DoD's $804M contract for nuclear reactor components awarded to Bechtel Plant Machinery, Inc. in 1996

Contract Overview

Contract Amount: $226,081,997 ($226.1M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 1996-11-04

End Date: 2004-12-31

Contract Duration: 2,979 days

Daily Burn Rate: $75.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199704!1700!0175!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002496C4053 !A!*!P00003 !19961104!20051231!804715027!804715027!001343953!N!24374!CBS CORPORATION !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENECTADY !NEW YORK !0001!+000033066000!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 $226.1 million to BECHTEL PLANT MACHINERY, INC. for work described as: 199704!1700!0175!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002496C4053 !A!*!P00003 !19961104!20051231!804715027!804715027!001343953!N!24374!CBS CORPORATION !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENE… Key points: 1. Contract awarded for nuclear reactor components, indicating a critical and specialized defense need. 2. Long-term award spanning nearly a decade suggests sustained demand for these components. 3. The 'Not Competed' status raises questions about the procurement process and potential lack of competitive pricing. 4. Awarded to a single entity, Bechtel Plant Machinery, Inc., highlighting potential single-source reliance. 5. The contract's value of over $800 million underscores the significant investment in naval nuclear propulsion systems. 6. The 'Cost Plus Fixed Fee' pricing structure may incentivize cost overruns if not closely monitored.

Value Assessment

Rating: questionable

The total value of $804,715,027 for nuclear reactor components over a 9-year period is substantial. Without comparable contracts for similar specialized components, it's difficult to definitively benchmark value. However, the 'Not Competed' nature of the award suggests a potential lack of competitive pressure, which could lead to less favorable pricing for the government compared to a fully competed contract. The 'Cost Plus Fixed Fee' (CPFF) contract type, while allowing for flexibility, can also lead to higher costs if the fixed fee is not adequately justified or if cost controls are weak.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'Not Competed' basis, indicating that a full and open competition was not conducted. This typically occurs when only one responsible source is available or when urgent and compelling circumstances prevent competition. The lack of multiple bidders means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process.

Taxpayer Impact: The sole-source award means taxpayers may have paid a premium, as there was no competitive pressure to drive down costs. This also limits transparency into whether the government secured the best possible price for these critical components.

Public Impact

The primary beneficiaries are the U.S. Navy, which relies on these nuclear reactor components for its fleet operations. The services delivered include the manufacturing and supply of critical components for naval nuclear reactors. The geographic impact is primarily within the United States, with manufacturing likely concentrated near the contractor's facilities in Schenectady, NY, and potentially other specialized sites. Workforce implications include employment for skilled engineers, technicians, and manufacturing personnel at Bechtel Plant Machinery, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not rigorously managed.
Long duration of the contract (nearly 9 years) increases the risk of cost escalation and scope creep.
Lack of competition raises concerns about contractor performance incentives and innovation.
Specialized nature of nuclear components may create barriers to entry for potential competitors, perpetuating sole-source awards.

Positive Signals

Award to a known entity (Bechtel) suggests a level of established capability for this specialized work.
Long contract duration indicates a stable, long-term need and potentially a reliable supply chain for critical components.
The contract supports a vital national defense capability (naval nuclear propulsion).
The fixed fee component, if well-defined, provides some level of cost predictability compared to purely cost-reimbursement contracts.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically supporting naval nuclear propulsion systems. The market for nuclear reactor components is highly specialized, characterized by significant technical expertise, stringent regulatory requirements, and high barriers to entry. Spending in this sector is driven by national security imperatives and the long lifecycle of naval vessels. Comparable spending benchmarks are difficult to establish due to the unique nature of nuclear components and the limited number of qualified suppliers.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans within the provided data. Given the highly specialized nature of nuclear reactor components, it is likely that the prime contractor, Bechtel Plant Machinery, Inc., possesses unique capabilities. However, opportunities may exist for small businesses within Bechtel's supply chain for less specialized materials or services. Further investigation into subcontracting reports would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Naval Sea Systems Command (NAVSEA) and the Defense Contract Management Agency (DCMA). As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing would be expected to monitor costs and ensure the fixed fee is justified. Transparency is limited due to the sole-source nature and the defense classification of nuclear technology. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Naval Nuclear Propulsion Program
Defense Shipbuilding and Repair
Military Aircraft and Missile Production
Department of Energy - Nuclear Energy

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Lack of transparency in competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $226.1 million to BECHTEL PLANT MACHINERY, INC.. 199704!1700!0175!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002496C4053 !A!*!P00003 !19961104!20051231!804715027!804715027!001343953!N!24374!CBS CORPORATION !600 LIBERTY ST !SCHENECTADY !NY!12305!65508!093!36!SCHENECTADY !SCHENECTADY !NEW YORK !0001!+000033066000!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 $226.1 million.

What is the period of performance?

Start: 1996-11-04. End: 2004-12-31.

What is the track record of Bechtel Plant Machinery, Inc. in supplying nuclear reactor components to the DoD?

Bechtel Plant Machinery, Inc. has a long history of involvement in nuclear power, including naval applications. As a subsidiary of Bechtel Corporation, it possesses significant engineering, procurement, and construction capabilities. While specific details on past performance for this exact contract are not provided, Bechtel's broader experience in complex, large-scale industrial projects, including nuclear facilities, suggests a capacity to handle such demanding requirements. However, the 'Not Competed' status and the long duration of this specific contract warrant scrutiny regarding consistent performance and adherence to schedule and budget over its nearly decade-long span.

How does the $804 million contract value compare to similar procurements for naval nuclear reactor components?

Direct comparisons for naval nuclear reactor components are challenging due to the highly specialized and classified nature of the technology, as well as the limited number of qualified contractors. This contract, awarded in 1996 and ending in 2004, represented a significant investment. However, without access to detailed specifications of the components procured and data from other, potentially more recent, sole-source or competed contracts for similar systems, a precise value benchmark is not feasible. The 'Not Competed' status further complicates direct value-for-money assessments, as competitive market forces were absent.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for nuclear components?

The primary risks associated with this contract structure are multifaceted. A sole-source award eliminates competitive pressure, potentially leading to inflated prices and reduced incentive for the contractor to optimize costs. The Cost Plus Fixed Fee (CPFF) structure, while providing a defined profit margin (the fixed fee), can incentivize the contractor to incur costs to justify the fee, especially if cost controls are not robust. For critical components like nuclear reactors, delays or quality issues can have severe national security implications. The long duration also increases the risk of cost escalation due to unforeseen factors and potential obsolescence of technology if not managed proactively.

How effective has the Naval Sea Systems Command (NAVSEA) been in overseeing contracts of this nature?

NAVSEA is responsible for the development, procurement, and maintenance of the U.S. Navy's ships and submarines, including their nuclear propulsion systems. Oversight of complex, long-term contracts like this one is critical. While specific performance metrics for NAVSEA's oversight of this particular contract are not publicly available, the agency generally operates under stringent DoD regulations and quality assurance protocols. The effectiveness of oversight is often judged by the contractor's adherence to contract terms, delivery schedules, quality standards, and budget constraints. The 'Not Competed' nature suggests that initial oversight focused on ensuring a qualified source was secured, with subsequent oversight likely emphasizing cost control and delivery.

What are the historical spending patterns for naval nuclear reactor components, and how does this contract fit?

Historical spending on naval nuclear reactor components has been consistently high, reflecting the strategic importance and technological complexity of maintaining the U.S. Navy's nuclear-powered fleet. These procurements are characterized by long-term planning, significant R&D investment, and often involve sole-source or limited competition due to the specialized nature of the components and the established infrastructure. This $804 million contract, awarded in the mid-1990s, represents a substantial, albeit singular, expenditure within a broader, ongoing pattern of investment in naval nuclear technology. It aligns with the historical trend of significant, long-duration contracts necessary to support the lifecycle of nuclear-powered vessels.

What are the implications of the 'Not Competed' status for taxpayer value on this contract?

The 'Not Competed' status directly implies a lack of competitive bidding, which is a primary mechanism for ensuring taxpayer value in government procurement. When a contract is awarded without competition, the government foregoes the opportunity to solicit bids from multiple vendors, compare pricing, and negotiate based on market-driven offers. This can lead to higher costs than might be achieved through a competitive process. While there may be legitimate reasons for a sole-source award (e.g., unique capabilities, national security), it inherently shifts the burden of price justification onto the contractor and requires robust government oversight to mitigate potential overspending and ensure a fair, though not necessarily lowest, price.

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