DOE awards $403.7M for Naval Reactor Cores to BWXT Nuclear Operations Group, Inc
Contract Overview
Contract Amount: $403,731,880 ($403.7M)
Contractor: Bwxt Nuclear Operations Group, Inc.
Awarding Agency: Department of Energy
Start Date: 2002-12-15
End Date: 2010-12-16
Contract Duration: 2,923 days
Daily Burn Rate: $138.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: NAVAL REACTOR CORES
Place of Performance
Location: LYNCHBURG, LYNCHBURG (CITY) County, VIRGINIA, 24505
State: Virginia Government Spending
Plain-Language Summary
Department of Energy obligated $403.7 million to BWXT NUCLEAR OPERATIONS GROUP, INC. for work described as: NAVAL REACTOR CORES Key points: 1. Significant contract value of $403.7 million for specialized nuclear components. 2. Sole-source award to BWXT Nuclear Operations Group, Inc. raises questions about competition. 3. Long contract duration (2002-2010) suggests a critical, long-term need. 4. The sector involves high-stakes, specialized manufacturing for national security.
Value Assessment
Rating: questionable
The contract value of $403.7 million over 8 years is substantial. Without competitive bidding, it's difficult to assess if this price represents fair value compared to potential market alternatives. The fixed-price incentive structure aims to control costs, but the baseline is unverified.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to drive down the price. The justification for sole-source is critical.
Taxpayer Impact: The lack of competition for a contract of this magnitude likely results in a higher cost to taxpayers than a competitively awarded contract would have.
Public Impact
Ensures the continued operation and maintenance of critical naval nuclear propulsion systems. Supports national security by providing essential components for the U.S. Navy's fleet. Impacts a highly specialized industrial base, potentially limiting future supplier options.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Sole-source award
- High contract value
- Long contract duration
Positive Signals
- Critical national security component
- Established supplier for specialized needs
Sector Analysis
This contract falls within the Power Boiler and Heat Exchanger Manufacturing sector (NAICS 332410), specifically for naval reactor cores. This is a highly specialized niche within manufacturing, critical for national defense, with very few qualified suppliers globally.
Small Business Impact
The contract data indicates no small business participation. This is typical for highly specialized, large-scale defense contracts requiring extensive infrastructure and unique technical expertise, which are often beyond the capabilities of small businesses.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure the contractor is performing efficiently and that the pricing remains reasonable throughout the contract's life. The Department of Energy's oversight is crucial for managing this critical national security asset.
Related Government Programs
- Power Boiler and Heat Exchanger Manufacturing
- Department of Energy Contracting
- Department of Energy Programs
Risk Flags
- Sole-source award lacks competitive pricing.
- Potential for cost overruns despite FPI structure.
- Long-term dependency on a single supplier.
- High value contract requires stringent oversight.
- Specialized nature limits alternative sourcing options.
Tags
power-boiler-and-heat-exchanger-manufact, department-of-energy, va, dca, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $403.7 million to BWXT NUCLEAR OPERATIONS GROUP, INC.. NAVAL REACTOR CORES
Who is the contractor on this award?
The obligated recipient is BWXT NUCLEAR OPERATIONS GROUP, INC..
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $403.7 million.
What is the period of performance?
Start: 2002-12-15. End: 2010-12-16.
What was the specific justification for awarding this contract on a sole-source basis, and were alternative procurement methods considered?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent national security needs where only one source can fulfill the requirement. For naval reactor cores, it's likely due to BWXT's established expertise and facilities, potentially deemed essential and irreplaceable by the Department of Energy for maintaining the nuclear fleet's operational readiness.
How does the fixed-price incentive (FPI) structure mitigate cost risks for taxpayers given the sole-source nature of the contract?
An FPI contract establishes a target cost, target profit, and a price ceiling. If the final cost is below the target, both the contractor and the government share in the savings. If costs exceed the target, the contractor bears a larger share of the overrun up to the ceiling. This incentivizes the contractor to control costs, but the effectiveness is limited by the lack of competitive baseline pricing.
What is the long-term strategic implication of relying on a single supplier for such a critical component of the U.S. naval fleet?
Long-term reliance on a sole-source supplier for critical components like naval reactor cores poses strategic risks, including potential supply chain vulnerabilities, lack of innovation due to absent competition, and significant leverage for the supplier in price negotiations. It necessitates robust government oversight and contingency planning to ensure sustained capability and national security.
Industry Classification
NAICS: Manufacturing › Boiler, Tank, and Shipping Container Manufacturing › Power Boiler and Heat Exchanger Manufacturing
Product/Service Code: FURNACE/STEAM/DRYING; NUCL REACTOR
Competition & Pricing
Extent Competed: NOT COMPETED
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Contractor Details
Parent Company: BWX Technologies, Inc. (UEI: 968037221)
Address: 2016 MOUNT ATHOS RD, LYNCHBURG, VA, 05
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $403,731,880
Exercised Options: $403,731,880
Current Obligation: $403,731,880
Timeline
Start Date: 2002-12-15
Current End Date: 2010-12-16
Potential End Date: 2010-12-16 00:00:00
Last Modified: 2014-06-23
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