Naval Reactors contract for engineering services awarded to Electric Boat Corporation for over $116 million

Contract Overview

Contract Amount: $116,920,919 ($116.9M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2011-10-01

End Date: 2016-11-07

Contract Duration: 1,864 days

Daily Burn Rate: $62.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NAVAL REACTORS

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $116.9 million to ELECTRIC BOAT CORPORATION for work described as: NAVAL REACTORS Key points: 1. Contract awarded to a single, incumbent provider, raising questions about competitive pricing. 2. The cost-plus-fixed-fee structure may incentivize cost overruns. 3. Long contract duration suggests a need for ongoing, specialized services. 4. The absence of small business participation warrants further investigation. 5. This contract falls within the critical defense sector, supporting naval nuclear propulsion. 6. Engineering services are essential for maintaining and developing complex naval systems.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its specialized nature and lack of competition. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D, can lead to higher costs compared to fixed-price contracts if not managed tightly. Without comparable bids, it's difficult to definitively assess if the $116.9 million represents a fair price for the engineering services rendered over its 5-year duration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when only one contractor possesses the unique capabilities or security clearances required for the work, as is often the case with highly specialized defense systems like naval nuclear propulsion. The lack of competition means there was no opportunity for price discovery through bidding, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down costs.

Public Impact

The primary beneficiaries are the U.S. Navy's nuclear-powered vessels, ensuring their operational readiness and technological advancement. Services delivered include critical engineering support for the design, construction, and maintenance of naval nuclear reactors. The geographic impact is concentrated in Connecticut, where Electric Boat Corporation is headquartered and operates. This contract supports a highly skilled workforce of engineers and technical specialists within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure can lead to cost escalation.
Lack of small business involvement limits broader economic participation.

Positive Signals

Electric Boat Corporation is a long-standing, experienced provider in this highly specialized field.
The contract supports critical national security infrastructure.
Engineering services are vital for maintaining complex defense systems.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), specifically supporting the defense industry's need for specialized technical expertise in naval nuclear propulsion. The market for such services is highly concentrated, with few companies possessing the necessary security clearances, infrastructure, and historical knowledge. Spending in this niche is driven by national security imperatives and the lifecycle management of complex defense assets.

Small Business Impact

This contract did not include small business set-asides, nor is there information suggesting significant subcontracting to small businesses. Given the specialized and sole-source nature of the award, it is unlikely that small businesses were primary participants. This limits opportunities for small businesses to contribute to critical defense projects and potentially impacts the broader small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would likely fall under the Department of the Navy and potentially the Naval Reactors program office, which has its own stringent oversight mechanisms due to the sensitive nature of nuclear technology. Accountability measures are embedded within the contract's cost-plus-fixed-fee structure and reporting requirements. Transparency may be limited due to national security considerations.

Related Government Programs

Naval Nuclear Propulsion Program
Submarine Construction
Defense Engineering Services
Shipbuilding and Repair

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $116.9 million to ELECTRIC BOAT CORPORATION. NAVAL REACTORS

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 $116.9 million.

What is the period of performance?

Start: 2011-10-01. End: 2016-11-07.

What is the historical spending trend for engineering services related to naval reactors with Electric Boat Corporation?

Historical spending data for engineering services related to naval reactors with Electric Boat Corporation indicates a consistent and significant investment over many years. While the specific contract data provided covers 2011-2016 with an award of $116.9 million, broader trends show that the Naval Reactors program is a long-term, high-value undertaking. Electric Boat Corporation has been the primary contractor for submarine construction and maintenance, including the associated engineering services, for decades. Spending in this area is characterized by large, multi-year contracts often awarded on a sole-source or limited-competition basis due to the unique and critical nature of nuclear propulsion systems. The overall trend reflects sustained government commitment to maintaining and modernizing its nuclear submarine fleet, necessitating continuous engineering support.

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

The Cost-Plus-Fixed-Fee (CPFF) contract type is often employed for research and development or complex engineering projects where the scope of work is not fully defined at the outset, or where innovation is a key objective. In such cases, it allows the contractor to recover all allowable costs plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF generally offers less incentive for the contractor to control costs, as the government bears the risk of cost overruns. However, for highly specialized and uncertain work like advanced naval engineering, it can be more appropriate than fixed-price contracts, which might lead to excessively high initial bids to account for unknown risks. Other contract types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) offer more cost control mechanisms by linking contractor profit to performance or cost savings.

What are the specific risks associated with a sole-source award for critical defense engineering services?

Sole-source awards for critical defense engineering services, such as those provided by Electric Boat Corporation for naval reactors, carry several inherent risks. The most significant is the lack of price competition, which can lead to higher costs for the government as there is no market pressure to ensure competitive pricing. This can result in taxpayers bearing a premium for the services. Additionally, sole-source contracts can reduce the incentive for innovation and efficiency, as the incumbent contractor may face less pressure to improve processes or adopt cost-saving technologies. There's also a risk of vendor lock-in, making it difficult and costly to transition to a different provider in the future, even if performance issues arise. Finally, it can limit opportunities for new or smaller companies to enter the market and develop expertise.

What is the typical performance period for contracts of this nature and how does this one compare?

Contracts for specialized defense engineering services, particularly those supporting critical national security assets like naval nuclear propulsion, often have extended performance periods reflecting the long lifecycle of the systems they support. The provided data indicates a duration of 1864 days, which is approximately 5 years. This is a common timeframe for major engineering support contracts, allowing for sustained effort on complex projects. Longer durations, sometimes spanning a decade or more with options, are not uncommon for programs involving new platform development or major upgrades. Shorter durations might be seen for specific, well-defined tasks or initial research phases. The 5-year period for this contract appears typical for providing consistent, long-term engineering support to the Naval Reactors program.

Are there any known performance issues or contractor track record concerns with Electric Boat Corporation regarding naval reactor engineering services?

Electric Boat Corporation has a long and established history as the primary designer, builder, and refueler of U.S. Navy submarines, including those with nuclear propulsion. As such, they possess unique expertise and infrastructure critical to the Naval Reactors program. While specific performance details for individual contracts are often not publicly disclosed in detail, the company generally has a strong track record in delivering complex, high-stakes projects within this highly specialized domain. Issues that may arise in such large, long-term contracts typically relate to cost growth or schedule adjustments, which are common in complex engineering and construction. However, there are no widespread, publicly documented performance failures or significant concerns that would suggest a systemic inability of Electric Boat Corporation to fulfill its critical role in supporting naval nuclear propulsion.

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: N0002411R2100

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, 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: $123,477,327

Exercised Options: $123,477,327

Current Obligation: $116,920,919

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline