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Bechtel Wins $7 Billion Nuclear Propulsion Deal

Bechtel Corp., the largest construction and engineering company in the U.S., won the Defense Department's biggest contract in November.

The San Francisco-based company received a $7 billion, multi-year deal with the Navy to design nuclear propulsion systems for submarines and surface ships. Most of the work will take place in upstate New York.

Bechtel Marine Propulsion Corp. won the contract from the Naval Sea Systems Command to manage the government-owned Knolls Atomic Power Laboratory near Schenectady, N.Y., as well as the Bettis Atomic Power Laboratory outside Pittsburgh, Pa., according to the Pentagon's Nov. 5 announcement. It didn't specify whether other companies also bid for the work.

The contract topped a list of 200 awards announced in November, with a combined potential value of more than $30 billion, according to a Military​.com analysis of the Pentagon’s daily contract announcements.

The total monthly value was almost double that of October, the first month of the government's fiscal year, but 4 percent lower than the average for the previous three months. The figures don't reflect what is actually spent, or obligated, because many deals are only partially funded at first.

For example, the Navy obligated $82.9 million for the Bechtel contract at the time of the award, and plans to spend $485 million by the end of fiscal 2014, or Sept. 30, according to the announcement.

The labs, which are technically owned by the Energy Department, are part of a program between the department and the Navy to develop and maintain nuclear-powered warships.

The Knolls facility, known as KAPL, operates two sites. The main location in Niskayuna, N.Y., a suburb of Schenectady, designs nuclear reactor plants for the Navy's submarines, including the Los Angeles-class, Ohio-class and Virginia-class. Another location about 20 miles to the north in West Milton runs two land-based reactors to train sailors who will eventually operate similar plants at sea.

The Bettis facility uses three primary sites to develop and maintain nuclear propulsion systems for the Navy's surface ships and subs, including the main site in West Mifflin, Pa., a suburb of Pittsburgh; a Navy nuclear training facility in Charleston, S.C.; and the Naval Reactors Facility in Idaho Falls, Idaho.

Two of the Pentagon's top five contracts in November were so-called multiple-award contracts. Under these kinds of arrangements, companies win seats on the contract, then compete against each other for individual orders.

A group of nine companies, including Dell Inc. and Harris Corp., landed seats on the second-largest contract, a deal valued at $6.9 billion to provide the Air Force with information technology products and services as part of the so-called Network Centric Solutions-2, or NETCENTS-2, program, according to the Nov. 5 announcement.

More than 900 companies shared the third-largest contract, a Navy agreement potentially worth $5.3 billion primarily for engineering services as part of the so-called SeaPort Enhanced, or SeaPort-e, program, according to the Nov. 19 announcement. In fact, only 41 of the 955 bidders didn't get a piece of the deal.

Cardinal Health Inc., the Dublin, Ohio-based distributor of pharmaceuticals and medical products, won the fourth-largest contract, a $1 billion contract with the Defense Logistics Agency for surgical supplies, according to the Nov. 13 announcement.

The Institute for Defense Analyses, a nonprofit based in Alexandria, Va., secured the fifth-largest contract, an $888 million, five-year agreement with the Washington Headquarters Services to conduct research for major offices within the Pentagon, including the Office of the Secretary of the Defense and Joint Staff, combatant commands, defense agencies, joint program offices, among others, according to the Nov. 1 announcement.

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