Naval Sea Systems Command awards $132.4M contract for nuclear reactor components, raising value-for-money questions

Contract Overview

Contract Amount: $132,416,869 ($132.4M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2000-10-16

End Date: 2015-09-30

Contract Duration: 5,462 days

Daily Burn Rate: $24.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200111!015352!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002401C4002 !A!N!*!N! !20001016!20060930!074993825!154287825!049422439!N!BECHTEL PLANT MACHINERY INC !500 PENN CENTER BLVD !PITTSBURGH !PA!15235!61000!003!42!PITTSBURGH !ALLEGHENY !PENN !+000132416869!N!N!000000000000!4470!NUCLEAR REACTORS !A3 !SHIPS !2SDN!SUBMARINE NUCLEAR-SSN !332410!*!*!3! ! ! !*!*!*!B!*!*!A! !D !N!U!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: MONROEVILLE, ALLEGHENY County, PENNSYLVANIA, 15146

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $132.4 million to BECHTEL PLANT MACHINERY, INC. for work described as: 200111!015352!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002401C4002 !A!N!*!N! !20001016!20060930!074993825!154287825!049422439!N!BECHTEL PLANT MACHINERY INC !500 PENN CENTER BLVD !PITTSBURGH !PA!15235!61000!003!42!PITTSBURGH !ALLEG… Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant contract duration of over 15 years suggests potential for cost overruns. 3. The 'NOT COMPETED' status warrants scrutiny regarding justification for lack of broader bidding. 4. Focus on nuclear reactors for submarines indicates a critical, specialized defense need. 5. The contract's value, while substantial, needs benchmarking against similar specialized component procurements.

Value Assessment

Rating: questionable

The awarded amount of $132.4 million for nuclear reactor components over a 15-year period presents a significant expenditure. Without detailed cost breakdowns or comparisons to similar sole-source procurements, it is difficult to definitively assess value for money. The extended duration could indicate complex manufacturing or long-term support needs, but also carries inherent risks of cost escalation. Benchmarking against industry standards for specialized nuclear components would be crucial for a thorough evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source procurement. The justification for this approach is not provided in the data, but it typically implies that only one responsible source was available or that the urgency of the requirement precluded full and open competition. The lack of multiple bidders means that competitive pressures were not leveraged to potentially lower the price or improve terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price discovery mechanisms inherent in competitive bidding processes.

Public Impact

The primary beneficiaries are likely the U.S. Navy's submarine fleet, ensuring operational readiness. Services delivered include the manufacturing or refurbishment of critical nuclear reactor components. Geographic impact is national, supporting naval operations and potentially specialized manufacturing hubs. Workforce implications include employment for highly skilled engineers, technicians, and manufacturing personnel in the nuclear and shipbuilding sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Extended contract duration increases risk of cost overruns and scope creep.
Sole-source justification needs rigorous review to ensure necessity.
Potential for contractor lock-in due to specialized nature of components.

Positive Signals

Addresses a critical national defense requirement for submarine nuclear propulsion.
Award to an established entity (Bechtel Plant Machinery, Inc.) suggests experience in complex projects.
Long-term contract may ensure supply chain stability for essential components.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically supporting naval nuclear propulsion systems. The market for such specialized components is highly concentrated, often involving a limited number of firms with the requisite security clearances, technical expertise, and manufacturing capabilities. Spending in this niche sector is driven by defense appropriations and strategic naval modernization programs. Comparable spending benchmarks would likely involve other major defense contractors involved in shipbuilding and nuclear systems.

Small Business Impact

The data indicates this was not a small business set-aside. Given the specialized nature of nuclear reactor components, it is unlikely that small businesses would be primary contractors, though they may participate as subcontractors. The implications for the small business ecosystem are minimal for the prime contract, but the prime contractor's subcontracting plan, if any, would be relevant.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and inspection agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would include performance reviews, milestone tracking, and quality assurance protocols specific to nuclear components. Transparency is limited by the sole-source nature and the classified aspects often associated with naval nuclear programs.

Related Government Programs

Naval Nuclear Propulsion Program
Submarine Procurement
Defense Manufacturing Contracts
Nuclear Reactor Components
Shipbuilding and Repair

Risk Flags

Sole-source award requires justification review.
Long contract duration increases risk.
Cost-plus contract type requires diligent cost monitoring.
Nuclear components demand high quality and safety standards.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $132.4 million to BECHTEL PLANT MACHINERY, INC.. 200111!015352!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002401C4002 !A!N!*!N! !20001016!20060930!074993825!154287825!049422439!N!BECHTEL PLANT MACHINERY INC !500 PENN CENTER BLVD !PITTSBURGH !PA!15235!61000!003!42!PITTSBURGH !ALLEGHENY !PENN !+000132416869!N!N!000000000000!4470!NUCLEAR REACTORS !A3 !SHIPS !2SDN!SUBMARINE NUCLEAR-SSN !332410!*!*!3! ! ! !*!*!*!B!*!*!A!

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 $132.4 million.

What is the period of performance?

Start: 2000-10-16. End: 2015-09-30.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'DEFINITIVE CONTRACT' to Bechtel Plant Machinery, Inc. Sole-source awards are typically justified when only one responsible source is capable of providing the required goods or services, or when urgent and compelling circumstances prevent full and open competition. For specialized defense systems like nuclear reactor components for submarines, it's common for a limited number of contractors to possess the necessary technical expertise, security clearances, and manufacturing infrastructure. A formal justification document, usually required for sole-source procurements exceeding certain thresholds, would detail the specific reasons why competition was not feasible or practical in this instance. Without access to that justification, we can only infer potential reasons related to the highly specialized and critical nature of the work.

How does the $132.4 million award compare to historical spending on similar nuclear reactor components?

Direct historical spending comparisons for this specific type of nuclear reactor component are challenging without more granular data on comparable contracts. The $132.4 million award covers a significant period (October 16, 2000, to September 30, 2015), averaging approximately $8.8 million per year. This figure needs to be contextualized within the broader Naval Nuclear Propulsion Program budget and the specific requirements for submarine maintenance and construction. Benchmarking would ideally involve analyzing other contracts for submarine reactor components, propulsion systems, or related specialized manufacturing services awarded around the same period or subsequently. Factors such as inflation, technological advancements, and changes in procurement strategies would need to be considered for a meaningful comparison.

What are the primary risks associated with a sole-source contract of this magnitude and duration?

The primary risks associated with a sole-source contract of this magnitude ($132.4 million) and long duration (over 15 years) include potential for cost overruns, reduced incentive for contractor efficiency, and contractor lock-in. Without competitive pressure, the contractor may have less incentive to control costs or innovate, potentially leading to prices higher than what could be achieved through competition. The long duration increases the exposure to market fluctuations, changes in material costs, and potential scope creep. Furthermore, the specialized nature of nuclear reactor components means the government may become heavily reliant on a single supplier, making it difficult and costly to switch providers if performance issues arise or if better alternatives become available.

What is the track record of Bechtel Plant Machinery, Inc. in handling nuclear-related defense contracts?

Bechtel Plant Machinery, Inc. has a significant track record in complex industrial projects, including those involving nuclear power and defense applications. As a subsidiary of the Bechtel Group, it has extensive experience in engineering, procurement, and construction for large-scale infrastructure and energy projects. While specific details on their performance for this particular Naval Sea Systems Command contract require deeper investigation, their general reputation suggests a capacity to handle technically demanding and high-stakes projects. Their involvement in defense contracts, particularly those related to naval systems or nuclear facilities, would be a key indicator of their suitability and past performance in meeting stringent military requirements and quality standards.

What performance metrics or oversight mechanisms are likely in place for this contract?

Given the critical nature of nuclear reactor components for submarines, stringent performance metrics and oversight mechanisms are expected. These would likely include detailed technical specifications, quality assurance protocols (e.g., ISO standards, specific nuclear industry certifications), and rigorous inspection and testing procedures at various manufacturing stages. The contract type, 'COST PLUS FIXED FEE' (CPFF), suggests that the contractor is reimbursed for allowable costs plus a fixed fee representing profit, which requires close monitoring of expenditures. Oversight would be provided by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), responsible for ensuring contractor compliance, monitoring progress, verifying costs, and assessing performance against contract requirements. Milestones, delivery schedules, and defect reporting would be key elements of this oversight.

Industry Classification

NAICS: Manufacturing › Boiler, Tank, and Shipping Container Manufacturing › Power Boiler and Heat Exchanger Manufacturing

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

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