DoD's $1.37B Submarine Planning Yard Contract Awarded to Electric Boat Corp. Faces Scrutiny

Contract Overview

Contract Amount: $1,370,352,119 ($1.4B)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-11

End Date: 2028-12-31

Contract Duration: 3,461 days

Daily Burn Rate: $395.9K/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 $1.37 billion to ELECTRIC BOAT CORPORATION for work described as: SUBMARINE PLANNING YARD Key points: 1. The contract awarded to Electric Boat Corporation for submarine planning yard services is a significant expenditure. 2. Lack of competition raises concerns about potential overpricing and limited innovation. 3. The long duration and cost-plus structure may increase financial risk for taxpayers. 4. This spending falls within the broader context of naval shipbuilding and repair, a sector known for high costs and long lead times.

Value Assessment

Rating: questionable

The contract's cost-plus fixed fee structure, combined with a lack of competition, makes a direct pricing assessment difficult. Without comparable contracts or competitive bids, it's challenging to determine if the $1.37 billion represents fair value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs compared to a competitive environment. The rationale for sole-sourcing should be clearly documented.

Taxpayer Impact: The absence of competition for a contract of this magnitude raises concerns about taxpayer value. Without competitive pressure, there's a risk that costs could be inflated, ultimately impacting the defense budget.

Public Impact

Taxpayers may be paying a premium due to the lack of competitive bidding. The long contract duration could lock in potentially inefficient practices. The strategic importance of submarine planning may justify sole-sourcing, but transparency is crucial. Future submarine programs could be impacted by the pricing established in this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus contract type
Long contract duration
High dollar value

Positive Signals

Essential service for submarine readiness
Established contractor with relevant experience

Sector Analysis

This contract falls under the Ship Building and Repairing sector (NAICS 336611), which is characterized by complex, long-term projects and significant capital investment. Spending benchmarks in this sector are generally high due to the specialized nature of naval vessel construction and maintenance.

Small Business Impact

There is no indication that small businesses were involved in this specific contract award. The nature of submarine construction and planning typically involves large, specialized prime contractors, potentially limiting direct opportunities for small businesses.

Oversight & Accountability

Oversight will be critical to ensure cost control and performance given the sole-source nature and cost-plus structure. Regular audits and performance reviews by the Department of the Navy are essential to safeguard taxpayer funds.

Related Government Programs

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

Risk Flags

Sole-source award lacks competition
Cost-plus contract type can inflate costs
Long contract duration increases risk
High contract value requires stringent oversight
Potential for cost overruns
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.37 billion 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 $1.37 billion.

What is the period of performance?

Start: 2019-07-11. End: 2028-12-31.

What is the justification for awarding this contract on a sole-source basis, and what measures are in place to ensure cost reasonableness?

The justification for sole-sourcing typically relates to unique capabilities or urgent needs. To ensure cost reasonableness, the Department of the Navy should conduct thorough cost analyses, independent government cost estimates, and implement robust oversight mechanisms, including audits and performance monitoring, throughout the contract's life cycle.

What are the potential risks associated with a cost-plus fixed fee contract for submarine planning, especially in a sole-source scenario?

Cost-plus contracts can incentivize contractors to incur more costs, as a portion of their profit is tied to the total cost. In a sole-source scenario, the absence of competitive pressure exacerbates this risk, potentially leading to cost overruns and reduced efficiency. The fixed fee component aims to limit profit, but overall cost control remains a significant concern.

How does this contract contribute to the long-term strategic goals of the Navy's submarine force, and is the investment justified by the expected outcomes?

Submarine planning yards are crucial for the design, modernization, and sustainment of the submarine fleet. This contract likely supports critical, long-term strategic objectives. Justification hinges on the Navy demonstrating a clear link between the planning services provided and the operational readiness and future capabilities of its 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: N0002418R2125

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: $1,386,491,611

Exercised Options: $1,386,491,611

Current Obligation: $1,370,352,119

Actual Outlays: $40,808,350

Subaward Activity

Number of Subawards: 1292

Total Subaward Amount: $240,918,828

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline