Navy awards $202.7M contract for long lead reactor plan components and material to Bechtel Plant Machinery, Inc

Contract Overview

Contract Amount: $202,675,701 ($202.7M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2002-11-26

End Date: 2016-09-30

Contract Duration: 5,057 days

Daily Burn Rate: $40.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LONG LEAD REACTOR PLAN COMPONENTS AND MATERIAL

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 $202.7 million to BECHTEL PLANT MACHINERY, INC. for work described as: LONG LEAD REACTOR PLAN COMPONENTS AND MATERIAL Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award raises questions about competition and potential for better pricing. 3. Long contract duration (2002-2016) suggests a complex, multi-year project. 4. Awarded by the Department of the Navy, indicating a defense-related procurement. 5. The contract value of $202.7 million represents a significant investment in naval infrastructure. 6. The North American Industry Classification System (NAICS) code 336611 points to shipbuilding and repair, a specialized sector.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a sole-source award, makes a direct value-for-money assessment challenging without further details on cost drivers and profit margins. Benchmarking against similar sole-source procurements for specialized naval components would be necessary to determine if the pricing is competitive. The extended duration and significant value suggest a critical but potentially costly acquisition.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary specialized capabilities, technology, or intellectual property. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are likely components of the Department of Defense, specifically the U.S. Navy, requiring specialized reactor plan components and materials. The services delivered involve the provision of critical materials and components essential for naval operations, likely related to propulsion or power systems. The geographic impact is primarily within the United States, supporting domestic defense industrial base capabilities. Workforce implications may include specialized manufacturing, engineering, and technical roles within Bechtel Plant Machinery, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee contract type can incentivize cost overruns.
Long contract duration may obscure current market price benchmarks.
Lack of transparency in sole-source justifications can hide potential inefficiencies.

Positive Signals

Award to an established contractor (Bechtel) suggests a degree of reliability.
Focus on 'long lead' components indicates strategic planning for critical defense assets.
Contracting for essential materials supports national security objectives.

Sector Analysis

This contract falls within the defense industrial base, specifically related to shipbuilding and repair (NAICS 336611). The market for specialized naval reactor components is highly concentrated, often dominated by a few firms with the requisite security clearances, technical expertise, and manufacturing capabilities. Spending in this sector is driven by national security requirements and long-term fleet modernization programs. Comparable spending benchmarks would likely be found within other major naval shipbuilding contracts.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Given the specialized nature of reactor components and the sole-source award, it is unlikely that significant subcontracting opportunities for small businesses were mandated or actively sought through a competitive process. The primary focus appears to be on securing the specialized capabilities of the prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Given the sole-source nature and long duration, robust oversight would be crucial to monitor costs, schedule, and performance. Inspector General jurisdiction would apply to investigate fraud, waste, and abuse. Transparency may be limited due to the sole-source justification, but contract modifications and performance reports would be subject to review.

Related Government Programs

Naval Nuclear Propulsion Program
Shipbuilding and Repair Contracts
Defense Materiel Procurement
Long Lead Time Material Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of publicly available performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $202.7 million to BECHTEL PLANT MACHINERY, INC.. LONG LEAD REACTOR PLAN COMPONENTS AND MATERIAL

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 $202.7 million.

What is the period of performance?

Start: 2002-11-26. End: 2016-09-30.

What specific reactor plan components and materials were procured under this contract?

The contract specifically addresses 'LONG LEAD REACTOR PLAN COMPONENTS AND MATERIAL.' While the exact specifications are not detailed in the provided data, this typically refers to critical, high-cost, and time-consuming-to-manufacture items essential for the construction or maintenance of nuclear reactors. For naval applications, these could include reactor vessels, steam generators, turbines, control rod drive mechanisms, or specialized fuel components. The 'long lead' designation highlights that these items require significant upfront investment and manufacturing time, necessitating early procurement to avoid delaying overall program schedules.

Why was this contract awarded on a sole-source basis?

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's requirements. For specialized defense procurements like long lead reactor components, this often stems from unique technical expertise, proprietary technology, existing infrastructure, or specific security clearances held by a single contractor. In this case, Bechtel Plant Machinery, Inc. likely possesses the exclusive capabilities or intellectual property necessary for these specific reactor components, making competition impractical or impossible. The Department of Defense would have had to formally justify this sole-source determination.

How does the Cost Plus Fixed Fee (CPFF) contract type impact cost control for this procurement?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor (Bechtel Plant Machinery, Inc.) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fee is fixed, the total cost to the government can fluctuate based on actual expenses. This structure can incentivize contractors to manage costs, as their profit margin is a fixed amount regardless of the final project cost. However, it also places the cost risk primarily on the government, as the contractor is guaranteed their fee. Effective oversight is crucial to ensure costs are reasonable and allowable.

What is the significance of the contract's long duration (2002-2016)?

The contract's extensive duration, spanning over 14 years, indicates the procurement of highly complex, long-lead-time items for a major defense program, likely a new ship class or a significant upgrade. Such long durations are common in defense shipbuilding and nuclear programs where components require extensive design, specialized manufacturing, testing, and integration. This extended timeline also means that the contract's initial pricing and cost estimates were made many years ago, potentially diverging significantly from current market conditions or technological advancements by the time of completion.

What are the potential risks associated with a $202.7 million sole-source contract for specialized defense components?

Several risks are associated with this type of contract. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than if multiple bids were solicited. Secondly, the CPFF structure shifts cost risk to the government, increasing the potential for cost overruns if not rigorously managed. Thirdly, the long duration can lead to scope creep, schedule delays, and obsolescence issues if not actively managed. Finally, reliance on a single contractor can create dependency and reduce flexibility in future procurements or sustainment efforts.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

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. (UEI: 094878980)

Address: 3500 TECHNOLOGY DR, MONROEVILLE, PA, 15146

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

Financial Breakdown

Contract Ceiling: $202,675,701

Exercised Options: $202,675,701

Current Obligation: $202,675,701

Contract Characteristics

Cost or Pricing Data: YES

Timeline