Naval Sea Systems Command awards $724M contract for nuclear reactor components, with Bechtel Corporation as the sole provider

Contract Overview

Contract Amount: $72,400,696 ($72.4M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2000-06-29

End Date: 2015-09-30

Contract Duration: 5,571 days

Daily Burn Rate: $13.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200009!1700!003042!BZ004 !NAVAL SEA SYSTEMS COMMAND !N0002400C4066 !A!*!* !20000629!20051230!072972644!094878998!094878980!N!1L0E8!BECHTEL CORPORATION !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENECTADY !NEW YORK !0001!+000072400696!N!N!000000000000!4470!NUCLEAR REACTORS !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !8999!3!*!*!*!B!A!*!D !N!U!1!001!N!1G!A!Y!Z!* !* !N!C!*!A!Z!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: MONROEVILLE, ALLEGHENY County, PENNSYLVANIA, 15146

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $72.4 million to BECHTEL PLANT MACHINERY, INC. for work described as: 200009!1700!003042!BZ004 !NAVAL SEA SYSTEMS COMMAND !N0002400C4066 !A!*!* !20000629!20051230!072972644!094878998!094878980!N!1L0E8!BECHTEL CORPORATION !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCH… Key points: 1. Contract awarded to a single entity suggests limited market competition for specialized nuclear reactor components. 2. The cost-plus-fixed-fee structure may incentivize cost overruns, requiring close oversight. 3. Long contract duration of over 5 years indicates a significant, ongoing need for these components. 4. The contract falls under the 'Nuclear Reactors' product service code, highlighting its critical and specialized nature. 5. Awarded by the Naval Sea Systems Command, this contract directly supports naval fleet readiness and modernization.

Value Assessment

Rating: fair

The contract value of $724,006,960 over approximately 5.5 years for nuclear reactor components is substantial. Without specific benchmarks for similar components or detailed cost breakdowns, it's difficult to definitively assess value for money. The cost-plus-fixed-fee (CPFF) contract type can lead to higher costs than fixed-price contracts if not managed tightly, as the contractor is reimbursed for allowable costs plus a fixed fee. However, CPFF is often used for complex R&D or production where cost certainty is low.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Bechtel Corporation, was solicited. This indicates a lack of readily available alternative sources or a determination that only Bechtel could meet the specific requirements, possibly due to proprietary technology, unique expertise, or existing infrastructure. The absence of competition means there was no direct price comparison or incentive for multiple bidders to offer their best pricing.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also limits opportunities for other businesses to compete for this work.

Public Impact

The primary beneficiaries are the U.S. Navy's nuclear-powered vessels, ensuring the continued operation and maintenance of their propulsion systems. Services delivered include the manufacturing and supply of critical components for nuclear reactors, essential for naval power generation. The geographic impact is national, with the contractor located in Schenectady, NY, but the ultimate impact is on naval operations worldwide. This contract supports a highly specialized workforce within Bechtel Corporation, likely involving engineers, technicians, and manufacturing personnel with expertise in nuclear technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type may not provide the strongest incentive for cost efficiency.
Long contract duration could mask inefficiencies if not closely monitored.
Lack of publicly available details on specific components and performance metrics hinders detailed value assessment.

Positive Signals

Award to an established contractor like Bechtel suggests a level of confidence in their capability to deliver specialized nuclear components.
The contract directly supports critical national defense infrastructure (naval nuclear propulsion).
The fixed fee component of the CPFF contract provides some level of cost certainty for the government compared to pure cost-reimbursement.
The contract is managed by the Naval Sea Systems Command, an agency with significant experience in complex defense procurements.

Sector Analysis

This contract falls within the Defense sector, specifically supporting naval operations and nuclear propulsion systems. The market for nuclear reactor components is highly specialized, dominated by a few firms with the necessary security clearances, technical expertise, and manufacturing capabilities. Spending in this niche is driven by the U.S. Navy's fleet size and modernization programs. Comparable spending benchmarks are difficult to establish due to the proprietary and sensitive nature of nuclear technology.

Small Business Impact

This contract does not appear to have a small business set-aside component. Given the specialized nature of nuclear reactor components, it is unlikely that small businesses would be primary contractors, though they may participate as subcontractors to Bechtel Corporation. The impact on the small business ecosystem is likely minimal for the prime contract, but Bechtel's subcontracting strategy could offer opportunities.

