DoD Awards $3B Contract to Bechtel for Power Boilers and Heat Exchangers, Ending 2033

Contract Overview

Contract Amount: $3,004,573,964 ($3.0B)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-11-30

End Date: 2033-09-30

Contract Duration: 5,418 days

Daily Burn Rate: $554.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Manufacturing

Official Description: S1B

Place of Performance

Location: MONROEVILLE, ALLEGHENY County, PENNSYLVANIA, 15146

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $3.00 billion to BECHTEL PLANT MACHINERY, INC. for work described as: S1B Key points: 1. Significant long-term contract awarded to a single vendor. 2. High value contract with a fixed fee structure. 3. Potential for cost overruns given the 'Cost Plus Fixed Fee' type. 4. Manufacturing sector focused on critical defense components.

Value Assessment

Rating: questionable

The contract value of $3,004,573,964 is substantial. However, the 'Cost Plus Fixed Fee' (CPFF) structure, while providing incentives, can lead to higher final costs compared to fixed-price contracts if costs escalate significantly. Benchmarking is difficult without specific per-unit data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was 'NOT COMPETED', indicating a sole-source award. This limits price discovery and competition, potentially leading to less favorable pricing for the government compared to a fully competed scenario.

Taxpayer Impact: The lack of competition in this large sole-source award raises concerns about taxpayer value and the potential for inflated costs over the contract's extended duration.

Public Impact

Ensures supply of critical power boiler and heat exchanger components for naval operations. Long-term award provides stability for the contractor and ensures sustained production. Potential for increased costs to taxpayers due to sole-source and CPFF structure. Lack of small business participation noted.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration (15 years)
No small business participation

Positive Signals

Ensures critical component supply
Long-term commitment provides stability

Sector Analysis

This contract falls within the Power Boiler and Heat Exchanger Manufacturing sector (NAICS 332410), a critical area for defense infrastructure. Spending in this sector is often driven by defense needs, with significant investments in specialized manufacturing capabilities.

Small Business Impact

The data indicates that small businesses were not involved in this contract, as 'sb' is false. This represents a missed opportunity for small business participation and contracting goals.

Oversight & Accountability

The 'NOT COMPETED' status suggests a potential lack of robust oversight in the initial award decision. Further review of the justification for sole-sourcing and ongoing cost monitoring is crucial for accountability.

Related Government Programs

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

Risk Flags

Sole-source award limits competition and price discovery.
Cost Plus Fixed Fee structure carries inherent risk of cost overruns.
Long contract duration (15 years) increases exposure to cost escalation.
No small business participation noted, missing opportunities.
Potential for reduced value for taxpayer dollars due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.00 billion to BECHTEL PLANT MACHINERY, INC.. S1B

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 $3.00 billion.

What is the period of performance?

Start: 2018-11-30. End: 2033-09-30.

What was the specific justification for awarding this contract on a sole-source basis instead of seeking competitive bids?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Without specific documentation, it's difficult to ascertain the exact reason. However, the lack of competition raises concerns about whether alternative sources were adequately explored or if market research was insufficient, potentially impacting the government's ability to secure the best possible price and value.

How will the Department of Defense mitigate the risks associated with the Cost Plus Fixed Fee (CPFF) structure to control potential cost overruns?

Mitigation strategies for CPFF contracts often include stringent oversight, detailed cost tracking, performance metrics, and clear communication channels. The Department of Defense likely employs program managers and contracting officers to monitor expenditures closely, review contractor cost submissions, and ensure adherence to the fixed fee. Regular audits and performance reviews are essential to identify and address any cost escalation trends early, ensuring the contractor remains incentivized to manage costs effectively within the agreed-upon framework.

What is the long-term strategic value of this sustained investment in Bechtel Plant Machinery, Inc. for power boiler and heat exchanger manufacturing?

The long-term strategic value lies in ensuring a reliable domestic supply chain for critical naval components. By committing to a single, established provider for nearly 15 years, the Department of Defense secures specialized manufacturing capacity and expertise essential for fleet readiness and modernization. This sustained investment can foster innovation and maintain high-quality production standards, although it necessitates careful management to balance this strategic advantage against potential cost inefficiencies inherent in sole-source, CPFF arrangements.

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: N0002418R2115

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: $3,004,573,964

Exercised Options: $3,004,573,964

Current Obligation: $3,004,573,964

Subaward Activity

Number of Subawards: 67

Total Subaward Amount: $527,960,368

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline