Naval Sea Systems Command awarded $20.8M cost-plus-fixed-fee contract to Electric Boat Corporation for submarine development

Contract Overview

Contract Amount: $20,846,227 ($20.8M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2000-03-01

End Date: 2006-11-14

Contract Duration: 2,449 days

Daily Burn Rate: $8.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200006!1700!001642!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002400C2103 !A!*!* !20000301!20010930!963737366!963737366!001381284!N!96169!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW LONDON !CONN !0001!+000001685000!N!N!000000000000!AC34!RDTE/SHIPS-DEMO/VALID !A3 !SHIPS !2SDN!SUBMARINE NUCLEAR-SSN !3731!3!*!*!*!B!A!*!D !N!U!1!001!N!3A!Z!Y!Z!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $20.8 million to ELECTRIC BOAT CORPORATION for work described as: 200006!1700!001642!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002400C2103 !A!*!* !20000301!20010930!963737366!963737366!001381284!N!96169!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW… Key points: 1. Contract awarded for research, development, testing, and evaluation (RDTE) related to submarine development. 2. The contract utilized a 'not competed' procurement approach, indicating potential limitations in market exploration. 3. A cost-plus-fixed-fee pricing structure was used, which can incentivize contractors to manage costs effectively while allowing for profit. 4. The contract duration was approximately 6.7 years, suggesting a long-term developmental effort. 5. The primary contractor, Electric Boat Corporation, is a significant player in the submarine manufacturing sector. 6. The contract was awarded to a large business, with no indication of small business set-aside or subcontracting.

Value Assessment

Rating: fair

The contract value of $20.8 million for a nearly 7-year research and development effort on submarine technology appears to be within a reasonable range for specialized defense work. However, without specific benchmarks for similar submarine development projects or detailed cost breakdowns, a precise value-for-money assessment is challenging. The cost-plus-fixed-fee structure suggests that the government is willing to cover costs plus a predetermined profit, which can be appropriate for R&D where costs are uncertain, but it requires careful oversight to ensure efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'not competed' method, which typically implies a sole-source or limited competition scenario. This approach is often used when only one responsible source can fulfill the requirement, such as for unique capabilities or follow-on work. The lack of broader competition means that the government did not explore the full range of potential providers, which could potentially lead to less favorable pricing or innovation.

Taxpayer Impact: A sole-source award means taxpayers did not benefit from competitive pricing that could have potentially lowered the overall cost of this submarine development effort.

Public Impact

The primary beneficiaries of this contract are the U.S. Navy and its submarine fleet, through advancements in submarine technology. The services delivered include research, development, testing, and evaluation for submarine platforms. The geographic impact is primarily centered around Electric Boat Corporation's facilities in Groton, Connecticut, a hub for submarine development. This contract supports a highly specialized workforce within the defense industrial base, particularly in naval engineering and shipbuilding.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in higher costs than a fully competed contract.
The cost-plus-fixed-fee structure requires robust government oversight to prevent cost overruns.
Lack of transparency in the sole-source justification could obscure potential alternatives.
The long duration of the contract could lead to scope creep if not managed tightly.

Positive Signals

Award to a known, experienced contractor (Electric Boat Corporation) reduces technical risk.
The fixed-fee component provides some cost certainty for the government.
Focus on R&D for submarine platforms aligns with critical national security needs.
The contract supports a key U.S. defense industrial base capability.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on shipbuilding and naval technology. The market for submarine development and manufacturing is highly concentrated, with a few key players like Electric Boat Corporation dominating the landscape. Spending in this area is driven by national security requirements and long-term strategic planning for naval power projection. Comparable spending benchmarks would likely be found within other major naval platform development contracts, which are typically in the multi-million to multi-billion dollar range over their lifecycles.

Small Business Impact

This contract was awarded to a large business, Electric Boat Corporation. There is no indication of any small business set-aside provisions or subcontracting requirements associated with this award. Therefore, the direct impact on the small business ecosystem is likely minimal, as the prime contract is not designed to foster small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Naval Sea Systems Command (NAVSEA). As a cost-plus-fixed-fee contract, rigorous financial oversight and auditing are crucial to ensure that costs are reasonable and allocable. The Department of Defense's Inspector General may also conduct audits or investigations into contract performance and financial reporting. Transparency is facilitated through contract reporting mechanisms, but the sole-source nature limits public visibility into the competitive process.

Related Government Programs

Submarine Development Programs
Naval Ship Research and Development
Defense Research and Development Contracts
Strategic Weapons Systems Development

Risk Flags

Sole-source award limits price discovery.
Cost-plus-fixed-fee contracts require robust oversight to manage costs.
Long contract duration increases risk of scope creep.
Lack of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.8 million to ELECTRIC BOAT CORPORATION. 200006!1700!001642!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002400C2103 !A!*!* !20000301!20010930!963737366!963737366!001381284!N!96169!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW LONDON !CONN !0001!+000001685000!N!N!000000000000!AC34!RDTE/SHIPS-DEMO/VALID !A3 !SHIPS !2SDN!SUBMARINE NUCLEAR-SSN !3731!3!*!*!*!B!A!*!D !N!U!

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 $20.8 million.

What is the period of performance?

Start: 2000-03-01. End: 2006-11-14.

What is Electric Boat Corporation's track record with the Department of Defense, particularly on submarine development contracts?

Electric Boat Corporation has a long and established history as a primary builder of U.S. Navy submarines, including both attack and ballistic missile submarines. They have been involved in numerous major submarine programs, such as the Los Angeles-class (SSN), Seawolf-class (SSN), and Virginia-class (SSN) attack submarines, as well as the Ohio-class (SSBN) ballistic missile submarines. Their track record generally indicates a high level of technical expertise and capability in complex submarine design, construction, and modernization. However, like many large defense contractors, they have also faced scrutiny regarding cost performance and schedule adherence on certain programs. This specific contract, awarded in 2000 for R&D, likely represents a foundational effort for subsequent submarine platforms or technologies.

How does the $20.8 million contract value compare to other submarine R&D efforts by the Navy?

The $20.8 million contract value for a nearly 7-year submarine R&D effort appears relatively modest when viewed in the context of the overall lifecycle costs of submarine programs, which can run into billions of dollars. However, this specific contract likely represents a discrete research and development task, such as exploring a new technology, a specific subsystem, or a preliminary design study, rather than the full development and construction of a new submarine class. Benchmarking this specific value is difficult without knowing the precise scope of the R&D. Naval R&D contracts can range widely, from small, focused studies costing a few million dollars to larger, multi-year initiatives for advanced concepts that could exceed tens or hundreds of millions.

What are the primary risks associated with this cost-plus-fixed-fee contract for submarine development?

The primary risks associated with a cost-plus-fixed-fee (CPFF) contract, especially for research and development, revolve around cost control and contractor performance. For the government, the main risk is that the contractor may not exert maximum effort to control costs, as the government agrees to pay all allowable costs plus a fixed fee. This can lead to cost overruns if the initial cost estimates are inaccurate or if unforeseen technical challenges arise. Another risk is ensuring the contractor's technical progress aligns with the R&D objectives. For the contractor, the risk lies in accurately estimating the costs to perform the work and ensuring the fixed fee adequately compensates them for the effort and risk undertaken, particularly if unexpected technical hurdles arise that increase costs beyond initial projections without a corresponding increase in the fee.

How effective is the 'not competed' procurement method for specialized defense R&D like submarine technology?

The 'not competed' procurement method, often indicating a sole-source award, can be effective for highly specialized defense R&D when there is a demonstrable lack of alternative sources or when leveraging unique existing capabilities is paramount. In the case of submarine technology, Electric Boat Corporation possesses highly specialized knowledge, infrastructure, and workforce critical for such development. Using a sole-source approach can ensure continuity, leverage existing expertise, and potentially accelerate development by avoiding lengthy competitive processes. However, its effectiveness is contingent on the government's thorough justification that no other source can meet the requirement and that competition would not yield better value. Without competition, there's a risk of reduced price pressure and potentially less innovation compared to a broader solicitation.

What are the historical spending patterns for submarine development and acquisition by the Department of the Navy?

Historical spending patterns for submarine development and acquisition by the Department of the Navy show a consistent, significant investment driven by strategic national security requirements. Major submarine programs, such as the Virginia-class attack submarines and the Columbia-class ballistic missile submarines (which replaced the Ohio-class), represent multi-billion dollar investments over decades. Spending includes not only the construction of new platforms but also extensive research, development, testing, and evaluation (RDT&E) for new technologies, weapons systems, and platform upgrades. The Navy's budget typically allocates substantial portions to shipbuilding and conversion, with submarines being a critical, albeit smaller in number compared to surface ships, component of that spending. The trend has been towards increasingly complex and technologically advanced submarines, driving up R&D costs.

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

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

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: YES

Timeline