Wednesday, May 19, 2010

The US Navy’s Nuclear Propulsion Contracts

Nuclear Naval Propulsion Around the World
 
CVN Charles de Gaulle
CVN Charles de Gaulle

Several navies around the world currently use nuclear propulsion in at least some ships and submarines. Britain’s sale of its SSK Upholder Class to Canada (as the problem-plagued Victoria Class) has made them an all-nuclear submarine fleet, like their American allies. China, France and Russia all use naval nuclear propulsion within mixed submarine fleets, India is currently working to join this club via its SSN program, and Brazil has launched a program of its own.

America’s nuclear surface ships are joined by France’s problem-plagued aircraft carrier FS Charles de Gaulle, and Russia’s Kirov Class cruisers.

The saga of the Charles de Gaulle serves as a reminder that adapting nuclear power technologies to the small spaces of a submarine, or installing them a surface warship, is no trivial feat. Much can go wrong, even in nations that have considerable naval nuclear propulsion experience. On the flip side, advances in design can offer significant benefits. The new nuclear plants in America’s Virginia Class and Seawolf Class fast attack subs, Britain’s new Astute Class fast attack submarines, and the USA’s forthcoming CVN-78 Gerald R. Ford Class aircraft carriers, offer designs that will save billions over the life of each ship by eliminating the standard mid-life reactor refueling.

American Contracts (FY 2006 – Present)

SSN Virginia Class Cutaway
SSN-774 cutaway: Virginia Class

Most contracts noted here are awarded by the US Naval Sea Systems Command in Washington, DC. Babcock & Wilcox contracts are issued by the US Department of Energy, rather than the Department of Defense, even though they are defense-related.

Completion dates or other additional information are not provided for Naval Nuclear Propulsion Program contracts as a matter of official policy. Other contracts related to maintenance, however, may show completion dates.

April 29/10: Bechtel Plant Machinery Inc. in Monroeville, PA receives a $37.3 million modification to a previously awarded contract (N00024-07-C-2100) for naval nuclear propulsion components. Work will be performed in Monroeville, PA (90%) and Schenectady, NY (10%). Contract funds in the amount of $923,558 will expire at the end of the current fiscal year.

Jan 27/10: Babcock & Wilcox Nuclear Operations Group, Inc. announces an award of approximately $450 million for the manufacture of nuclear components to support U.S. defense programs, which includes the manufacture of U.S. Naval nuclear power systems for submarines and aircraft carriers.

Babcock & Wilcox is an operating group of McDermott International, Inc., and employs about 4,000 people. B&W NOG is headquartered in Lynchburg, VA, with locations in Barberton, OH; Mount Vernon, IN; and Euclid, OH; as well as at subsidiary Nuclear Fuel Services, Inc. in Erwin, TN. Together, the facilities offer a range of nuclear components and services, from providing nuclear fuel and the manufacture of reactors for U.S. Naval submarines and aircraft carriers to other nuclear and non-nuclear R&D and component production. The company also performs plutonium and uranium decontamination and decommissioning, facility stabilization, and nuclear materials management.

Nov 18/09: Bechtel Plant Machinery Inc. in Monroeville, PA receives a $248.8 million modification to a previously awarded contract (N00024-07-C-2100) for naval nuclear propulsion components. Work will be performed in Monroeville, PA (95%) and Schenectady, NY (5%). Contract funds in the amount of $326.7 million will expire at the end of the current fiscal year.

Nov 10/09: Bechtel Plant Machinery Inc. in Monroeville, PA receives a $110.5 million modification to a previously awarded contract (N00024-07-C-2102) for additional naval nuclear propulsion components. Work will be performed in Schenectady, NY (86%) and Monroeville, PA (14%).

Oct 19/09: Bechtel Plant Machinery Inc. in Monroeville, PA receives a $523.5 million cost-plus-fixed fee contract (N00024-10-C-2119) for naval nuclear propulsion components. Work will be performed in Monroeville, PA (67%) and Schenectady, NY (33%).

Oct 13/09: General Dynamics Electric Boat Corp. in Groton, CT received an $18.1 million modification to a previously awarded contract (N00024-07-C-2103) for reactor plant planning yard services for nuclear-powered submarines and support yard services for the US Navy’s moored training ships. The contractor will furnish, fabricate, or acquire such materials, supplies and services as may be necessary to perform the functions of the planning yard for reactor plants and associated portions of the propulsion plants for nuclear-powered submarines.

Work will be performed in Groton, CT (95%), Charleston, SC (5%), and is expected to be complete by September 2010. This contract was not competitively procured by the Naval Sea Systems Command in Washington, DC.

May 29/09: Bechtel Plant Machinery Inc. in Monroeville, PA receives an $11.7 million modification to a previously awarded contract (N00024-07-C-2100) for Naval Nuclear Propulsion Components. Work will be performed in Pittsburgh, PA (90.5%) and Schenectady, NY (9.5%). Contract funds in the amount of $233,157 will expire at the end of the current fiscal year.

Feb 25/09: Babcock & Wilcox Nuclear Operations Group, Inc. announces awards “in excess of $1 billion” for the manufacture of nuclear components to support U.S. defense programs, including the manufacture of U.S. Naval nuclear power systems for submarines and aircraft carriers. This work is part of a previously negotiated and announced set of contracts that, if fully executed, will be worth more than $2.66 billion in revenue over 10 years.

As a result of this increased workload, B&W NOG expects to hire an estimated 250 new salaried and hourly employees throughout 3 of its locations. B&W NOG is headquartered in Lynchburg, VA, with locations in Barberton, OH; Mount Vernon, IN; and Euclid, OH; as well as at subsidiary Nuclear Fuel Services, Inc. in Erwin, TN.

Nov 3/08: Curtiss-Wright Corporation announces a contract from Bechtel Plant Machinery, Inc. (BPMI), to provide critical valves for the nuclear propulsion systems in the U.S. Navy’s next 4 Virginia-Class submarines, and the 2nd Ford-Class Aircraft Carrier [CVN 79]. The contract contains options for up to 4 more sets: a submarine ship-set and an aircraft carrier ship-set funded in 2008, and 2 additional submarine ship-sets to be funded in 2009.

The value is over $83 million if all options are exercised, and the initial award is for an initial ship-set of submarine valves and long lead materials valued at approximately $15 million. Curtiss-Wright’s Flow Control segment will perform the work at its facility in East Farmingdale, NY. Delivery is scheduled to commence in 2009 and continue through 2017.

Variants of Curtiss-Wright’s Smart, Leakless Valves are already used in the commercial nuclear power industry. These fully automated, sealed solenoid valves can control the flow of liquids, gas, and steam, withstanding up to 2500 psi pressure and 670F temperatures while requiring little to no maintenance over long periods. The firm is now using the valve beyond nuclear power applications, and has a $62 million contract to retrofit all of the JP-5 jet fuel pumping station valves on the U.S. Navy’s Nimitz class aircraft carriers.

Oct 30/08: Bechtel Plant Machinery Inc. in Pittsburgh, PA receives a $605 million modification to previously awarded contract (N00024-07-C-2102) for additional naval nuclear propulsion components. Work will be performed in Pittsburgh, PA (68%) and Schenectady, NY (32%).

Oct 16/08: Babcock & Wilcox announces a new award for the manufacture of nuclear components in support of U.S. defense programs. The contracts employ a multiple-award approach over a number of years, which is designed to give the U.S. government cost predictability, while providing B&W with additional financial incentives based on performance.

Under this award, the contracts for 2008 are valued in excess of $230 million. They are the initial contracts under a negotiated set of orders that, if executed, would total more than $960 million between 2008 – 2010. These awards are in addition to a $1.7 billion series of contracts that B&W previously announced for 2007 – 2009. If all future orders are placed, the total value of the awards for the period of 2007 – 2010 would be approximately $2.66 billion.

Oct 15/08: Bechtel Plant Machinery Inc. in Pittsburgh, PA receives a $200.5 million cost plus fixed fee modification to previously awarded contract (N00024-07-C-2100) for Naval nuclear propulsion components. Work will be performed in Pittsburgh, PA (97%) and Schenectady, NY (3%).

Oct 15/08: KAPL Inc. (Knolls Atomic Power Laboratory) in Schenectady, NY receives a $62.2 million cost plus fixed fee modification to previously awarded contract (N00024-00-C-4011) for Naval nuclear propulsion work during FY 2009. This is the contract’s 9th year of performance.

Work will be performed in Schenectady, NY, and funding in the amount of $39.1 million will expire at the end of the current fiscal year. The original contract was competitively procured.

Oct 14/08: Bechtel Plant Machinery Inc. in Pittsburgh, PA received a $349 million cost plus fixed fee contract for naval nuclear propulsion components. Work will be performed in Pittsburgh, PA (77%) and Schenectady, NY (23%) (N00024-09-C-2108).

Oct 10/08: Bechtel Bettis Inc. in West Mifflin, PA received a $205.3 million cost-plus-fixed fee modification for FY 2009 naval nuclear propulsion work at the Bettis Atomic Power Laboratory. Work will be performed in West Mifflin, PA, and contract funds in the amount of $90 million will expire at the end of FY 2009 (N00024-98-C-4064).

Sept 18/08: Bechtel Marine Propulsion Corp. in San Francisco, CA receives a cost plus fixed fee contract for “Naval Nuclear Propulsion work.” What this means is that Bechtel Marine Propulsion Corporation (BMPC) has been awarded contracts to operate the Bettis and Knolls Atomic Power Laboratories, under a 5-year contract with the Department of Energy (DOE) and the U.S. Navy’s Naval Sea Systems Command (NAVSEA). This contract was competitively procured, with 3 offers received via the U.S. Department of Energy’s Industry Interactive Procurement System (N00024-08-C-2103).

The Bettis Atomic Power Laboratory is currently operated by Bechtel Bettis, Inc.; it has facilities in Pittsburgh, PA; Idaho Falls, ID; and Charleston, SC. The Knolls Atomic Power Laboratory in Schenectady, NY, is currently operated by Lockheed Martin subsidiary KAPL, Inc. BMPC will assume operation of the Bettis and Knolls Atomic Power Laboratories on Feb 1/09, following a 4-month transition period.

Bechtel’s release values this contract at $6 billion, but the Pentagon’s DefenseLINK adds that the contract includes options which, if exercised, would bring the cumulative value to an estimated $9.724 billion. Work will be performed in Schenectady, NY (30%); Idaho Falls, ID (15%); and Pittsburgh, PA (55%).

April 16/08: Bechtel Plant Machinery Inc. in Pittsburgh, PA received an $80.2 million cost-plus-fixed-fee contract modification to previously awarded contract (N00024-07-C-2100) for Naval Nuclear Propulsion Components. Work will be performed in Pittsburgh, PA (99%) and Schenectady, NY (1%).

Feb 22/08: Bechtel Plant Machinery Inc. in Pittsburgh, PA received a $312.6 million modification to previously awarded cost-plus-fixed fee contract (N00024-08-C-2118) for Naval nuclear propulsion components. Work will be performed in Pittsburgh, PA (68.3%, and Schenectady, NY (31.7%).

Dec 6/07: Bechtel Plant Machinery Inc. in Pittsburgh, PA received a $165.7 million modification to previously awarded contract (N00024-07-C-2100) for Naval Nuclear Propulsion Components. Work will be performed in Pittsburgh, PA (74%), and Schenectady, N.Y. (26%).

Oct 16/07: Bechtel Plant Machinery Inc. in Pittsburgh, PA received a $282.3 million cost-plus-fixed fee contract for Naval Nuclear Propulsion Components. Work will be performed in Pittsburgh, PA (62%)and Schenectady, NY (38%). The contract was not competitively procured (N00024-08-C-2118).

Oct 16/07: Bechtel Plant Machinery Inc. in Pittsburgh, PA received a $124.4 million cost-plus-fixed fee modification to previously awarded contract (N00024-07-C-2102) for additional naval nuclear propulsion components. Work will be performed in Pittsburgh, PA (52%) and Schenectady, NY (48%) (N00024-07-C-2102).

Oct 12/07: Bechtel Bettis Inc., Bettis Atomic Power Laboratory, West Mifflin, PA received a $450.7 million cost-plus-fixed-fee modification to previously awarded contract (N00024-98-C-4064) for Naval Nuclear Propulsion work at the Bettis Atomic Power Laboratory. Work will be performed in West Mifflin, PA. Contract funds in the amount of $242.2 million will expire at the end of the current fiscal year.

“Bettis [Atomic Power Laboratory] is engaged solely in the design and development of naval nuclear propulsion plants. The Naval Nuclear Propulsion Program is a joint Navy/DOE program responsible for all matters pertaining to Naval nuclear propulsion. This Program is distinct from the remainder of DOE both by Presidential Executive Order and by statute. 

The Lab provides technical support for the safe and reliable operation of existing Naval reactors. Bettis designed reactor plants for the first nuclear-powered submarine (USS Nautilus), the first nuclear-powered aircraft carrier (USS Enterprise), all of the Nimitz-class aircraft carriers, and the USS Seawolf [attack submarines]. ...A major new initiative for the Laboratory is design of the nuclear propulsion plants and electrical power systems for the next class of US Navy aircraft carriers.”

Oct 11/07: KAPL Inc. (Knolls Atomic Power Laboratory) in Schenectady, NY received a $168.9 million cost-plus-fixed-fee modification to previously awarded contract (N00024-00-C-4011) for Naval nuclear propulsion work at the Knolls Atomic Power Laboratory. Work will be performed in Schenectady, NY. Contract funds in the amount of $109 million will expire at the end of the current fiscal year.

Oct 10/07: General Dynamics Electric Boat Corp. in Groton, CT received an $16.2 million modification to previously awarded contract (N00024-07-C-2103) for reactor plant planning yard services for nuclear-powered submarines and support yard services for the US Navy’s moored training ships. Work will be performed in Groton, CT (95%), Charleston, SC (5%), and is expected to be complete by September 2008. This contract was not competitively procured by the Naval Sea Systems Command in Washington, DC.

June 6/07: Bechtel Plant Machinery Inc. in Schenectady, NY received a $69.9 million cost-plus-fixed-fee modification to previously awarded contract (N00024-07-C-2100) for Naval nuclear propulsion components. Work will be performed in Pittsburgh, PA (85%) and Schenectady, NY (15%).

April 30/07: Bechtel Plant Machinery Inc. in Schenectady, NY received a $13.4 million cost-plus-fixed fee modification to previously awarded contract (N00024-07-C-2101) for additional naval nuclear propulsion components. Work will be performed in Schenectady, NY.

March 30/07: McDermott International, Inc. subsidiary, BWX Technologies, Inc. (BWXT) announces 2 major U.S. Government contracts to manufacture nuclear components in support of U.S. defense programs. Taken together, the awards are worth more than $320 million, and contain options for the anticipated requirements through 2009 that could total up to $1.7 billion. BWXT can improve the contracts’ profitability by achieving certain performance measures.

BWXT, headquartered in Lynchburg, VA, supplies nuclear operations services and products to the U. S. Government and commercial clients. BWXT also manages complex production facilities and advanced energy products. Among its diverse capabilities are decontamination and decommissioning, waste management, engineering, and project management services.

Feb 28/07: Bechtel Plant Machinery Inc. in Schenectady, NY received a $7.8 million modification to previously awarded contract (N00024-07-C-2102) for additional naval nuclear propulsion components. Work will be performed in Schenectady, NY.

CVN-71 Theodore Roosevelt
CVN-71, Indian Ocean

Dec 27/06: McDermott International, Inc. and its subsidiaries announce that they have completed remaining financial obligations under The Babcock & Wilcox Company’s (“B&W”) plan of reorganization and settlement agreement. With the completion of these payments, the Company has satisfied all of its financial obligations to the B&W asbestos trust.

On on Dec 1/06, the Company retired the $250 million contingent promissory note utilizing the term loan feature under B&W’s credit facility; and on Dec 21/06, McDermott paid from cash on hand the $355 million contingent payment right. The contingent payment right and contingent note vested on Dec 1/06, as a result of the Fairness in Asbestos Injury Resolution Act of 2005, or other similar legislation, failing to become law by Nov 30/06. The new term debt matures on Feb 22/12, and bears interest at LIBOR plus 3.0%. McDermott may prepay this loan at any time without penalty.

By completing all payments owed to the asbestos trust ahead of schedule and during this calendar year, the Company accelerates the tax benefit associated with these payments. EVP and CFO Frank Kalman says that they expect to receive a cash tax refund of approximately $250 million, most likely in late 2007 or early 2008, subject to the resolution of open IRS tax audits.

Oct 17/06: Bechtel Plant Machinery Inc. in Schenectady, NY received a $267.5 million cost-plus-fixed fee contract for naval nuclear propulsion components, raising its contracts awarded to $442.2 million total since Oct 1/06. Work will be performed in Pittsburgh, PA (52%) and Schenectady, NY (48%). The contract was not competitively procured (N00024-07-C-2101). DID has covered previous awards to Bechtel Plant Machinery for naval nuclear propulsion components, including the previous 2 entries, plus FY 2006 awards for $166.3 million in December 2005, and another $272.2 million in October 2005. A FY 2006 award for $35.6 million was also made in on May 25, 2006, but not covered by DID at the time.

Oct 16/06: Bechtel Plant Machinery Inc. in Schenectady, NY received a $44.8 million cost-plus-fixed fee contract for naval nuclear propulsion components, which can be added to the Oct. 12, 2006 award to get a total of $174.7 million. Work will be performed in Schenectady, NY. The contract was not competitively procured (N00024-07-C-2102).

Oct 12/06: Bechtel Plant Machinery Inc. in Schenectady, NY received a $129.9 million cost-plus-fixed fee contract for Naval nuclear propulsion components. Work will be performed in Schenectady, NY (48%) and Pittsburgh, PA (52%). The contract was not competitively procured (N00024-07-C-2100.


Oct 12/06: Bechtel Bettis Inc., Bettis Atomic Power Laboratory in West Mifflin, PA received a $461.1 million cost-plus-fixed fee modification to previously awarded contract N00024-98-C-4064 for naval nuclear propulsion work (FY 2006 award: $480.7 million). Work will be performed in West Mifflin, PA. This action represents funding of the contract’s 7th year of effort, and contract funds in the amount of $104.7 million will expire at the end of the current fiscal year.

Oct 12/06: KAPL Inc. (Knolls Atomic Power Laboratory) in Schenectady, NY received a $160.4 million cost-plus-fixed-fee modification to previously awarded contract N00024-00-C-4011 for Naval nuclear propulsion work at the Knolls Atomic Power Laboratory during fiscal year 2007 (FY 2006 award: $138.6 million). Work will be performed in Schenectady, NY. This represents funding for the contract’s 7th year of performance, and funding in the amount of $25.5 million will expire at the end of the current fiscal year (N00024-00-C-4011).


Oct 11/06: General Dynamics Electric Boat Corp. in Groton, CT received an $18.7 million cost-plus-fixed-fee, level of effort contract for reactor plant planning yard services for nuclear-powered submarines and support yard services for Navy moored training ships. This work generally includes engineering services for lifecycle support, maintenance and modernization of the reactor plants and selected propulsion-plant systems of Los Angeles, Trident and Seawolf-class submarines, and the nuclear research submarine NR-1.

Additionally, Electric Boat provides similar services for all systems on the Navy’s moored training ships in Charleston, SC.

Work will be performed in Groton, CT (95%) and Charleston, SC (5%), and is expected to be complete by September 2007. This contract was not competitively procured by the Naval Sea Systems Command in Washington, DC (N00024-07-C-2103).

May 25/06: Bechtel Plant Machinery Inc. Schenectady, N.Y., is being awarded a $35.6 million cost-plus-fixed fee modification to previously awarded contract (N00024-02-C-2102) for Naval nuclear propulsion components. Work will be performed in Pittsburgh, PA (68%) and Schenectady, NY (32%).
Feb 22/06: McDermott International, Inc. announces that:

“The Babcock & Wilcox Company and certain of its subsidiaries (“B&W”) have now exited from Chapter 11 bankruptcy and entered into its previously announced settlement. Accordingly, B&W’s financial results will be re-consolidated with McDermott’s and its operations managed without Bankruptcy Court supervision.”

The move comes 6 years to the day since its original Chapter 11 filing. McDermott also announces that B&W has finalized and implemented its exit-financing package, and has funded its initial payment of $350 million and $1.15 billion face-amount of insurance to the asbestos-claimants’ trust. Depending on the status of national asbestos legislation at Nov 30/06, either an additional $25 million or $605 million in consideration will be made available to the trust in the time periods required.

B&W’s exit-financing package consists of 3 tranches, for a combined total of $650 million of credit capacity. In December 2005, Moody’s Investors Services and Standard & Poor’s Ratings Services issued newly assigned credit ratings for B&W of B1 and B+, respectively.

Dec 20/05: Bechtel Plant Machinery Inc. in Pittsburgh, PA received a $166,318,354 cost-plus-fixed-fee modification to previously awarded contract (N00024-02-C-2102) for naval nuclear propulsion components. Work will be performed in Pittsburgh, PA (73%) and Schenectady, NY (27%).

Dec 19/05: McDermott International, Inc. subsidiary, BWX Technologies, Inc. (BWXT) announces “several major U.S. government contracts,” valued “in excess of $410 million,” for the manufacture of components in support of U.S. defense programs. BWXT, headquartered in Lynchburg, VA, supplies nuclear power operations services and products to the U. S. government and commercial clients.

Oct 20/05: KAPL Inc. Knolls Atomic Power Laboratory in Schenectady, NY received a $138.6 million cost-plus-fixed fee modification to previously awarded contract (N00024-00-C-4011) for naval nuclear propulsion work at the Knolls Atomic Power Laboratory. Work will be performed in Schenectady, NY.

Oct 20/05: Bechtel Bettis Inc. at Bettis Atomic Power Laboratory in West Mifflin, PA, received a $480.7 million cost-plus-fixed-fee modification to previously awarded contract (N00024-98-C-4064) for naval nuclear Propulsion work at the Bettis Atomic Power Laboratory. Work will be performed in West Mifflin, PA.

Oct 18/05: Bechtel Plant Machinery Inc. in Pittsburgh, PA received a $279,237,437 cost-plus-fixed-fee contract for Naval nuclear propulsion components. Work will be performed in Schenectady, NY (50%) and Pittsburgh, PA (50%). Contract funds will not expire at the end of the current fiscal year. The contract was not competitively procured (N00024-06-C-2106).

Oct 14/05: Bechtel Plant Machinery Inc. in Pittsburgh, PA received a $30,200,000 cost-plus-fixed-fee modification to previously awarded contract (N00024-04-C-2104) for Naval Nuclear Propulsion Components. Work will be performed in Pittsburgh, PA.

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