DOE's $159M contract for nuclear fuel services awarded to Nuclear Fuel Services Inc. in 2005

Contract Overview

Contract Amount: $15,927,186 ($15.9M)

Contractor: Nuclear Fuel Services Inc

Awarding Agency: Department of Energy

Start Date: 2005-06-28

End Date: 2013-11-30

Contract Duration: 3,077 days

Daily Burn Rate: $5.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Other

Official Description: FEEDSTOCK

Place of Performance

Location: ERWIN, UNICOI County, TENNESSEE, 37650

State: Tennessee Government Spending

Plain-Language Summary

Department of Energy obligated $15.9 million to NUCLEAR FUEL SERVICES INC for work described as: FEEDSTOCK Key points: 1. Contract value represents a significant investment in critical nuclear fuel supply chain. 2. The fixed-price incentive structure aimed to balance cost control with performance. 3. Long duration suggests a sustained need for these specialized services. 4. Awarded under full and open competition after source exclusion, indicating a deliberate procurement process. 5. The contract's performance period spanned nearly a decade, highlighting its long-term importance. 6. Focus on basic inorganic chemical manufacturing points to foundational industrial processes.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable service agreements. The fixed-price incentive (FPI) structure suggests an attempt to manage costs while encouraging contractor efficiency. However, the total award amount of $159.3 million over a nearly 8-year period indicates substantial government expenditure for specialized nuclear fuel processing. Without detailed cost breakdowns or comparisons to similar FPI contracts for nuclear materials, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition after exclusion of sources.' This specific clause implies that while the competition was broadly open, certain sources were initially excluded, possibly due to specific technical requirements, security clearances, or prior performance issues. The fact that it was still 'full and open' suggests multiple bidders were considered and evaluated after the initial exclusion phase, which is generally positive for price discovery and competition.

Taxpayer Impact: A competitive award process, even with initial source exclusions, generally benefits taxpayers by fostering a more robust bidding environment and potentially leading to better pricing and service terms compared to sole-source awards.

Public Impact

The primary beneficiary is the Department of Energy, ensuring a supply of critical materials for national security and energy programs. Services delivered likely include the processing and manufacturing of nuclear fuel components. The contract's location in Tennessee suggests a significant impact on the regional industrial and technical workforce. This contract supports the broader U.S. nuclear industry's infrastructure and supply chain resilience.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to assess if the incentive structure effectively controlled costs or drove optimal performance.
The 'exclusion of sources' clause, while potentially justified, warrants scrutiny to ensure it did not unduly limit competition.
Long contract duration could present risks if technology or requirements evolve significantly over time.

Positive Signals

Awarded through full and open competition, indicating a structured and potentially fair procurement process.
The fixed-price incentive contract type signals an effort to align contractor incentives with government objectives.
The sustained award over a long period suggests the contractor, Nuclear Fuel Services Inc., likely met performance expectations.

Sector Analysis

The nuclear fuel services sector is highly specialized, characterized by stringent regulatory requirements, significant capital investment, and a limited number of qualified providers. This contract falls within the 'All Other Basic Inorganic Chemical Manufacturing' category, underscoring the foundational chemical processes involved in preparing nuclear materials. Spending in this niche sector is often driven by national security imperatives and long-term energy policy, with contracts typically being large and long-duration due to the complexity and criticality of the services.

Small Business Impact

There is no indication from the provided data that this contract included specific small business set-asides. Given the highly specialized nature of nuclear fuel services, it is common for such contracts to be awarded to large, experienced firms. Subcontracting opportunities for small businesses might exist in supporting roles, but the primary award is unlikely to have been directed towards small business participation.

Oversight & Accountability

Oversight for this contract would fall under the Department of Energy's established procurement and program management protocols. Accountability measures are typically embedded within the contract's terms, including reporting requirements, performance milestones, and payment schedules tied to deliverables. Transparency is generally maintained through contract award databases and public reporting, though specific operational details may be sensitive. The Inspector General for the Department of Energy would have jurisdiction for audits and investigations.

Related Government Programs

Department of Energy - Nuclear Energy Programs
National Nuclear Security Administration
Defense Nuclear Facilities Safety Board
U.S. Nuclear Regulatory Commission

Risk Flags

Potential for cost overruns inherent in fixed-price incentive contracts if not closely managed.
Risk associated with long-term contracts adapting to evolving technological or regulatory landscapes.
Dependence on a limited number of specialized suppliers in the nuclear fuel sector.

Frequently Asked Questions

What is this federal contract paying for?

Department of Energy awarded $15.9 million to NUCLEAR FUEL SERVICES INC. FEEDSTOCK

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 $15.9 million.

What is the period of performance?

Start: 2005-06-28. End: 2013-11-30.

What specific nuclear fuel components or services did Nuclear Fuel Services Inc. provide under this contract?

The provided data classifies the contract under 'All Other Basic Inorganic Chemical Manufacturing' (NAICS 325188), suggesting the services involved fundamental chemical processing of raw materials into forms suitable for nuclear fuel fabrication or related applications. This could encompass activities such as uranium conversion, enrichment support, or the production of specific inorganic compounds essential for the nuclear fuel cycle. Without more granular contract details, the exact nature of the 'feedstock' processed and the final 'product' or service rendered remains generalized. However, given the contractor's name and the agency (Department of Energy), it is highly probable that the work directly supported national nuclear energy programs or defense-related nuclear material requirements.

How did the 'fixed price incentive' (FPI) structure function in this contract, and what were the target and ceiling prices?

A Fixed Price Incentive (FPI) contract establishes a target cost, target profit, and target price. 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 cost, both the government and contractor share in the savings according to a pre-negotiated formula. Conversely, if the final cost exceeds the target cost, the contractor's profit is reduced, and potentially the government's share of savings is also affected, up to a ceiling price. The provided data indicates the contract type was FPI but does not specify the target cost, target profit, target price, ceiling price, or the sharing formula. Therefore, a detailed analysis of how the incentive mechanism operated and its impact on the final cost cannot be determined from this data alone.

What was the rationale behind excluding certain sources prior to the 'full and open competition' phase?

The clause 'full and open competition after exclusion of sources' suggests that the Department of Energy identified specific requirements or conditions that disqualified certain potential bidders from the outset. This exclusion could be based on various factors, such as the need for specific security clearances, specialized technical expertise, unique manufacturing capabilities, prior performance history with the agency, or compliance with specific regulatory standards critical to nuclear materials handling. While the competition was ultimately 'full and open' among the remaining eligible sources, the initial exclusion implies a deliberate narrowing of the field to ensure that only highly qualified and suitable contractors were considered, potentially to mitigate risks associated with national security or complex technical demands.

What is the typical market size and competitive landscape for nuclear fuel services in the U.S.?

The market for nuclear fuel services in the U.S. is highly concentrated and specialized, dominated by a small number of companies possessing the necessary technical expertise, infrastructure, and regulatory approvals. Key segments include uranium conversion, enrichment, fuel fabrication, and spent fuel management. Companies like Nuclear Fuel Services Inc. (a subsidiary of BWX Technologies) are significant players. The competitive landscape is shaped by high barriers to entry, including substantial capital investment, stringent safety and security regulations (overseen by the NRC and DOE), and long lead times for facility development and licensing. Consequently, competition for large government contracts can be limited, often involving only a few qualified bidders, making the procurement process critical for ensuring fair pricing and reliable supply.

How does this contract's duration and value compare to other federal contracts for similar nuclear materials processing services?

This contract, valued at approximately $159 million and spanning over 8 years (from 2005 to 2013), represents a substantial, long-term commitment for specialized nuclear fuel services. Contracts in this sector are typically characterized by long durations due to the lengthy operational lifecycles of nuclear facilities and the time required for material processing. The value is significant but falls within the range expected for major federal procurements supporting critical infrastructure like the nuclear fuel cycle. Comparisons with other federal contracts would require access to a broader database of similar procurements, looking at factors like the specific services rendered (e.g., enrichment, fabrication, waste processing), the agency involved (e.g., DOE, DOD), and the contract type (e.g., FPI, cost-plus). However, the combination of a large dollar value and extended period is consistent with the strategic importance and complexity of nuclear materials management.

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: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: DE-RP12-05SN39442

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: BWX Technologies, Inc. (UEI: 968037221)

Address: 1205 BANNER HILL RD, ERWIN, TN, 01

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $15,927,186

Exercised Options: $15,927,186

Current Obligation: $15,927,186

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline