Electric Boat Corp. awarded $987.8M for submarine construction, with a significant portion for SSN 21 class

Contract Overview

Contract Amount: $987,764,702 ($987.8M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 1996-06-15

End Date: 2015-08-26

Contract Duration: 7,011 days

Daily Burn Rate: $140.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 200610!000131!1700!N62789!SUPERVISOR SHIPBUILDING CONVERSI!N0002496C2108 !A!N! !N! !A01182!20060728!20041208!963737366!963737366!001381284!N!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW LONDON !CONN !-000000628866!N!N!000000000000!1904!SUBMARINES !A3 !SHIPS !258 !SSN 21 !336611!E! !3! ! !B! ! !99990909!B! ! !A! !D!N!L!1!001!N!3A!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! !1724!N62789!0001! !

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340, UNITED STATES OF AMERICA

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $987.8 million to ELECTRIC BOAT CORPORATION for work described as: 200610!000131!1700!N62789!SUPERVISOR SHIPBUILDING CONVERSI!N0002496C2108 !A!N! !N! !A01182!20060728!20041208!963737366!963737366!001381284!N!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW … Key points: 1. Contract awarded to a single, established supplier for a critical defense platform. 2. Pricing structure is fixed-price incentive, aiming to balance cost control with performance. 3. Long-term contract duration suggests a stable, ongoing need for these specialized services. 4. Geographic concentration in Connecticut highlights regional economic dependence on this sector. 5. The contract falls under a broader shipbuilding category, indicating significant defense spending in this area.

Value Assessment

Rating: fair

The contract's value of $987.8 million for submarine construction is substantial. However, without specific benchmarks for the SSN 21 class or comparable submarine contracts, a precise value-for-money assessment is challenging. The fixed-price incentive (FPI) structure suggests an attempt to manage costs, but the final price could vary based on performance incentives. The long duration of the contract (over 7,000 days) also implies potential for cost escalation over time.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Electric Boat Corporation. This indicates that the Department of the Navy identified Electric Boat as the only responsible source capable of fulfilling the requirement, likely due to specialized expertise, existing infrastructure, or unique capabilities related to submarine construction. The lack of competition means that price discovery through market forces was not utilized.

Taxpayer Impact: Sole-source awards can limit opportunities for taxpayers to benefit from competitive pricing, potentially leading to higher costs than if multiple bidders had vied for the contract.

Public Impact

The primary beneficiaries are the U.S. Navy and national security, through the acquisition of advanced submarines. Services delivered include the construction and potentially the modification or maintenance of submarines, specifically the SSN 21 class. The geographic impact is concentrated in Groton, Connecticut, and the surrounding New London area, supporting a significant regional economy. Workforce implications include the sustained employment of highly skilled engineers, technicians, and laborers within the shipbuilding industry in Connecticut.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Long contract duration may lead to cost overruns if not managed effectively.
High concentration of spending in one company and region could pose supply chain risks.

Positive Signals

Award to a known, experienced contractor (Electric Boat) reduces technical risk.
Fixed-price incentive contract aims to align contractor and government interests on cost and performance.
Long-term nature provides stability for critical defense industrial base.

Sector Analysis

This contract falls within the Defense sector, specifically the shipbuilding and maintenance sub-sector. The U.S. defense budget allocates significant resources to naval capabilities, including submarine construction. Electric Boat Corporation is a major player in this specialized market, historically responsible for building U.S. nuclear submarines. Comparable spending benchmarks would typically involve other major naval vessel construction contracts, which are often large, complex, and awarded through limited or sole-source means due to the unique nature of the industry.

Small Business Impact

There is no indication of a small business set-aside for this contract. Given the specialized nature of submarine construction and the sole-source award to a large prime contractor like Electric Boat Corporation, the primary focus is on the prime's capabilities. Subcontracting opportunities for small businesses may exist within the broader supply chain managed by Electric Boat, but this contract itself does not appear to directly target small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Government Accountability Office (GAO) may review contract awards and performance if protests arise or through broader audits. The Inspector General of the Department of Defense would also have jurisdiction to investigate fraud, waste, or abuse related to this significant expenditure. Transparency is generally limited for sole-source defense contracts, with details often classified or restricted.

Related Government Programs

Naval Shipbuilding
Submarine Procurement
Defense Contracts
Fixed-Price Incentive Contracts
Department of the Navy Contracts

Risk Flags

Sole-source award
Long contract duration
High dollar value
Specialized industry

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $987.8 million to ELECTRIC BOAT CORPORATION. 200610!000131!1700!N62789!SUPERVISOR SHIPBUILDING CONVERSI!N0002496C2108 !A!N! !N! !A01182!20060728!20041208!963737366!963737366!001381284!N!ELECTRIC BOAT CORPORATION !75 EASTERN POINT RD !GROTON !CT!06340!34180!011!09!GROTON !NEW LONDON !CONN !-000000628866!N!N!000000000000!1904!SUBMARINES !A3 !SHIPS !258 !SSN 21 !336611!E! !3! ! !B! ! !999

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 $987.8 million.

What is the period of performance?

Start: 1996-06-15. End: 2015-08-26.

What is the historical spending pattern for submarine construction contracts awarded to Electric Boat Corporation?

Electric Boat Corporation has a long and established history of constructing submarines for the U.S. Navy. Historical data indicates consistent, large-scale awards for various submarine classes, including attack submarines (SSN) and ballistic missile submarines (SSBN). For instance, prior contracts have covered the Seawolf class and the Virginia class (SSN 774). Spending has often been in the hundreds of millions to billions of dollars per contract, reflecting the complexity and cost of nuclear submarine construction. The SSN 21 class, mentioned in this contract's data, represents a specific generation of attack submarines, and Electric Boat has been the primary, if not sole, builder for these platforms over extended periods, leading to significant cumulative federal spending.

How does the pricing structure (Fixed Price Incentive) typically perform in large defense contracts?

A Fixed Price Incentive (FPI) contract is designed to share the risks and rewards between the government and the contractor. It establishes a target cost, a target profit, and a price ceiling. If the final cost is below the target, both parties share in the savings according to a pre-negotiated formula. If the final cost exceeds the target, the contractor bears an increasing share of the overrun until the price ceiling is reached, after which the contractor is responsible for all additional costs. FPI contracts can be effective in motivating contractors to control costs while ensuring a reasonable profit, but they require robust government oversight to monitor cost performance and ensure the incentive structure remains effective throughout the contract's life. Performance can vary significantly based on the accuracy of the initial cost estimates and the contractor's efficiency.

What are the key risks associated with a sole-source award for a major defense system like submarines?

The primary risk of a sole-source award for a major defense system like submarines is the lack of competitive pressure, which can lead to higher prices than might be achieved in a competitive bidding process. This reduces the government's leverage in negotiating terms and costs. Additionally, reliance on a single supplier can create vulnerabilities in the supply chain and reduce innovation, as there is less incentive for alternative solutions to emerge. It also concentrates critical industrial capabilities within one entity, potentially posing a long-term strategic risk if that entity faces financial difficulties or operational challenges. Ensuring robust oversight and performance management becomes even more critical in sole-source situations.

What is the typical performance track record of Electric Boat Corporation on large submarine contracts?

Electric Boat Corporation generally has a strong track record in delivering complex submarine platforms for the U.S. Navy. As a long-standing prime contractor, they possess deep expertise and established infrastructure for nuclear submarine construction. While specific contract performance metrics (cost, schedule, technical) can vary, they have successfully delivered numerous submarines across different classes, including the SSN 688 (Improved), Seawolf, and Virginia classes. Issues such as cost overruns or schedule delays, common in large, technologically advanced defense programs, have occurred, but the company has consistently been relied upon to fulfill the Navy's strategic submarine requirements. Their performance is often evaluated against stringent military specifications and program objectives.

How does the geographic concentration in Connecticut impact the broader defense industrial base?

The concentration of submarine construction expertise and facilities in Groton, Connecticut, represents a critical node in the U.S. defense industrial base. This geographic clustering fosters a highly skilled workforce and specialized supply chains, which are essential for the unique demands of nuclear submarine production. However, it also creates a dependency on this region for a vital national security capability. While beneficial for local economies and the development of specialized skills, such concentration can also present risks. Disruptions in the region (e.g., natural disasters, labor disputes, economic downturns) could significantly impact the Navy's ability to procure and maintain its submarine fleet. Furthermore, it may limit the development of similar capabilities in other regions, potentially reducing overall industrial resilience.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 75 EASTERN POINT RD, GROTON, CT, 06340

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline