DoD's $238.6M Nemmi Support Contract with Electric Boat Corporation Raises Concerns Over Competition and Value

Contract Overview

Contract Amount: $238,591,322 ($238.6M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2017-12-06

End Date: 2023-04-28

Contract Duration: 1,969 days

Daily Burn Rate: $121.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NEMMI SUPPORT

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $238.6 million to ELECTRIC BOAT CORPORATION for work described as: NEMMI SUPPORT Key points: 1. The contract awarded to Electric Boat Corporation for Nemmi Support is a significant expenditure of $238.6 million. 2. Lack of competition is a major red flag, as the contract was 'NOT COMPETED'. 3. The Cost Plus Fixed Fee (CPFF) pricing structure, combined with limited competition, presents a risk to achieving optimal value. 4. The sector is Ship Building and Repairing, a critical but often complex area for government procurement.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type, while common in complex shipbuilding, can lead to cost overruns if not managed tightly. Without competitive benchmarking, assessing the fairness of the fixed fee and overall pricing is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating a lack of competitive bidding. This significantly limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The absence of competition means taxpayers may be paying a premium for these services, as there was no market pressure to drive down costs.

Public Impact

Taxpayers may be overpaying for shipbuilding and repair services due to the lack of competition. The long duration of the contract (1969 days) suggests a critical, ongoing need, but the sole-source nature warrants scrutiny. The Department of the Navy's reliance on a single contractor for this support raises questions about strategic sourcing and future competition.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of transparency in pricing
Long contract duration without competition

Positive Signals

Essential support for naval operations
Established contractor with relevant experience

Sector Analysis

The Ship Building and Repairing sector (NAICS 336611) is characterized by high barriers to entry and specialized expertise. Government contracts in this area are often substantial and long-term, making competitive sourcing crucial for cost control.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. The sole-source nature likely precluded any opportunities for small business participation.

Oversight & Accountability

The sole-source award for a contract of this magnitude requires robust justification and oversight from the Department of the Navy to ensure fair and reasonable pricing and performance.

Related Government Programs

Ship Building and Repairing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits competition and price discovery.
Cost-plus contract type can incentivize cost overruns.
Lack of transparency in fee determination.
Potential for reduced value due to non-competitive nature.
Long contract duration without competitive re-evaluation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $238.6 million to ELECTRIC BOAT CORPORATION. NEMMI SUPPORT

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 $238.6 million.

What is the period of performance?

Start: 2017-12-06. End: 2023-04-28.

What specific justifications were provided for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. This often occurs due to unique capabilities, proprietary technology, or urgent needs. The Department of the Navy would need to document these justifications thoroughly, and the Government Accountability Office (GAO) may review these decisions if protested. Exploring options like phased competition or market research for future needs is vital.

How is the 'fixed fee' component of this Cost Plus Fixed Fee contract determined, and what mechanisms are in place to ensure it remains reasonable over the contract's life?

The fixed fee in a CPFF contract is negotiated at the outset and represents the contractor's profit. It's typically based on factors like complexity, risk, and the contractor's historical performance. Agencies use various methods, including benchmarking against similar contracts and assessing the contractor's proposed labor and overhead, to determine its reasonableness. Regular performance reviews and contract modifications are crucial for managing this fee effectively.

What performance metrics and oversight are in place to ensure the effectiveness and efficiency of Nemmi Support services provided by Electric Boat Corporation?

Effective oversight involves establishing clear performance work statements (PWS), key performance indicators (KPIs), and regular progress reviews. The Department of the Navy should be actively monitoring contractor performance against these metrics, conducting site visits, and ensuring deliverables meet quality standards. Robust contract administration and quality assurance surveillance plans are essential to guarantee the value and effectiveness of the services rendered.

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: N0002417R4315

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: $239,517,727

Exercised Options: $239,517,727

Current Obligation: $238,591,322

Actual Outlays: $148,946,007

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline