Navy awards $1B+ engineering services contract to Electric Boat Corp. for submarine development

Contract Overview

Contract Amount: $1,010,124,389 ($1.0B)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2005-10-01

End Date: 2011-02-28

Contract Duration: 1,976 days

Daily Burn Rate: $511.2K/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 $1.01 billion to ELECTRIC BOAT CORPORATION for work described as: Key points: 1. Contract value exceeds $1 billion, indicating significant investment in submarine technology. 2. Sole-source award suggests limited market alternatives or specialized capabilities required. 3. Long contract duration (over 5 years) implies a sustained need for these services. 4. Cost-plus-fixed-fee structure may incentivize cost overruns if not closely monitored. 5. Focus on engineering services highlights the critical role of design and development in naval capabilities. 6. Award to a single, established contractor may limit opportunities for new entrants and innovation.

Value Assessment

Rating: fair

The contract's value of over $1 billion for engineering services is substantial. Benchmarking this against similar, large-scale submarine development contracts is difficult without more specific service details. However, the cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D, carries inherent risks of cost escalation if not managed with rigorous oversight. The lack of competitive bidding also removes a key mechanism for price discovery and value assurance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a single contractor possesses unique capabilities, intellectual property, or is the only responsible source capable of meeting the government's requirements. The lack of competition means the government did not benefit from a bidding process that could have driven down prices or spurred innovation from a wider range of suppliers.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without alternative bids, it's harder to ascertain if the price reflects the best possible value for the services rendered.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive critical engineering support for its submarine programs. Services delivered include advanced engineering and design crucial for the development and maintenance of naval vessels. The geographic impact is concentrated in Connecticut, where Electric Boat Corporation is headquartered and likely performs the majority of the work. This contract supports a highly specialized workforce of engineers and technical professionals within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not meticulously managed.
Long contract duration increases exposure to potential scope creep or evolving requirements.
Lack of transparency in sole-source justification requires careful scrutiny.
Concentration of significant defense spending with one contractor can create dependency.

Positive Signals

Award to Electric Boat Corporation, a long-standing and experienced submarine builder, suggests a high likelihood of technical success.
Focus on engineering services indicates investment in critical, long-term naval capabilities.
The substantial value of the contract signals a significant commitment to national defense infrastructure.
The contract supports a vital segment of the U.S. defense industrial base.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting the defense industry's complex needs for naval architecture and submarine development. The market for specialized submarine engineering is highly concentrated, with a few key players dominating. The value of this single contract, exceeding $1 billion, represents a significant portion of annual spending within this niche, underscoring the strategic importance and high cost associated with maintaining a modern submarine fleet.

Small Business Impact

As a sole-source award to a large prime contractor, this contract does not appear to include specific small business set-asides. While Electric Boat Corporation may engage subcontractors, the primary award mechanism bypasses direct opportunities for small businesses to compete for the prime contract. The subcontracting plan, if any, would be critical to understanding the downstream impact on the small business ecosystem.

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 significant value, rigorous oversight of cost, schedule, and performance is essential. Transparency may be limited due to the non-competitive award, but contract modifications, performance reviews, and financial audits would serve as key accountability measures. The Inspector General's office would likely have jurisdiction for audits and investigations.

Related Government Programs

Naval Ship Systems Engineering
Submarine Design and Development
Defense Engineering Services
Major Defense Acquisition Programs
Shipbuilding and Repair

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.01 billion 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 $1.01 billion.

What is the period of performance?

Start: 2005-10-01. End: 2011-02-28.

What is Electric Boat Corporation's track record with similar sole-source, large-value engineering contracts for the Navy?

Electric Boat Corporation (EBC) has a long and established history of sole-source contracts with the U.S. Navy, particularly for submarine design, development, and construction. Their expertise is deeply embedded in the nation's strategic submarine programs, including the Ohio-class and the ongoing Columbia-class ballistic missile submarine programs. EBC has consistently been the primary entity responsible for the engineering and manufacturing of nuclear-powered submarines. While specific dollar values and durations of past sole-source engineering contracts vary, their entire business model is predicated on fulfilling these critical, often non-competed, requirements due to the unique and specialized nature of submarine technology and infrastructure. This extensive track record suggests a high degree of familiarity and capability in executing such large-scale, long-term engineering efforts for the Navy.

How does the $1 billion+ value of this contract compare to historical Navy spending on submarine engineering services?

The $1.01 billion value of this contract is substantial and aligns with the significant investment required for advanced submarine engineering. Historically, major submarine programs, such as the development and construction of new classes of submarines (like the Virginia-class attack submarines or the upcoming Columbia-class ballistic missile submarines), involve multi-billion dollar outlays over many years. Engineering services represent a critical, albeit often a portion of, the total program cost. This $1 billion award likely covers a specific phase or set of engineering tasks within a larger submarine development lifecycle. Compared to annual spending on broader defense engineering services, this contract is significant, but within the context of major naval platforms, it represents a typical investment for specialized, long-term development efforts.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract of this magnitude are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to higher prices than might be achieved in a competed environment. The government relies heavily on negotiation and oversight to ensure fair pricing. Secondly, the CPFF structure, while providing flexibility for evolving requirements common in R&D, can incentivize the contractor to incur higher costs, as their fee is a percentage of those costs. This necessitates robust government oversight to monitor expenditures, control scope creep, and ensure efficient performance. Without diligent management, cost overruns are a significant risk, potentially increasing the final contract value well beyond initial estimates.

What does the 'Engineering Services' classification (NAICS 541330) typically encompass in defense contracts?

The NAICS code 541330, 'Engineering Services,' in the context of defense contracts, encompasses a broad range of professional services related to the design, development, testing, and evaluation of military systems, equipment, and infrastructure. This includes activities such as conceptual design, detailed engineering, systems integration, performance analysis, simulation, prototyping, and technical support throughout the lifecycle of defense projects. For submarine development, this would involve naval architecture, mechanical, electrical, nuclear, and software engineering disciplines. It signifies the application of scientific and engineering principles to solve complex technical challenges, ensuring that defense platforms meet stringent performance, safety, and operational requirements.

How does the contract duration (1976 days, approx. 5.4 years) impact the assessment of value and risk?

The contract duration of approximately 5.4 years is substantial and indicates a long-term commitment to a specific engineering effort, likely tied to a major submarine program phase. From a value perspective, a longer duration can allow for more in-depth development and refinement, potentially leading to a superior end product. However, it also increases the risk of cost escalation due to inflation, changing technological landscapes, or unforeseen challenges. For the contractor, it provides stability and allows for specialized team development. For the government, it requires sustained oversight and management to ensure the project remains on track and within budget over the extended period. The value is realized through the successful completion of complex engineering milestones over this extended timeframe.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

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, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline