DOE's $528M DUF6 conversion contract awarded to BWXT Conversion Services, LLC for facilities support
Contract Overview
Contract Amount: $528,263,474 ($528.3M)
Contractor: Bwxt Conversion Services, LLC
Awarding Agency: Department of Energy
Start Date: 2010-12-08
End Date: 2017-01-31
Contract Duration: 2,246 days
Daily Burn Rate: $235.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS AWARD FEE
Sector: Other
Official Description: OPERATION OF DUF6 CONVERSION FACILITIES IN PORTSMOUTH, OH AND PADUCAH, KY
Place of Performance
Location: PIKETON, PIKE County, OHIO, 45661
State: Ohio Government Spending
Plain-Language Summary
Department of Energy obligated $528.3 million to BWXT CONVERSION SERVICES, LLC for work described as: OPERATION OF DUF6 CONVERSION FACILITIES IN PORTSMOUTH, OH AND PADUCAH, KY Key points: 1. Contract value of over half a billion dollars indicates a significant, long-term federal commitment to managing hazardous materials. 2. The 'Facilities Support Services' NAICS code suggests a broad scope of work, potentially encompassing maintenance, operations, and specialized technical services. 3. A definitive contract type, especially with a Cost Plus Award Fee structure, implies a need for flexibility and performance incentives in a complex operational environment. 4. The duration of the contract (2246 days) points to the sustained nature of the services required for DUF6 conversion. 5. The award to a single entity, BWXT Conversion Services, LLC, warrants examination of the competitive landscape and potential for future competition. 6. The absence of small business set-aside flags suggests the primary contractor is likely a large entity, with potential subcontracting opportunities. 7. The contract's focus on DUF6 conversion highlights a critical national security and environmental management function.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging without specific details on the scope of 'DUF6 conversion facilities operation'. However, a contract exceeding $500 million over approximately six years for specialized hazardous material management suggests a substantial investment. The Cost Plus Award Fee (CPAF) structure indicates that the government aims to incentivize performance, but it also carries a risk of cost overruns if not managed tightly. Comparing this to other large-scale environmental remediation or specialized facility operations contracts would be necessary for a more precise value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under 'Full and Open Competition', indicating that all responsible sources were permitted to submit offers. The presence of 3 bidders suggests a moderate level of competition for this specialized service. While three bidders is better than a sole-source award, the specific details of the bidding process, including the technical proposals and final pricing, would be needed to fully assess the effectiveness of the competition in driving down costs and ensuring the best value for the government.
Taxpayer Impact: Full and open competition, even with a limited number of bidders, generally benefits taxpayers by encouraging multiple companies to vie for the contract, potentially leading to more competitive pricing and innovative solutions.
Public Impact
The primary beneficiaries are the Department of Energy and potentially the Department of Defense, as the contract supports the management of nuclear materials. Services delivered include the operation and maintenance of facilities crucial for converting depleted uranium hexafluoride (DUF6). The geographic impact is concentrated in Portsmouth, Ohio, and Paducah, Kentucky, where these specialized conversion facilities are located. Workforce implications include the employment of specialized engineers, technicians, and support staff at the specified locations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee contracts can lead to higher overall costs if performance metrics are not rigorously defined and monitored.
- The long duration of the contract may reduce flexibility for the government to adapt to changing technological needs or market conditions.
- Concentration of such a critical function with one contractor could pose risks if the contractor faces financial or operational difficulties.
Positive Signals
- Awarding to BWXT Conversion Services, LLC, a known entity in nuclear materials management, suggests a level of confidence in their capabilities.
- The 'Full and Open Competition' process, even with three bidders, indicates an effort to secure competitive offers.
- The CPAF structure incentivizes the contractor to meet or exceed performance expectations, potentially leading to higher quality service delivery.
Sector Analysis
The contract falls within the Facilities Support Services sector, specifically dealing with highly specialized operations related to nuclear material conversion. This is a niche market dominated by a few large, experienced contractors with the necessary security clearances and technical expertise. The total federal spending on facilities support services is substantial, but contracts for DUF6 conversion are unique due to the specific hazardous materials involved and the stringent regulatory environment.
Small Business Impact
The contract data indicates that small business set-asides were not utilized for this award (ss: false, sb: false). This suggests that the primary contract was awarded to a large business. While there is no direct indication of subcontracting plans for small businesses within the provided data, large federal contracts often include subcontracting goals. The impact on the small business ecosystem would depend on whether BWXT Conversion Services, LLC actively seeks out and utilizes small businesses for specialized support services related to this operation.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy's contracting officers and program managers. Given the nature of DUF6 conversion, it is highly probable that multiple layers of oversight exist, including technical reviews, safety inspections, and potentially audits by the Government Accountability Office (GAO) or the DOE's Office of Inspector General (OIG). Transparency would be facilitated through contract reporting mechanisms and public disclosures of contract awards, though detailed operational performance data may be sensitive.
Related Government Programs
- Department of Energy - Environmental Management
- Department of Energy - National Nuclear Security Administration
- Defense Nuclear Facilities Safety Board
- Environmental Protection Agency - Hazardous Waste Management
Risk Flags
- Potential for cost overruns due to CPAF structure
- Long contract duration may limit adoption of new technologies
- Dependency on a single contractor for critical services
Tags
department-of-energy, facilities-support-services, hazardous-materials-management, nuclear-materials, cost-plus-award-fee, definitive-contract, full-and-open-competition, ohio, kentucky, large-contract, long-term-contract, bwxt-conversion-services-llc
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $528.3 million to BWXT CONVERSION SERVICES, LLC. OPERATION OF DUF6 CONVERSION FACILITIES IN PORTSMOUTH, OH AND PADUCAH, KY
Who is the contractor on this award?
The obligated recipient is BWXT CONVERSION 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 $528.3 million.
What is the period of performance?
Start: 2010-12-08. End: 2017-01-31.
What is the historical spending pattern for DUF6 conversion services by the Department of Energy?
Historical spending on DUF6 conversion services by the Department of Energy (DOE) is significant, reflecting the long-term challenge of managing these materials. While the specific contract data provided covers $528 million from 2010 to 2017, the DOE has been engaged in DUF6 conversion efforts for decades. Previous contracts and ongoing programs at facilities like Portsmouth and Paducah represent substantial, multi-year investments. Analyzing historical spending requires looking at prior contract awards for similar services, the duration of those contracts, and the total obligated amounts. The trend generally shows a consistent need for these services due to the large quantities of DUF6 accumulated and the complex, time-consuming nature of the conversion process. Fluctuations in spending can be influenced by budget appropriations, technological advancements in conversion methods, and shifts in national policy regarding nuclear material management.
How does the pricing structure (Cost Plus Award Fee) compare to other similar federal contracts for hazardous material management?
The Cost Plus Award Fee (CPAF) pricing structure is common for federal contracts involving complex, performance-based services where the scope may evolve or where achieving specific outcomes is critical. For hazardous material management, CPAF is often employed because it allows for flexibility in addressing unforeseen challenges while incentivizing the contractor to meet or exceed defined performance standards through award fees. Compared to fixed-price contracts, CPAF can potentially lead to higher overall costs if not managed diligently, as the government reimburses allowable costs plus a fee that can be adjusted based on performance. However, it can also yield better results and innovation than purely cost-reimbursement contracts. Other similar contracts might use Cost Plus Incentive Fee (CPIF) or even firm-fixed-price structures for more defined scopes. The suitability of CPAF depends heavily on the clarity of performance metrics and the government's ability to effectively monitor and evaluate contractor performance.
What are the key performance indicators (KPIs) typically used in DUF6 conversion contracts, and how are they measured?
Key Performance Indicators (KPIs) in DUF6 conversion contracts are designed to ensure safety, environmental compliance, operational efficiency, and timely completion of conversion goals. Common KPIs often include metrics related to the volume of DUF6 converted per unit of time, the efficiency of the conversion process (e.g., yield of desired products), adherence to strict safety protocols (e.g., incident rates, near misses), environmental compliance (e.g., emissions, waste management), and facility operational availability. Measurement typically involves rigorous data collection by the contractor, verified through government oversight, inspections, and audits. For CPAF contracts, these KPIs directly influence the 'award fee' portion, meaning the contractor's financial incentive is tied to their performance against these specific metrics. The exact KPIs and their weighting are detailed in the contract's Performance Work Statement (PWS).
What is the track record of BWXT Conversion Services, LLC in managing large-scale hazardous material contracts for the federal government?
BWXT Conversion Services, LLC, and its parent company BWX Technologies, Inc., have a significant and long-standing track record in managing complex nuclear-related projects for the U.S. government, including the Department of Energy and the Department of Defense. They are known for their expertise in nuclear fuel production, component manufacturing, and the handling and processing of nuclear materials. Their involvement in DUF6 conversion at both the Portsmouth and Paducah sites spans many years, indicating a deep familiarity with the specific challenges and requirements of this operation. Their history includes managing large-scale facilities, adhering to stringent safety and security regulations, and delivering on complex technical objectives. While specific performance details for every contract are not always public, their continued selection for such critical and high-value contracts suggests a generally positive performance history and established credibility within the nuclear services sector.
What are the potential risks associated with the long duration and high value of this contract?
The long duration (over 6 years) and high value (over $528 million) of this DUF6 conversion contract present several potential risks. Firstly, there's the risk of cost escalation beyond initial projections, especially with a Cost Plus Award Fee structure, if cost controls are not rigorously maintained or if unforeseen technical challenges arise. Secondly, the long-term commitment might reduce the government's flexibility to adopt newer, potentially more efficient or cost-effective technologies that emerge during the contract period. Thirdly, reliance on a single contractor for such a critical and specialized function creates a dependency risk; any operational disruptions, financial instability, or significant performance issues with the contractor could have major consequences for national security and environmental management. Finally, there's a potential risk of 'contractor lock-in,' where the incumbent contractor gains significant advantages, making it difficult for competitors to challenge them in future procurements.
Industry Classification
NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services
Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 3
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: BWX Technologies, Inc. (UEI: 968037221)
Address: 800 MAIN ST, LYNCHBURG, VA, 24504
Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $529,430,125
Exercised Options: $529,430,125
Current Obligation: $528,263,474
Actual Outlays: $3,617
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2010-12-08
Current End Date: 2017-01-31
Potential End Date: 2018-01-12 00:00:00
Last Modified: 2019-07-10
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