DOE's $118.8M contract for nuclear fuel services awarded to Nuclear Fuel Services Inc. without competition
Contract Overview
Contract Amount: $118,855,750 ($118.9M)
Contractor: Nuclear Fuel Services Inc
Awarding Agency: Department of Energy
Start Date: 2002-10-15
End Date: 2005-01-30
Contract Duration: 838 days
Daily Burn Rate: $141.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Other
Place of Performance
Location: ERWIN, UNICOI County, TENNESSEE, 37650
Plain-Language Summary
Department of Energy obligated $118.9 million to NUCLEAR FUEL SERVICES INC for work described as: Key points: 1. The contract's value of over $118 million for nuclear fuel services raises questions about cost-effectiveness due to the lack of competitive bidding. 2. Awarding the contract on a sole-source basis limits opportunities for price discovery and potentially higher costs for taxpayers. 3. The fixed-price incentive contract type suggests an attempt to manage costs, but the absence of competition hinders benchmarking. 4. Performance context is limited as this was a sole-source award, making external comparisons difficult. 5. The contract falls within the basic inorganic chemical manufacturing sector, specifically related to nuclear fuel. 6. The duration of the contract (838 days) indicates a significant, ongoing need for these specialized services.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to its sole-source nature. Without competing bids, it's difficult to ascertain if the $118.8 million represents a fair market price for the nuclear fuel services provided. The fixed-price incentive structure aims to control costs, but the lack of competitive pressure means there's less assurance of optimal value for taxpayer dollars compared to a fully competed contract. Further analysis would require detailed cost breakdowns and comparisons to similar, albeit potentially scarce, sole-source procurements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning that only one vendor, Nuclear Fuel Services Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple bidders vying for the contract. The lack of competition means there were no alternative proposals to compare against, potentially leading to a less favorable price for the government and limiting the government's ability to explore innovative solutions from a wider market.
Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that often arise from competitive bidding. The government may end up paying more than necessary without the pressure of competing offers.
Public Impact
The primary beneficiary is the Department of Energy, which secures essential nuclear fuel services for its operations. The services delivered are critical for maintaining the nation's nuclear capabilities and research infrastructure. The contract's geographic impact is primarily in Tennessee, where Nuclear Fuel Services Inc. is located and likely performs the work. The contract supports specialized jobs within the nuclear fuel manufacturing and processing industry.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated prices.
- Sole-source awards can stifle innovation by not engaging a broader market.
- Limited transparency in pricing due to absence of bids.
Positive Signals
- Fixed-price incentive contract type aims to control costs.
- Contract addresses a critical national need for nuclear fuel services.
- Nuclear Fuel Services Inc. is likely a specialized provider with unique capabilities.
Sector Analysis
This contract falls within the 'All Other Basic Inorganic Chemical Manufacturing' sector, specifically focusing on nuclear fuel. This is a highly specialized niche within the broader chemical industry, often characterized by significant regulatory oversight, high barriers to entry, and a limited number of qualified providers. Comparable spending benchmarks are difficult to establish due to the unique nature of nuclear fuel production and the typical reliance on sole-source or limited competition awards for such critical national security or energy infrastructure components.
Small Business Impact
The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a likely large, specialized entity, there are no direct subcontracting implications for small businesses mentioned in this data. The focus is on a single, prime contractor for a critical, specialized service.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy's internal procurement and program management structures. Given the nature of nuclear materials, stringent regulatory and safety oversight from relevant federal agencies (e.g., NRC, if applicable) would also be expected. Transparency is limited by the sole-source nature, but contract award details and performance reports, if publicly available, would offer some insight. Inspector General jurisdiction would apply to investigate potential fraud, waste, or abuse.
Related Government Programs
- Department of Energy Nuclear Programs
- Nuclear Materials Management
- Basic Inorganic Chemical Manufacturing
- Federal Fuel Cycle Programs
Risk Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns without competitive pressure
Tags
department-of-energy, nuclear-fuel, basic-inorganic-chemical-manufacturing, sole-source, fixed-price-incentive, tennessee, large-contract, chemical-manufacturing, national-security, energy-sector
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $118.9 million to NUCLEAR FUEL SERVICES INC. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is NUCLEAR FUEL SERVICES INC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $118.9 million.
