Navy Awards $836M Contract for Nuclear Reactors, Primarily for Ships, with Long-Term Oversight

Contract Overview

Contract Amount: $9,438,254,579 ($9.4B)

Contractor: Energy, Department of

Awarding Agency: Department of Defense

Start Date: 1996-11-04

End Date: 2027-09-30

Contract Duration: 11,287 days

Daily Burn Rate: $836.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 199712!1700!1276!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002496F4060 !A!*!P00005 !19961104!20060930!087689394!161906078!161906193!Y!0C2Y9!ENERGY, UNITED STATES DEPT OF !1000 INDEPENDENCE AVE SW !WASHINGTON !DC!20585!50000!001!11!WASHINGTON !DISTRICT OF COLUMBIA !D.C. !0001!+000169262376!N!N!000000000000!4470!NUCLEAR REACTORS !A3 !SHIPS !2000!NOT DISCERNABLE OR CLASSIFIED !3559!8!*!*!C!B!*!*!B !*!*!0!000!*!* !*!*!*!* !* !*!*!*!*!*!*!*!*!*!* !*!*!*!*!*!*!*!*!*!*!

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20585

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $9.44 billion to ENERGY, DEPARTMENT OF for work described as: 199712!1700!1276!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002496F4060 !A!*!P00005 !19961104!20060930!087689394!161906078!161906193!Y!0C2Y9!ENERGY, UNITED STATES DEPT OF !1000 INDEPENDENCE AVE SW !WASHINGTON !DC!20585!50000!001!11!WASHINGTON !DISTRI… Key points: 1. The contract, valued at $836,206, is for nuclear reactors, with a significant portion allocated to ships. 2. Awarded by the Department of the Navy, it falls under the Power Boiler and Heat Exchanger Manufacturing sector. 3. The contract has a long duration, spanning from 1996 to 2027, indicating a long-term need or project. 4. The procurement method was 'NOT COMPETED', raising questions about potential cost efficiencies and market exploration.

Value Assessment

Rating: questionable

The contract value of $836,206 for nuclear reactors seems low for a long-term, complex project. Benchmarking against similar large-scale nuclear reactor procurements is difficult without more specific details on the scope and quantity.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, suggesting a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as competitive pressures are absent.

Taxpayer Impact: The lack of competition may result in a higher overall cost to taxpayers compared to a competitively bid contract.

Public Impact

Potential for long-term reliance on a single supplier for critical nuclear reactor components. Impact on national security and energy infrastructure due to the nature of nuclear technology. Questions about the justification for not competing this significant contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Long contract duration
Potential for cost overruns due to sole-source award

Positive Signals

Awarded to a specific sector (Power Boiler and Heat Exchanger Manufacturing)
Clear end-user identified (Department of the Navy, Ships)

Sector Analysis

This contract falls within the Power Boiler and Heat Exchanger Manufacturing sector, specifically related to nuclear reactors for naval applications. Spending benchmarks for such specialized, long-term procurements are highly variable and depend on specific technological requirements and scale.

Small Business Impact

There is no indication that small businesses were involved in this contract, as it was not competed and the data does not specify subcontracting opportunities.

Oversight & Accountability

The long duration of the contract (1996-2027) necessitates robust oversight to ensure performance, cost control, and adherence to safety and regulatory standards for nuclear reactors.

Related Government Programs

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

Risk Flags

Sole-source award lacks competition.
Long contract duration (over 10 years) increases risk.
Potential for cost overruns.
Lack of transparency in pricing due to non-competition.
Critical technology (nuclear reactors) requires stringent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.44 billion to ENERGY, DEPARTMENT OF. 199712!1700!1276!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002496F4060 !A!*!P00005 !19961104!20060930!087689394!161906078!161906193!Y!0C2Y9!ENERGY, UNITED STATES DEPT OF !1000 INDEPENDENCE AVE SW !WASHINGTON !DC!20585!50000!001!11!WASHINGTON !DISTRICT OF COLUMBIA !D.C. !0001!+000169262376!N!N!000000000000!4470!NUCLEAR REACTORS !A3 !SHIPS !2000!NOT DISCERNABLE OR CLASSIFIED !3559!8!*!*!C!B!*!*!B !*!*!0!0

Who is the contractor on this award?

The obligated recipient is ENERGY, DEPARTMENT OF.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $9.44 billion.

What is the period of performance?

Start: 1996-11-04. End: 2027-09-30.

What was the specific justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that cannot be met by other sources. Without further documentation, it's impossible to confirm the specific rationale. However, agencies are required to conduct market research and negotiate pricing to ensure it is fair and reasonable, even in sole-source situations, often through cost analysis or comparison to similar, albeit not identical, procurements.

Given the long contract duration and sole-source nature, what are the primary risks associated with cost escalation and contractor performance?

The primary risks include significant cost escalation due to the absence of competitive pressure, potential for scope creep, and contractor underperformance without the threat of losing future business. Long-term sole-source contracts require stringent performance monitoring, clear milestones, and potentially built-in mechanisms for price adjustments based on objective criteria to mitigate these risks.

How does this contract contribute to the Navy's overall mission readiness and technological advancement in nuclear propulsion systems?

This contract is likely crucial for maintaining and potentially upgrading the Navy's nuclear-powered fleet, ensuring operational readiness. It may also support the development or sustainment of advanced nuclear propulsion technologies, contributing to the Navy's long-term strategic advantage and technological superiority in this specialized domain.

Industry Classification

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

Product/Service Code: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of the United States

Address: 1000 INDEPENDENCE AVE SW, WASHINGTON, DC, 20585

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline