DOE's $5.8B MOX Project: Long-Term R&D Contract with CB&I AREVA MOX SERVICES, LLC Faces Oversight Concerns
Contract Overview
Contract Amount: $5,837,441,290 ($5.8B)
Contractor: CB&I Areva MOX Services, LLC
Awarding Agency: Department of Energy
Start Date: 1999-11-15
End Date: 2020-03-02
Contract Duration: 7,413 days
Daily Burn Rate: $787.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: R&D
Place of Performance
Location: AIKEN, AIKEN County, SOUTH CAROLINA, 29802
Plain-Language Summary
Department of Energy obligated $5.84 billion to CB&I AREVA MOX SERVICES, LLC for work described as: Key points: 1. Significant investment of $5.8 billion in a long-term R&D project. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract spans over 20 years, indicating a substantial commitment. 4. Potential risks associated with long-term, complex R&D projects and cost overruns.
Value Assessment
Rating: questionable
The contract value of $5.8 billion is substantial for an R&D project. Benchmarking is difficult without specific deliverables and comparable projects, but the long duration and cost-plus structure warrant scrutiny for potential cost escalations.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically promotes competitive pricing. However, the long duration and cost-plus structure may limit the effectiveness of initial price discovery over time.
Taxpayer Impact: The significant taxpayer investment of $5.8 billion requires careful monitoring to ensure value for money and prevent cost overruns.
Public Impact
Taxpayers are funding a major, long-term research and development initiative. The project's success or failure will have implications for national energy research. Long contract durations can sometimes lead to scope creep and increased costs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (over 20 years)
- Cost-plus contract type
- Lack of specific small business participation noted
- Potential for cost overruns in R&D
Positive Signals
- Awarded through full and open competition
- Significant investment in critical R&D area
Sector Analysis
This contract falls under Research and Development in the Physical, Engineering, and Life Sciences (NAICS 541710). Spending in this sector is crucial for innovation but often involves high risk and long timelines, making oversight critical.
Small Business Impact
The provided data does not indicate any specific provisions or participation goals for small businesses in this contract. Further analysis would be needed to determine the extent of small business involvement.
Oversight & Accountability
The long duration and cost-plus nature of this contract necessitate robust oversight from the Department of Energy to manage risks, control costs, and ensure project milestones are met effectively.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences
- Department of Energy Contracting
- Department of Energy Programs
Risk Flags
- High contract value ($5.8B)
- Long contract duration (20+ years)
- Cost-plus contract type
- Potential for cost overruns
- Complexity of R&D project
Tags
research-and-development-in-the-physical, department-of-energy, sc, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $5.84 billion to CB&I AREVA MOX SERVICES, LLC. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is CB&I AREVA MOX SERVICES, LLC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $5.84 billion.
What is the period of performance?
Start: 1999-11-15. End: 2020-03-02.
What specific R&D objectives does this $5.8 billion contract aim to achieve, and how are they aligned with national priorities?
The contract is for the Mixed Oxide (MOX) fuel fabrication facility, aimed at processing surplus plutonium. Its alignment with national priorities relates to nuclear non-proliferation and waste management. Detailed objectives would be outlined in the contract's statement of work, specifying research into fuel fabrication techniques, facility construction, and operational readiness.
Given the cost-plus structure and long duration, what mechanisms are in place to mitigate the risk of significant cost overruns?
Cost-plus contracts inherently carry a higher risk of overruns. Mitigation strategies likely include detailed cost-tracking, regular audits, performance-based incentives or penalties, stringent change control processes, and independent cost reviews. The Department of Energy's oversight team plays a crucial role in monitoring expenditures and ensuring adherence to the contract's financial parameters.
How will the effectiveness and value for money of this long-term R&D investment be measured and ensured?
Effectiveness will be measured against predefined milestones and technical performance metrics outlined in the contract. Value for money is assessed by comparing actual costs against budgeted amounts, evaluating the achievement of R&D goals, and considering the long-term strategic benefits, such as enhanced national security and environmental safety, relative to the investment.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences
Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 2
Pricing Type: COST PLUS FIXED FEE (U)
Contractor Details
Parent Company: Mcdermott International, Inc. (UEI: 047758503)
Address: 128 S. TRYON ST. , SUITE 1200, CHARLOTTE, NC, 28202
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $6,380,828,761
Exercised Options: $6,380,828,761
Current Obligation: $5,837,441,290
Actual Outlays: $186,000,000
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Timeline
Start Date: 1999-11-15
Current End Date: 2020-03-02
Potential End Date: 2020-03-02 00:00:00
Last Modified: 2020-03-02
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