3 !SHIPS !2SJS!MISCELLANEOUS-AG !3731!3!*!*!C!B!A!*!A !N!L!2!002!C!* !Z!N!A!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: WESTWEGO, JEFFERSON County, LOUISIANA, 70094

State: Louisiana Government Spending

Plain-Language Summary

Department of Defense obligated $67.2 million to HUNTINGTON INGALLS INCORPORATED for work described as: 199712!1700!C363!BS124!SUPERVISOR SHIPBUILDING CONVERSI!N0002493C2205 !A!*!A00104 !19961205!20000430!144620747!144620747!144620747!N!1CC97!AVONDALE INDUSTRIES INC !5100 RIVER RD !WESTWEGO !LA!70094!55000!071!22!NEW ORLEANS !ORLEAN… Key points: 1. Contract value of $144.6 million for transport vessels, including troop carriers. 2. Awarded by the Department of the Navy, indicating a focus on defense logistics. 3. The contract spans over 19 years, suggesting a long-term need or phased delivery. 4. Fixed Price Incentive contract type implies shared risk and reward between government and contractor. 5. The primary contractor, Avondale Industries Inc., has a substantial role in shipbuilding. 6. Geographic focus on Louisiana, a known hub for shipbuilding and maritime industries.

Value Assessment

Rating: fair

The contract value of $144.6 million over nearly 20 years for transport vessels appears reasonable given the duration and specialized nature of shipbuilding. However, without specific details on the number and type of vessels, a precise value-for-money assessment is challenging. Benchmarking against similar long-term naval shipbuilding contracts would be necessary for a more definitive evaluation of pricing and value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders had the opportunity to compete. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The presence of multiple bidders typically leads to a more robust selection process and potentially better terms.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down costs through market forces, ensuring that the government is not overpaying for essential services like shipbuilding.

Public Impact

Benefits the Department of the Navy by providing essential transport vessels for troops and potentially other cargo. Supports the maritime defense sector by engaging a key shipbuilding contractor. Impacts the workforce in Louisiana, a state with a strong shipbuilding industry, through job creation and sustainment. Contributes to national security by ensuring the availability of critical naval assets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (nearly 20 years) could lead to cost overruns if not managed effectively.
Fixed Price Incentive contracts can sometimes lead to cost growth if performance targets are not met or if scope creep occurs.
Reliance on a single primary contractor for such a long period may pose risks if the contractor faces financial or operational difficulties.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing and a robust selection process.
The contract type (Fixed Price Incentive) aims to align contractor and government interests for performance.
The contractor, Avondale Industries Inc., is likely experienced in large-scale shipbuilding, providing a degree of reliability.

Sector Analysis

This contract falls within the Defense sector, specifically naval shipbuilding. The market for large-scale naval vessels is highly specialized, with a limited number of major shipyards capable of undertaking such complex projects. Spending in this area is driven by national security requirements and fleet modernization programs. Comparable spending benchmarks would typically involve other major naval vessel construction contracts awarded by the U.S. Navy or similar international defense organizations.

Small Business Impact

While the data indicates this is a large contract awarded to a major entity (Avondale Industries Inc.), there is no explicit information regarding small business set-asides or subcontracting plans. Large defense contracts often include provisions for small business participation, but the extent of this contract's impact on the small business ecosystem is not detailed here. Further investigation into subcontracting requirements would be needed to assess this aspect.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the long duration and significant value, regular performance reviews, milestone tracking, and financial audits are expected. The Inspector General's office for the Department of Defense would likely have jurisdiction for investigating any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Naval Shipbuilding Programs
Defense Logistics Contracts
Military Sealift Command Vessels
Amphibious Assault Ships
Aviation Logistics Support Ships

Risk Flags

Long contract duration may increase risk of cost escalation.
Fixed Price Incentive contracts can lead to cost growth if not managed tightly.
Potential for schedule slippage over a multi-year, complex project.
Dependence on a single contractor for a critical capability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $67.2 million to HUNTINGTON INGALLS INCORPORATED. 199712!1700!C363!BS124!SUPERVISOR SHIPBUILDING CONVERSI!N0002493C2205 !A!*!A00104 !19961205!20000430!144620747!144620747!144620747!N!1CC97!AVONDALE INDUSTRIES INC !5100 RIVER RD !WESTWEGO !LA!70094!55000!071!22!NEW ORLEANS !ORLEANS !LOUISIANA !0001!+000000084650!N!N!000000000000!1910!TRANSPORT VESSELS, PASSENGER AND TROOP !A3 !SHIPS !2SJS!MISCELLANEOUS-AG !3731!3!*!*!C!B!A!*!A !N!L!2!0

Who is the contractor on this award?

The obligated recipient is HUNTINGTON INGALLS INCORPORATED.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $67.2 million.

What is the period of performance?

Start: 1996-12-05. End: 2016-12-15.

What specific types of transport vessels are being procured under this contract, and what are their intended roles?

The contract specifies 'TRANSPORT VESSELS, PASSENGER AND TROOP' under the Product Service Code (PSC) 22. This indicates the vessels are designed for moving personnel, likely military personnel, and potentially associated equipment or supplies. Their intended roles could range from troop transport in amphibious operations to logistical support for naval deployments. Without more detailed contract line item numbers or specifications, the exact configuration and mission capabilities of these vessels remain unspecified in the provided data. Further details would be found in the contract's Statement of Work (SOW) or technical exhibits.

How does the contract's duration of nearly 20 years compare to typical shipbuilding contracts for similar vessels?

A contract duration of nearly 20 years (from award in 1996 to estimated completion in 2016, though the data shows an initial award date of 1996-12-05 and an end date of 2000-04-30, with a total duration of 7315 days, which is approximately 20 years) for shipbuilding is exceptionally long. Typically, the construction phase for individual vessels might take several years, but a contract encompassing design, construction, and potentially long-term support or upgrades over two decades is unusual. This extended period might suggest a block buy, a phased delivery schedule over many years, or a contract that includes significant post-delivery support, modernization, or sustainment elements. Standard shipbuilding contracts for individual vessels are often shorter, focusing on the construction and delivery timeline.

What are the key performance metrics and incentives within this Fixed Price Incentive (FPI) contract?

In a Fixed Price Incentive (FPI) contract, the final price is determined by the relationship between the final negotiated cost and the target cost. The government and contractor agree on a target cost, a target profit, and a price ceiling. If the final cost is below the target cost, both parties share in the savings according to a negotiated formula. Conversely, if the final cost exceeds the target cost, the contractor absorbs a portion of the overrun, but the government's liability is capped at the price ceiling. Key performance metrics would likely relate to vessel construction milestones, quality standards, delivery schedules, and potentially operational performance characteristics. The incentive structure aims to motivate the contractor to control costs while meeting performance specifications.

What is the historical spending pattern for similar transport vessels by the Department of the Navy?

Historical spending patterns for similar transport vessels by the Department of the Navy would typically involve analyzing past contracts for troop transports, cargo ships, and other logistical support vessels. This would include examining contract values, quantities procured, and the types of contractors involved. The Navy has a consistent need for such vessels to support global operations, fleet readiness, and power projection. Analyzing historical data would reveal trends in procurement strategies, technological advancements in vessel design, and fluctuations in shipbuilding costs over time. This specific contract's value of $144.6 million for potentially multiple vessels over a long period needs to be contextualized against the Navy's overall shipbuilding budget and its specific requirements for maritime transport capabilities.

What is the track record of Avondale Industries Inc. in fulfilling large naval shipbuilding contracts?

Avondale Industries Inc., now part of Huntington Ingalls Industries, has a long and significant history in U.S. naval shipbuilding. They have been involved in the construction of a wide array of naval vessels, including aircraft carriers, destroyers, cruisers, amphibious assault ships, and support vessels. Their track record includes delivering complex, large-scale projects for the Navy. However, like any major industrial undertaking, large shipbuilding projects can face challenges related to cost, schedule, and technical issues. A comprehensive assessment of their track record would involve reviewing past contract performance, including any instances of cost overruns, schedule delays, or disputes, alongside their successful deliveries and contributions to the fleet.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Huntington Ingalls Industries, Inc (UEI: 967362331)

Address: 1000 ACCESS RD, PASCAGOULA, MS, 39567

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline