Naval Reactors Contract Awarded to Bechtel for $605M, Lacks Competition
Contract Overview
Contract Amount: $605,212,398 ($605.2M)
Contractor: Bechtel Plant Machinery, Inc.
Awarding Agency: Department of Defense
Start Date: 2015-11-20
End Date: 2030-09-30
Contract Duration: 5,428 days
Daily Burn Rate: $111.5K/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
Plain-Language Summary
Department of Defense obligated $605.2 million to BECHTEL PLANT MACHINERY, INC. for work described as: NAVAL REACTORS Key points: 1. Significant long-term contract for naval reactors. 2. Sole-source award to Bechtel Plant Machinery, Inc. raises competition concerns. 3. High value contract with a long duration requires careful oversight. 4. Sector is critical for national defense infrastructure.
Value Assessment
Rating: questionable
The contract value is substantial, but without competitive bidding, it's difficult to assess if the pricing is optimal. The Cost Plus Fixed Fee structure can incentivize cost increases.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to reduce prices.
Taxpayer Impact: The lack of competition on this large contract likely results in a higher cost to taxpayers than if it had been competitively bid.
Public Impact
Ensures continued operation and maintenance of critical naval nuclear propulsion systems. Potential for cost overruns due to the sole-source nature and CPFF contract type. Long-term commitment impacts future budget allocations for defense. Job creation in specialized manufacturing and engineering sectors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Long contract duration
- Lack of transparency in pricing
Positive Signals
- Critical national security asset
- Experienced contractor
- Long-term planning
Sector Analysis
This contract falls within the Power Boiler and Heat Exchanger Manufacturing sector, specifically supporting the Department of Defense's naval nuclear propulsion program. Spending in this niche area is highly specialized and driven by national security requirements rather than market dynamics.
Small Business Impact
The data indicates that this contract was not awarded to a small business. There is no information provided to suggest any subcontracting opportunities for small businesses within this large, sole-source award.
Oversight & Accountability
Given the sole-source nature and long duration, robust oversight from the Department of the Navy is crucial to monitor costs, performance, and ensure adherence to contract terms. Independent audits may be warranted.
Related Government Programs
- Power Boiler and Heat Exchanger Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award limits price competition.
- Cost Plus Fixed Fee contract type can incentivize higher costs.
- Long contract duration (over 14 years) increases risk of cost escalation.
- Lack of small business participation.
- Potential for cost overruns without strong oversight.
Tags
power-boiler-and-heat-exchanger-manufact, department-of-defense, pa, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $605.2 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 $605.2 million.
What is the period of performance?
Start: 2015-11-20. End: 2030-09-30.
What is the justification for the sole-source award, and has it been reviewed for potential competition?
The justification for a sole-source award typically involves unique capabilities or circumstances where only one source can meet the requirement. For this Naval Reactors contract, the specific rationale needs to be documented and publicly accessible. Regular reviews should ensure that competition is not feasible before continuing sole-source awards, especially for such a long duration.
How are cost overruns managed and controlled under this Cost Plus Fixed Fee contract?
Cost Plus Fixed Fee contracts provide the contractor with reimbursement for allowable costs plus a fixed fee representing profit. Cost overruns are managed through stringent monitoring of allowable costs, negotiation of the fixed fee, and clear contract clauses defining cost ceilings and potential penalties. The government's oversight team must diligently track expenditures and contractor performance.
What is the long-term strategic value and potential obsolescence risk associated with this contract?
The long-term strategic value lies in maintaining the operational readiness of the U.S. nuclear-powered fleet. However, risks include technological obsolescence if advancements in propulsion are not incorporated, and the potential for escalating costs over the contract's extended period. Continuous assessment of technological trends and cost-effectiveness is vital.
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: N0002415R2107
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: $605,212,398
Exercised Options: $605,212,398
Current Obligation: $605,212,398
Subaward Activity
Number of Subawards: 81
Total Subaward Amount: $573,319,715
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2015-11-20
Current End Date: 2030-09-30
Potential End Date: 2030-09-30 00:00:00
Last Modified: 2015-12-10
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