DoD's $52M Submarine R&D Contract with Electric Boat Corp. Faces Scrutiny for Value and Competition

Contract Overview

Contract Amount: $51,976,534 ($52.0M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2018-10-15

End Date: 2026-06-05

Contract Duration: 2,790 days

Daily Burn Rate: $18.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 99

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NEXT GENERATION SUBMARINE S&T RESEARCH

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $52.0 million to ELECTRIC BOAT CORPORATION for work described as: NEXT GENERATION SUBMARINE S&T RESEARCH Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending without strict cost controls. 2. Limited public data on comparable R&D contracts makes independent value assessment challenging. 3. The sole-source nature of this award raises concerns about potential price inflation and lack of competitive pressure. 4. Performance context is limited due to the early-stage R&D nature of the work. 5. This contract falls within the critical Defense sector, specifically focusing on advanced submarine technology. 6. The significant duration and value suggest a long-term strategic investment by the Navy. 7. The absence of small business set-asides or subcontracting requirements is noted.

Value Assessment

Rating: questionable

Assessing the value for money on this R&D contract is difficult without more granular cost breakdowns and benchmarks. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to cost overruns if not meticulously managed. Comparing this to similar, highly specialized submarine R&D efforts is challenging due to the proprietary nature of such work. The fixed fee component provides some incentive for the contractor to manage costs, but the primary risk of cost escalation lies with the government.

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 bidder considered. This approach is typically justified when a specific contractor possesses unique capabilities or intellectual property essential for the project. However, the lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to a higher price than if multiple firms had competed.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without alternative proposals, it's harder to ensure the government is receiving the best possible price for the research and development services.

Public Impact

The primary beneficiary is the U.S. Navy, which will receive advanced research and development for future submarine platforms. This contract supports the development of next-generation submarine technologies, crucial for national defense. The geographic impact is concentrated in Connecticut, where Electric Boat Corporation is headquartered and operates. The contract supports a highly specialized workforce in naval engineering and advanced research.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure and potential cost savings.
Cost-plus-fixed-fee structure carries inherent risk of cost overruns for the government.
Lack of transparency in R&D cost components hinders independent value assessment.
Long contract duration (nearly 8 years) increases exposure to potential scope changes or unforeseen challenges.

Positive Signals

Electric Boat Corporation is a long-standing, experienced contractor in submarine design and construction.
The contract addresses a critical national security need for advanced naval technology.
The fixed fee provides a defined profit margin, offering some cost predictability.
The definitive contract type suggests a clear statement of work and terms.

Sector Analysis

This contract operates within the Defense Industrial Base, specifically the segment focused on naval shipbuilding and advanced technology research. The market for submarine R&D is highly concentrated, with a limited number of firms possessing the requisite expertise and security clearances. Electric Boat Corporation is a dominant player in this niche. Comparable spending benchmarks are difficult to establish due to the specialized and often classified nature of submarine technology development.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions. Given the specialized nature of submarine R&D and Electric Boat's established role, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available within this specific R&D effort. The focus is on leveraging the prime contractor's unique capabilities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Inspector General for the Department of Defense would have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is limited due to the classified nature of some aspects of submarine technology and the sole-source award process. Regular program reviews and audits would be expected oversight mechanisms.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Submarine Technology Research Programs
Advanced Naval Platforms Development
Department of Defense Research and Development Spending

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Lack of public cost benchmarks
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.0 million to ELECTRIC BOAT CORPORATION. NEXT GENERATION SUBMARINE S&T RESEARCH

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 $52.0 million.

What is the period of performance?

Start: 2018-10-15. End: 2026-06-05.

What is Electric Boat Corporation's track record with similar sole-source R&D contracts for the Navy?

Electric Boat Corporation has a long and established history of sole-source contracts with the U.S. Navy, particularly for submarine design, construction, and modernization. Their deep expertise in this highly specialized field often leads to sole-source awards for critical R&D initiatives where they are the sole entity with the necessary knowledge, facilities, and security clearances. While specific details of past sole-source R&D contracts are often not publicly disclosed due to their sensitive nature, their consistent role as the primary designer and builder of U.S. submarines suggests a pattern of such awards. This historical reliance underscores the Navy's dependence on Electric Boat for advancing submarine technology, but also highlights the ongoing challenge of ensuring competitive pricing and innovation through alternative means.

How does the cost-plus-fixed-fee (CPFF) structure compare to other R&D contract types in terms of value for money?

The Cost-Plus-Fixed-Fee (CPFF) contract type is common for research and development (R&D) where the scope of work is not fully defined at the outset, making it difficult to establish a firm fixed price. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a fixed fee representing profit. This structure incentivizes the contractor to complete the work, as their profit is fixed regardless of the final cost. However, it places the cost risk primarily on the government, as the contractor has less incentive to control costs once the fee is set. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for evolving R&D but potentially less value for money if costs escalate significantly. Other R&D contract types like Cost Plus Incentive Fee (CPIF) can offer better value by adjusting the fee based on performance against cost targets, but CPFF is often chosen for its simplicity and ability to accommodate high uncertainty.

What are the primary risks associated with this sole-source R&D contract for taxpayers?

The primary risks for taxpayers associated with this sole-source R&D contract are twofold: inflated costs and lack of innovation. Without competitive bidding, there is a reduced incentive for the contractor, Electric Boat Corporation, to offer the most competitive price. The government may end up paying more than necessary for the research and development services. Furthermore, the absence of competition can stifle innovation. When multiple companies are vying for a contract, they are motivated to propose novel and cost-effective solutions. In a sole-source scenario, the single contractor may have less pressure to explore groundbreaking approaches, potentially leading to incremental rather than transformative advancements. The CPFF structure also means that cost overruns are borne by the government, increasing the financial exposure for taxpayers.

What is the strategic importance of 'NEXT GENERATION SUBMARINE S&T RESEARCH' to the Department of Defense?

The 'NEXT GENERATION SUBMARINE S&T RESEARCH' contract is of paramount strategic importance to the Department of Defense (DoD) and the U.S. Navy. Submarines represent a critical component of the U.S. nuclear triad and conventional deterrence, providing stealth, persistent presence, and significant offensive and defensive capabilities. Investing in next-generation technologies ensures that the U.S. maintains its qualitative edge in undersea warfare against potential adversaries. This research likely focuses on areas such as improved propulsion systems, advanced sonar and sensor technology, quieter hull designs, enhanced weapon systems, and potentially new materials or power sources. Maintaining technological superiority in submarines is vital for projecting power, gathering intelligence, and deterring aggression in a complex global security environment.

Are there any publicly available benchmarks for submarine R&D spending that can be used to assess this contract's value?

Publicly available benchmarks for submarine R&D spending are extremely limited, primarily due to the classified nature of much of this work and the highly specialized, concentrated market. Unlike more common goods or services, the development of cutting-edge submarine technology involves unique intellectual property, proprietary designs, and national security considerations that prevent open disclosure of cost data. While aggregate spending figures for naval R&D might be available within broader DoD budget documents, granular cost-per-research-hour or cost-per-technology-developed benchmarks specific to submarine programs are generally not published. This lack of transparency makes independent assessment of whether $51.9 million represents good value for money exceptionally challenging, relying heavily on internal Navy cost analyses and oversight.

What are the potential long-term implications of this contract on the submarine industrial base?

This contract has significant long-term implications for the submarine industrial base, reinforcing Electric Boat Corporation's dominant position. By awarding a substantial R&D contract on a sole-source basis, the Navy signals its continued reliance on Electric Boat for future submarine advancements. This can foster deep expertise and maintain critical skills within the company and its immediate supply chain. However, it also risks creating a dependency that could stifle competition from potential new entrants or alternative technology developers in the future. The long-term health of the industrial base often benefits from a degree of competition to drive innovation and efficiency. This award, while addressing immediate R&D needs, may perpetuate a market structure with limited competitive dynamics for future large-scale submarine programs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001418SB001

Offers Received: 99

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

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

Financial Breakdown

Contract Ceiling: $97,696,260

Exercised Options: $58,626,935

Current Obligation: $51,976,534

Subaward Activity

Number of Subawards: 31

Total Subaward Amount: $18,683,562

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline