Navy awards $921.6M contract to Electric Boat Corp. for submarine planning yard services through 2023

Contract Overview

Contract Amount: $921,664,216 ($921.7M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2014-09-11

End Date: 2023-06-30

Contract Duration: 3,214 days

Daily Burn Rate: $286.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUBMARINE PLANNING YARD

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $921.7 million to ELECTRIC BOAT CORPORATION for work described as: SUBMARINE PLANNING YARD Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Long-term contract duration suggests a strategic, ongoing need for these specialized services. 3. Cost-plus-fixed-fee structure may incentivize cost overruns, requiring robust oversight. 4. Electric Boat Corporation's established role as a primary submarine builder likely influenced the sole-source award. 5. The contract's value represents a significant investment in maintaining and planning for naval submarine capabilities. 6. Performance period spans nearly a decade, indicating a stable, long-term relationship. 7. The absence of competition limits opportunities for market-driven price discovery.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging due to the lack of comparable bids. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex, R&D-intensive projects, can lead to higher overall costs compared to fixed-price contracts if not managed diligently. The fixed fee component provides some cost control, but the government bears the risk of actual costs incurred. Without competitive bids, it's difficult to definitively assess if the pricing reflects optimal value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Electric Boat Corporation, was solicited. This approach is typically used when a unique capability or specialized expertise is required, and only one source can provide it. The lack of competition means there was no opportunity for multiple companies to bid, which could have driven down prices through a competitive bidding process. This limits the government's ability to leverage market forces for cost savings.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. Without competing bids, the government cannot be assured it is receiving the most cost-effective solution available in the market.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring continued planning and support for its submarine fleet. Services include essential planning, engineering, and technical support for submarine construction and maintenance. The contract directly supports the strategic defense capabilities of the United States. Workforce implications include sustained employment for highly skilled engineers and technical personnel at Electric Boat Corporation. Geographic impact is primarily centered in Connecticut, where Electric Boat Corporation is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost-plus-fixed-fee structure shifts cost risk to the government and may incentivize higher spending.
Long contract duration without clear performance milestones could reduce contractor urgency.
Lack of transparency in the sole-source justification process.
Potential for scope creep given the nature of planning and R&D services.

Positive Signals

Electric Boat Corporation has a long-standing, specialized expertise in submarine design and construction, critical for national security.
The contract ensures continuity of essential services for the submarine fleet, vital for naval readiness.
The fixed fee component provides some level of cost predictability for the government.
The long duration suggests a stable, predictable need and a strong working relationship.
The contract supports a critical defense industrial base capability.

Sector Analysis

This contract falls within the shipbuilding and repair sector, a critical component of the defense industrial base. The market for submarine construction and planning is highly specialized, with a limited number of qualified contractors. Electric Boat Corporation is a dominant player in this niche. Comparable spending benchmarks are difficult to establish due to the unique nature of submarine programs and the prevalence of sole-source or limited competition awards in this high-stakes sector.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the specialized nature of submarine planning and construction, it is unlikely that small businesses would be primary contractors for such a large-scale, sole-source award. Subcontracting opportunities for small businesses may exist, but their extent and nature are not detailed in the provided data. The focus on a single, large prime contractor suggests limited direct impact on the broader small business ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the cost-plus-fixed-fee structure, rigorous financial oversight and auditing are crucial to ensure costs are reasonable and allocable. The Inspector General's office for the Department of Defense may also conduct audits or investigations. Transparency is limited due to the sole-source nature, but contract performance reviews and milestone tracking are standard oversight mechanisms.

Related Government Programs

Naval Ship Building
Submarine Procurement
Defense Industrial Base Support
Strategic Weapons Systems
Naval Engineering Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Long contract duration
Critical defense capability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $921.7 million to ELECTRIC BOAT CORPORATION. SUBMARINE PLANNING YARD

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 $921.7 million.

What is the period of performance?

Start: 2014-09-11. End: 2023-06-30.

What is the historical spending trend for submarine planning yard services with Electric Boat Corporation?

Analyzing historical spending trends for submarine planning yard services with Electric Boat Corporation requires access to detailed contract databases beyond the provided summary. However, given Electric Boat's long-standing role as a primary builder of U.S. Navy submarines, it is reasonable to infer a consistent and significant level of spending over many years. Contracts for such specialized, long-term support typically span multiple fiscal years and often involve sole-source or limited competition awards due to the unique capabilities required. Without specific historical data, it's difficult to quantify year-over-year increases or decreases, but the sustained nature of submarine programs suggests a generally stable, albeit potentially escalating, spending pattern driven by fleet modernization and maintenance requirements.

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

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used for research and development or complex services where the scope of work is not fully defined at the outset, as is common in submarine planning. Compared to fixed-price contracts, CPFF shifts the risk of cost overruns to the government, as the contractor is reimbursed for actual costs incurred plus a predetermined fixed fee. While this allows for flexibility and encourages contractor participation in uncertain projects, it generally leads to higher overall costs for the government than a well-defined fixed-price contract. Competitive bidding under a fixed-price structure typically yields better price discovery and cost certainty for taxpayers. However, for highly specialized, unique services like submarine planning, where defining all costs upfront is impractical, CPFF might be deemed necessary, albeit requiring stringent oversight to manage costs effectively.

What are the key performance indicators (KPIs) used to evaluate Electric Boat Corporation's performance under this contract?

Key Performance Indicators (KPIs) for a contract like this, involving submarine planning and support, are typically established within the contract's Statement of Work (SOW) and Performance Work Statement (PWS). While not detailed in the provided summary, common KPIs would likely include adherence to project schedules and milestones for planning and design phases, quality of engineering deliverables (e.g., accuracy of blueprints, technical documentation), responsiveness to Navy technical directives, and effective management of resources. For a CPFF contract, KPIs also extend to cost control measures and efficient utilization of labor hours. The Navy's contracting officer and technical representatives would monitor these KPIs through regular progress reports, reviews, and potentially site visits to ensure the contractor meets contractual obligations and delivers the required support effectively.

What is the strategic importance of this contract to the U.S. Navy's long-term submarine force structure?

This contract is strategically vital for the U.S. Navy's long-term submarine force structure as it ensures the continuous availability of specialized planning and engineering expertise necessary for the design, development, modernization, and maintenance of its submarine fleet. Submarines are a cornerstone of U.S. strategic deterrence and power projection capabilities. Electric Boat Corporation, as a sole-source provider for these specific planning yard services, plays a critical role in maintaining the technological edge and operational readiness of this complex and expensive asset class. The contract's duration suggests a commitment to supporting the Navy's ongoing submarine programs, including potential future classes of submarines, and ensuring the industrial base capacity to sustain these vital platforms throughout their lifecycle.

Are there any known risks associated with Electric Boat Corporation's track record in fulfilling similar large-scale defense contracts?

Electric Boat Corporation has a long and established track record in building and servicing U.S. Navy submarines, including the Trident and Virginia-class programs. As a primary, and often sole, contractor for these complex platforms, their performance is generally viewed as critical to national security. While large, complex defense contracts inherently carry risks such as schedule delays or cost overruns (as seen in many major shipbuilding programs across the industry), Electric Boat has consistently delivered submarines vital to the fleet. Specific risks associated with their track record would typically be detailed in internal Navy risk assessments or contractor performance evaluations (e.g., CPARS reports), which are not publicly available. However, their continued selection for major submarine programs indicates a generally satisfactory performance history in fulfilling demanding requirements.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002413R2104

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: $1,572,818,954

Exercised Options: $1,572,818,954

Current Obligation: $921,664,216

Actual Outlays: $1,286,966

Subaward Activity

Number of Subawards: 1093

Total Subaward Amount: $147,306,503

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline