DoD's $3.38 Billion Naval Reactors Contract with Bechtel Raises Cost and Competition Concerns
Contract Overview
Contract Amount: $3,376,284,837 ($3.4B)
Contractor: Bechtel Plant Machinery, Inc.
Awarding Agency: Department of Defense
Start Date: 2018-11-30
End Date: 2032-09-30
Contract Duration: 5,053 days
Daily Burn Rate: $668.2K/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
Plain-Language Summary
Department of Defense obligated $3.38 billion to BECHTEL PLANT MACHINERY, INC. for work described as: NAVAL REACTORS Key points: 1. Significant contract value ($3.38B) for Power Boiler and Heat Exchanger Manufacturing. 2. Sole-source award to Bechtel Plant Machinery, Inc. limits competitive pricing. 3. Long contract duration (2018-2032) may obscure current market value. 4. Lack of small business participation noted.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee structure, combined with a lack of competition, makes it difficult to assess value. The long duration and potential for cost overruns are significant risks.
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 taxpayers.
Taxpayer Impact: The lack of competition and cost-plus structure may result in inflated costs, directly impacting taxpayer funds allocated to naval propulsion systems.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. The long-term nature of the contract could lead to outdated technology or inefficient processes. Critical defense infrastructure relies on this sole-source provider, creating potential supply chain risks.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- No small business participation
Positive Signals
- Essential defense capability
- Experienced contractor
Sector Analysis
This contract falls under Power Boiler and Heat Exchanger Manufacturing, a critical sector for defense infrastructure. Spending benchmarks are difficult to establish for highly specialized sole-source defense contracts.
Small Business Impact
The contract data indicates no small business participation. This suggests opportunities for small businesses in this sector are either limited or were not pursued.
Oversight & Accountability
The sole-source nature of this large contract warrants close oversight to ensure cost controls and performance meet expectations throughout its extended duration.
Related Government Programs
- Power Boiler and Heat Exchanger Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Cost-plus contract type
- Long contract duration
- Potential for cost overruns
- No small business participation
Tags
power-boiler-and-heat-exchanger-manufact, department-of-defense, pa, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $3.38 billion 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 $3.38 billion.
What is the period of performance?
Start: 2018-11-30. End: 2032-09-30.
What is the justification for the sole-source award, and have alternative competitive strategies been considered?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent national security needs. For this Naval Reactors contract, the specific rationale needs to be thoroughly documented and reviewed by oversight bodies. Alternative competitive strategies, even for specialized components, should be explored to ensure fair pricing and foster innovation where possible.
How are cost overruns managed and mitigated under this Cost Plus Fixed Fee structure over such a long period?
Cost Plus Fixed Fee contracts can incentivize contractors to increase costs to maximize their fixed fee percentage. Robust oversight, detailed cost audits, and clear performance metrics are crucial to mitigate overruns. Regular reviews of spending against benchmarks and independent cost analyses are necessary to ensure the government is receiving fair value throughout the contract's lifecycle.
What performance metrics are in place to ensure the effectiveness and efficiency of the contractor's work on naval reactors?
Effectiveness is likely measured by the operational readiness and reliability of the naval reactors. Efficiency metrics could include adherence to schedules, meeting technical specifications, and managing costs within projections. Independent verification and validation of performance data, along with regular technical reviews by the Navy, are essential to ensure the contractor is delivering effectively.
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: N0002418R2114
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: $3,664,012,636
Exercised Options: $3,376,284,837
Current Obligation: $3,376,284,837
Subaward Activity
Number of Subawards: 49
Total Subaward Amount: $146,315,120
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-11-30
Current End Date: 2032-09-30
Potential End Date: 2032-09-30 00:00:00
Last Modified: 2025-05-19
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