Oversight & Accountability

Oversight is likely provided by the Naval Sea Systems Command (NAVSEA) and potentially the Defense Contract Management Agency (DCMA). The contract's CPFF structure necessitates rigorous oversight of costs, performance, and compliance. Transparency may be limited due to the sensitive nature of nuclear technology and defense procurement, but internal government audits and reviews would be standard. Inspector General jurisdiction would apply for investigations into fraud, waste, or abuse.

Related Government Programs

Naval Nuclear Propulsion Program
Shipbuilding and Repair Contracts
Defense Industrial Base
Nuclear Energy Sector
Department of Defense Procurement

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Critical defense infrastructure component
Potential for limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.4 million to BECHTEL PLANT MACHINERY, INC.. 200009!1700!003042!BZ004 !NAVAL SEA SYSTEMS COMMAND !N0002400C4066 !A!*!* !20000629!20051230!072972644!094878998!094878980!N!1L0E8!BECHTEL CORPORATION !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENECTADY !NEW YORK !0001!+000072400696!N!N!000000000000!4470!NUCLEAR REACTORS !A3 !SHIPS !2SBP!CARRIER ACFT NUCLEAR-CVAN !8999!3!*!*!*!B!A!*!D !N!U!

Who is the contractor on this award?

The obligated recipient is BECHTEL PLANT MACHINERY, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $72.4 million.

What is the period of performance?

Start: 2000-06-29. End: 2015-09-30.

What is Bechtel Corporation's track record with similar naval nuclear reactor component contracts?

Bechtel Corporation, through its various entities like Bechtel Plant Machinery, Inc., has a long history of involvement in nuclear projects, including naval applications. They have been a key contractor for the Naval Nuclear Propulsion Program for decades, responsible for the design, construction, and maintenance of nuclear propulsion plants for submarines and aircraft carriers. Their experience includes manufacturing critical components, managing complex supply chains, and adhering to stringent safety and quality standards required for nuclear operations. This extensive background suggests a strong capability and established relationship with the Navy for such specialized work, though specific contract details and performance metrics from past awards are often not publicly disclosed.

How does the $724M contract value compare to historical spending on naval nuclear reactor components?

Historical spending on naval nuclear reactor components is substantial and spans many years, reflecting the ongoing need to maintain and modernize the nuclear-powered fleet. While this specific $724M contract represents a significant investment, it must be viewed within the broader context of the multi-billion dollar Naval Nuclear Propulsion Program. Annual budgets for this program often exceed several billion dollars, encompassing new construction, refueling, maintenance, and component procurement. Without access to detailed historical procurement data for specific reactor components, a direct year-over-year comparison is challenging. However, contract values of this magnitude are not uncommon for major systems and components within the nuclear shipbuilding and maintenance enterprise.

What are the primary risks associated with this sole-source, cost-plus-fixed-fee contract?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are related to cost control and potential lack of innovation. Being sole-source, there's no competitive pressure to ensure the government receives the best possible price. The CPFF structure, while necessary for complex projects with uncertain costs, can reduce the contractor's incentive to minimize expenses, as they are reimbursed for allowable costs plus a fixed fee. This could lead to cost overruns if not managed diligently. Additionally, a sole-source award might stifle innovation from potential competitors who could offer alternative solutions or more cost-effective methods. Ensuring robust oversight and clear performance metrics is crucial to mitigate these risks.

How effective is the Naval Sea Systems Command in managing complex nuclear-related contracts?

The Naval Sea Systems Command (NAVSEA) is generally considered highly effective in managing complex nuclear-related contracts. NAVSEA oversees the entire lifecycle of naval nuclear propulsion, from research and development to construction, operation, and decommissioning. They possess specialized expertise and established processes for handling the unique technical, safety, and security requirements of nuclear propulsion. Their long history of successfully managing these critical programs, including the construction and maintenance of nuclear-powered vessels, indicates a high level of competence. However, like any large organization managing complex procurements, challenges can arise, and continuous oversight and adaptation of management strategies are essential.

What are the potential long-term implications of relying on a single supplier for these critical components?

Relying on a single supplier, like Bechtel Corporation in this case, for critical nuclear reactor components carries several long-term implications. Firstly, it creates a dependency that could be problematic if the supplier faces financial difficulties, operational disruptions, or decides to exit the market. Secondly, it can lead to a lack of supply chain resilience and potentially higher long-term costs due to the absence of competition. Thirdly, it may limit the government's ability to leverage technological advancements or alternative solutions that might emerge from a more diverse supplier base. Maintaining a strong, long-term relationship with the sole supplier, coupled with robust government oversight and contingency planning, is essential to manage these risks.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Bechtel Group, Inc.

Address: 3500 TECHNOLOGY DR, MONROEVILLE, PA, 15146

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline