Naval Reactors Contract Awarded to Bechtel for $575M, Lacks Competition

Contract Overview

Contract Amount: $575,059,980 ($575.1M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-11-09

End Date: 2026-09-30

Contract Duration: 3,612 days

Daily Burn Rate: $159.2K/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 $575.1 million to BECHTEL PLANT MACHINERY, INC. for work described as: NAVAL REACTORS Key points: 1. Significant contract value of $575 million awarded to Bechtel Plant Machinery, Inc. 2. Lack of competition raises concerns about potential overspending and limited innovation. 3. The contract is for Power Boiler and Heat Exchanger Manufacturing, a critical defense sector. 4. Long contract duration of 3612 days (approx. 10 years) warrants close monitoring.

Value Assessment

Rating: questionable

The contract type is Cost Plus Fixed Fee, which can lead to higher costs if not managed tightly. Without competitive bidding, it's difficult to benchmark pricing against similar contracts.

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 for a large contract like this suggests taxpayers may be paying a premium for goods and services.

Public Impact

Taxpayers may be overpaying due to the absence of competitive bidding. Potential for reduced innovation and efficiency without market-driven incentives. Ensuring robust oversight is crucial given the sole-source nature of the award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Long contract duration
No small business participation indicated

Positive Signals

Critical national security function
Experienced contractor

Sector Analysis

This contract falls within the Power Boiler and Heat Exchanger Manufacturing sector, which is vital for naval propulsion systems. Spending benchmarks are difficult to establish due to the specialized nature and lack of competition.

Small Business Impact

There is no indication of small business participation in this contract. Given its sole-source nature and specialized requirements, opportunities for small businesses may have been overlooked.

Oversight & Accountability

The sole-source nature of this contract necessitates strong government oversight to ensure cost control, performance, and adherence to contract terms. Accountability is paramount given the significant taxpayer investment.

Related Government Programs

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

Risk Flags

Lack of competition may lead to inflated costs.
Cost-plus contract type increases risk of overruns.
Long contract duration presents management challenges.
Potential for reduced innovation.
No clear small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $575.1 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 $575.1 million.

What is the period of performance?

Start: 2016-11-09. End: 2026-09-30.

What is the justification for the sole-source award, and has it been thoroughly documented?

The justification for a sole-source award must be clearly documented and demonstrate why only one source can fulfill the requirement. This typically involves unique capabilities, urgent needs, or lack of alternatives. Without this documentation, it's difficult to assess the necessity of foregoing competition and the potential impact on value for money.

How is the government ensuring cost control and preventing overruns with a Cost Plus Fixed Fee contract awarded without competition?

With a Cost Plus Fixed Fee contract, robust government oversight is essential. This includes detailed cost tracking, regular audits, performance monitoring, and negotiation of fair fixed fees. The absence of competition means the government must be extra vigilant in scrutinizing all costs and ensuring the contractor is delivering efficiently and effectively.

What measures are in place to ensure the effectiveness and timely delivery of critical components under this long-term, sole-source contract?

Effectiveness and timely delivery are ensured through stringent contract management, including clear performance metrics, milestone tracking, and regular progress reviews. For long-term sole-source contracts, establishing strong communication channels and potentially incorporating incentive clauses for performance can help mitigate risks associated with extended durations and lack of competitive pressure.

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: N0002416R2120

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: $575,059,980

Exercised Options: $575,059,980

Current Obligation: $575,059,980

Subaward Activity

Number of Subawards: 59

Total Subaward Amount: $482,227,658

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline