DoD's $1.4B Engineering Services Contract with Electric Boat Corporation Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $1,418,130,936 ($1.4B)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2010-07-02

End Date: 2026-03-31

Contract Duration: 5,751 days

Daily Burn Rate: $246.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Engineering Services

Official Description: LEAD YARD SERVICES

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $1.42 billion to ELECTRIC BOAT CORPORATION for work described as: LEAD YARD SERVICES Key points: 1. Significant contract value of $1.4 billion awarded to a single large business. 2. Sole-source award raises concerns about potential overpricing and limited innovation. 3. Engineering services sector is critical but often complex, requiring careful oversight. 4. Long contract duration of over 15 years could mask inefficiencies.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a lack of competition, makes it difficult to assess value. The awarded amount of $1.4 billion over 15 years suggests a high potential for cost overruns without strong oversight.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to offer competitive pricing.

Taxpayer Impact: The lack of competition on this large contract likely results in higher costs for taxpayers than if it had been competitively bid.

Public Impact

Taxpayers may be overpaying for essential engineering services due to the sole-source nature of the contract. The long duration of the contract limits opportunities for other companies to compete for this work. Potential for reduced innovation and efficiency as the contractor faces no competitive pressure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Cost-plus-fixed-fee pricing
No small business participation

Positive Signals

Critical engineering services for defense
Established contractor with relevant experience

Sector Analysis

This contract falls within the Engineering Services sector, which is vital for complex projects like naval shipbuilding. Benchmarks for this sector vary widely based on project scope and complexity, but competitive bidding typically drives efficiency.

Small Business Impact

The data indicates no small business participation in this contract. This is a missed opportunity to foster small business growth and leverage their specialized capabilities within the defense supply chain.

Oversight & Accountability

The sole-source nature of this large, long-term contract necessitates robust oversight from the Department of Defense to ensure cost control, performance, and adherence to contract terms. Regular audits and performance reviews are crucial.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competition may lead to inflated costs.
Long contract duration increases risk of cost overruns and reduced efficiency.
Cost-plus-fixed-fee structure shifts cost risk to the government.
No small business participation noted.
Potential for contractor complacency due to sole-source status.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.42 billion to ELECTRIC BOAT CORPORATION. LEAD YARD SERVICES

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 $1.42 billion.

What is the period of performance?

Start: 2010-07-02. End: 2026-03-31.

What specific justifications were provided for awarding this critical engineering services contract on a sole-source basis, and have these justifications been re-evaluated over the contract's lifespan

Sole-source awards typically require stringent justification, often citing unique capabilities or urgent needs. Without a competitive process, it's imperative that the DoD continuously validates the necessity of this approach. Re-evaluation is key to ensuring continued justification and exploring future competitive opportunities, especially given the contract's extended duration.

How does the cost-plus-fixed-fee structure, combined with the lack of competition, impact the government's ability to control costs and ensure fair pricing for these engineering services?

The cost-plus-fixed-fee structure inherently shifts cost risk to the government, while the absence of competition removes market pressure for cost efficiency. This combination creates a significant risk of inflated costs, as the contractor has less incentive to minimize expenses. Robust government oversight and detailed cost audits are essential to mitigate this risk.

What mechanisms are in place to measure and ensure the effectiveness and quality of the engineering services provided by Electric Boat Corporation under this long-term, sole-source contract?

Effectiveness and quality are typically measured through performance metrics, milestones, and deliverables outlined in the contract. For sole-source, long-term agreements, the government must implement rigorous performance monitoring, regular reviews, and potentially independent technical assessments to ensure the contractor is meeting all requirements and delivering high-quality services.

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: N0002409R2118

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

Financial Breakdown

Contract Ceiling: $1,513,036,428

Exercised Options: $1,513,036,428

Current Obligation: $1,418,130,936

Actual Outlays: $16,799,715

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline