DOE's $221M Nuclear Fuel Contract with Nuclear Fuel Services Inc. Awarded in 1999
Contract Overview
Contract Amount: $221,318,330 ($221.3M)
Contractor: Nuclear Fuel Services Inc
Awarding Agency: Department of Energy
Start Date: 1999-12-15
End Date: 2006-02-28
Contract Duration: 2,267 days
Daily Burn Rate: $97.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Other
Place of Performance
Location: TENNESSEE
Plain-Language Summary
Department of Energy obligated $221.3 million to NUCLEAR FUEL SERVICES INC for work described as: Key points: 1. Significant contract value of $221.3 million over its duration. 2. Sole-source award indicates limited competition for this specialized service. 3. Long contract duration (1999-2006) may impact price competitiveness over time. 4. The sector is basic inorganic chemical manufacturing, crucial for nuclear fuel.
Value Assessment
Rating: fair
The contract's fixed-price incentive structure aims to control costs, but the lack of competition and long duration raise questions about optimal pricing. Benchmarking against similar specialized chemical manufacturing contracts would be beneficial.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded sole-source, meaning there was no open competition. This approach is often used for highly specialized services where only one vendor can meet the requirements, potentially leading to higher prices than a competitive process.
Taxpayer Impact: The lack of competition for this significant contract may result in taxpayers paying a premium for nuclear fuel services.
Public Impact
Ensures supply of critical nuclear fuel components for national energy needs. Potential for long-term reliance on a single supplier could create vulnerabilities. The specialized nature of the work limits broader economic benefits from competition.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price discovery.
- Long contract duration may lead to price escalation.
- Lack of small business participation noted.
Positive Signals
- Ensures critical national security/energy supply.
- Fixed-price incentive contract aims for cost control.
Sector Analysis
This contract falls under 'All Other Basic Inorganic Chemical Manufacturing,' a sector vital for energy production. The spending benchmark for such specialized chemical manufacturing contracts can vary widely based on material, complexity, and regulatory requirements.
Small Business Impact
The data indicates no small business participation in this contract. Given the specialized nature of nuclear fuel services, it is common for large, established firms to dominate this market, potentially excluding smaller businesses.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure the government is receiving fair value. Tracking performance metrics and cost trends throughout the contract's long duration is crucial for accountability.
Related Government Programs
- All Other Basic Inorganic Chemical Manufacturing
- Department of Energy Contracting
- Department of Energy Programs
Risk Flags
- Sole-source award
- Long contract duration
- No small business participation
- Potential for price escalation
- Lack of transparency in price discovery
Tags
all-other-basic-inorganic-chemical-manuf, department-of-energy, tn, dca, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $221.3 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 $221.3 million.
What is the period of performance?
Start: 1999-12-15. End: 2006-02-28.
What was the justification for the sole-source award, and were alternative solutions considered?
The justification for a sole-source award typically centers on unique capabilities, proprietary technology, or urgent needs that only one contractor can fulfill. For this nuclear fuel contract, it's likely that Nuclear Fuel Services Inc. possessed specialized facilities and expertise essential for processing nuclear materials, making open competition impractical or impossible. Further review of the contract file would reveal the specific rationale and any documented consideration of alternative approaches.
How did the fixed-price incentive structure perform in controlling costs over the contract's lifespan?
The fixed-price incentive (FPI) contract aims to share cost savings or overruns between the government and the contractor, incentivizing efficiency. However, without competitive pressure, the effectiveness of the FPI in achieving optimal cost savings is questionable. Analyzing the final contract price against the initial target price and the contractor's actual costs would reveal the degree to which cost efficiencies were realized and whether the incentive structure successfully mitigated potential overspending.
What is the long-term strategic risk associated with relying on a single provider for critical nuclear fuel services?
The long-term strategic risk of relying on a sole-source provider for critical nuclear fuel services includes potential supply chain disruptions, price gouging due to lack of alternatives, and reduced innovation. If Nuclear Fuel Services Inc. were to face operational issues or decide to exit the market, the government could face significant challenges in securing an alternative source, potentially impacting national energy security and defense capabilities.
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: $26,983,330
Exercised Options: $26,983,330
Current Obligation: $221,318,330
Timeline
Start Date: 1999-12-15
Current End Date: 2006-02-28
Potential End Date: 2006-02-28 00:00:00
Last Modified: 2010-09-20
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