Navy awards $218.6M contract to Electric Boat Corp. for nuclear regional maintenance

Contract Overview

Contract Amount: $218,647,437 ($218.6M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2018-04-27

End Date: 2023-08-05

Contract Duration: 1,926 days

Daily Burn Rate: $113.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NUCLEAR REGIONAL MAINTENANCE DEPARTMENT

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $218.6 million to ELECTRIC BOAT CORPORATION for work described as: NUCLEAR REGIONAL MAINTENANCE DEPARTMENT Key points: 1. Contract awarded to a single, established provider suggests limited market exploration. 2. Long-term duration indicates a sustained need for specialized maintenance services. 3. Cost-plus-fixed-fee structure may incentivize cost escalation if not closely monitored. 4. Focus on nuclear maintenance highlights critical infrastructure support. 5. Geographic concentration in Connecticut points to regional economic dependence. 6. Absence of small business set-aside raises questions about broader economic inclusion.

Value Assessment

Rating: fair

The contract's value of $218.6 million over approximately five years for nuclear regional maintenance is substantial. Benchmarking this against similar specialized naval maintenance contracts is challenging due to the unique nature of nuclear systems and the limited number of qualified providers. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex, uncertain work, carries inherent risks of cost overruns if not rigorously managed. Without detailed cost breakdowns and comparisons to industry standards for similar nuclear-related services, assessing true value-for-money is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Electric Boat Corporation was the only entity considered for this specific requirement. This approach is typically justified when a unique capability or proprietary technology is essential, or when only one source can meet the urgent needs of the government. The lack of competition means that pricing and service innovation were not driven by market forces, potentially leading to higher costs than if multiple bidders had vied for the contract.

Taxpayer Impact: Sole-source awards limit opportunities for competitive bidding, which can result in higher prices for taxpayers. The absence of competition means the government could not leverage market dynamics to secure the best possible value.

Public Impact

The primary beneficiaries are the U.S. Navy's nuclear-powered vessels requiring specialized maintenance. Services delivered include critical upkeep and repair for nuclear propulsion systems. Geographic impact is concentrated in Connecticut, where Electric Boat Corporation is based. Workforce implications include sustained employment for highly skilled technicians and engineers in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing and efficiency.
Cost-plus-fixed-fee contract type can lead to cost overruns if oversight is insufficient.
Long contract duration may reduce flexibility to adapt to changing technological needs or market conditions.
Lack of small business participation limits opportunities for smaller, specialized firms.

Positive Signals

Award to Electric Boat Corporation, a known entity with extensive experience in naval nuclear programs, suggests a high likelihood of successful execution.
The contract addresses a critical national security need for maintaining nuclear-powered assets.
Long-term nature of the contract provides stability for essential maintenance operations.
The definitive contract award indicates a clear scope and terms for the duration.

Sector Analysis

The shipbuilding and repairing sector, particularly for naval assets, is highly specialized and dominated by a few large, experienced contractors. Electric Boat Corporation is a key player in this niche, especially concerning nuclear submarine construction and maintenance. This contract fits within the broader defense industrial base, supporting the operational readiness of the U.S. Navy's fleet. Spending in this area is driven by national security requirements and the lifecycle management of complex, high-value assets.

Small Business Impact

This contract was not competed with small business set-asides, nor does it appear to involve significant subcontracting opportunities for small businesses based on the provided data. Electric Boat Corporation, as a large prime contractor, may have its own internal small business subcontracting program, but the direct award structure does not prioritize small business participation. This limits the potential for smaller, specialized firms to contribute to this critical maintenance work and benefit from federal spending.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a definitive contract, its terms and performance are subject to standard government oversight procedures. The cost-plus-fixed-fee structure necessitates close monitoring of costs and progress to ensure value for money. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse. Transparency is generally limited for sole-source defense contracts.

Related Government Programs

Naval Ship Maintenance Contracts
Nuclear Propulsion System Support
Defense Industrial Base Contracts
Shipbuilding and Repair Services

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 $218.6 million to ELECTRIC BOAT CORPORATION. NUCLEAR REGIONAL MAINTENANCE DEPARTMENT

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 $218.6 million.

What is the period of performance?

Start: 2018-04-27. End: 2023-08-05.

What is Electric Boat Corporation's track record with similar nuclear maintenance contracts for the Navy?

Electric Boat Corporation (EBC) has a long and established history as the primary builder and maintainer of U.S. Navy submarines, including those with nuclear propulsion systems. EBC has consistently been awarded contracts for the construction, overhaul, repair, and modernization of these complex vessels. Their track record includes managing intricate nuclear maintenance schedules and adhering to stringent safety and operational standards. While specific details of past nuclear maintenance contracts are often sensitive, EBC's role as the sole builder of U.S. nuclear submarines implies a deep and proven capability in this specialized area. The Navy relies heavily on EBC's expertise for the sustainment of its nuclear fleet, indicating a generally positive performance history in fulfilling these critical requirements.

How does the pricing of this contract compare to similar naval maintenance services?

Directly comparing the pricing of this $218.6 million contract to similar naval maintenance services is challenging due to the highly specialized nature of nuclear propulsion systems and the sole-source award. The cost-plus-fixed-fee (CPFF) structure means that the final cost is determined by actual costs incurred plus a fixed fee, making direct price comparisons difficult without detailed cost breakdowns. However, CPFF contracts are generally used when the scope of work is uncertain or involves significant risk, and they can sometimes lead to higher overall costs compared to fixed-price contracts if not managed meticulously. Benchmarking would require access to data on the labor hours, material costs, and overhead associated with comparable nuclear maintenance tasks, which is often proprietary or classified. The absence of competition further complicates a direct value-for-money assessment based on price alone.

What are the primary risks associated with this sole-source, cost-plus-fixed-fee contract?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source nature means there is no competitive pressure to drive down costs or incentivize efficiency, potentially leading to higher prices for the government. The Navy cannot leverage market forces to ensure it is receiving the best possible value. Secondly, the CPFF structure, while suitable for uncertain work, carries the risk of cost escalation. If the contractor's costs increase, the government pays more, and the fixed fee remains constant. This necessitates robust government oversight to scrutinize costs, prevent waste, and ensure that the contractor is managing resources effectively. Without strong oversight, there is a risk that costs could exceed initial estimates significantly, impacting the overall value of the contract.

How effective is the Department of the Navy in overseeing long-term, sole-source maintenance contracts?

The Department of the Navy employs a range of oversight mechanisms for long-term, sole-source maintenance contracts, including program management reviews, contract surveillance, and cost-reimbursement controls. For CPFF contracts, the Navy typically assigns contracting officers' representatives (CORs) to monitor performance, track expenditures, and ensure compliance with contract terms. However, the effectiveness of oversight can vary depending on the complexity of the work, the availability of skilled government personnel, and the contractor's cooperation. For highly specialized areas like nuclear maintenance, the Navy often relies on the contractor's inherent expertise, which can sometimes create an information asymmetry that challenges oversight. While the Navy has established processes, the inherent risks of sole-source, CPFF contracts mean that continuous vigilance and robust auditing are crucial for ensuring effectiveness and accountability.

What are the historical spending patterns for nuclear regional maintenance by the Department of the Navy?

Historical spending patterns for nuclear regional maintenance by the Department of the Navy are characterized by significant, long-term investments due to the high cost and complexity of maintaining nuclear-powered vessels. These contracts are typically awarded to a limited number of specialized contractors, primarily Electric Boat Corporation and Huntington Ingalls Industries (Newport News Shipbuilding), which are the nation's only builders of nuclear submarines. Spending is driven by the operational tempo of the fleet, the lifecycle of the submarines, and the need for regular overhauls, repairs, and refueling. The total annual spending can fluctuate based on the number of vessels undergoing maintenance and the scope of work required, but it consistently represents a substantial portion of the Navy's shipbuilding and conversion budget. These expenditures are critical for ensuring the readiness and safety of the nuclear submarine force.

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: N0002418R4301

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

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: $231,894,066

Exercised Options: $231,894,066

Current Obligation: $218,647,437

Actual Outlays: $92,084,387

Subaward Activity

Number of Subawards: 42

Total Subaward Amount: $1,919,740

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline