Navy awards $198M contract to Bechtel Plant Machinery for machinery and equipment services

Contract Overview

Contract Amount: $198,061,627 ($198.1M)

Contractor: Bechtel Plant Machinery, Inc.

Awarding Agency: Department of Defense

Start Date: 1999-11-09

End Date: 2015-09-30

Contract Duration: 5,804 days

Daily Burn Rate: $34.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: SCHENECTADY, SCHENECTADY County, NEW YORK, 12305, UNITED STATES OF AMERICA

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $198.1 million to BECHTEL PLANT MACHINERY, INC. for work described as: Key points: 1. Contract value of $198 million over its lifecycle suggests significant investment in critical infrastructure. 2. Sole-source award raises questions about competition and potential for price optimization. 3. Long contract duration (1999-2015) indicates a sustained need for these services. 4. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 5. Awarded by the Department of the Navy, highlighting its importance for naval operations. 6. The geographic location of the contractor in New York may have implications for local economic impact.

Value Assessment

Rating: fair

Benchmarking the value of this $198 million contract is challenging without specific service details or comparable contracts. However, the Cost Plus Fixed Fee (CPFF) structure, while common for complex or uncertain scope work, carries inherent risks of cost escalation. The government pays the contractor's allowable costs plus a fixed fee, meaning the contractor has less incentive to control costs compared to fixed-price contracts. Without detailed performance metrics and cost breakdowns, it's difficult to definitively assess value for money, but the CPFF structure warrants careful oversight.

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 only one source is capable of meeting the requirement, or in cases of urgent need. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from multiple bidders vying for the contract.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. It also limits opportunities for other qualified businesses to secure government work.

Public Impact

Naval operations and readiness are directly supported by the machinery and equipment services provided. The contract ensures the availability and maintenance of critical assets for the Department of the Navy. Potential economic benefits for the New York region through contractor operations and employment. Workforce involved likely includes skilled technicians, engineers, and support staff specializing in heavy machinery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee contract type can lead to cost overruns if not managed diligently.
Lack of detailed performance data makes it difficult to assess efficiency and effectiveness.
Long contract duration might indicate a lack of agile procurement or evolving requirements.

Positive Signals

Sustained award suggests a critical and ongoing need for Bechtel's specialized services.
Contractor's long-term engagement implies a level of trust and established capability with the Navy.
The fixed fee component of the CPFF contract provides some cost predictability for the fee portion.

Sector Analysis

This contract falls within the broader industrial and defense manufacturing support sector. The market for specialized machinery and equipment services for military applications is often characterized by high barriers to entry due to technical expertise, security clearances, and established relationships with government agencies. While specific market size data for this niche is not readily available, it is a critical component of the defense industrial base, ensuring operational readiness of naval assets.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss=false, sb=false). As a sole-source award to a large entity (implied by the scale of the contract), there are likely limited direct subcontracting opportunities for small businesses unless explicitly mandated or pursued by the prime contractor. This contract does not appear to contribute to the small business ecosystem through set-asides.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Given the Cost Plus Fixed Fee structure, rigorous oversight of allowable costs and performance is crucial. Transparency is often limited in sole-source procurements. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Ship Systems
Defense Logistics Agency Support
Military Equipment Maintenance
Heavy Machinery Procurement

Risk Flags

Sole-source award lacks competitive pressure.
Cost Plus Fixed Fee structure carries inherent cost overrun risk.
Limited transparency due to sole-source nature.
Long contract duration may indicate potential for complacency or missed opportunities for innovation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $198.1 million to BECHTEL PLANT MACHINERY, INC.. See the official description on USAspending.

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 $198.1 million.

What is the period of performance?

Start: 1999-11-09. End: 2015-09-30.

What specific types of machinery and equipment were covered under this contract, and what was their criticality to naval operations?

The provided data does not specify the exact types of machinery and equipment. However, given the contractor's name (Bechtel Plant Machinery, Inc.) and the awarding agency (Department of the Navy), it is highly probable that the contract covered heavy machinery, industrial equipment, and potentially specialized systems essential for naval bases, shipyards, or onboard vessels. This could include items like cranes, propulsion systems components, manufacturing equipment, or maintenance machinery. The criticality is implied by the substantial contract value and its sole-source nature, suggesting unique capabilities or essential operational support that only Bechtel could provide at the time.

How does the $198 million total award value compare to typical spending on similar machinery and equipment services by the Department of the Navy?

Without specific details on the services rendered and the exact period of performance for comparable contracts, a direct comparison is difficult. However, $198 million is a significant sum, indicating a substantial and long-term requirement. The Department of the Navy procures a vast array of services and equipment, and this figure would place it among major contracts. To provide a precise benchmark, one would need to analyze contracts for similar machinery maintenance, overhaul, or manufacturing support over comparable durations and scope within the Navy or other military branches. The sole-source nature also suggests this might be for a unique or legacy system where competition is limited.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude and duration?

The primary risks with a CPFF contract of this scale ($198 million) and duration (1999-2015) revolve around cost control and contractor performance. The CPFF structure means the contractor is reimbursed for all allowable costs plus a predetermined fixed fee. This can incentivize the contractor to incur higher costs, as their profit (the fee) remains constant regardless of the total cost. Effective oversight is paramount to scrutinize allowable costs, prevent inefficiencies, and ensure the contractor is performing diligently to meet the contract's objectives. Scope creep, if not managed, can also inflate costs significantly. For taxpayers, the risk is paying more than necessary if costs are not rigorously controlled and justified.

Given the sole-source award, what mechanisms were likely in place to ensure fair pricing and prevent contractor overreach?

Even in sole-source procurements, agencies employ mechanisms to ensure fair and reasonable pricing. This typically involves conducting a thorough price analysis, which might include reviewing historical pricing data for similar items or services, analyzing the contractor's cost estimates, and potentially negotiating the fixed fee. The agency's contracting officers are responsible for determining price reasonableness. Furthermore, contract clauses related to cost allowability, cost accounting standards, and audit rights provide oversight. While competition is absent, robust internal agency review processes and potentially Defense Contract Audit Agency (DCAA) involvement would be expected to mitigate risks of overpricing.

What does the contract's long duration (1999-2015) imply about the nature of the services and the Navy's procurement strategy?

The extensive duration of this contract, spanning over 15 years, suggests that the services provided were either for long-lifecycle equipment requiring continuous support, or represented a strategic, long-term partnership for specialized capabilities. It could imply that the machinery or systems involved are critical and have a prolonged operational life, necessitating ongoing maintenance, repair, or upgrades. Alternatively, it might reflect a procurement strategy focused on stability and deep contractor expertise rather than frequent re-competition. Such long-term awards can sometimes indicate a lack of market dynamism or a deliberate choice to leverage a single, highly capable provider for critical, specialized functions.

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. (UEI: 094878980)

Address: 3500 TECHNOLOGY DR, MONROEVILLE, PA, 15146

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline