Navy awards $2B+ boiler contract to Bechtel Plant Machinery, Inc. for over a decade

Contract Overview

Contract Amount: $2,032,588,758 ($2.0B)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 2023-12-21

End Date: 2034-09-30

Contract Duration: 3,936 days

Daily Burn Rate: $516.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: S1B

Place of Performance

Location: MONROEVILLE, ALLEGHENY County, PENNSYLVANIA, 15146

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $2.03 billion to BECHTEL PLANT MACHINERY, INC. for work described as: S1B Key points: 1. Contract value exceeds $2 billion, indicating a significant investment in critical infrastructure. 2. Long duration of nearly 10 years suggests a sustained need for these services. 3. Sole-source award raises questions about potential cost efficiencies and market alternatives. 4. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 5. Focus on power boiler and heat exchanger manufacturing points to a specialized industrial need. 6. The contractor, Bechtel Plant Machinery, Inc., likely possesses unique capabilities for this requirement.

Value Assessment

Rating: fair

The contract value of over $2 billion for a nearly 10-year period represents a substantial commitment. Without specific benchmarks for similar large-scale boiler manufacturing and maintenance contracts, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can lead to higher costs if the fixed fee is not adequately calibrated against the anticipated effort and risk. Benchmarking against industry standards for similar complex manufacturing projects would be necessary to determine if the pricing is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not conduct a competitive bidding process. This typically occurs when a single source is determined to be uniquely qualified or when urgency precludes competition. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a fully competed scenario.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The government did not benefit from the potential cost savings that can arise from multiple bidders vying for the contract.

Public Impact

The primary beneficiaries are likely naval operations requiring reliable power boiler and heat exchanger systems for their vessels or shore facilities. The contract ensures the continued manufacturing, maintenance, and potentially upgrade of critical power generation and heating equipment. Geographic impact is likely concentrated around the contractor's facilities and naval bases where the equipment is deployed or serviced. Workforce implications include job creation and retention within specialized manufacturing and engineering roles at Bechtel Plant Machinery, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits transparency and potential for cost savings through competition.
Cost Plus Fixed Fee contract type carries inherent risk of cost escalation if not managed diligently.
Long contract duration increases exposure to potential changes in technology or operational needs.
Lack of small business participation noted, potentially limiting broader economic impact.

Positive Signals

Contract awarded to a known entity (Bechtel Plant Machinery, Inc.) suggesting established capabilities.
Long-term award provides stability for critical equipment manufacturing and support.
Focus on essential naval infrastructure indicates alignment with core defense missions.

Sector Analysis

The manufacturing of power boilers and heat exchangers falls within the heavy industrial and manufacturing sector, with specific ties to defense industrial base requirements. This contract supports the production and sustainment of critical components for naval power systems. The market for such specialized manufacturing is often characterized by high barriers to entry due to technical expertise, capital investment, and stringent quality control requirements. Comparable spending benchmarks would likely be found within other large defense contracts for complex machinery and systems.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no small business participation (sb: false). The large scale and specialized nature of power boiler and heat exchanger manufacturing may present challenges for small businesses to compete directly. There is no indication of subcontracting plans for small businesses within the provided data, suggesting limited direct impact on the small business ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be embedded within the Cost Plus Fixed Fee structure, requiring detailed cost reporting and performance metrics. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Ship Systems
Defense Industrial Base Manufacturing
Power Generation Equipment
Heat Exchanger Manufacturing
Cost Plus Fixed Fee Contracts

Risk Flags

Sole Source Award
Cost Plus Fixed Fee Contract Type
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.03 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 $2.03 billion.

What is the period of performance?

Start: 2023-12-21. End: 2034-09-30.

What is Bechtel Plant Machinery, Inc.'s track record with the Department of Defense, particularly on similar sole-source contracts?

Bechtel Plant Machinery, Inc. has a history of working with the Department of Defense, often on large-scale industrial and manufacturing projects. While specific details on their track record with sole-source contracts of this magnitude require deeper investigation into historical contract awards and performance reviews, their selection suggests a perceived capability and necessity for their specialized services. Analyzing past performance metrics, delivery timelines, and cost adherence on previous DoD contracts would provide a clearer picture of their reliability and efficiency. Without access to detailed performance reports or a comparative analysis of their past sole-source awards, it's difficult to definitively assess their track record beyond their established presence in the defense industrial base.

How does the awarded amount of over $2 billion compare to historical spending on power boiler and heat exchanger manufacturing for the Navy?

The awarded amount of over $2 billion for power boiler and heat exchanger manufacturing is a significant figure, suggesting a substantial investment. To benchmark this against historical spending, one would need to analyze the Navy's procurement data for similar equipment over the past decade or more. This would involve identifying contracts for boiler systems, heat exchangers, and related manufacturing services, noting their values, durations, and contract types. If this contract represents a substantial increase or decrease compared to previous procurement trends, it could indicate shifts in fleet modernization, maintenance strategies, or the availability of competitive pricing. A detailed historical analysis would reveal whether this award is an outlier or part of a consistent spending pattern for these critical components.

What are the primary risks associated with a sole-source Cost Plus Fixed Fee contract of this duration?

A sole-source Cost Plus Fixed Fee (CPFF) contract spanning nearly a decade presents several key risks. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs as the contractor may not be incentivized to find the most economical solutions. Secondly, the CPFF structure, while providing flexibility, shifts much of the cost risk to the government. If the contractor's cost estimates are inaccurate or if unforeseen issues arise, the total expenditure can significantly exceed initial projections. The fixed fee component aims to provide contractor incentive, but its adequacy is crucial. Finally, the long duration increases the risk of technological obsolescence, changes in government requirements, or contractor performance degradation over time, all of which can be harder to mitigate without competitive re-evaluation.

What are the potential implications of this contract on the broader defense industrial base for specialized manufacturing?

This contract, awarded to Bechtel Plant Machinery, Inc., has significant implications for the specialized manufacturing sector within the defense industrial base. By securing a large, long-term sole-source award, Bechtel Plant Machinery, Inc. is likely to maintain and potentially expand its workforce and manufacturing capabilities. This can be seen as a positive signal for the sustainment of critical industrial capacity. However, the sole-source nature might limit opportunities for other specialized manufacturers to enter or expand their presence in this niche, potentially concentrating critical capabilities within a single entity. This concentration could create dependencies and reduce overall market resilience in the long run.

How will the performance of Bechtel Plant Machinery, Inc. be monitored under this contract to ensure value for taxpayer money?

Performance monitoring under this Cost Plus Fixed Fee (CPFF) contract will be crucial for ensuring value for taxpayer money. The Department of the Navy will likely assign contracting officers' representatives (CORs) and quality assurance specialists to oversee the contractor's progress, adherence to specifications, and cost management. Key performance indicators (KPIs) related to production schedules, quality control, defect rates, and timely delivery will be established. Regular progress reviews, audits of cost submissions, and site inspections will be conducted. The fixed fee component requires careful negotiation and oversight to ensure it adequately compensates the contractor for the agreed-upon scope and risk without being excessive, thereby safeguarding taxpayer funds.

Industry Classification

NAICS: Manufacturing › Boiler, Tank, and Shipping Container Manufacturing › Power Boiler and Heat Exchanger Manufacturing

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002424R2115

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: $2,374,059,742

Exercised Options: $2,374,059,742

Current Obligation: $2,032,588,758

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline