Navy's $60M Engineering Services Contract Awarded to Electric Boat Corporation Raises Value and Competition Questions

Contract Overview

Contract Amount: $60,432,785 ($60.4M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2017-05-01

End Date: 2022-09-30

Contract Duration: 1,978 days

Daily Burn Rate: $30.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CT::IGF TRIDENT UK SSI 8 TEMPALT 370.02 SUPPORT

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $60.4 million to ELECTRIC BOAT CORPORATION for work described as: IGF::CT::IGF TRIDENT UK SSI 8 TEMPALT 370.02 SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of the contract (1978 days) suggests a long-term need for these engineering services. 3. The cost-plus-fixed-fee structure may incentivize cost overruns, requiring robust oversight. 4. Lack of competition raises concerns about whether the government secured the best possible value. 5. The contract's focus on engineering services for a specific platform indicates specialized requirements. 6. The geographic location of the contractor (Connecticut) may influence local economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this $60 million contract is challenging due to the sole-source award and lack of publicly available comparable data. The cost-plus-fixed-fee (CPFF) contract type, while common for complex projects, can lead to higher final costs compared to fixed-price contracts if not managed carefully. Without competitive bids, it's difficult to definitively assess if the pricing reflects fair market value or if there were opportunities for cost savings through a more competitive procurement process. The significant duration and value suggest a critical need, but the absence of competition warrants scrutiny regarding overall value for taxpayer money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Electric Boat Corporation, was solicited. This approach is typically used when only one responsible source is available or when there is a compelling justification for excluding full and open competition. The lack of multiple bidders means there was no direct price competition, which can limit the government's ability to negotiate the lowest possible price and may result in a higher overall cost to the taxpayer.

Taxpayer Impact: Sole-source awards limit the government's leverage in price negotiations, potentially leading to higher expenditures for taxpayers compared to competitively awarded contracts. This reduces the incentive for contractors to offer their most competitive pricing.

Public Impact

The primary beneficiary is Electric Boat Corporation, a key defense contractor, which receives substantial revenue. The services delivered are critical engineering support, likely for naval platforms or systems. The geographic impact is concentrated in Connecticut, where Electric Boat Corporation is headquartered, potentially supporting local jobs and the regional economy. Workforce implications include the employment of engineers and technical staff at Electric Boat Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs.
Cost-plus-fixed-fee structure may incentivize cost overruns.
Lack of transparency in pricing due to no competitive bidding.
Long contract duration could indicate potential for scope creep if not managed.
Limited public information on specific deliverables and performance metrics.

Positive Signals

Electric Boat Corporation is a long-standing, experienced defense contractor with a known track record.
The contract addresses a specific, likely critical, engineering need for the Department of the Navy.
The fixed fee component of the CPFF contract provides some cost certainty for the contractor's profit.
The contract duration suggests a stable, ongoing requirement, allowing for focused expertise development.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the defense industrial base. The market for specialized naval engineering services is often dominated by a few large, established firms due to the high barriers to entry, including security clearances, specialized knowledge, and existing relationships with the Department of Defense. Spending in this sector is substantial, driven by the need for design, development, and sustainment of complex military platforms. Comparable spending benchmarks are difficult to establish without more specific details on the services rendered, but large-scale engineering support contracts for naval programs can range from tens to hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false. Furthermore, the 'sb': false flag suggests no specific subcontracting goals for small businesses were mandated within this award. This means that opportunities for small businesses to participate in this contract are likely limited to those that might be solicited by the prime contractor, Electric Boat Corporation, on a non-mandated basis. The absence of set-asides or specific subcontracting plans could limit the direct economic benefit to the small business ecosystem associated with this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight is crucial to monitor expenditures and ensure the fixed fee is earned appropriately. Inspector General jurisdiction would apply, allowing for audits and investigations into potential fraud, waste, or abuse. Transparency is moderate; while contract award details are public, the specifics of cost build-ups and performance metrics may be less accessible due to proprietary or national security concerns.

Related Government Programs

Naval Ship Engineering Support
Defense Contractor Services
Submarine Development Programs
Department of Defense Engineering Contracts
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole Source Award
Cost-Plus-Fixed-Fee Structure
Lack of Competition
Potential for Cost Overruns
Limited Transparency in Pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.4 million to ELECTRIC BOAT CORPORATION. IGF::CT::IGF TRIDENT UK SSI 8 TEMPALT 370.02 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 $60.4 million.

What is the period of performance?

Start: 2017-05-01. End: 2022-09-30.

What is the specific nature of the engineering services provided under this contract?

The provided data indicates the contract is for 'ENGINEERING SERVICES' (NAICS 541330) awarded to Electric Boat Corporation by the Department of the Navy. While the specific nature of the services is not detailed in the provided data snippet, Electric Boat Corporation is a primary builder of submarines for the U.S. Navy. Therefore, it is highly probable that these engineering services relate to the design, development, modification, maintenance, or sustainment of naval vessels, likely submarines, or associated systems. This could encompass a wide range of activities, including systems engineering, naval architecture, mechanical engineering, electrical engineering, and software engineering, all tailored to the unique requirements of naval platforms.

How does the $60.4 million contract value compare to similar engineering services contracts for naval platforms?

Comparing the $60.4 million value requires context on the scope and duration. This contract spans nearly five years (May 2017 to September 2022), averaging over $12 million per year. For specialized engineering services supporting major defense platforms like submarines, this value is not unusual, especially considering the complexity and long lead times involved. However, without knowing the exact deliverables (e.g., R&D, sustainment, specific system design), a precise benchmark is difficult. Contracts for major platform development can reach billions, while smaller sustainment or upgrade contracts might be in the tens of millions. The sole-source nature also complicates direct value comparison, as competitive bids often drive prices down.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing and reduced incentive for the contractor to be highly efficient. The government may not be securing the best possible value. Secondly, the CPFF structure, while providing some cost certainty through the fixed fee, can incentivize the contractor to incur more costs to justify the fee, especially if oversight is not rigorous. There's a risk of cost overruns exceeding initial estimates, and the contractor might be less motivated to find cost-saving measures compared to fixed-price contracts. Robust oversight and detailed performance metrics are critical to mitigate these risks.

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

Electric Boat Corporation (EBC) has an extensive and long-standing track record with the Department of the Navy, primarily as the designer and builder of nuclear-powered submarines. EBC has been a critical partner for decades, responsible for the construction and lifecycle support of numerous submarine classes. Their history includes managing large, complex, and high-value contracts involving sophisticated engineering and technical services. Given their sole-source provider status for submarine construction, it's expected they would also be the primary recipient for related engineering support services, suggesting a deep, established relationship and a proven, albeit non-competed, capability in this domain.

How has federal spending on engineering services (NAICS 541330) trended over the period of this contract (2017-2022)?

Federal spending on engineering services (NAICS 541330) generally remained robust and saw an increasing trend during the 2017-2022 period, largely driven by defense and infrastructure investments. The Department of Defense is consistently the largest federal buyer of engineering services, accounting for a significant portion of the total. While specific aggregate data for NAICS 541330 across all agencies isn't provided here, broader trends indicate sustained or growing demand for engineering expertise in areas like defense systems development, modernization, and infrastructure projects. This contract's value aligns with the typical scale of major defense engineering support contracts awarded during that timeframe.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003017R0023

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: $64,868,094

Exercised Options: $60,432,785

Current Obligation: $60,432,785

Actual Outlays: $974,597

Subaward Activity

Number of Subawards: 98

Total Subaward Amount: $15,549,046

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline