DoD's $714M Engineering Services Contract with Bechtel Plant Machinery, Inc. Lacked Competition

Contract Overview

Contract Amount: $714,560,914 ($714.6M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2003-10-15

End Date: 2019-09-30

Contract Duration: 5,829 days

Daily Burn Rate: $122.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

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 $714.6 million to BECHTEL PLANT MACHINERY, INC. for work described as: Key points: 1. Significant contract value of $714.6 million awarded over 16 years. 2. Sole-source award indicates a lack of competitive bidding. 3. Long contract duration (over 15 years) raises questions about sustained necessity and market evolution. 4. Engineering Services sector (NAICS 541330) often sees competitive bidding, making this award notable. 5. Potential for overpayment due to lack of competition and cost-plus contract type.

Value Assessment

Rating: questionable

The contract type is Cost Plus Fixed Fee, which can incentivize higher costs. Without competitive benchmarks, assessing the pricing's reasonableness against similar services is difficult, especially given the long duration and sole-source nature.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there was no competitive pressure to drive down prices.

Taxpayer Impact: The lack of competition on a $714.6 million contract likely resulted in higher costs than a competed procurement, impacting taxpayer funds negatively.

Public Impact

Taxpayers may have overpaid for engineering services due to the absence of competitive bidding. The long contract term raises concerns about the government's ability to adapt to changing technological needs or market prices. Lack of transparency in the procurement process due to sole-source award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of small business participation (sb: false)

Positive Signals

Contract awarded to a known entity (Bechtel)
Clear agency (Department of Defense)

Sector Analysis

This contract falls under Engineering Services (NAICS 541330). Spending in this sector can vary widely, but typically involves specialized expertise. Without competition, it's hard to benchmark if this award was cost-effective compared to market rates.

Small Business Impact

The data indicates no small business participation (sb: false) in this contract. This suggests that opportunities for small businesses were either not sought or not feasible under the sole-source award structure.

Oversight & Accountability

The sole-source nature of this large contract warrants scrutiny regarding the justification for not competing it. Oversight should focus on whether the fixed fee adequately controlled costs over the extended period.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competition
Cost-plus contract type
Long contract duration (over 15 years)
No small business participation
Potential for cost overruns
Limited price discovery

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $714.6 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 $714.6 million.

What is the period of performance?

Start: 2003-10-15. End: 2019-09-30.

What was the specific justification for awarding this large engineering services contract on a sole-source basis?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of available sources. For this contract, the specific rationale would need to be documented by the Department of the Navy, likely detailing why Bechtel Plant Machinery, Inc. was the only viable option at the time of award.

How did the Cost Plus Fixed Fee structure impact the final cost given the lack of competition?

A Cost Plus Fixed Fee (CPFF) contract allows the contractor to recover all allowable costs plus a predetermined fixed fee. Without competition, there's less incentive for the contractor to minimize costs, as the fee is fixed regardless of the actual costs incurred. This structure, combined with sole-sourcing, increases the risk of cost overruns and reduced value for taxpayer money.

What mechanisms were in place to ensure effective performance and value for money over the 15-year contract duration?

Given the sole-source and CPFF nature, oversight would be critical. Mechanisms likely included detailed cost monitoring, performance reviews, and potentially contract modifications to ensure the fixed fee remained appropriate. However, the inherent limitations of a non-competed, cost-reimbursable contract over such a long period raise questions about sustained cost-effectiveness.

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