Navy awards $146.7M contract for submarine services, highlighting sole-source nature and Electric Boat Corporation's role

Contract Overview

Contract Amount: $14,668,457 ($14.7M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2006-04-12

End Date: 2007-09-30

Contract Duration: 536 days

Daily Burn Rate: $27.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200608!429063!1700!N62789!SUPERVISOR SHIPBUILDING CONVERSI!N0002405G4417 !A!N! !N!L816 ! !20060412!20060929!963737366!963737366!001381284!N!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW LONDON !CONN !+000010000000!N!N!000000000000!1904!SUBMARINES !A3 !SHIPS !000 !NOT DISCERNABLE !336611!E! !4! !S! ! ! !99990909!B! ! !N!Z!D!U!U!1!001!N!1A!Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! !1700!N62789!0001! !

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $14.7 million to ELECTRIC BOAT CORPORATION for work described as: 200608!429063!1700!N62789!SUPERVISOR SHIPBUILDING CONVERSI!N0002405G4417 !A!N! !N!L816 ! !20060412!20060929!963737366!963737366!001381284!N!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW … Key points: 1. Contract awarded to Electric Boat Corporation, a sole-source provider for critical submarine services. 2. Significant portion of contract value allocated to specialized submarine maintenance and repair. 3. Contract duration of 536 days indicates a medium-term engagement for ongoing support. 4. The 'NOT COMPETED' status suggests a lack of market exploration for potential cost savings. 5. Geographic concentration in Groton, Connecticut, points to a localized industrial base for this service. 6. Cost Plus Fixed Fee contract type may incentivize cost overruns if not closely monitored.

Value Assessment

Rating: fair

The contract value of $146.7 million for submarine services appears substantial. However, without direct comparable contracts for similar sole-source services, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) pricing structure, while common for complex projects, carries inherent risks of cost escalation if not rigorously managed. Benchmarking against industry standards for submarine maintenance and repair would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Electric Boat Corporation was the only vendor considered. This approach is typically used when a specific contractor possesses unique capabilities or when urgency precludes a competitive process. The lack of competition means that the government did not explore alternative pricing or service models from other potential providers, potentially limiting price discovery.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure that could drive down costs. This necessitates strong government oversight to ensure fair pricing and prevent potential overspending.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the continued operational readiness of its submarine fleet. Services delivered include essential maintenance, repair, and potentially upgrades for submarines. The contract's impact is geographically concentrated in Groton, Connecticut, supporting local jobs and the regional economy. This contract supports a highly specialized workforce within the shipbuilding and repair sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee structure requires diligent oversight to prevent cost overruns.
Lack of competition may reduce incentives for innovation and efficiency improvements.
Concentration of work with a single contractor can create dependency and reduce flexibility.

Positive Signals

Award to Electric Boat Corporation leverages established expertise in submarine maintenance.
Contract ensures critical support for national defense assets.
Long-standing relationship may indicate efficient working dynamics and understanding of Navy requirements.

Sector Analysis

The shipbuilding and repair sector is a critical component of the U.S. industrial base, particularly for national defense. This contract falls within the broader defense sector, specifically supporting naval operations. The market for submarine construction and maintenance is highly specialized, with a limited number of qualified contractors. Spending in this area is often characterized by long-term, high-value contracts due to the complexity and strategic importance of naval vessels.

Small Business Impact

This contract does not appear to include specific small business set-asides. As a sole-source award to a large corporation, the direct impact on small businesses is likely minimal unless Electric Boat Corporation engages them as subcontractors. Further analysis would be needed to determine subcontracting opportunities and their adherence to small business utilization goals.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous financial oversight, performance monitoring, and compliance checks are crucial. The Inspector General's office for the Department of Defense would likely have jurisdiction for audits and investigations into potential fraud, waste, or abuse.

Related Government Programs

Naval Ship Maintenance Contracts
Submarine Fleet Support
Defense Industrial Base Contracts
Shipbuilding and Repair Services

Risk Flags

Sole-source award limits competitive pricing.
Cost Plus Fixed Fee structure requires diligent oversight.
Lack of competition may reduce incentive for innovation.
Potential for cost overruns due to CPFF structure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.7 million to ELECTRIC BOAT CORPORATION. 200608!429063!1700!N62789!SUPERVISOR SHIPBUILDING CONVERSI!N0002405G4417 !A!N! !N!L816 ! !20060412!20060929!963737366!963737366!001381284!N!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW LONDON !CONN !+000010000000!N!N!000000000000!1904!SUBMARINES !A3 !SHIPS !000 !NOT DISCERNABLE !336611!E! !4! !S! ! ! !999

Who is the contractor on this award?

The obligated recipient is ELECTRIC BOAT CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $14.7 million.

What is the period of performance?

Start: 2006-04-12. End: 2007-09-30.

What is Electric Boat Corporation's track record with similar sole-source Navy contracts?

Electric Boat Corporation (EBC) has a long and established history as the primary designer, builder, and maintainer of U.S. Navy submarines. Their track record with sole-source contracts is extensive, reflecting their unique position and expertise in this highly specialized field. Historically, EBC has been the recipient of numerous sole-source awards for various phases of submarine lifecycle support, including new construction, modernization, and repair. While this specialization ensures continuity and deep technical knowledge, it also means that competitive benchmarking is often difficult. Government oversight agencies, such as the Government Accountability Office (GAO) and the Department of Defense Inspector General, have reviewed EBC's performance and contract management in the past, often focusing on cost control and schedule adherence within these sole-source arrangements. Analyzing past performance reports and audit findings related to EBC's sole-source work would provide further insight into their efficiency and cost-effectiveness.

How does the $146.7 million value compare to historical spending on submarine services?

The $146.7 million contract value represents a significant investment in submarine services. To contextualize this figure, it's essential to compare it with historical spending patterns for similar submarine maintenance, repair, and overhaul (MRO) contracts awarded by the Navy. The Navy's submarine fleet requires continuous upkeep, and contracts for these services can range from tens of millions to hundreds of millions of dollars, depending on the scope, duration, and complexity of the work. For instance, major overhauls or modernization programs for specific submarine classes (e.g., Virginia-class, Ohio-class) often involve multi-year contracts with substantial funding. This particular contract, with a duration of approximately 1.7 years (536 days), appears to be for ongoing operational support or a specific maintenance cycle rather than a full overhaul or new construction. Therefore, comparing it to other delivery orders or service contracts for routine maintenance and repair, rather than large-scale modernization projects, would provide a more accurate benchmark.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for submarine services?

A sole-source, Cost Plus Fixed Fee (CPFF) contract for submarine services presents several key risks. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved in a competitive bidding environment. The government relies heavily on the contractor's cost proposals and the contracting officer's negotiation skills. Secondly, the CPFF structure, while providing flexibility for evolving requirements, shifts much of the cost risk to the government. The contractor is reimbursed for allowable costs plus a predetermined fixed fee, creating a potential incentive to incur more costs, as their profit (the fixed fee) remains constant regardless of the final cost. Effective risk mitigation requires robust government oversight, including detailed cost analysis, thorough audits of incurred costs, strict adherence to contract terms, and proactive management of contract modifications to prevent scope creep and uncontrolled cost increases. Without vigilant management, CPFF contracts can exceed initial budget estimates.

How does the 'NOT COMPETED' status impact the government's ability to ensure optimal value?

The 'NOT COMPETED' status signifies that the contract was awarded without a full and open competition. This typically occurs under specific justifications, such as when only one responsible source can satisfy the agency's needs, or in cases of urgent and compelling circumstances. While such justifications exist, the absence of competition inherently limits the government's ability to ensure optimal value. Competitive processes allow the government to solicit proposals from multiple vendors, fostering price discovery, encouraging innovation, and driving efficiency. When competition is foregone, the government must rely more heavily on its internal expertise to negotiate fair and reasonable prices, assess contractor capabilities, and monitor performance. This increases the importance of robust pre-award market research (even if it leads to a sole-source justification) and stringent post-award oversight to mitigate the risks associated with a lack of market validation.

What are the implications of the contract's duration (536 days) for program stability and cost?

A contract duration of 536 days, approximately 1 year and 5 months, suggests a medium-term engagement for specific submarine services. This duration can offer a degree of stability for both the contractor and the Navy, allowing for focused execution of planned tasks without the immediate uncertainty of frequent re-competition. For the contractor, it provides a predictable revenue stream and allows for resource planning. For the Navy, it ensures continuity of essential services. However, a longer duration, especially under a CPFF structure, also extends the period during which cost overruns can occur if not managed effectively. It necessitates sustained oversight throughout the contract period. If the services are highly specialized and critical, this duration might be appropriate. If the services could potentially be performed more efficiently or at a lower cost through shorter, more frequent contracts or by introducing competition sooner, then the longer duration might represent a missed opportunity for cost savings or performance improvements.

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: General Dynamics Corp (UEI: 001381284)

Address: 75 EASTERN POINT RD, GROTON, CT, 06340

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $14,668,457

Exercised Options: $14,668,457

Current Obligation: $14,668,457

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0002405G4417

IDV Type: IDC

Timeline