Bechtel Plant Machinery awarded $855M for nuclear reactor services, a sole-source contract with a long duration

Contract Overview

Contract Amount: $85,500,630 ($85.5M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2000-10-16

End Date: 2015-10-16

Contract Duration: 5,478 days

Daily Burn Rate: $15.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200107!015270!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002401C4004 !A!N!*!N! !20001016!20060930!072972644!094878998!094878980!N!BECHTEL PLANT MACHINERY, INC !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENECTADY !NEW YORK !+000085500630!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!Z!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 $85.5 million to BECHTEL PLANT MACHINERY, INC. for work described as: 200107!015270!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002401C4004 !A!N!*!N! !20001016!20060930!072972644!094878998!094878980!N!BECHTEL PLANT MACHINERY, INC !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHEN… Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Long contract duration of over 15 years may indicate a need for sustained, specialized services. 3. The contract's cost-plus-fixed-fee structure could incentivize cost overruns, requiring robust oversight. 4. Focus on nuclear reactors for ships suggests a critical, high-stakes defense-related service. 5. Limited competition raises concerns about market responsiveness and innovation. 6. The contractor has a significant award amount, indicating substantial experience in this niche.

Value Assessment

Rating: questionable

The contract's value of $855 million over more than 15 years is substantial. Without comparable sole-source contracts for similar nuclear reactor services on naval vessels, it is difficult to benchmark the value for money. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or services where costs are uncertain, carries inherent risks of cost escalation. The fixed fee component needs careful scrutiny to ensure it is reasonable for the level of effort and risk undertaken by Bechtel Plant Machinery, Inc. Further analysis of the fee structure and historical cost performance would be necessary for a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one contractor, Bechtel Plant Machinery, Inc., was solicited. This typically occurs when there is a lack of competition due to specialized capabilities, proprietary technology, or urgent needs. The absence of a competitive bidding process means that the government did not benefit from price discovery through multiple offers, potentially leading to a higher price than if the contract had been competed. The rationale for this sole-source award would need to be thoroughly documented to justify the lack of competition.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competition. Without a competitive process, there is less pressure on the contractor to offer the most cost-effective solution, potentially leading to higher overall program costs.

Public Impact

The primary beneficiaries are the U.S. Navy, which receives critical services for its submarine fleet. Services delivered include the maintenance, repair, and potentially overhaul of nuclear reactor components for naval vessels. The geographic impact is likely concentrated around naval bases and shipyards where these submarines are serviced. This contract supports highly specialized jobs in nuclear engineering, manufacturing, and maintenance within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not closely monitored.
Long contract duration (over 15 years) increases exposure to potential cost overruns and performance issues.
Lack of transparency in the sole-source justification could mask inefficiencies.
The specialized nature of nuclear reactors means limited contractor pool, potentially creating dependency.

Positive Signals

Contract addresses a critical national security need for the U.S. Navy's submarine program.
Bechtel Plant Machinery, Inc. likely possesses unique expertise essential for nuclear reactor maintenance.
A long-term contract can ensure continuity of essential services for complex naval assets.
The fixed fee component, if reasonable, provides some cost certainty for the government.
The award signifies a significant investment in maintaining the U.S. nuclear-powered submarine fleet.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically supporting naval nuclear propulsion. The market for nuclear reactor maintenance and services for naval vessels is highly specialized, with a limited number of qualified contractors. Spending in this sector is driven by national security requirements and the long lifecycle of naval assets. Comparable benchmarks are difficult to establish due to the unique nature of military nuclear reactors and the sole-source procurement approach.

Small Business Impact

There is no indication that this contract involved small business set-asides. Given the highly specialized nature of nuclear reactor services for naval vessels, it is unlikely that small businesses would possess the required certifications, infrastructure, and expertise. Subcontracting opportunities for small businesses may exist in ancillary support services, but the core work is likely performed by the prime contractor or its large specialized subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and inspection agencies, such as the Defense Contract Management Agency (DCMA). Given the critical nature of nuclear systems, rigorous oversight mechanisms, including technical inspections, performance reviews, and financial audits, are expected. Transparency may be limited due to the sole-source nature and national security implications, but accountability should be enforced through contract performance metrics and adherence to safety and operational standards.

Related Government Programs

Naval Nuclear Propulsion Program
Shipbuilding and Repair Contracts
Defense Maintenance and Repair Services
Nuclear Power Generation Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Long contract duration
Critical infrastructure/technology

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $85.5 million to BECHTEL PLANT MACHINERY, INC.. 200107!015270!1700!BZ002 !NAVAL SEA SYSTEMS COMMAND !N0002401C4004 !A!N!*!N! !20001016!20060930!072972644!094878998!094878980!N!BECHTEL PLANT MACHINERY, INC !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENECTADY !NEW YORK !+000085500630!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 $85.5 million.

What is the period of performance?

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

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under specific circumstances outlined in federal acquisition regulations, such as the existence of only one responsible source capable of providing the required service, urgent and compelling needs, or when the contract is a follow-on to a previously competed contract where the original contractor possesses unique knowledge or capabilities. For a contract of this magnitude and duration related to nuclear reactors, the justification likely centers on Bechtel Plant Machinery, Inc.'s unique expertise, specialized facilities, or proprietary knowledge essential for maintaining the U.S. Navy's nuclear-powered submarine fleet. A thorough review of the contract file and associated documentation would be required to ascertain the precise justification.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar services?

Cost-plus-fixed-fee (CPFF) contracts are often used for research and development, complex services, or situations where the scope of work and associated costs are difficult to define precisely at the outset. In this case, for nuclear reactor maintenance and services on naval vessels, the complexity and potential for unforeseen issues might necessitate a CPFF structure. However, compared to fixed-price contracts, CPFF offers less cost certainty to the government, as the contractor is reimbursed for actual costs incurred, plus a fixed fee. Other contract types like cost-plus-incentive-fee (CPIF) could offer better cost control by incentivizing the contractor to stay below target costs. Firm-fixed-price (FFP) contracts would provide the most cost certainty but are generally unsuitable for services with high uncertainty.

What are the potential risks associated with a contract duration of over 15 years?

A contract duration exceeding 15 years, like this one, presents several risks. Firstly, it increases the government's exposure to potential cost increases over time due to inflation, changes in labor rates, or material costs, even with a fixed fee. Secondly, the longer the contract, the greater the risk of contractor performance degradation or obsolescence of technology or processes if not actively managed. Maintaining oversight and ensuring continued value for money over such an extended period requires sustained diligence. Furthermore, market conditions and technological advancements could render the contracted services less efficient or effective compared to future alternatives, making the government locked into a potentially suboptimal arrangement.

What is Bechtel Plant Machinery, Inc.'s track record with similar government contracts?

While the provided data identifies Bechtel Plant Machinery, Inc. as the contractor for this $855 million nuclear reactor services contract, it does not offer details on their broader track record with the government. However, being awarded such a significant, long-term, sole-source contract for critical naval nuclear systems strongly suggests a history of successful performance and specialized expertise recognized by the U.S. Navy. Companies undertaking such work typically undergo rigorous vetting and must demonstrate extensive experience, adherence to stringent quality and safety standards, and the capability to manage complex, high-stakes projects. Further research into their contract history, performance reviews, and any past issues would be necessary for a comprehensive assessment.

How does this contract's value compare to overall federal spending on shipbuilding and repair?

The $855 million awarded to Bechtel Plant Machinery, Inc. for nuclear reactor services represents a significant investment within the broader defense budget. Federal spending on shipbuilding and repair is substantial, often running into tens of billions of dollars annually, encompassing new vessel construction, modernization, and maintenance across various fleet types (carriers, submarines, surface combatants). While this specific contract focuses on a critical niche (nuclear reactors for submarines), its value is a notable component of the overall spending dedicated to maintaining and operating the Navy's complex assets. Without detailed breakdowns of shipbuilding and repair budgets by specific service category, a precise comparison is difficult, but this contract underscores the high cost associated with specialized naval nuclear support.

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