DOE awards $14.77B for Naval Nuclear Laboratory operations, a significant investment in R&D
Contract Overview
Contract Amount: $14,773,195,999 ($14.8B)
Contractor: Fluor Marine Propulsion, LLC
Awarding Agency: Department of Energy
Start Date: 2018-07-12
End Date: 2028-09-30
Contract Duration: 3,733 days
Daily Burn Rate: $4.0M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Official Description: MANAGEMENT AND OPERATION OF THE NAVAL NUCLEAR LABORATORY AND NAVAL NUCLEAR PROPULSION PROGRAM SUPPORT
Place of Performance
Location: WEST MIFFLIN, ALLEGHENY County, PENNSYLVANIA, 15122
Plain-Language Summary
Department of Energy obligated $14.77 billion to FLUOR MARINE PROPULSION, LLC for work described as: MANAGEMENT AND OPERATION OF THE NAVAL NUCLEAR LABORATORY AND NAVAL NUCLEAR PROPULSION PROGRAM SUPPORT Key points: 1. This contract represents a substantial commitment to maintaining critical naval nuclear capabilities. 2. The long duration suggests a stable, long-term need for these specialized services. 3. The cost-plus-fixed-fee structure allows for flexibility but requires careful oversight of costs. 4. The single award indicates a high degree of specialization and limited contractor pool. 5. Performance context is crucial given the national security implications of the Naval Nuclear Propulsion Program. 6. Sector positioning is within advanced R&D, specifically for physical and engineering sciences.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging due to its unique nature and national security focus. The $14.77 billion over its term represents a significant investment. While the cost-plus-fixed-fee (CPFF) structure can lead to cost overruns if not managed tightly, it also provides flexibility for research and development activities where costs can be unpredictable. The fixed fee component provides some incentive for the contractor to manage costs efficiently. Without comparable contracts for similar scope and scale, a precise value-for-money assessment is difficult, but the sustained funding suggests perceived value by the agency.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple entities were likely considered. However, the fact that it resulted in a single award suggests that Fluor Marine Propulsion, LLC was the most qualified or best-positioned bidder for this highly specialized and critical function. The competition likely drove initial pricing, but the long-term nature and complexity of the work may limit ongoing competitive pressures.
Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best value for a critical national security function. While the initial competition is positive, the long-term nature of the contract necessitates ongoing vigilance to ensure continued cost-effectiveness.
Public Impact
The primary beneficiaries are the U.S. Navy and Department of Defense, ensuring the continued safe and effective operation of nuclear-powered vessels. Services delivered include research, development, design, construction, and operation of naval nuclear propulsion plants. The contract supports a highly specialized workforce, primarily located in Pennsylvania, contributing to the regional economy. This contract is essential for maintaining U.S. strategic deterrence and global naval presence.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost overruns are a potential risk with Cost Plus Fixed Fee contracts, requiring robust oversight.
- The long-term nature of the contract could lead to contractor complacency if performance metrics are not rigorously enforced.
- Dependence on a single contractor for such a critical function poses a strategic risk.
- Ensuring continuous innovation and technological advancement within the contracted scope requires proactive management.
Positive Signals
- The full and open competition at the outset suggests a strong initial selection process.
- The sustained award indicates a high level of trust and proven performance by Fluor Marine Propulsion, LLC.
- The contract's focus on R&D supports technological advancement in a critical national security area.
- The fixed fee component provides a degree of cost certainty and contractor incentive.
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The Naval Nuclear Propulsion Program is a unique and highly specialized area within this sector, with limited market comparables. The scale of this award ($14.77 billion) is exceptionally large, reflecting the immense scope and criticality of managing nuclear propulsion for the U.S. Navy. Spending in this niche R&D area is driven by national security imperatives rather than typical market dynamics.
Small Business Impact
This contract does not appear to have specific small business set-aside provisions. Given the highly specialized nature of the Naval Nuclear Laboratory and Propulsion Program, it is unlikely that small businesses would be primary contractors. However, Fluor Marine Propulsion, LLC may engage small businesses as subcontractors for specific support services, contributing to the broader small business ecosystem.
Oversight & Accountability
Oversight is likely managed through stringent Department of Energy and Department of Navy protocols, given the sensitive and critical nature of the work. Performance metrics, financial audits, and regular progress reviews would be standard accountability measures. Transparency may be limited due to national security concerns, but internal oversight mechanisms are expected to be robust. The Inspector General's office for the Department of Energy would likely have jurisdiction.
Related Government Programs
- Naval Nuclear Propulsion Program
- Department of Energy Research and Development
- National Nuclear Security Administration
- Defense Nuclear Facilities Safety Board
Risk Flags
- High dollar value
- Critical national security function
- Long contract duration
- Cost-Plus-Fixed-Fee structure
- Single award contract
Tags
research-and-development, department-of-energy, naval-nuclear-propulsion-program, definitive-contract, large-contract, full-and-open-competition, cost-plus-fixed-fee, pennsylvania, national-security, fluor-marine-propulsion-llc
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $14.77 billion to FLUOR MARINE PROPULSION, LLC. MANAGEMENT AND OPERATION OF THE NAVAL NUCLEAR LABORATORY AND NAVAL NUCLEAR PROPULSION PROGRAM SUPPORT
Who is the contractor on this award?
The obligated recipient is FLUOR MARINE PROPULSION, LLC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $14.77 billion.
What is the period of performance?
Start: 2018-07-12. End: 2028-09-30.
What is the historical spending trend for the Naval Nuclear Laboratory and Propulsion Program under previous contracts?
Historical spending data for the Naval Nuclear Laboratory and Propulsion Program is not publicly detailed in a way that allows for direct year-over-year comparison to this specific $14.77 billion award. However, the program has consistently received substantial federal funding for decades, reflecting its enduring importance to national security. Previous contracts, often held by related entities or predecessors to Fluor Marine Propulsion, LLC, have also represented multi-billion dollar commitments over extended periods. The scale of this current award is consistent with the long-term, high-cost nature of maintaining and advancing nuclear propulsion technology for the U.S. Navy. Fluctuations in spending would typically be tied to modernization efforts, new vessel construction cycles, and evolving technological requirements.
How does the fixed fee component of this contract compare to industry standards for similar large-scale R&D and operational support contracts?
The fixed fee component in a Cost Plus Fixed Fee (CPFF) contract, like this one, is negotiated at the outset and represents the contractor's profit. For large-scale R&D and operational support contracts, particularly those with high technical complexity and national security implications, fixed fees typically range from 5% to 15% of the estimated cost. Without specific details on the negotiated fee percentage for this $14.77 billion contract, a direct comparison is difficult. However, the Department of Energy would have benchmarked this fee against similar complex government contracts, considering factors like risk, innovation requirements, and the contractor's performance history. A fee significantly outside this range might raise questions about value for money or risk allocation.
What are the key performance indicators (KPIs) used to evaluate Fluor Marine Propulsion, LLC's performance under this contract?
Key Performance Indicators (KPIs) for a contract of this magnitude and criticality are extensive and likely cover multiple domains. While specific KPIs are often sensitive, they would typically include metrics related to the safety and reliability of nuclear propulsion systems, operational readiness of naval vessels, successful completion of research and development milestones, adherence to project schedules, cost control efficiency (within the CPFF structure), quality of engineering and technical support, and compliance with all regulatory and security requirements. Performance would be rigorously assessed through regular reviews, audits, and direct feedback from the Navy and DOE stakeholders who rely on these services.
What is the risk profile associated with Fluor Marine Propulsion, LLC as the sole contractor for this critical program?
The risk profile associated with Fluor Marine Propulsion, LLC being the sole contractor for the Naval Nuclear Laboratory and Propulsion Program is significant, primarily due to the program's critical national security implications. Key risks include potential disruptions if the contractor faces financial instability, major operational failures, or significant legal/compliance issues. There's also the risk of 'contractor lock-in,' where the specialized knowledge and infrastructure make it difficult and costly to transition to another provider. Mitigating these risks involves robust government oversight, strong contractual safeguards, contingency planning, and potentially fostering a competitive environment for future contract renewals or specific project components to ensure continued innovation and cost-effectiveness.
How has the geographic concentration of this contract in Pennsylvania impacted local economies and workforce development?
The concentration of this contract's operations in Pennsylvania has a substantial positive impact on the regional economy. It supports a highly skilled workforce in specialized fields such as nuclear engineering, physics, and advanced manufacturing. This creates high-paying jobs and stimulates local businesses through direct employment and indirect supply chain effects. Workforce development is fostered through training programs, apprenticeships, and partnerships with local educational institutions, ensuring a pipeline of talent for this critical sector. The long-term nature of the contract provides economic stability for the region, although it also creates a dependency on this single major employer.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: DE-SOL-0011530
Offers Received: 2
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Fluor Corporation
Address: 100 FLUOR DANIEL DR, GREENVILLE, SC, 29607
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $18,500,250,000
Exercised Options: $18,500,250,000
Current Obligation: $14,773,195,999
Actual Outlays: $9,062,911,054
Subaward Activity
Number of Subawards: 2431
Total Subaward Amount: $957,926,572
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2018-07-12
Current End Date: 2028-09-30
Potential End Date: 2028-09-30 00:00:00
Last Modified: 2026-03-31
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