Navy awards $185M contract to Electric Boat Corp. for submarine construction and repair services

Contract Overview

Contract Amount: $185,142,203 ($185.1M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2003-02-18

End Date: 2013-11-26

Contract Duration: 3,934 days

Daily Burn Rate: $47.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $185.1 million to ELECTRIC BOAT CORPORATION for work described as: Key points: 1. Contract awarded for submarine construction and repair, a critical defense capability. 2. Significant long-term investment in naval fleet modernization and maintenance. 3. Sole-source award suggests limited market alternatives for specialized submarine work. 4. Contract duration indicates a sustained need for these services. 5. Focus on shipbuilding and repairing aligns with national security objectives. 6. Potential for high-value, complex work packages within the contract.

Value Assessment

Rating: fair

The contract value of $185 million over its duration is substantial, reflecting the complexity and specialized nature of submarine construction and repair. Benchmarking this specific contract is challenging due to the unique requirements of naval shipbuilding. However, cost-plus-fixed-fee contracts can sometimes lead to cost overruns if not meticulously managed. Without detailed cost breakdowns and comparisons to similar, albeit rare, submarine contracts, a definitive value-for-money assessment is difficult. The long duration suggests a stable, albeit potentially less competitive, pricing environment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that the Department of the Navy identified Electric Boat Corporation as the only responsible source capable of meeting the requirement. This is common in highly specialized defense sectors like submarine construction, where unique facilities, expertise, and security clearances are necessary. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bidders had been involved.

Taxpayer Impact: Sole-source awards can limit taxpayer savings as competitive bidding, which typically drives down prices, is absent. This necessitates robust government oversight to ensure fair pricing.

Public Impact

The primary beneficiaries are the U.S. Navy and national security, ensuring the operational readiness of the submarine fleet. Services delivered include the construction and repair of submarines, vital for strategic deterrence and power projection. Geographic impact is concentrated around Electric Boat Corporation's facilities in Connecticut, supporting the regional economy. Workforce implications include sustained employment for highly skilled engineers, technicians, and laborers in the shipbuilding sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits competitive pressure on pricing.
Cost-plus-fixed-fee structure carries inherent risk of cost escalation if not tightly managed.
Long contract duration may reduce agility in adapting to technological advancements or changing requirements.
Dependence on a single contractor for critical submarine capabilities poses a strategic risk.

Positive Signals

Award to a known, experienced contractor with a proven track record in submarine construction.
Ensures continuity of essential services for a critical defense asset.
Long-term commitment provides stability for workforce and infrastructure investment.
Contract addresses a vital national security need, aligning with strategic defense goals.

Sector Analysis

The shipbuilding and repairing industry, particularly for naval vessels, is a highly specialized and capital-intensive sector. It is characterized by long production cycles, complex engineering, and significant government investment. Market concentration is typical, with a few key players dominating the production of large naval platforms like submarines. This contract fits within the broader defense industrial base, supporting the Navy's strategic shipbuilding programs. Comparable spending benchmarks are difficult to establish due to the unique nature of submarine construction, but overall naval shipbuilding budgets represent billions of dollars annually.

Small Business Impact

This contract does not appear to have a specific small business set-aside component. Given the specialized nature of submarine construction and repair, the primary contractor, Electric Boat Corporation, likely performs the majority of the work in-house. However, there may be opportunities for small businesses to participate as subcontractors for specific components or services, though this is not explicitly detailed in the provided data. The impact on the broader small business ecosystem is likely indirect, through potential supply chain opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be embedded within the cost-plus-fixed-fee structure, requiring detailed reporting and justification of costs. Transparency is often limited in sole-source defense contracts due to national security considerations, but contract awards and basic details are usually publicly available. Inspector General jurisdiction would apply to investigate fraud, waste, or abuse.

Related Government Programs

Naval Ship Construction
Submarine Procurement
Defense Industrial Base
Ship Repair and Maintenance
Strategic Weapons Systems

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Critical defense capability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $185.1 million to ELECTRIC BOAT CORPORATION. See the official description on USAspending.

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 $185.1 million.

What is the period of performance?

Start: 2003-02-18. End: 2013-11-26.

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

Electric Boat Corporation has a long and established history as a primary builder of U.S. Navy submarines, including nuclear-powered ballistic missile submarines (SSBNs) and attack submarines (SSNs). They have been instrumental in delivering major platforms like the Ohio-class and Virginia-class submarines. Historically, their performance has been critical to maintaining the U.S. submarine fleet's technological edge. However, like many large, complex defense programs, submarine construction has faced challenges related to cost growth and schedule delays on specific projects. The Navy's continued reliance on Electric Boat for sole-source awards suggests a continued confidence in their capability to execute these highly specialized and demanding contracts, despite the inherent complexities and potential for cost fluctuations in such long-term, intricate projects.

How does the cost-plus-fixed-fee (CPFF) contract type typically perform in terms of cost control compared to other contract types for shipbuilding?

Cost-plus-fixed-fee (CPFF) contracts are often used when the scope of work is not precisely defined or involves significant uncertainty, which is common in complex R&D or specialized manufacturing like shipbuilding. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. While CPFF provides flexibility, it carries a higher risk of cost overruns for the government compared to fixed-price contracts, as the contractor has less incentive to control costs beyond what is necessary to complete the work. Effective government oversight, stringent cost accounting standards, and clear performance metrics are crucial to mitigate these risks and ensure value for money. For shipbuilding, where design evolution and unforeseen technical challenges are frequent, CPFF can be a necessary tool, but it demands rigorous management.

What are the primary risks associated with a sole-source award for critical defense systems like submarines?

The primary risks associated with a sole-source award for critical defense systems like submarines include a lack of competitive pressure on pricing, potentially leading to higher costs for taxpayers. Without competing bids, the government has less leverage to negotiate favorable terms. Furthermore, sole-source awards can reduce innovation, as there is no market incentive for alternative approaches or technologies. There's also a strategic risk of over-reliance on a single supplier; if that supplier faces financial difficulties, production issues, or geopolitical challenges, it could severely disrupt the delivery of essential defense capabilities. Robust government oversight and negotiation are paramount to mitigate these risks.

What is the typical lifecycle cost of a modern submarine, and how does this contract contribute to it?

The lifecycle cost of a modern submarine is exceptionally high, encompassing design, construction, operation, maintenance, and eventual decommissioning. Construction alone for a nuclear-powered submarine can run into billions of dollars per vessel. This $185 million contract, awarded in 2003 and ending in 2013, likely covers specific construction phases, major overhauls, or repair work for existing submarines, rather than the entire lifecycle cost of a new platform. It represents a significant investment in maintaining and potentially expanding the Navy's submarine fleet capabilities, contributing to the long-term operational readiness and sustainment costs associated with these strategic assets.

How has federal spending on shipbuilding and repairing (NAICS 336611) trended over the past decade, and where does this contract fit?

Federal spending on shipbuilding and repairing (NAICS 336611) has historically been substantial, driven by the U.S. Navy's fleet modernization and maintenance requirements. While specific annual figures fluctuate based on budget allocations and major procurement cycles (e.g., aircraft carriers, submarines, destroyers), the sector consistently represents billions of dollars in federal outlays. This $185 million contract, awarded in 2003, falls within a period where naval shipbuilding budgets were robust, supporting the construction and sustainment of key platforms. Its value is significant for a single contract but represents a portion of the overall annual spending within this critical defense sub-sector.

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, 02

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline