Navy awards $34.5M contract for submarine repair, highlighting construction sector activity

Contract Overview

Contract Amount: $34,476,373 ($34.5M)

Contractor: THE Nutmeg Companies, Inc.

Awarding Agency: Department of Defense

Start Date: 2020-05-15

End Date: 2024-10-01

Contract Duration: 1,600 days

Daily Burn Rate: $21.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: REPAIR FAILING CI 58 SUBMARINE A SCHOOL

Place of Performance

Location: GROTON, NEW LONDON County, CONNECTICUT, 06349

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $34.5 million to THE NUTMEG COMPANIES, INC. for work described as: REPAIR FAILING CI 58 SUBMARINE A SCHOOL Key points: 1. Contract value of $34.5 million indicates significant investment in specialized infrastructure. 2. Full and open competition suggests a robust bidding process for this service. 3. The definitive contract type with a firm fixed price offers cost certainty. 4. Long duration of 1600 days points to a complex and extended repair project. 5. The award to The Nutmeg Companies, Inc. reflects their position in the construction market. 6. Focus on submarine repair underscores the critical nature of naval asset maintenance.

Value Assessment

Rating: good

The contract value of $34.5 million for submarine repair appears reasonable given the specialized nature of naval infrastructure maintenance. Benchmarking against similar large-scale construction and repair projects for defense assets suggests that costs are generally in line with market expectations for such complex undertakings. The firm fixed-price structure provides a degree of cost control for the government, although the long duration could introduce unforeseen challenges. Without specific per-unit cost data for repair elements, a precise value-for-money assessment is difficult, but the competitive award process lends confidence.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. With 7 bidders participating, the level of competition was substantial. This broad participation suggests that the market has multiple capable providers for this type of specialized submarine repair service. A higher number of bidders generally leads to more competitive pricing and a greater likelihood of the government securing favorable terms.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers, as it likely drove down prices and ensured the government received a fair market value for the repair services. It also signals that taxpayer funds are being utilized efficiently by selecting the most cost-effective and capable offer.

Public Impact

The primary beneficiaries are the U.S. Navy and its submarine fleet, ensuring operational readiness. Services delivered include critical repairs to submarine infrastructure, maintaining vessel integrity and functionality. The geographic impact is centered in Connecticut, where the repairs will likely take place, supporting the local economy. Workforce implications include employment opportunities for skilled construction and maritime trades personnel in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (1600 days) increases the risk of cost overruns due to potential inflation or unforeseen repair complexities.
Firm fixed-price contracts can expose the contractor to significant losses if repair needs are underestimated, potentially impacting project completion.
Dependence on a single contractor for a critical, long-term repair project could create vulnerabilities if performance issues arise.

Positive Signals

Awarded under full and open competition with multiple bidders (7) suggests a competitive market and likely fair pricing.
Firm fixed-price contract provides cost certainty for the government, limiting exposure to escalating costs.
The contract is for a definitive contract type, implying a clear scope of work and defined terms.
The contractor, The Nutmeg Companies, Inc., is likely experienced in commercial and institutional building construction, a relevant field.

Sector Analysis

The contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on specialized repair services for naval assets. This sector is crucial for maintaining critical infrastructure, including defense facilities. The $34.5 million award is a significant sum, reflecting the complexity and scale of submarine repair. Comparable spending in defense construction often involves large, long-term projects requiring specialized expertise and adherence to stringent quality and security standards. The market for such services is competitive, with established firms capable of undertaking high-value government contracts.

Small Business Impact

This contract was awarded under full and open competition and does not appear to have specific small business set-aside provisions. The prime contractor, The Nutmeg Companies, Inc., is not explicitly identified as a small business in the provided data. There is no information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is unclear, though large prime contractors often utilize small businesses for specialized support services.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm fixed-price definitive contract structure, which holds the contractor responsible for delivering the specified repairs within the agreed-upon price. Transparency is facilitated through the federal procurement data system where contract awards are reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Ship Repair Contracts
Defense Infrastructure Construction
Submarine Maintenance Programs
Federal Building and Repair Contracts

Risk Flags

Long contract duration may increase risk of cost escalation or scope creep.
Firm fixed-price contract places significant risk on the contractor for unforeseen cost increases.
Dependence on a single contractor for a critical, long-term asset repair.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.5 million to THE NUTMEG COMPANIES, INC.. REPAIR FAILING CI 58 SUBMARINE A SCHOOL

Who is the contractor on this award?

The obligated recipient is THE NUTMEG COMPANIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $34.5 million.

What is the period of performance?

Start: 2020-05-15. End: 2024-10-01.

What is the track record of The Nutmeg Companies, Inc. with federal contracts, particularly within the Department of Defense?

The provided data indicates The Nutmeg Companies, Inc. was awarded this $34.5 million contract by the Department of the Navy. Further analysis of federal procurement databases (like FPDS or SAM.gov) would be necessary to ascertain their complete federal contract history. This would include reviewing past awards, performance ratings, and any history of contract modifications or disputes. Understanding their experience with similar large-scale construction and repair projects, especially for naval vessels or defense infrastructure, is crucial for assessing their capability and reliability for this specific submarine repair task. A review of their past performance on similar contracts would provide valuable insight into their ability to meet deadlines, manage costs, and deliver quality work.

How does the $34.5 million contract value compare to similar submarine repair or naval construction projects?

The $34.5 million value for submarine repair is substantial and reflects the specialized and complex nature of maintaining naval assets. To benchmark this value, one would compare it to other definitive contracts awarded by the Department of Defense or other naval commands for similar repair, overhaul, or construction services on submarines or other major naval vessels. Factors such as the scope of work (e.g., hull integrity, propulsion systems, internal components), the specific class of submarine, and the duration of the contract (1600 days in this case) are critical for a meaningful comparison. While specific per-unit costs are not available, the number of bidders (7) suggests a competitive market, implying the price is likely aligned with market rates for such high-stakes projects. Without access to detailed cost breakdowns or a broader dataset of comparable contracts, a precise value-for-money assessment remains challenging, but the competitive award process provides a positive signal.

What are the primary risks associated with a firm fixed-price contract for a 1600-day submarine repair project?

The primary risk associated with a firm fixed-price (FFP) contract for a long-duration project like a 1600-day submarine repair is the potential for the contractor to incur significant losses if costs escalate beyond initial estimates. While FFP contracts offer cost certainty to the government, they place the financial risk on the contractor. For a project spanning over four years, unforeseen issues such as material price inflation, unexpected complexities discovered during the repair process, or labor cost increases can substantially impact the contractor's profitability. If the contractor faces severe financial strain, it could jeopardize project completion or lead to disputes. Conversely, if the contractor significantly underestimates costs, they might cut corners on quality, posing a risk to the submarine's integrity and operational safety. Robust oversight and clear contract terms are essential to mitigate these risks.

What does the 'Commercial and Institutional Building Construction' classification imply for the scope of this submarine repair contract?

The classification 'Commercial and Institutional Building Construction' (ND) for this submarine repair contract suggests that the work involves structural, mechanical, and potentially electrical repairs and maintenance that are analogous to those performed on large buildings. While submarines are highly specialized vessels, the underlying principles of construction, repair, and system integration share similarities with large-scale building projects. This classification implies the contract likely covers the physical structure of the submarine, its internal systems (like HVAC, plumbing, electrical distribution), and potentially habitability or operational spaces. It indicates that the contractor's expertise in managing complex construction projects, coordinating trades, ensuring structural integrity, and adhering to safety and quality standards is relevant and applicable to the repair tasks required for the submarine.

Given the 1600-day duration, what are the potential implications for the Navy's operational readiness and submarine availability?

A submarine repair project lasting 1600 days (approximately 4.4 years) represents a significant period during which a vessel will be unavailable for operational deployment. This extended downtime directly impacts the Navy's overall submarine fleet readiness and operational capacity. The Navy must strategically plan its deployment schedules and maintenance availabilities to ensure sufficient submarines remain active to meet strategic requirements. The long duration also necessitates careful management of the repair process to minimize delays and ensure the submarine returns to service as efficiently as possible. Furthermore, the Navy may need to reallocate resources or adjust mission profiles to compensate for the absence of the repaired submarine, potentially increasing the burden on other active vessels.

How does the definitive contract type influence the management and execution of this submarine repair project compared to other contract types?

A definitive contract is a contract that has been awarded and finalized, establishing the terms and conditions for the entire duration of the agreement. In the context of this submarine repair project, it signifies that the scope of work, pricing (firm fixed-price), delivery schedule, and other key provisions have been clearly defined and agreed upon between the Department of the Navy and The Nutmeg Companies, Inc. This contrasts with indefinite-delivery/indefinite-quantity (IDIQ) contracts, which allow for more flexibility in task orders over time. The definitive nature of this contract provides a high degree of certainty for both parties regarding their obligations and expectations. It simplifies management by establishing a fixed framework, but it also means that any changes to the scope or terms would likely require formal contract modifications, which can be a complex process.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N4008520R0034

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 OHIO AVE, NORWICH, CT, 06360

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $34,476,373

Exercised Options: $34,476,373

Current Obligation: $34,476,373

Actual Outlays: $567,641

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $8,298,109

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline