DOE's $2.8B nuclear fuel contract awarded to Nuclear Fuel Services Inc. without competition
Contract Overview
Contract Amount: $280,601,677 ($280.6M)
Contractor: Nuclear Fuel Services Inc
Awarding Agency: Department of Energy
Start Date: 2008-08-11
End Date: 2012-02-28
Contract Duration: 1,296 days
Daily Burn Rate: $216.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Energy
Official Description: FUEL PRODUCTION
Place of Performance
Location: ERWIN, UNICOI County, TENNESSEE, 37650
Plain-Language Summary
Department of Energy obligated $280.6 million to NUCLEAR FUEL SERVICES INC for work described as: FUEL PRODUCTION Key points: 1. The contract's value of $2.8 billion represents a significant investment in nuclear fuel production. 2. Awarded on a sole-source basis, the lack of competition raises questions about price discovery and potential value for money. 3. The fixed-price incentive contract type suggests an attempt to align contractor performance with cost objectives, but the absence of competition limits benchmarking. 4. The contract duration of 1296 days (approximately 3.5 years) indicates a substantial, long-term commitment. 5. The geographic location of performance in Tennessee may have implications for regional economic impact and workforce development. 6. The absence of small business set-asides or subcontracting requirements suggests limited direct benefit to the small business sector through this specific award.
Value Assessment
Rating: questionable
Benchmarking the value of this $2.8 billion contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to assess if the pricing reflects market rates or if alternative suppliers could have offered better terms. The fixed-price incentive structure aims to control costs, but the lack of competition means there's no external validation of the negotiated price. Further analysis would require access to internal cost data or comparisons with similar, competitively awarded contracts for nuclear fuel production, which are not readily available.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when only one responsible source is available or in cases of urgent need. The lack of multiple bidders means taxpayers did not benefit from the price reductions and innovation that often arise from a competitive bidding process. This approach limits the government's ability to explore a wider range of solutions and potentially secure more favorable pricing.
Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not achieve the best possible price without competitive pressure. It also reduces transparency in the procurement process.
Public Impact
The primary beneficiary is the contractor, Nuclear Fuel Services Inc., which receives substantial revenue for fuel production. The services delivered are critical for the operation of nuclear facilities, ensuring a steady supply of fuel. Performance is concentrated in Tennessee, potentially creating jobs and economic activity within that state. The contract supports the broader national energy infrastructure by providing essential nuclear fuel.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may result in inflated costs for taxpayers.
- Sole-source awards reduce transparency and accountability in the procurement process.
- Limited opportunities for small businesses to participate in this large-scale contract.
- Potential for contractor lock-in due to the specialized nature of nuclear fuel production.
Positive Signals
- The contract ensures a critical supply of nuclear fuel, supporting national energy security.
- The fixed-price incentive contract type aims to manage costs and incentivize performance.
- The contractor, Nuclear Fuel Services Inc., likely possesses specialized expertise required for this task.
Sector Analysis
The nuclear fuel production sector is highly specialized and dominated by a few key players due to stringent regulatory requirements and technological expertise. This contract represents a significant portion of spending within this niche market. Comparable spending benchmarks are difficult to establish without more data on other sole-source or competitively awarded contracts for similar fuel types and quantities. The Department of Energy's role underscores the strategic importance of domestic fuel production for national security and energy independence.
Small Business Impact
This contract does not appear to have included specific small business set-aside provisions. The sole-source nature of the award further limits opportunities for small businesses to participate directly as prime contractors. While the prime contractor may engage small businesses for subcontracting, there is no explicit requirement detailed here, suggesting that the direct economic impact on the small business ecosystem from this specific award may be minimal.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy's contracting and program management offices. Accountability measures are typically embedded within the contract's performance clauses and reporting requirements. Transparency is limited due to the sole-source nature of the award. The Inspector General for the Department of Energy would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.
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
- Sole-source award lacks competitive justification.
- Potential for cost overruns due to lack of competition.
- Limited transparency in pricing and negotiation.
- No explicit small business participation requirements.
Tags
energy, nuclear-fuel-production, department-of-energy, sole-source, fixed-price-incentive, large-contract, tennessee, basic-inorganic-chemical-manufacturing, contractor-nuclear-fuel-services-inc
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $280.6 million to NUCLEAR FUEL SERVICES INC. FUEL PRODUCTION
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 $280.6 million.
What is the period of performance?
Start: 2008-08-11. End: 2012-02-28.
What is the specific type of nuclear fuel being produced under this contract, and what are its intended applications?
The data indicates the contract is for 'FUEL PRODUCTION' and falls under the 'NUCLEAR FUEL SERVICES INC' category, with a North American Industry Classification System (NAICS) code of '325188' for 'All Other Basic Inorganic Chemical Manufacturing'. While the specific type of nuclear fuel is not detailed, this NAICS code suggests the production of inorganic chemicals, which could include precursors or components for nuclear fuel. The intended applications are likely related to powering nuclear reactors for electricity generation or other governmental/defense purposes, given the Department of Energy's involvement. Further details on the fuel composition and end-use would require access to the contract's statement of work.
Why was this contract awarded on a sole-source basis, and what justifications were provided?
The provided data explicitly states the contract type as 'NOT COMPETED', indicating a sole-source award. The justification for such an award typically stems from situations where only one responsible contractor can meet the government's needs, often due to unique capabilities, proprietary technology, or urgent requirements. For nuclear fuel production, specialized facilities, extensive regulatory compliance, and specific technical expertise held by a limited number of entities like Nuclear Fuel Services Inc. are common reasons for sole-source awards. A formal justification document, usually required by federal acquisition regulations, would detail the specific reasons why competition was not feasible or practicable in this instance.
How does the fixed-price incentive (FPI) contract structure aim to manage costs and incentivize performance in this context?
A Fixed-Price Incentive (FPI) contract establishes a target cost, a target profit, and a price ceiling. The final price is adjusted based on the contractor's actual performance relative to the target cost. If the contractor's final cost is below the target cost, both the government and the 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 the government's share of the cost increases, up to the price ceiling. This structure incentivizes the contractor to control costs and perform efficiently to maximize their profit, while the government benefits from potential cost savings and a cap on the total expenditure.
What are the potential risks associated with a sole-source contract of this magnitude for nuclear fuel production?
The primary risk of a sole-source contract of this magnitude is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government may overpay for the goods or services. Another risk is reduced innovation, as the contractor may have less incentive to develop more cost-effective or advanced solutions. Furthermore, sole-source awards can create contractor dependency, making it difficult to switch providers in the future. There's also a heightened need for robust government oversight to ensure fair pricing and adequate performance, as the usual market checks and balances are absent.
What is the historical spending pattern for nuclear fuel production by the Department of Energy, and how does this contract compare?
The provided data only details this single contract ($2.8 billion from 2008-2012). To understand historical spending patterns, one would need to analyze broader Department of Energy (DOE) procurement data over multiple fiscal years, looking at contracts for fuel production, enrichment, and related services. This specific contract, valued at $2.8 billion over its duration, appears substantial. Without comparative data on other similar contracts, it's difficult to definitively state how it compares. However, the fact that it was a sole-source award for a significant amount suggests a critical, potentially long-term need that the DOE addressed through a single provider.
What are the implications of the contract performance location (Tennessee) for workforce and economic impact?
The contract performance location being in Tennessee (ST: TN, SN: TENNESSEE) implies that the economic benefits, such as job creation and local spending, will be concentrated in that state. Nuclear fuel production is a highly specialized industry, so the jobs created are likely to be skilled positions requiring specific technical expertise. This can lead to a positive economic impact on the local community through direct employment, as well as indirect effects on supporting industries and local businesses. The presence of such a contract could also foster the development of a specialized workforce and related infrastructure within Tennessee.
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
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: DE-RP11-08PN39003
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, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $280,601,677
Exercised Options: $280,601,677
Current Obligation: $280,601,677
Contract Characteristics
Cost or Pricing Data: YES
Timeline
Start Date: 2008-08-11
Current End Date: 2012-02-28
Potential End Date: 2012-02-28 00:00:00
Last Modified: 2012-04-05
More Contracts from Nuclear Fuel Services Inc
- Fuel Production — $324.2M (Department of Energy)
- Fuel Production — $265.6M (Department of Energy)
- Federal Contract — $221.3M (Department of Energy)
- Enriched Uranium Conversion and Purification Services — $185.7M (Department of Energy)
- Fuel Production — $129.0M (Department of Energy)
Other Department of Energy Contracts
- Federal Contract — $48.1B (Lockheed Martin Corp)
- ,Ct::igf Contract Award De-Na0003525 to the National Technology&engineering Solutions of Sandia, LLC (ntess) for the Management and Operation of the Department of Energy, National Nuclear Security Administration's Sandia National Laboratories (SNL) — $41.7B (National Technology & Engineering Solutions of Sandia, LLC)
- Management and Operation of the OAK Ridge National Laboratory — $40.8B (Ut-Battelle LLC)
- TAS::89 0240::TAS This Performance-Based Management Contract (pbmc) IS for the Management and Operation of the Lawrence Livermore National Laboratory (llnl). the Contractor Shall, in Accordance With the Provisions of This Contract, Accomplish the Missions and Programs Assigned by the U.S. Department of Energy (DOE) and Manage and Operate the Laboratory. the Laboratory IS ONE of Does Office of Defense Program Multi-Program Laboratories. the Laboratory IS a Federally Funded Research and Development Institution (established in Accordance With the Federal Acquisition Regulation (FAR) Part 35 and Operated Under This Management and Operating (M&O) Contract, AS Defined in FAR 17.6 and Dear 917.6 — $40.8B (Lawrence Livermore National Security, LLC)
- M&O of Lanl BR of U of CA — $35.3B (Regents of the University of California, the)