What is the period of performance?
Start: 2002-10-15. End: 2005-01-30.
What is the specific nature of the nuclear fuel services provided under this contract?
The contract NA (Notice of Action) number 325188, awarded to Nuclear Fuel Services Inc. (co), falls under the PSC (Product Service Code) category related to 'All Other Basic Inorganic Chemical Manufacturing' (nd). While the specific 'nuclear fuel services' are not detailed in the provided data, this classification suggests the contract likely involves the processing, manufacturing, or handling of materials essential for nuclear reactors or weapons programs. This could encompass activities such as uranium enrichment, fuel fabrication, or the management of nuclear materials. The Department of Energy (ag) is the contracting agency, indicating a focus on national energy security or defense-related nuclear activities.
Why was this contract awarded on a sole-source basis instead of through full and open competition?
The data explicitly states the contract was 'NOT COMPETED' (ct), indicating a sole-source award. Sole-source justifications typically arise when only one responsible source is available or capable of meeting the government's needs. For specialized services like nuclear fuel production, this could be due to unique technical expertise, proprietary processes, existing infrastructure, or national security requirements that limit the pool of potential contractors. The Department of Energy (ag) would have had to formally justify this sole-source determination, often citing reasons such as urgency, lack of alternatives, or the specialized capabilities of Nuclear Fuel Services Inc. (co).
How does the fixed-price incentive (FPI) contract type aim to manage costs in this sole-source scenario?
A Fixed-Price Incentive (FPI) contract (pt) establishes a target cost, target profit, and a price ceiling. The final price is adjusted based on the contractor's performance relative to the target cost. If the contractor's final cost is below the target, both the government and contractor share in the savings (cost underrun). If the final cost exceeds the target, the contractor bears a portion of the increased cost up to the ceiling. In this sole-source context, the FPI aims to incentivize Nuclear Fuel Services Inc. (co) to control its costs effectively, as they will share in any savings achieved below the target cost, while also being penalized if costs exceed the agreed-upon ceiling. This provides some cost control mechanism despite the absence of competitive bidding.
What are the potential risks associated with a sole-source award of this magnitude ($118.8 million)?
A sole-source award of $118.8 million (a) carries several risks. Primarily, the lack of competition means the Department of Energy (ag) may not be obtaining the best possible price, as there was no market pressure to drive down costs. This can lead to overpayment. Additionally, sole-sourcing can limit the government's access to innovative solutions or technologies that might have been offered by other potential bidders. It also concentrates risk with a single contractor, Nuclear Fuel Services Inc. (co), meaning any performance issues or disruptions could have a significant impact on the continuity of critical nuclear fuel services. Furthermore, it can create a perception of favoritism or lack of transparency.
What is the historical spending context for Nuclear Fuel Services Inc. with the Department of Energy?
The provided data shows this contract (na: 325188) was awarded on October 15, 2002 (sd) and expired on January 30, 2005 (ed), with a duration of 838 days (dur). This suggests a specific, time-bound engagement. Without access to broader historical contract databases, it's difficult to ascertain the full extent of Nuclear Fuel Services Inc.'s (co) past dealings with the Department of Energy (ag). However, the existence of this significant sole-source contract implies a pre-existing relationship or a recognized capability that led the DOE to sole-source this requirement. Further investigation into prior contracts awarded to this entity by the DOE would be necessary to establish a comprehensive spending pattern.
Industry Classification
NAICS: Manufacturing › Basic Chemical Manufacturing › All Other Basic Inorganic Chemical Manufacturing
Product/Service Code: FURNACE/STEAM/DRYING; NUCL REACTOR
Competition & Pricing
Extent Competed: NOT COMPETED
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Contractor Details
Parent Company: Babcock & Wilcox Company the (UEI: 787523976)
Address: 1205 BANNER HILL RD, ERWIN, TN, 01
Business Categories: Category Business, Small Business
Financial Breakdown
Contract Ceiling: $118,855,750
Exercised Options: $118,855,750
Current Obligation: $118,855,750
Timeline
Start Date: 2002-10-15
Current End Date: 2005-01-30
Potential End Date: 2005-01-30 00:00:00
Last Modified: 2012-11-01
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