Navy awards $480M R&D contract to Electric Boat Corp. for submarine advancements

Contract Overview

Contract Amount: $480,108,884 ($480.1M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2010-10-17

End Date: 2020-09-30

Contract Duration: 3,636 days

Daily Burn Rate: $132.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUBMARINE

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $480.1 million to ELECTRIC BOAT CORPORATION for work described as: SUBMARINE Key points: 1. Contract focuses on research and development for submarine technology, indicating a long-term investment in naval capabilities. 2. Sole-source award to Electric Boat Corporation suggests a lack of readily available alternative suppliers for this specialized work. 3. The contract's duration of over 10 years points to complex, multi-phase research objectives. 4. Cost-plus-fixed-fee structure may incentivize cost overruns if not closely monitored. 5. The significant value of the award highlights the strategic importance of submarine modernization. 6. This contract falls under R&D for physical and engineering sciences, excluding biotechnology.

Value Assessment

Rating: fair

Benchmarking the value of this R&D contract is challenging due to its specialized nature and sole-source award. However, the extensive duration and significant funding suggest a comprehensive research effort. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, carries inherent risks of cost escalation if not managed with rigorous oversight. Without comparable sole-source R&D contracts for submarine technology, a direct value-for-money assessment is difficult, but the investment reflects a substantial commitment to advancing naval technology.

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 considered. This typically occurs when a unique capability or proprietary technology is required, or when there are insufficient qualified sources. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors. This approach is often justified for highly specialized or critical defense systems where only one entity possesses the necessary expertise or infrastructure.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The government's ability to negotiate the best possible price is diminished in a sole-source scenario.

Public Impact

The primary beneficiary is the U.S. Navy, which will receive advancements in submarine technology, enhancing its strategic capabilities. The contract supports the development of next-generation submarine systems, crucial for national defense. Geographic impact is concentrated in Connecticut, where Electric Boat Corporation is located, potentially supporting local jobs and the regional economy. The contract implies a need for highly skilled engineers, scientists, and technicians within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure can lead to cost overruns without stringent oversight.
Sole-source award limits competitive pressure, potentially impacting price and innovation.
Long contract duration increases the risk of scope creep or evolving requirements.
Dependence on a single contractor for critical submarine R&D poses a strategic risk.

Positive Signals

Award to a known, experienced contractor (Electric Boat Corporation) suggests a higher likelihood of technical success.
Focus on R&D indicates a forward-looking approach to maintaining technological superiority.
Significant investment signals commitment to the long-term viability of submarine programs.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on Research and Development for advanced naval platforms. The market for submarine technology is highly specialized, with a limited number of prime contractors capable of undertaking such complex projects. Electric Boat Corporation is a major player in this niche. Comparable spending benchmarks are difficult to establish due to the unique nature of submarine R&D, but significant government investment in this area is consistent with maintaining a strategic military advantage.

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 entity. While large prime contractors are often required to subcontract portions of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without further information on subcontracting goals, it's difficult to assess the direct impact on small businesses.

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 R&D focus, rigorous technical and financial oversight is crucial to manage costs and ensure progress aligns with objectives. Transparency may be limited due to the classified nature of some submarine technology. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Naval Ship Systems
Submarine Modernization Programs
Defense Research and Development
Advanced Weapons Systems
Strategic Deterrence Programs

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Long contract duration
Specialized R&D domain

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $480.1 million to ELECTRIC BOAT CORPORATION. SUBMARINE

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 $480.1 million.

What is the period of performance?

Start: 2010-10-17. End: 2020-09-30.

What is the historical spending pattern for submarine R&D by the Department of the Navy with Electric Boat Corporation?

Analyzing historical spending patterns for submarine R&D with Electric Boat Corporation requires access to detailed contract databases beyond the provided snippet. However, it is generally understood that the U.S. Navy has a long-standing and substantial investment in submarine technology, with Electric Boat Corporation being a primary contractor for decades. Past major programs, such as the Virginia-class submarines, involved significant R&D and procurement funding. Trends likely show consistent, high-value awards reflecting the complexity and strategic importance of maintaining a modern submarine fleet. Fluctuations in spending would typically correlate with the lifecycle of major submarine development and production programs, as well as shifts in defense priorities and technological advancements.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar R&D efforts?

The Cost-Plus-Fixed-Fee (CPFF) structure is common for research and development contracts where the scope of work is not precisely defined at the outset, making it difficult to establish a firm fixed price. In CPFF contracts, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This contrasts with Firm-Fixed-Price (FFP) contracts, which are preferred when requirements are well-defined and offer the greatest cost risk to the contractor and potential savings to the government. Cost-Plus-Incentive-Fee (CPIF) contracts, another alternative, include incentives for the contractor to control costs. For R&D, CPFF provides flexibility but requires robust government oversight to prevent cost overruns, as the contractor has less financial incentive to minimize expenses compared to FFP or CPIF.

What are the specific technological advancements expected from this $480 million R&D contract?

The provided data indicates the contract is for 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)' related to submarines, but does not specify the exact technological advancements. Given Electric Boat Corporation's role, these advancements likely pertain to areas such as improved propulsion systems, quieter hull designs, enhanced sonar and sensor technology, advanced combat systems, cyber resilience, or new materials for submarine construction. The 'SUBMARINE' designation suggests a broad scope covering various aspects of submarine design, operation, and survivability. Specific details are often classified due to national security implications.

What is Electric Boat Corporation's track record with sole-source R&D contracts for the Navy?

Electric Boat Corporation (EB) has a long and established history as a prime contractor for the U.S. Navy's submarine programs, including significant research and development efforts. Given the highly specialized and often classified nature of submarine technology, EB has frequently been the recipient of sole-source or limited-competition contracts. Their track record includes the development and construction of major submarine classes like the Ohio, Los Angeles, and Virginia classes. While specific data on all sole-source R&D awards is not publicly detailed, EB's consistent role as the Navy's primary submarine designer and builder implies a history of successful, albeit often sole-source, R&D engagements that have met the Navy's evolving technological requirements.

What are the potential risks associated with a sole-source award for critical defense R&D?

Sole-source awards for critical defense R&D, like this submarine contract, carry several potential risks. Firstly, the absence of competition can lead to higher prices than might be achieved in a competitive bidding process, as the government lacks the leverage of multiple offers. Secondly, it can stifle innovation, as there is less pressure on the sole contractor to develop novel solutions or improve efficiency when they are guaranteed the contract. Thirdly, it creates a dependency on a single supplier, which can be problematic if that supplier faces financial difficulties, operational issues, or fails to meet performance expectations. This dependency also reduces the government's flexibility to switch to alternative technologies or contractors if circumstances change. Finally, without competitive benchmarking, assessing true value for money becomes more challenging.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002409R2109

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: $844,366,615

Exercised Options: $620,427,402

Current Obligation: $480,108,884

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline