Naval Sea Systems Command awards $4.28B contract for government-owned, contractor-operated R&D facility to Bechtel National, Inc

Contract Overview

Contract Amount: $4,284,667,505 ($4.3B)

Contractor: Bechtel Bettis Incorporated

Awarding Agency: Department of Defense

Start Date: 1999-01-28

End Date: 2009-01-31

Contract Duration: 3,656 days

Daily Burn Rate: $1.2M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199905!1700!1304!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002498C4064 !A!*!P00001 !19990128!20040131!089176176!094878980!094878980!N!15307!BECHTEL NATIONAL, INC !45 FREMONT ST !SAN FRANCISCO !CA!94105!83512!003!42!WEST MIFFLIN !ALLEGHENY !PENN !0001!+000107440000!N!N!000000000000!M181!OPERATION/GOVT-OWNED CONTRACTOR-OPERATED R&D FAC !A3 !SHIPS !2000!NOT DISCERNABLE OR CLASSIFIED !7371!3!*!*!C!B!A!*!A !N!U!2!002!B!* !Z!N!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: WEST MIFFLIN, ALLEGHENY County, PENNSYLVANIA, 15122

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $4.28 billion to BECHTEL BETTIS INCORPORATED for work described as: 199905!1700!1304!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002498C4064 !A!*!P00001 !19990128!20040131!089176176!094878980!094878980!N!15307!BECHTEL NATIONAL, INC !45 FREMONT ST !SAN FRANCISCO !CA!94105!83512!003!42!WEST MIFFLIN !ALLEGH… Key points: 1. Contract awarded for a critical R&D facility supporting naval shipbuilding and repair. 2. Significant long-term commitment with a duration of over 10 years. 3. Sole-source award raises questions about competition and potential cost efficiencies. 4. Contract type is Cost Plus Fixed Fee, which can incentivize cost overruns. 5. Geographic concentration in Pennsylvania for facility operations. 6. High dollar value suggests a substantial and complex undertaking.

Value Assessment

Rating: questionable

The contract's value of over $4.28 billion over a decade is substantial. Without comparable sole-source R&D facility contracts for benchmarking, assessing value for money is difficult. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D, carries inherent risks of cost escalation if not meticulously managed. The lack of competition further complicates a direct price comparison.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically justified when only one source is capable of meeting the requirement, or for reasons of national security or urgency. The absence of multiple bidders limits the government's ability to leverage competitive pressures to secure the best possible pricing and terms.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions typically achieved through competitive bidding, potentially leading to higher overall costs.

Public Impact

The primary beneficiaries are the Department of the Navy and the broader defense industrial base, which rely on advanced R&D capabilities. The contract supports the operation of a government-owned, contractor-operated research and development facility. Operations are geographically concentrated in West Mifflin, Pennsylvania. The contract implies a sustained need for specialized technical expertise and a skilled workforce in the R&D sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can lead to cost overruns if not managed tightly.
Long contract duration (over 10 years) increases exposure to potential performance issues or changing requirements.
Lack of detailed public information on the specific R&D activities and performance metrics.

Positive Signals

Award to a known entity (Bechtel) suggests a level of trust and established capability.
Contract supports critical R&D for naval shipbuilding, a key national security function.
Long-term nature indicates a stable, ongoing requirement and commitment to the facility's mission.

Sector Analysis

This contract falls within the Ship Building and Repairing sector, specifically supporting research and development for naval applications. The scale of this award suggests a significant investment in specialized infrastructure and expertise. Comparable spending benchmarks would likely involve other large-scale, long-term R&D facility operations contracts within the defense sector, though direct comparisons are difficult due to the sole-source nature and specific operational focus.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans in the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is unclear, though Bechtel may engage small businesses as subcontractors for specific services or supplies.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Naval Sea Systems Command. Given the CPFF structure and long duration, rigorous oversight of cost, schedule, and performance is crucial. Transparency is limited by the sole-source nature and the classification of some R&D activities. Inspector General jurisdiction would apply to investigate fraud, waste, and abuse.

Related Government Programs

Naval Sea Systems Command Contracts
Department of Defense Research and Development Facilities
Shipbuilding and Repair Contracts
Cost Plus Fixed Fee Contracts
Government-Owned Contractor-Operated Facilities

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration
Lack of detailed public performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $4.28 billion to BECHTEL BETTIS INCORPORATED. 199905!1700!1304!BZ004!NAVAL SEA SYSTEMS COMMAND !N0002498C4064 !A!*!P00001 !19990128!20040131!089176176!094878980!094878980!N!15307!BECHTEL NATIONAL, INC !45 FREMONT ST !SAN FRANCISCO !CA!94105!83512!003!42!WEST MIFFLIN !ALLEGHENY !PENN !0001!+000107440000!N!N!000000000000!M181!OPERATION/GOVT-OWNED CONTRACTOR-OPERATED R&D FAC !A3 !SHIPS !2000!NOT DISCERNABLE OR CLASSIFIED !7371!3!*!*!C!B!A!*!A !N!U!2!0

Who is the contractor on this award?

The obligated recipient is BECHTEL BETTIS INCORPORATED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $4.28 billion.

What is the period of performance?

Start: 1999-01-28. End: 2009-01-31.

What specific R&D activities are encompassed by this contract, and what are the key performance indicators (KPIs) for Bechtel National, Inc.?

The provided data indicates the contract is for 'OPERATION/GOVT-OWNED CONTRACTOR-OPERATED R&D FAC' within the 'SHIPS' category. However, specific R&D activities and detailed KPIs are not publicly discernible from the data. Typically, such facilities support advanced naval technology development, materials science, propulsion systems, or combat systems research. Performance would likely be measured against milestones, technical objectives, budget adherence, and timely delivery of research outcomes. Without further documentation, the precise scope and metrics remain classified or not publicly disclosed.

How does the $4.28 billion contract value compare to historical spending on similar naval R&D facilities?

Direct historical comparisons for this specific contract are challenging due to its sole-source nature and the specialized 'government-owned, contractor-operated' R&D facility designation. However, the $4.28 billion figure over approximately 10 years represents a significant, sustained investment. Large-scale defense R&D facilities often involve multi-billion dollar commitments over extended periods. To provide a precise benchmark, one would need to analyze historical spending on comparable naval R&D infrastructure projects, considering factors like facility size, technological complexity, and operational scope. The long duration suggests a strategic, long-term commitment rather than a short-term project.

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 ($4.28 billion over 10+ years) include potential cost overruns and contractor inefficiency. While the fixed fee provides the contractor with an incentive to control costs to some extent, the 'cost plus' element means the government bears the majority of the actual expenses. If the contractor's cost estimates are inaccurate or if unforeseen technical challenges arise, the total cost to the government can escalate significantly beyond initial projections. Effective oversight is critical to monitor costs, validate expenses, and ensure the contractor is performing efficiently to achieve the R&D objectives within the overall budget framework.

Given the sole-source award, what mechanisms are in place to ensure Bechtel National, Inc. maintains high performance standards?

Even in sole-source contracts, robust performance management mechanisms are essential. For this contract, oversight by the Naval Sea Systems Command (NAVSEA) would be paramount. This likely includes regular performance reviews, milestone tracking, technical evaluations, and audits of expenditures. Contractual clauses would stipulate performance standards, delivery schedules, and quality requirements. Failure to meet these standards could result in penalties, reduced fees, or even contract termination, although the latter is less common for critical, long-term facilities. The government would also maintain oversight of the government-owned facility itself.

What is the expected impact of this contract on the small business ecosystem, particularly in Pennsylvania?

The provided data does not specify any small business set-asides or subcontracting goals for this contract. As a sole-source award to Bechtel National, Inc., a large entity, the direct impact on small businesses is not immediately apparent from the contract award details. However, Bechtel may engage small businesses as subcontractors for various support services, materials, or specialized tasks. The extent of this subcontracting would depend on Bechtel's procurement practices and the specific needs of the R&D facility's operations. Without explicit subcontracting requirements, the positive impact on the small business ecosystem may be limited or indirect.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

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.

Address: 814 PITTSBURGH MCKEESPORT BLVD, WEST MIFFLIN, PA, 15122

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline