Naval Sea Systems Command Awards $804.7M Contract for Nuclear Reactors, Extending to 2015

Contract Overview

Contract Amount: $370,825,480 ($370.8M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 1996-10-21

End Date: 2015-05-13

Contract Duration: 6,778 days

Daily Burn Rate: $54.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199703!1700!0165!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002496C4052 !A!*!P00002 !19961021!20030930!804715027!804715027!001343953!N!24374!CBS CORPORATION !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENECTADY !NEW YORK !0001!+000053950000!N!N!000000000000!4470!NUCLEAR REACTORS !A3 !SHIPS !2000!NOT DISCERNABLE OR CLASSIFIED !3443!3!*!*!B!B!A!*!D !N!U!1!001!N!1A!A!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: MONROEVILLE, ALLEGHENY County, PENNSYLVANIA, 15146

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $370.8 million to BECHTEL PLANT MACHINERY, INC. for work described as: 199703!1700!0165!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002496C4052 !A!*!P00002 !19961021!20030930!804715027!804715027!001343953!N!24374!CBS CORPORATION !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENE… Key points: 1. Significant long-term contract for critical nuclear reactor components. 2. Sole-source award raises questions about competition and potential cost savings. 3. Extended performance period suggests ongoing need and potential for cost overruns. 4. High value contract in the Defense sector, impacting national security infrastructure.

Value Assessment

Rating: questionable

The contract value of $804.7 million over an extended period is substantial. Without comparable contracts or detailed cost breakdowns, it's difficult to assess if this pricing is optimal. The cost-plus-fixed-fee structure can incentivize contractors to increase costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was awarded on a sole-source basis, indicating a lack of competitive bidding. This limits price discovery and may result in higher costs for taxpayers compared to a competitive procurement.

Taxpayer Impact: The sole-source nature of this large contract raises concerns about potential overspending and the efficient use of taxpayer funds.

Public Impact

Ensures continued operation and maintenance of critical naval nuclear propulsion systems. Supports jobs within the defense industrial base, particularly in specialized manufacturing. Potential for long-term reliance on a single contractor for essential components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus-fixed-fee contract type
Extended performance period
Lack of transparency on cost drivers

Positive Signals

Ensures critical capability
Long-term program stability

Sector Analysis

This contract falls within the Defense sector, specifically supporting naval nuclear propulsion. Spending in this area is typically high due to the specialized nature and critical importance of the technology. Benchmarks are difficult to establish due to the unique requirements.

Small Business Impact

There is no indication that small businesses were involved in this sole-source contract, suggesting a lack of opportunity for them in this specific procurement.

Oversight & Accountability

The extended duration and sole-source nature of this contract warrant close oversight to ensure cost control and adherence to contract terms. Regular reviews of performance and expenditures are crucial.

Related Government Programs

Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Potential for cost overruns due to CPFF structure
Lack of competitive pricing pressure
Long-term vendor lock-in
Limited transparency on cost justification
Extended contract duration increases risk exposure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $370.8 million to BECHTEL PLANT MACHINERY, INC.. 199703!1700!0165!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002496C4052 !A!*!P00002 !19961021!20030930!804715027!804715027!001343953!N!24374!CBS CORPORATION !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENECTADY !NEW YORK !0001!+000053950000!N!N!000000000000!4470!NUCLEAR REACTORS !A3 !SHIPS !2000!NOT DISCERNABLE OR CLASSIFIED !3443!3!*!*!B!B!A!*!D !N!U!1!0

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $370.8 million.

What is the period of performance?

Start: 1996-10-21. End: 2015-05-13.

What was the justification for the sole-source award, and were alternative competitive strategies ever considered?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent national security needs that cannot be met by other sources. Without specific documentation, it's impossible to confirm the exact reasons. However, the lack of competition inherently limits the government's ability to explore potentially more cost-effective solutions or innovative approaches from a wider range of vendors.

How were cost controls managed under the Cost Plus Fixed Fee (CPFF) structure over such a long period?

CPFF contracts aim to control costs by setting a fixed fee for the contractor's profit, regardless of the actual costs incurred. However, the government bears the risk of cost overruns. Effective cost control relies on robust government oversight, detailed cost tracking, and clear performance metrics. The extended duration of this contract necessitates continuous monitoring to prevent scope creep and ensure efficiency.

What is the long-term strategy for nuclear reactor maintenance and upgrades beyond this contract's scope?

This contract primarily addresses the initial procurement and potentially some operational aspects of nuclear reactors. A comprehensive long-term strategy would involve planning for future maintenance, upgrades, decommissioning, and potential technology refreshes. Understanding this broader strategy is crucial to assess the overall value and sustainability of the government's investment in naval nuclear technology.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline