Navy awards $689M contract for missile compartments, highlighting engineering services for submarine platforms

Contract Overview

Contract Amount: $689,426,152 ($689.4M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2008-12-23

End Date: 2014-10-01

Contract Duration: 2,108 days

Daily Burn Rate: $327.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: COMMON MISSILE COMPARTMENT

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $689.4 million to ELECTRIC BOAT CORPORATION for work described as: COMMON MISSILE COMPARTMENT Key points: 1. Contract awarded for critical submarine components, indicating long-term defense needs. 2. Sole-source award suggests limited market options or specific technical requirements. 3. Significant contract value points to complex engineering and manufacturing processes. 4. Duration of the contract spans over six years, implying sustained program support. 5. Focus on engineering services underscores the importance of design and development in defense procurement. 6. Geographic concentration in Connecticut may reflect specialized industrial base capabilities.

Value Assessment

Rating: fair

The contract value of $689.4 million for engineering services related to missile compartments is substantial. Without specific benchmarks for comparable missile compartment engineering contracts, a precise value-for-money assessment is challenging. However, the 'cost plus fixed fee' pricing structure can sometimes lead to higher costs if not carefully managed, as it incentivizes the contractor to incur costs to achieve a fixed profit. Further analysis would require comparing the per-unit cost of engineering effort or the total cost relative to the complexity and scope of the missile compartment design and integration.

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 vendor considered. This approach is typically used when a single source possesses unique capabilities, proprietary technology, or when urgency prevents a competitive process. The lack of competition means that price discovery through market forces was absent, potentially leading to higher costs for the government compared to a fully competed scenario. The justification for a sole-source award would need to be robust to ensure taxpayer value.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible pricing, potentially resulting in higher expenditures for taxpayers. It also reduces the incentive for other companies to develop competing technologies or capabilities.

Public Impact

The primary beneficiary is the Department of the Navy, ensuring the continued development and support of its submarine fleet. Services delivered include critical engineering expertise for the design, integration, and potentially sustainment of missile compartments. The geographic impact is concentrated in Connecticut, supporting a specialized segment of the defense industrial base. Workforce implications include the employment of highly skilled engineers and technical personnel within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type may offer less cost control than fixed-price alternatives.
Long contract duration could mask inefficiencies if not actively managed.
Lack of transparency in sole-source justification requires careful scrutiny.

Positive Signals

Award to a known, experienced contractor (Electric Boat Corporation) for a critical defense system.
Focus on engineering services suggests investment in advanced capabilities.
Contract supports a vital national security asset (submarines).

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on naval engineering and shipbuilding support. The market for submarine components and associated engineering services is highly specialized, with a limited number of qualified contractors. Electric Boat Corporation is a dominant player in this niche. Comparable spending benchmarks would likely be found within other major submarine construction programs, where significant investments are made in platform design and component integration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor, Electric Boat Corporation, is a large business. While there might be subcontracting opportunities for small businesses within the performance of this contract, the primary award is not directed towards them. The impact on the small business ecosystem would depend on the extent to which Electric Boat engages small businesses as subcontractors for specialized services or components.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures would be embedded in the contract terms, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award, but contract details and performance should be accessible through federal procurement databases. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Submarine Construction Programs
Naval Engineering Services
Defense Procurement
Missile Systems Integration
Shipbuilding and Repair

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Potential for cost overruns
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $689.4 million to ELECTRIC BOAT CORPORATION. COMMON MISSILE COMPARTMENT

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 $689.4 million.

What is the period of performance?

Start: 2008-12-23. End: 2014-10-01.

What is the historical spending pattern for missile compartment engineering services by the Department of the Navy?

Analyzing historical spending on missile compartment engineering services by the Department of the Navy requires a deep dive into historical contract data, often categorized under broader engineering services or shipbuilding procurement codes. While the provided data point is for a single contract valued at $689.4 million awarded in 2008, understanding the pattern involves looking at trends over multiple fiscal years. This would include identifying the number of contracts awarded, the total obligated amounts, the primary contractors, and the specific services procured. Factors influencing spending patterns include new submarine class development, modernization programs, and sustainment efforts. Without access to a comprehensive historical database filtered for this specific service, a precise trend analysis is not possible from this single data point. However, it's reasonable to infer that spending in this area is tied to the Navy's long-term shipbuilding plan and strategic defense priorities, likely showing significant, albeit potentially fluctuating, investment.

How does the cost-plus-fixed-fee (CPFF) pricing structure compare to other contract types for similar engineering services in the defense sector?

The Cost-Plus-Fixed-Fee (CPFF) contract type, used here, reimburses the contractor for allowable costs incurred and pays a predetermined fixed fee. This structure is often employed when the scope of work is not precisely defined or involves significant research and development, making it difficult to estimate costs accurately upfront. Compared to fixed-price contracts (like FFP - Firm-Fixed-Price), CPFF offers less cost certainty for the government, as the final price is not capped. However, it provides greater flexibility and can incentivize contractors to undertake complex or uncertain projects that might be too risky under FFP. Other cost-reimbursement types, like Cost-Plus-Incentive-Fee (CPIF), aim to share cost savings or overruns between the government and contractor, offering a middle ground. For engineering services where innovation and adaptation are key, CPFF can be appropriate, but it necessitates robust government oversight to manage costs effectively and ensure the fixed fee remains reasonable relative to the effort.

What are the specific risks associated with a sole-source award for critical defense components like missile compartments?

Sole-source awards for critical defense components like missile compartments carry several inherent risks. Firstly, the lack of competition removes the primary mechanism for price discovery, potentially leading to inflated costs for the government as the contractor faces no market pressure to offer competitive pricing. Secondly, it can stifle innovation and technological advancement, as there is less incentive for alternative providers to enter the market or for the incumbent to invest in disruptive technologies if their position is guaranteed. Thirdly, it can create vendor lock-in, making it difficult and costly to switch providers in the future, even if performance or pricing becomes unsatisfactory. Finally, sole-source awards can raise concerns about fairness and transparency in the procurement process, potentially leading to public scrutiny or political challenges if not adequately justified and managed.

What is Electric Boat Corporation's track record with large, sole-source defense contracts?

Electric Boat Corporation (EB) has a long and established track record as a primary designer and builder of U.S. Navy submarines, a role that has often involved sole-source or limited-competition contracts due to the highly specialized nature of submarine construction and the company's unique position. EB has historically been awarded significant contracts for submarine construction, modernization, and associated systems, including components like missile compartments. These contracts are often sole-source due to the integrated nature of submarine design, the proprietary technologies involved, and the limited number of qualified shipyards capable of undertaking such complex work. While specific details of all sole-source awards and their performance metrics are not publicly detailed, EB's continued role as the principal submarine contractor suggests a generally satisfactory performance history in delivering complex, high-value defense systems under these conditions, albeit with the inherent risks of non-competitive procurement.

How does the $689M contract value compare to the overall annual spending on naval engineering services?

The $689.4 million contract value for missile compartment engineering services represents a significant, but not necessarily dominant, portion of the Department of the Navy's overall annual spending on naval engineering services. Naval engineering encompasses a vast array of activities, including ship design, platform modernization, weapons systems integration, research and development, and lifecycle support for a global fleet. Annual budgets for naval engineering services can run into the billions of dollars, supporting numerous projects simultaneously across different ship classes and programs. Therefore, while this specific contract is substantial for its defined scope, it should be viewed within the broader context of the Navy's extensive engineering requirements. A precise comparison would necessitate analyzing the Navy's total obligated authority for engineering services across all its shipbuilding and maintenance programs for the relevant fiscal years.

Industry Classification

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

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002409R2100

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

Financial Breakdown

Contract Ceiling: $792,589,654

Exercised Options: $771,836,353

Current Obligation: $689,426,152

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline