DoD's $811M engineering services contract awarded to Bechtel Plant Machinery, Inc. raises value concerns

Contract Overview

Contract Amount: $811,784,619 ($811.8M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2002-01-18

End Date: 2019-09-20

Contract Duration: 6,454 days

Daily Burn Rate: $125.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: SCHENECTADY, SCHENECTADY County, NEW YORK, 12305, UNITED STATES OF AMERICA

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $811.8 million to BECHTEL PLANT MACHINERY, INC. for work described as: Key points: 1. The contract's significant value and sole-source nature warrant scrutiny for potential cost efficiencies. 2. Limited competition suggests a risk of inflated pricing and reduced incentive for contractor performance. 3. The extended duration and cost-plus fixed fee structure may not align with optimal value for taxpayer dollars. 4. Performance context is limited due to the 'NOT COMPETED' award, making direct comparison difficult. 5. Engineering services are critical, but the lack of competitive bidding impacts price discovery. 6. The contract's size and scope place it within a high-value spending category for the Department of Defense.

Value Assessment

Rating: questionable

The $811 million total award for engineering services is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The Cost Plus Fixed Fee (CPFF) contract type, while providing flexibility, can lead to higher costs if not managed rigorously, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure may not incentivize the most cost-effective solutions compared to fixed-price contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This significantly limits the opportunity for multiple vendors to bid, which typically drives down prices and encourages innovation. The absence of competition means the government did not benefit from a marketplace evaluation of capabilities and pricing for these essential engineering services.

Taxpayer Impact: Sole-source awards mean taxpayers may be paying a premium, as there was no competitive pressure to ensure the lowest possible price for these services.

Public Impact

The Department of the Navy benefits from specialized engineering services essential for its operations. The contract supports critical infrastructure and operational needs within the defense sector. Geographic impact is not specified but likely relates to naval facilities or projects. Workforce implications would involve specialized engineering and technical personnel, potentially supporting domestic jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a large-value contract raises concerns about potential overpayment.
The CPFF contract type can incentivize cost-plus behavior rather than cost-saving.
Limited transparency due to sole-source award makes performance and value assessment challenging.
Extended contract duration (6454 days) increases the risk of cost overruns and scope creep.

Positive Signals

Awarded to a known entity (Bechtel Plant Machinery, Inc.) potentially indicating specialized expertise.
Engineering services are crucial for defense infrastructure, suggesting a necessary procurement.
The contract is managed by the Department of Defense, a major federal agency with established procurement processes.

Sector Analysis

The engineering services sector is vital for national infrastructure and defense projects. This contract falls within the broader professional, scientific, and technical services industry. The Department of Defense is a significant consumer of such services, often requiring highly specialized expertise for complex projects. Benchmarking this contract's value is difficult without competitive data, but large-scale engineering contracts for government entities can range from tens to hundreds of millions of dollars.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large entity, it is unlikely to involve significant subcontracting opportunities for small businesses unless explicitly mandated and monitored. This contract does not appear to directly support the small business ecosystem.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Department of Defense's contracting officers and potentially Inspector General's office. However, the sole-source nature and CPFF structure necessitate robust oversight to ensure costs are reasonable and work is performed efficiently. Transparency is limited due to the lack of a competitive process, making public accountability more challenging.

Related Government Programs

Department of Defense Engineering Services
Naval Facilities Engineering Command Contracts
Cost-Plus Fixed Fee Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
High contract value
Extended duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $811.8 million to BECHTEL PLANT MACHINERY, INC.. See the official description on USAspending.

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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $811.8 million.

What is the period of performance?

Start: 2002-01-18. End: 2019-09-20.

What is the specific nature of the engineering services provided under this contract?

The provided data indicates the North American Industry Classification System (NAICS) code is 541330, which corresponds to 'Engineering Services'. This broad category encompasses a wide range of activities, including design, consulting, and project management for various engineering disciplines. For a contract of this magnitude awarded to Bechtel Plant Machinery, Inc. by the Department of the Navy, it likely involves complex, large-scale engineering projects related to naval infrastructure, equipment, or systems. Specific details would require access to the contract's statement of work, which is not available in the provided data. These services could range from conceptual design and feasibility studies to detailed engineering, procurement support, and construction management for military bases, shipyards, or specialized defense assets.

How does the $811 million award compare to typical spending on engineering services by the Department of Defense?

The $811 million total award is a substantial sum, placing it among significant procurements within the Department of Defense (DoD). While the DoD spends billions annually on various services, including engineering, the exact comparison depends on the specific type of engineering services and the fiscal year. Large-scale, sole-source contracts like this one, especially for specialized defense needs, can represent a considerable portion of a particular program's budget. Without access to historical spending data for comparable sole-source engineering contracts or the specific program this contract supports, it's challenging to definitively state if $811 million is high or low relative to benchmarks. However, the absence of competition for such a large amount warrants scrutiny regarding value for money.

What are the risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract of this size?

Sole-source contracts carry inherent risks because they bypass the competitive process, potentially leading to higher prices and reduced innovation. The government does not benefit from market forces driving efficiency. A CPFF contract structure, while offering flexibility by reimbursing allowable costs plus a fixed fee, can also incentivize the contractor to incur more costs, as their fee is fixed regardless of the total cost. This can lead to cost overruns if not managed meticulously. For a contract valued at $811 million and spanning over 6,400 days, the risks include significant cost escalation beyond initial estimates, potential scope creep, and a reduced incentive for the contractor to find the most economical solutions. Robust government oversight is critical to mitigate these risks.

What is Bechtel Plant Machinery, Inc.'s track record with federal contracts, particularly with the Department of Defense?

Bechtel Plant Machinery, Inc. is part of the larger Bechtel Corporation, a global engineering, construction, and project management company with a long history of working on large-scale government and private sector projects. While specific details on Bechtel Plant Machinery, Inc.'s individual federal contract history are not provided in the data, Bechtel Corporation has frequently been awarded significant contracts by various U.S. government agencies, including the Department of Defense, Department of Energy, and NASA. Their involvement often spans complex infrastructure, defense facilities, and energy projects. A thorough review would involve examining their performance ratings, past contract values, and any documented issues or successes on similar federal procurements to assess their reliability and capability for this specific engineering services contract.

How does the 'NOT COMPETED' status impact the government's ability to ensure fair and reasonable pricing?

The 'NOT COMPETED' status is a direct indicator that the contract was awarded without soliciting bids from multiple sources. This significantly hinders the government's ability to ensure fair and reasonable pricing. In a competitive environment, multiple bids allow contracting officers to compare prices, negotiate terms, and select the offer that provides the best value. Without this comparison, the government relies heavily on market research, historical pricing, and negotiation skills to determine a fair price, which can be less effective. For a contract of $811 million, the lack of competition means there's a heightened risk that the price paid is higher than it would have been in a competitive scenario, potentially resulting in a loss of taxpayer value.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: NUCLEAR ORDNANCE

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. (UEI: 094878980)

Address: 3500 TECHNOLOGY DR, MONROEVILLE, PA, 15146

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline