Navy awards $132.8M contract for NEMMI SUPPORT to Electric Boat Corporation, a sole-source procurement

Contract Overview

Contract Amount: $132,757,000 ($132.8M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2023-04-24

End Date: 2026-04-28

Contract Duration: 1,100 days

Daily Burn Rate: $120.7K/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 $132.8 million to ELECTRIC BOAT CORPORATION for work described as: NEMMI SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Cost-plus-fixed-fee structure may incentivize cost increases. 3. Long contract duration of 1100 days suggests a significant, ongoing need. 4. Awarded by the Department of the Navy, indicating a defense-centric requirement. 5. The contract's value is substantial, requiring careful oversight. 6. No small business set-aside was utilized for this procurement.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar sole-source procurements for submarine support. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or services where costs are uncertain, carries inherent risk of cost overruns. The fixed fee component provides some incentive for the contractor to manage costs, but the primary driver is cost reimbursement. Without competitive bids, it's difficult to ascertain if the pricing reflects optimal value for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential vendors. This typically occurs when only one vendor possesses the unique capabilities, technology, or security clearances required for the service. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price, potentially leading to higher costs for taxpayers compared to a competitively bid contract.

Public Impact

The primary beneficiary is the Department of the Navy, ensuring continued support for critical naval assets. Services delivered are essential for the maintenance and operation of specific naval platforms, likely submarines. Geographic impact is concentrated in Connecticut, where Electric Boat Corporation is headquartered and likely performs the work. Workforce implications include the retention of skilled labor at Electric Boat, supporting specialized shipbuilding and repair jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type can lead to cost overruns.
Lack of transparency in sole-source justification requires scrutiny.
Long contract duration may mask potential inefficiencies over time.

Positive Signals

Electric Boat Corporation is a highly specialized and experienced contractor for naval platforms.
The contract addresses a critical national defense need, ensuring operational readiness.
The fixed fee provides a defined profit margin, offering some cost predictability.
The definitive contract award signifies a commitment to a specific scope of work.

Sector Analysis

The shipbuilding and repair sector (NAICS 336611) is a highly specialized and concentrated industry, dominated by a few large prime contractors capable of handling complex naval vessel construction and maintenance. Government contracts, particularly for defense, represent a significant portion of this market. Electric Boat Corporation is a key player in this sector, particularly for submarine programs. This contract fits within the broader defense industrial base strategy, ensuring the availability of critical shipbuilding and repair capabilities.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. Given the specialized nature of submarine support and the sole-source award to a large prime contractor like Electric Boat Corporation, the direct impact on the small business ecosystem is likely minimal unless Electric Boat actively engages small businesses in its supply chain. Further investigation into subcontracting plans would be needed to assess broader small business implications.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the contract's terms, including performance standards and reporting requirements. Transparency may be limited due to the sole-source nature, but contract awards are generally reported. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Ship Systems Engineering Support
Submarine Maintenance and Modernization Programs
Defense Contract Management Agency (DCMA) Services
Shipbuilding and Repair Contracts

Risk Flags

Sole-source justification requires thorough review.
Cost-plus-fixed-fee structure warrants close cost monitoring.
Contract duration necessitates long-term performance assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $132.8 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 $132.8 million.

What is the period of performance?

Start: 2023-04-24. End: 2026-04-28.

What is the specific nature of the 'NEMMI SUPPORT' services being procured?

While the provided data abbreviates the service as 'NEMMI SUPPORT', it is highly probable that 'NEMMI' refers to the Naval Engineering, Maintenance, Modernization, and Integration program or a similar initiative. These services typically encompass a broad range of technical, engineering, maintenance, repair, and logistical support required to keep complex naval platforms, such as submarines, operational and up-to-date. This could include everything from routine maintenance and component repair to system upgrades, diagnostic services, and lifecycle support management. The specific details would be outlined in the contract's Statement of Work (SOW), which is not provided here but would detail the exact tasks, deliverables, and performance standards.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar services?

The Cost Plus Fixed Fee (CPFF) structure is often used for services where the scope of work is well-defined but the exact costs are difficult to estimate upfront, such as research and development or complex engineering services. In this structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government, as costs can fluctuate. However, it provides more flexibility than FFP when unforeseen technical challenges arise. Compared to Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF), CPFF offers a simpler profit calculation but potentially less incentive for the contractor to aggressively control costs beyond what is necessary to avoid disallowed expenses, as the fee is fixed regardless of final cost.

What are the risks associated with a sole-source award for a contract of this magnitude?

Sole-source awards, by definition, eliminate competitive bidding, which is a primary mechanism for ensuring fair and reasonable pricing. The main risk is that the government may pay a higher price than it would have in a competitive environment. Without competing offers, it's harder to benchmark the contractor's proposed costs against market rates or alternative solutions. Furthermore, sole-source awards can sometimes indicate a lack of market research or planning by the procuring agency, or they may reflect genuine unique capabilities. In this case, the risk is that taxpayers may be bearing a premium for the lack of competition, and the government has fewer options if performance issues arise, as switching contractors would be exceptionally difficult and costly.

What is Electric Boat Corporation's track record with the Department of the Navy for similar support contracts?

Electric Boat Corporation (EBC) has an extensive and long-standing track record with the Department of the Navy, particularly as the primary builder and support provider for U.S. Navy submarines. EBC has historically been awarded numerous large, complex, and often sole-source contracts for submarine construction, overhaul, repair, and lifecycle support. Their performance record is generally considered strong within the defense industrial base, given their specialized expertise and critical role in national security. However, like any large contractor managing complex, multi-year programs, there can be instances of cost growth, schedule adjustments, or performance challenges that are subject to ongoing oversight and negotiation with the Navy. The specific performance metrics for this 'NEMMI SUPPORT' contract would be detailed in internal Navy evaluations.

How does the $132.8 million award compare to historical spending on submarine support by the Navy?

The $132.8 million award represents a significant, but not unprecedented, investment in submarine support. The U.S. Navy's annual budget for shipbuilding, conversion, and repair is in the tens of billions of dollars. Contracts for submarine maintenance, modernization, and lifecycle support are typically multi-year and can range from tens of millions to several billion dollars, depending on the scope (e.g., routine maintenance vs. major overhaul or refit). This specific award appears to be for a defined period (approximately 3 years) and likely covers a specific set of support activities. Historical spending patterns show consistent, substantial investment in submarine readiness, making this award consistent with the Navy's ongoing commitment to its submarine fleet, though the exact 'value for money' depends heavily on the specific services rendered and their criticality.

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: N0002422R4300

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: $273,472,009

Exercised Options: $161,143,728

Current Obligation: $132,757,000

Actual Outlays: $22,430,604

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline