DoD's $1.18B A1B Reactor Components Contract with Bechtel Faces Long Duration and Limited Competition
Contract Overview
Contract Amount: $1,179,194,023 ($1.2B)
Contractor: Bechtel Plant Machinery, Inc.
Awarding Agency: Department of Defense
Start Date: 2006-10-16
End Date: 2028-06-30
Contract Duration: 7,928 days
Daily Burn Rate: $148.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: A1B REACTOR COMPONENTS.
Place of Performance
Location: PITTSBURGH, ALLEGHENY County, PENNSYLVANIA, 15235
Plain-Language Summary
Department of Defense obligated $1.18 billion to BECHTEL PLANT MACHINERY, INC. for work described as: A1B REACTOR COMPONENTS. Key points: 1. The contract's large value and extended duration (2006-2028) warrant close scrutiny. 2. Limited competition raises concerns about potential overpricing and reduced innovation. 3. The Cost Plus Fixed Fee structure may incentivize cost overruns. 4. This spending falls within the Ship Building and Repairing sector, a critical area for national defense.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) contract type, coupled with a lack of competition, suggests potential for higher costs than a competitively bid fixed-price contract. The fixed fee component provides some cost control, but the overall structure warrants careful monitoring.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source or limited competition award. This significantly reduces price discovery and negotiation leverage for the government, potentially leading to higher prices for taxpayers.
Taxpayer Impact: The lack of competition on this substantial contract likely results in higher costs for taxpayers compared to a scenario with multiple bidders vying for the work.
Public Impact
Taxpayers are funding a critical but potentially expensive component for naval operations. The long contract duration means sustained financial commitment and potential for evolving needs. Lack of transparency in pricing due to sole-sourcing impacts public trust. The contract supports specialized manufacturing within the defense industrial base.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost Plus Fixed Fee structure
- Long contract duration
- High contract value
Positive Signals
- Critical national defense component
- Long-term commitment ensures supply
Sector Analysis
This contract falls under Ship Building and Repairing, a sector characterized by high complexity, long lead times, and significant government investment. Benchmarks for reactor components are difficult to establish due to their specialized nature, but the overall value and duration are substantial.
Small Business Impact
The data indicates that neither the prime contractor nor the contract itself is designated as a small business set-aside. Therefore, there is no direct indication of small business participation or benefit from this specific contract award.
Oversight & Accountability
The long duration and sole-source nature of this contract necessitate robust oversight from the Department of Defense to ensure cost control, performance, and adherence to contract terms. Regular audits and performance reviews are crucial.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award limits price competition.
- CPFF contract type can incentivize cost overruns.
- Extended contract duration increases risk of obsolescence.
- High contract value requires significant oversight.
- Lack of small business participation noted.
Tags
ship-building-and-repairing, department-of-defense, pa, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.18 billion to BECHTEL PLANT MACHINERY, INC.. A1B REACTOR COMPONENTS.
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 $1.18 billion.
What is the period of performance?
Start: 2006-10-16. End: 2028-06-30.
What was the justification for not competing this contract, and what steps were taken to ensure a fair and reasonable price was negotiated?
The justification for not competing this contract is not provided in the data. However, for sole-source contracts, agencies typically conduct a price analysis based on historical data, commercial pricing, or other cost-estimating methods to ensure a fair and reasonable price. The government should have independently verified the contractor's proposed costs and profit margins.
What are the specific risks associated with the Cost Plus Fixed Fee (CPFF) structure over such a long period, and how are they being mitigated?
The primary risk of CPFF is that the contractor may have less incentive to control costs, as the government bears most of the cost risk. The fixed fee provides a profit incentive, but cost overruns can still occur. Mitigation strategies include detailed cost monitoring, performance metrics, and potentially incentive clauses tied to cost savings or performance improvements.
How does the extended contract end date (2028) impact the government's ability to adapt to potential technological advancements or changing requirements in reactor technology?
The long duration poses a risk of obsolescence or misalignment with future technological needs. The government should have mechanisms in place, such as contract modification clauses or regular reviews, to incorporate new technologies or adjust requirements. Alternatively, planning for future competitive procurements well in advance is essential.
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.
Address: 3500 TECHNOLOGY DR, MONROEVILLE, PA, 15146
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $1,198,384,293
Exercised Options: $1,198,384,293
Current Obligation: $1,179,194,023
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2006-10-16
Current End Date: 2028-06-30
Potential End Date: 2028-06-30 00:00:00
Last Modified: 2025-09-29
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