DoD's $662M Naval Reactors Contract with Bechtel Plant Machinery Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $662,152,531 ($662.2M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-11-15

End Date: 2027-09-30

Contract Duration: 5,432 days

Daily Burn Rate: $121.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NAVAL REACTORS

Place of Performance

Location: MONROEVILLE, ALLEGHENY County, PENNSYLVANIA, 15146

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $662.2 million to BECHTEL PLANT MACHINERY, INC. for work described as: NAVAL REACTORS Key points: 1. Significant contract value of $662M awarded to Bechtel Plant Machinery, Inc. 2. Lack of competition raises concerns about potential overpricing and value for taxpayer money. 3. The contract is for Power Boiler and Heat Exchanger Manufacturing, a critical defense sector. 4. Long contract duration (2012-2027) with a Cost Plus Fixed Fee structure warrants close monitoring.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee structure, combined with a lack of competition, makes it difficult to assess true value. The awarded amount of $662M over a long period suggests significant costs, but without competitive bids, benchmarks are hard to establish.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for the government compared to a competitive process.

Taxpayer Impact: The absence of competition for a contract of this magnitude raises concerns about the efficient use of taxpayer funds, as the government may not be securing the best possible price.

Public Impact

Taxpayers may be overpaying due to the lack of competitive bidding on this large defense contract. The long-term nature of the contract could lock in potentially inflated costs for years. Dependence on a single contractor for critical naval reactor components could pose supply chain risks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Cost Plus Fixed Fee contract type
Long contract duration
High contract value

Positive Signals

Awarded to an established company (Bechtel)
Supports critical defense infrastructure

Sector Analysis

This contract falls within the Power Boiler and Heat Exchanger Manufacturing sector, crucial for naval propulsion systems. Spending in this specialized manufacturing area can be high due to complex engineering and safety requirements, but competitive pricing is still expected.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as both the contractor and the contract type suggest a large-scale, established entity. There is no indication of subcontracting opportunities for small businesses within this data.

Oversight & Accountability

The 'NOT COMPETED' status and Cost Plus Fixed Fee structure necessitate robust oversight to ensure costs are reasonable and performance meets requirements. The long duration further emphasizes the need for continuous monitoring and potential re-evaluation.

Related Government Programs

Power Boiler and Heat Exchanger Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competition
Potential for cost overruns
Limited price discovery
Long contract duration
Sole-source award

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $662.2 million to BECHTEL PLANT MACHINERY, INC.. NAVAL REACTORS

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 $662.2 million.

What is the period of performance?

Start: 2012-11-15. End: 2027-09-30.

What specific justifications were provided for not competing this large contract, and do they align with federal procurement regulations for sole-source awards?

Federal regulations allow for sole-source contracts under specific circumstances, such as when only one responsible source can provide the required supplies or services. Detailed justification would typically involve technical uniqueness, proprietary data, or urgent and compelling needs. Without access to the specific justification documentation, it's impossible to confirm alignment, but the significant value and duration warrant a thorough review of the rationale.

How does the 'Cost Plus Fixed Fee' structure impact the government's ability to control costs and ensure contractor efficiency, especially in a non-competitive environment?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs plus a fixed fee representing profit. While the fee is fixed, the total cost can fluctuate. In a non-competitive scenario, the government has less leverage to negotiate costs, and the contractor may have less incentive to control expenses if the fixed fee is substantial. This structure requires diligent oversight to scrutinize costs and ensure the fixed fee remains appropriate for the work performed.

What are the long-term strategic implications of awarding such a critical and high-value contract on a sole-source basis for naval reactor components?

Sole-source awards for critical components can lead to a lack of innovation and potentially higher long-term costs due to the absence of market competition. It also creates a dependency on a single supplier, which could pose risks to national security if that supplier faces operational issues or if geopolitical factors impact their ability to deliver. Exploring options for future competition or developing alternative sources should be a strategic consideration.

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

Solicitation ID: N0002412R2118

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

Financial Breakdown

Contract Ceiling: $662,152,531

Exercised Options: $662,152,531

Current Obligation: $662,152,531

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline