DOE awards $129M contract for nuclear fuel production to Nuclear Fuel Services Inc

Contract Overview

Contract Amount: $129,028,760 ($129.0M)

Contractor: Nuclear Fuel Services Inc

Awarding Agency: Department of Energy

Start Date: 2013-12-30

End Date: 2015-03-31

Contract Duration: 456 days

Daily Burn Rate: $283.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Other

Official Description: FUEL PRODUCTION

Place of Performance

Location: ERWIN, UNICOI County, TENNESSEE, 37650

State: Tennessee Government Spending

Plain-Language Summary

Department of Energy obligated $129.0 million to NUCLEAR FUEL SERVICES INC for work described as: FUEL PRODUCTION Key points: 1. Contract value represents a significant investment in domestic nuclear fuel capabilities. 2. Sole-source award raises questions about potential cost efficiencies and market competition. 3. Fixed-price incentive contract structure aims to balance cost control with performance. 4. Contract duration of 456 days suggests a focused, short-term production requirement. 5. Geographic concentration in Tennessee for fuel production highlights regional specialization. 6. The award is a key component of the Department of Energy's broader energy security strategy.

Value Assessment

Rating: fair

The contract value of $129 million for nuclear fuel production appears substantial. Without specific benchmarks for nuclear fuel production costs or comparable contracts, a precise value-for-money assessment is challenging. The fixed-price incentive structure suggests an attempt to manage costs, but the lack of competition limits the ability to benchmark against market alternatives. The awarded amount should be evaluated against the quantity and quality of fuel produced and the criticality of the supply chain.

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 approach is typically used when only one responsible source is available or in cases of urgent need. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors. This raises concerns about whether the government secured the best possible price and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the potential for competitive pricing is eliminated. It also limits opportunities for other qualified businesses to secure government contracts.

Public Impact

The primary beneficiaries are likely the Department of Energy's nuclear energy programs and potentially national security initiatives reliant on a stable fuel supply. The contract delivers essential nuclear fuel, crucial for the operation of nuclear reactors. The geographic impact is concentrated in Tennessee, where Nuclear Fuel Services Inc. operates. Workforce implications include the potential for job creation and retention within the specialized nuclear fuel manufacturing sector in Tennessee.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Sole-source awards can reduce transparency in pricing and contract terms.
Dependence on a single supplier for critical nuclear fuel components poses a supply chain risk.

Positive Signals

Contract supports critical domestic nuclear fuel production capabilities.
Fixed-price incentive contract aims to align contractor performance with cost objectives.
Awardee has specialized expertise in nuclear fuel manufacturing.

Sector Analysis

The nuclear fuel production sector is highly specialized and capital-intensive, dominated by a few key players globally. This contract fits within the broader energy sector, specifically focusing on the upstream supply chain for nuclear power generation. Comparable spending benchmarks are difficult to establish due to the unique nature of nuclear fuel and the limited number of qualified manufacturers. The Department of Energy's role is critical in ensuring a secure and reliable supply of nuclear fuel for national interests.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The nature of nuclear fuel production typically requires highly specialized facilities and expertise, which often favors larger, established industrial firms. The impact on the small business ecosystem is likely minimal for this specific award, though it underscores the importance of the larger industrial base supporting such critical infrastructure.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Energy's contracting and program management offices. Accountability measures would be tied to the performance metrics within the fixed-price incentive contract. Transparency may be limited due to the sole-source nature of the award. The Inspector General of the Department of Energy would have jurisdiction to investigate any potential fraud, waste, or abuse related to the contract.

Related Government Programs

Nuclear Energy Programs
National Nuclear Security Administration
Strategic Fuel Reserves
Defense Nuclear Nonproliferation

Risk Flags

Sole-source award limits competitive pricing.
Potential supply chain risk due to single supplier.
Lack of public cost benchmarks hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Energy awarded $129.0 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 $129.0 million.

What is the period of performance?

Start: 2013-12-30. End: 2015-03-31.

What is the historical spending pattern for nuclear fuel production by the Department of Energy?

Historical spending on nuclear fuel production by the Department of Energy (DOE) can fluctuate based on national energy policies, defense requirements, and the operational status of nuclear facilities. While specific aggregate figures for 'nuclear fuel production' are not readily available in public databases without deeper analysis, the DOE has consistently invested in maintaining domestic capabilities for enriched uranium and other nuclear materials. This includes funding for research, development, and production activities. Past contracts for similar services have varied in value and duration, often reflecting the specific needs for reactor fuel or materials for research purposes. The trend generally indicates a sustained, albeit sometimes shifting, commitment to ensuring a secure supply chain for nuclear materials, often through a mix of competitive and sole-source procurements depending on market conditions and technological requirements.

How does the cost per unit of nuclear fuel produced under this contract compare to industry benchmarks?

Determining a precise per-unit cost comparison for nuclear fuel produced under this contract is challenging without access to detailed cost breakdowns and specific production metrics. Nuclear fuel production is a highly specialized and complex process involving significant capital investment, stringent safety protocols, and advanced technology. The provided data does not include per-unit cost information or specific production volumes. Furthermore, the sole-source nature of this award limits the ability to benchmark against competitive bids. Industry benchmarks for nuclear fuel are not widely published due to the sensitive and proprietary nature of the information. A thorough analysis would require comparing the total contract value against the specified quantity and quality of fuel produced, considering factors like enrichment levels and isotopic composition, and then attempting to find comparable data from other government or commercial contracts, which are scarce.

What are the specific risks associated with a sole-source award for critical nuclear fuel production?

A sole-source award for critical nuclear fuel production carries several significant risks. Firstly, the absence of competition can lead to higher prices for taxpayers, as the government may not benefit from the cost-saving pressures inherent in a competitive bidding process. Secondly, it reduces transparency in pricing and contract terms, making it harder to ascertain if the government is receiving fair value. Thirdly, it creates a dependency on a single supplier, which can pose a substantial supply chain risk. If the sole-source contractor experiences production issues, financial instability, or faces unforeseen operational challenges, the continuity of critical nuclear fuel supply could be jeopardized, potentially impacting national security or energy infrastructure. Lastly, it limits opportunities for other qualified companies to develop expertise and compete in this vital sector.

What is the track record of Nuclear Fuel Services Inc. in fulfilling government contracts, particularly for nuclear fuel?

Nuclear Fuel Services Inc. (NFS) has a long-standing history and established expertise in the nuclear fuel industry. As a key provider of fuel for the U.S. Navy's fleet of nuclear-powered submarines and aircraft carriers, NFS possesses specialized capabilities and a proven track record in handling and processing highly enriched uranium. Their experience extends to producing fuel cores for naval reactors, a highly demanding application requiring rigorous quality control and adherence to strict safety standards. While specific details of all past government contracts, including their value and performance metrics, are not publicly detailed in this summary, NFS's role as a primary supplier for critical defense programs indicates a significant level of trust and demonstrated capability within the government. Their continued engagement in this sector suggests a history of successful contract fulfillment, though performance on any specific contract can vary.

How does this contract align with the Department of Energy's broader mission and strategic goals?

This contract directly aligns with the Department of Energy's (DOE) core missions related to national security, energy security, and environmental management. By ensuring the production of nuclear fuel, the DOE is supporting the operational readiness of the U.S. Navy's nuclear fleet, a critical component of national defense. Furthermore, maintaining domestic capabilities for nuclear fuel production contributes to energy security by reducing reliance on foreign sources and ensuring a stable supply for potential future civilian nuclear power needs. The DOE is also responsible for managing the nation's nuclear materials, and contracts like this are essential for handling and processing these materials safely and securely, aligning with environmental management and non-proliferation goals. The award underscores the DOE's role as a steward of critical nuclear infrastructure and expertise.

Industry Classification

NAICS: Manufacturing › Basic Chemical Manufacturing › Other Basic Inorganic Chemical Manufacturing

Product/Service Code: FURNACE/STEAM/DRYING; NUCL REACTOR

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: DENR00007

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: $295,691,260

Exercised Options: $133,841,260

Current Obligation: $129,028,760

Contract Characteristics

Cost or Pricing Data: YES

Timeline