DoD's $442M FY18 Contract for Ship Building with Electric Boat Corporation: A 7-Year Deal
Contract Overview
Contract Amount: $44,232,647 ($44.2M)
Contractor: Electric Boat Corporation
Awarding Agency: Department of Defense
Start Date: 2018-02-15
End Date: 2026-03-31
Contract Duration: 2,966 days
Daily Burn Rate: $14.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FY18 CONFORM
Place of Performance
Location: GROTON, NEW LONDON County, CONNECTICUT, 06340
Plain-Language Summary
Department of Defense obligated $44.2 million to ELECTRIC BOAT CORPORATION for work described as: FY18 CONFORM Key points: 1. Significant long-term commitment to a single contractor for a critical defense need. 2. Lack of competition raises questions about potential cost efficiencies and innovation. 3. High value contract with a long duration presents inherent risks in cost escalation and performance. 4. The shipbuilding and repair sector is characterized by high barriers to entry and specialized capabilities.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure, while common for complex projects, can lead to cost overruns if not managed tightly. Benchmarking against similar long-term shipbuilding contracts is difficult due to the unique nature of naval vessel construction.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially reduces the incentive for the contractor to offer the most competitive pricing.
Taxpayer Impact: The absence of competition means taxpayers may not be receiving the best possible value, as alternative pricing or innovative solutions from other firms were not explored.
Public Impact
Ensures continued production of vital naval assets, supporting national security. Long-term employment opportunities within the shipbuilding industry and related supply chains. Potential for cost increases over the contract's 7-year duration impacts future defense budgets. Reliance on a single provider could create vulnerabilities in supply chain or production disruptions.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- Long contract duration
- Sole-source award
Positive Signals
- Ensures critical capability delivery
- Long-term planning for defense needs
- Potential for specialized expertise utilization
Sector Analysis
The shipbuilding and repair sector is highly specialized, capital-intensive, and often involves long production cycles. Government contracts are a significant driver of activity, with limited players capable of fulfilling large naval shipbuilding requirements.
Small Business Impact
This contract was awarded to Electric Boat Corporation, a large prime contractor. There is no indication of small business subcontracting participation within the provided data, which is a missed opportunity for small business engagement.
Oversight & Accountability
The long duration and sole-source nature of this contract warrant robust oversight from the Department of the Navy to ensure cost control, performance milestones are met, and that the contractor operates efficiently.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Cost-plus contract type
- Long contract duration
- Sole-source award
- Potential for cost overruns
- Limited small business participation
Tags
ship-building-and-repairing, department-of-defense, ct, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $44.2 million to ELECTRIC BOAT CORPORATION. FY18 CONFORM
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 $44.2 million.
What is the period of performance?
Start: 2018-02-15. End: 2026-03-31.
What is the estimated total cost if the contract's cost-plus-fixed-fee structure leads to cost overruns?
The contract's base value is $442.3 million, with a duration extending to March 2026. Without competition and with a cost-plus-fixed-fee structure, significant cost overruns are a risk. A precise estimate is difficult, but historical trends in large defense contracts suggest potential increases of 10-30% or more above the initial estimate, depending on unforeseen technical challenges and program management effectiveness.
What are the primary risks associated with a sole-source award for naval shipbuilding?
The primary risks include a lack of competitive pressure leading to higher prices and potentially less innovation. It also creates a dependency on a single supplier, making the program vulnerable to disruptions like labor strikes, supply chain issues, or the contractor's financial instability. Furthermore, without competitive benchmarking, it's harder to ensure the government is receiving fair market value for its investment.
How effective is the cost-plus-fixed-fee structure in ensuring value for money in long-term shipbuilding projects?
The cost-plus-fixed-fee structure is intended to incentivize contractors to control costs by providing a fixed fee regardless of the final cost. However, its effectiveness in ensuring value for money is debatable, especially in long-term, complex projects like shipbuilding. While it allows for flexibility and the incorporation of changes, it can also lead to cost escalation if the 'cost' component is not rigorously managed and audited, potentially diminishing the value proposition for taxpayers.
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: N0002415R2101
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, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $199,586,169
Exercised Options: $138,370,337
Current Obligation: $44,232,647
Actual Outlays: $2,502
Subaward Activity
Number of Subawards: 30
Total Subaward Amount: $7,736,492
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-02-15
Current End Date: 2026-03-31
Potential End Date: 2026-03-31 00:00:00
Last Modified: 2025-11-12
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