Navy awards $377.5M missile tube contract to Electric Boat Corp. for submarine production

Contract Overview

Contract Amount: $37,750,769 ($37.8M)

Contractor: Electric Boat Corporation

Awarding Agency: Department of Defense

Start Date: 2022-10-01

End Date: 2027-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $20.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: COLUMBIA TTF MISSILE TUBE PRODUCTION

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06340

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $37.8 million to ELECTRIC BOAT CORPORATION for work described as: COLUMBIA TTF MISSILE TUBE PRODUCTION Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Cost-plus-fixed-fee structure may incentivize cost overruns. 3. Long-term contract duration (5 years) suggests critical, ongoing need. 4. Sole contractor may indicate specialized capabilities or market concentration. 5. Focus on missile tube production highlights a key component of submarine readiness. 6. Contract value is substantial, reflecting the complexity and importance of the work.

Value Assessment

Rating: fair

The contract value of $377.5 million over five years for missile tube production appears significant. Without specific benchmarks for missile tube production costs or comparable sole-source contracts for similar components, a precise value-for-money assessment is challenging. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex defense procurements, carries inherent risks of cost escalation compared to fixed-price contracts. The fixed fee component, however, provides some predictability for the contractor's profit.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Electric Boat Corporation was the only vendor considered. This approach is typically used when a unique capability or proprietary technology is required, or when only one source can fulfill the requirement. The lack of competition means that the Navy did not benefit from potential price reductions or innovative solutions that might have emerged from a competitive bidding process.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The Navy's ability to negotiate the best possible price is diminished in a sole-source scenario.

Public Impact

The primary beneficiary is the U.S. Navy, ensuring the continued production of critical components for its submarine fleet. This contract directly supports the manufacturing of missile tubes, essential for the operational capability of submarines. The geographic impact is concentrated in Connecticut, where Electric Boat Corporation is located, supporting local jobs and the regional economy. Workforce implications include the need for skilled engineers, technicians, and manufacturing personnel at Electric Boat.

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.
Long contract duration may obscure potential for more efficient alternatives.
Lack of transparency in sole-source justification.
Potential for contractor to leverage sole-source position for future pricing.

Positive Signals

Electric Boat Corporation is a long-standing, experienced provider of submarine components.
Contract ensures critical supply chain for national defense.
Fixed fee provides some level of profit predictability for the contractor.
Long-term award suggests a stable, ongoing requirement for these components.

Sector Analysis

The defense industrial base, particularly the submarine manufacturing sector, is highly specialized and concentrated. Electric Boat Corporation is a dominant player in this niche, responsible for building nuclear-powered submarines for the U.S. Navy. This contract for missile tubes fits within the broader context of naval shipbuilding and defense manufacturing, a sector characterized by high barriers to entry, significant government investment, and long production cycles. Comparable spending benchmarks are difficult to establish due to the unique nature of submarine components and the limited number of qualified suppliers.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the specialized nature of missile tube production and the sole-source award to a large prime contractor, the direct impact on small businesses through set-asides is unlikely. However, Electric Boat Corporation may engage small businesses as subcontractors for various components or services, contributing indirectly to the small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Navy's contracting and program management offices. The Inspector General of the Department of Defense may conduct audits or investigations into the contract's performance and financial aspects, particularly given the cost-plus-fixed-fee structure. Transparency is limited due to the sole-source nature, but contract performance reviews and milestone tracking are expected oversight mechanisms.

Related Government Programs

Submarine Production Contracts
Naval Ship Systems
Defense Manufacturing
Missile Systems Components
Strategic Weapons Systems

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Long-term contract duration
Critical defense component procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.8 million to ELECTRIC BOAT CORPORATION. COLUMBIA TTF MISSILE TUBE PRODUCTION

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 $37.8 million.

What is the period of performance?

Start: 2022-10-01. End: 2027-09-30.

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

Electric Boat Corporation (EBC) has a long and established history as the primary builder of U.S. Navy submarines, including the Virginia-class and Columbia-class programs. Their expertise in submarine construction encompasses the integration of complex systems, including missile tubes. EBC has consistently been awarded major contracts for submarine construction and components by the Navy over many decades. While specific data on prior missile tube production contracts as a standalone procurement is not readily available in this dataset, their overall performance on large-scale submarine programs suggests a deep understanding of the requirements and manufacturing processes involved. The Navy's continued reliance on EBC for such critical components indicates a generally positive assessment of their past performance and capabilities in this specialized area.

How does the $377.5 million contract value compare to historical spending on missile tube production?

Direct historical spending comparisons for 'missile tube production' as a distinct contract category are challenging to isolate without more granular data. The $377.5 million awarded to Electric Boat Corporation over five years represents a significant investment in a critical submarine component. However, this figure needs to be contextualized within the overall budget for submarine construction and modernization. Missile tubes are integral parts of larger submarine platforms, and their cost is often embedded within broader shipbuilding contracts. Given the sole-source nature and the specialized manufacturing required, this contract value reflects the unique market position of Electric Boat and the strategic importance of ensuring a steady supply of these components for the Navy's fleet readiness and future submarine programs.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for missile tube production?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than might be achieved in a competitive bidding environment. The Navy has limited leverage to negotiate price reductions. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing incentives for the contractor to complete the work, can also incentivize cost overruns. If costs exceed initial estimates, the government bears the burden of these increased expenses, while the contractor's profit (the fixed fee) remains constant. This can lead to budget uncertainty and potential cost increases for the taxpayer. Effective oversight and robust cost accounting by the Navy are crucial to mitigate these risks.

What is the expected effectiveness of this contract in ensuring submarine readiness?

This contract is expected to be highly effective in ensuring submarine readiness by securing a dedicated supply of essential missile tubes for the U.S. Navy's submarine fleet. Missile tubes are critical components that house and launch strategic weapons systems, making their availability paramount for maintaining the operational capability and deterrence posture of submarines. By awarding a long-term contract to a sole, experienced provider like Electric Boat Corporation, the Navy aims to guarantee the production pipeline for these vital parts, thereby supporting both current operational needs and future submarine construction programs. The continuity provided by this award is crucial for long-term strategic planning and defense readiness.

How does this contract align with the Navy's long-term shipbuilding and modernization strategy?

This contract aligns directly with the Navy's long-term shipbuilding and modernization strategy, particularly concerning its submarine force. The Navy is investing heavily in replacing aging ballistic missile submarines (like the Ohio-class) with new Columbia-class submarines, which are equipped with advanced missile tubes. Ensuring a consistent and reliable supply of these critical components through a long-term award to a key industrial partner like Electric Boat Corporation is fundamental to executing this generational recapitalization. The contract supports the sustainment of existing submarine fleets while enabling the timely production and integration of new platforms, thereby maintaining the U.S.'s strategic deterrence capabilities.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003022R6003

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: $38,402,036

Exercised Options: $37,750,769

Current Obligation: $37,750,769

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $8,213,398

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline