Navy Awards $653M Ship Building Contract to Electric Boat Corporation for Submarine Maintenance

Contract Overview

Contract Amount: $652,960,237 ($653.0M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-12

End Date: 2028-11-30

Contract Duration: 1,540 days

Daily Burn Rate: $424.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: CONTINUATION CONTRACT TO N00024-19-C-2125

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $653.0 million to ELECTRIC BOAT CORPORATION for work described as: CONTINUATION CONTRACT TO N00024-19-C-2125 Key points: 1. Significant contract value of $653 million awarded to a single, established provider. 2. Limited competition is noted, with the contract type being 'NOT COMPETED'. 3. Potential risks include lack of competitive pricing and reliance on a sole provider for critical services. 4. The sector is dominated by a few large players, with Electric Boat being a key entity in shipbuilding.

Value Assessment

Rating: questionable

The contract is a continuation, suggesting a history with the provider. Without competitive bids, it's difficult to assess if the pricing is optimal compared to potential alternatives. The Cost Plus Fixed Fee structure can lead to cost overruns if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source or limited competition award. This approach bypasses the typical price discovery mechanisms of competitive bidding, potentially leading to higher costs for taxpayers.

Taxpayer Impact: The lack of competition raises concerns about the best use of taxpayer funds, as a more competitive process could have yielded lower prices or better value.

Public Impact

Impacts national security through continued support for critical naval assets. Affects the shipbuilding and repair sector, particularly in Connecticut. Ensures the operational readiness of the submarine fleet.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost-plus contract type
Long duration

Positive Signals

Ensures continuity of critical services
Supports a key defense contractor

Sector Analysis

This contract falls within the shipbuilding and repair sector, a highly specialized and capital-intensive industry. Spending benchmarks are difficult to establish due to the unique nature of naval vessel construction and maintenance, but this represents a substantial investment.

Small Business Impact

The data indicates this is a large prime contract awarded to Electric Boat Corporation, a major defense contractor. There is no direct indication of small business subcontracting in the provided data, but large prime contracts often involve a network of smaller suppliers.

Oversight & Accountability

As a continuation contract, oversight likely builds upon existing frameworks. However, the sole-source nature necessitates rigorous monitoring of costs and performance to ensure accountability and prevent potential inefficiencies.

Related Government Programs

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

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration (over 4 years)
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $653.0 million to ELECTRIC BOAT CORPORATION. CONTINUATION CONTRACT TO N00024-19-C-2125

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 $653.0 million.

What is the period of performance?

Start: 2024-09-12. End: 2028-11-30.

What specific factors justified the sole-source award for this continuation contract, and how are cost efficiencies being ensured?

The justification for a sole-source award typically involves unique capabilities, critical national security needs, or the impracticality of switching providers mid-project. For this contract, the specific rationale needs to be detailed in the contract's justification and approval (J&A) document. Ensuring cost efficiencies would rely on robust oversight of the Cost Plus Fixed Fee structure, including detailed cost tracking, performance metrics, and potentially independent cost reviews to validate expenditures.

What are the primary risks associated with a long-term, sole-source contract for submarine maintenance, and what mitigation strategies are in place?

The primary risks include potential cost escalation due to the absence of competitive pressure, vendor lock-in limiting future flexibility, and a possible decline in innovation if the contractor faces no external challenges. Mitigation strategies could involve strict contract performance clauses, regular performance reviews, benchmarking against industry standards where possible, and maintaining open communication channels to encourage efficiency improvements. The government may also conduct market research periodically to assess potential future competition.

How does this contract contribute to the overall effectiveness and readiness of the U.S. Navy's submarine fleet?

This contract is crucial for maintaining the operational readiness and effectiveness of the Navy's submarine fleet by ensuring that these complex vessels receive necessary maintenance, repairs, and potential upgrades. Consistent and expert servicing by a specialized contractor like Electric Boat is vital for the longevity and performance of submarines, which are critical assets for national security. The long-term nature of the contract suggests a commitment to sustained fleet readiness.

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: $712,627,590

Exercised Options: $712,627,590

Current Obligation: $652,960,237

Actual Outlays: $2,409,014

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $59,897

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline