Naval Sea Systems Command awards $323M contract to Electric Boat Corp. for submarine nuclear support

Contract Overview

Contract Amount: $32,326,115 ($32.3M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2001-11-09

End Date: 2014-12-19

Contract Duration: 4,788 days

Daily Burn Rate: $6.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200212!026001!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002402C2206 !A!N! !N! !20011109!20020930!963737366!963737366!001381284!N!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW LONDON !CONN !+000007605000!N!N!000000000000!B546!SECURITY STUDIES (PHYSICAL & PERSONAL) !A3 !SHIPS !2SDN!SUBMARINE NUCLEAR-SSN !336611!E! !1! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!2A!A!N!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001!

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340, UNITED STATES OF AMERICA

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $32.3 million to ELECTRIC BOAT CORPORATION for work described as: 200212!026001!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002402C2206 !A!N! !N! !20011109!20020930!963737366!963737366!001381284!N!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW LONDON !CONN !+000007605000!N!N!000000000000!B546!SECURITY STU… Key points: 1. Contract awarded for submarine nuclear support services, indicating a critical need for specialized maintenance and technical expertise. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and lack of competitive pressure. 3. Long contract duration of over 10 years suggests a sustained requirement for these services, impacting long-term budget planning. 4. The significant dollar value highlights the high cost associated with maintaining advanced naval assets like nuclear submarines. 5. Focus on submarine nuclear systems points to a highly specialized sector within defense contracting, requiring unique capabilities. 6. The contractor, Electric Boat Corporation, is a known entity in submarine construction and maintenance, suggesting established expertise.

Value Assessment

Rating: fair

The contract value of $323 million over approximately 10 years for submarine nuclear support is substantial. Without specific benchmarks for comparable sole-source contracts for similar services, a direct value-for-money assessment is challenging. However, the lack of competition inherently limits the opportunity for price discovery and potentially leads to higher costs than a competed contract might yield. The firm-fixed-price structure provides some cost certainty for the government, but the overall pricing should be benchmarked against historical data for Electric Boat Corporation's services and similar sole-source procurements to ensure reasonableness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Electric Boat Corporation, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or when only one responsible source is available. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. The justification for this sole-source award would need to be thoroughly reviewed to ensure it was appropriate and that all reasonable efforts were made to consider other potential sources.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without competition, there is less pressure on the contractor to offer the most cost-effective solution, potentially leading to higher overall spending for these critical services.

Public Impact

The primary beneficiaries are the U.S. Navy's submarine fleet, ensuring operational readiness and safety of nuclear-powered submarines. Services delivered include essential support for nuclear submarine systems, likely encompassing maintenance, repair, technical assistance, and potentially upgrades. The geographic impact is centered around naval facilities and shipyards where submarines are based and serviced, primarily Groton, CT. This contract supports a highly specialized workforce of engineers, technicians, and skilled labor involved in nuclear submarine operations and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long contract duration may not adapt well to evolving technological needs or cost-saving opportunities.
High reliance on a single contractor for critical nuclear support creates potential supply chain and operational risks.
Lack of transparency in pricing due to sole-source nature makes independent value assessment difficult.

Positive Signals

Contract awarded to a known, experienced provider (Electric Boat Corp.) with a track record in submarine support.
Firm-fixed-price contract provides cost certainty for the government over the contract period.
Focus on critical nuclear systems ensures specialized expertise is applied to vital national security assets.
Long-term nature of the contract suggests a stable, predictable requirement for essential services.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on shipbuilding and repair, with a specialization in nuclear submarine maintenance. The market for nuclear submarine support is highly concentrated, with a limited number of companies possessing the necessary security clearances, technical expertise, and infrastructure. Electric Boat Corporation is a dominant player in this niche. Comparable spending benchmarks are difficult to establish due to the unique nature of nuclear submarine support and the prevalence of sole-source contracts in this area.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions. Given the specialized nature of nuclear submarine support and the sole-source award to Electric Boat Corporation, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available within the scope of this primary contract. The primary focus is on the core capabilities of the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Naval Sea Systems Command (NAVSEA). Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified services. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the Department of Defense Inspector General could provide additional oversight. Reporting requirements within the contract would also ensure a degree of accountability.

Related Government Programs

Naval Ship Maintenance Contracts
Submarine Maintenance and Repair
Nuclear Propulsion Support Services
Defense Shipbuilding and Repair Contracts
Department of the Navy Procurement

Risk Flags

Sole Source Justification
Potential for Cost Overruns
Contractor Dependency Risk
Limited Market Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.3 million to ELECTRIC BOAT CORPORATION. 200212!026001!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002402C2206 !A!N! !N! !20011109!20020930!963737366!963737366!001381284!N!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW LONDON !CONN !+000007605000!N!N!000000000000!B546!SECURITY STUDIES (PHYSICAL & PERSONAL) !A3 !SHIPS !2SDN!SUBMARINE NUCLEAR-SSN !336611!E! !1! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!2A!A!N!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001!

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 $32.3 million.

What is the period of performance?

Start: 2001-11-09. End: 2014-12-19.

What is Electric Boat Corporation's track record with the Naval Sea Systems Command and similar contracts?

Electric Boat Corporation (EBC) has a long-standing and extensive track record with the Naval Sea Systems Command (NAVSEA) and the U.S. Navy, primarily as the designer and builder of U.S. Navy submarines. EBC has historically been awarded contracts for submarine construction, modernization, maintenance, and repair, including those involving nuclear propulsion systems. Their expertise in this highly specialized field is well-established. This specific contract, valued at over $323 million and spanning from 2001 to 2014, represents a significant, long-term commitment for nuclear support services. Given their sole position as a builder of nuclear submarines for the U.S. Navy, their track record with NAVSEA is inherently tied to the lifecycle support of these complex platforms. Performance data on previous contracts would be crucial for a comprehensive assessment, but their continued role suggests a generally satisfactory performance history in meeting the Navy's demanding requirements.

How does the $323 million value compare to similar submarine nuclear support contracts?

Directly comparing the $323 million value of this contract to similar submarine nuclear support contracts is challenging due to several factors. Firstly, the market for nuclear submarine support is highly specialized and dominated by a few key players, primarily Electric Boat Corporation. Secondly, many of these contracts are awarded on a sole-source or limited-competition basis, making direct price benchmarking difficult. The duration of this contract (approximately 10 years) also influences the total value. However, considering the complexity, security requirements, and specialized labor involved in nuclear systems, a multi-hundred-million-dollar value over a decade is not unexpected for such critical support. To assess value, one would ideally compare the per-year cost or the cost of specific services against historical data for EBC's own services or against any available data for comparable sole-source procurements within the naval nuclear enterprise, acknowledging the inherent limitations in finding truly comparable competed contracts.

What are the primary risks associated with this sole-source contract for submarine nuclear support?

The primary risks associated with this sole-source contract are centered around cost and competition. The lack of competition means the government may not be achieving the best possible price, as there is no market pressure to drive down costs. This can lead to potential overspending. Another significant risk is contractor dependency; the Navy relies heavily on Electric Boat Corporation for these critical nuclear support services. Any disruption in EBC's operations, such as labor disputes, financial instability, or unforeseen technical issues, could have severe implications for submarine readiness. Furthermore, without competitive pressure, there might be less incentive for the contractor to innovate or aggressively pursue cost-saving efficiencies. The long duration also poses a risk if technology or requirements change significantly, potentially locking the Navy into an outdated or overly expensive arrangement.

How effective is the firm-fixed-price (FFP) contract type in managing costs for nuclear submarine support?

The Firm-Fixed-Price (FFP) contract type is generally considered effective in managing costs for predictable services, as it shifts the risk of cost overruns to the contractor. For a contract like this, which involves ongoing support for established nuclear submarine systems, an FFP structure provides the government with cost certainty. The contractor is obligated to perform the work for the agreed-upon price, regardless of their actual costs. This incentivizes the contractor to manage their own expenses efficiently. However, the effectiveness is contingent on the initial price being fair and reasonable, which is harder to ascertain in a sole-source environment. If the initial price is inflated due to lack of competition, the FFP structure locks in that higher cost. Therefore, while FFP provides cost certainty, the 'value' aspect depends heavily on the negotiation and justification of that fixed price.

What are the historical spending patterns for submarine nuclear support by the Naval Sea Systems Command?

Historical spending patterns for submarine nuclear support by the Naval Sea Systems Command (NAVSEA) are characterized by significant, long-term investments in a highly specialized and concentrated market. Contracts in this domain are often substantial in value, reflecting the complexity and criticality of nuclear-powered submarines. Spending is typically dominated by a few key contractors, most notably Electric Boat Corporation, which holds a unique position in submarine design, construction, and lifecycle support. Awards are frequently sole-source or limited-competition due to the specialized nature of the work and stringent security requirements. Consequently, spending tends to be consistent over long periods, reflecting the extended service life of submarines and the ongoing need for maintenance, upgrades, and technical expertise. While specific aggregate spending figures fluctuate based on modernization programs and new construction, the overall trend indicates a sustained, high-cost commitment to maintaining the U.S. submarine fleet.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

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

Cost or Pricing Data: NO

Timeline