Interior Department awards $38.6M helium plant operations contract to Cliffside Refiners L.P

Contract Overview

Contract Amount: $38,600,319 ($38.6M)

Contractor: Cliffside Refiners L P

Awarding Agency: Department of the Interior

Start Date: 2018-04-01

End Date: 2024-09-30

Contract Duration: 2,374 days

Daily Burn Rate: $16.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF - HELIUM PLANT OPERATIONS

Place of Performance

Location: AMARILLO, POTTER County, TEXAS, 79124

State: Texas Government Spending

Plain-Language Summary

Department of the Interior obligated $38.6 million to CLIFFSIDE REFINERS L P for work described as: IGF::OT::IGF - HELIUM PLANT OPERATIONS Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Long contract duration of nearly 6 years suggests a need for stable, long-term operations. 3. Firm Fixed Price contract type offers cost certainty for the government. 4. Operations are concentrated in Texas, a key region for industrial gas production. 5. No small business set-aside or subcontracting was indicated, potentially limiting small business participation.

Value Assessment

Rating: fair

The contract's value of $38.6 million over approximately 5.8 years for helium plant operations appears to be within a reasonable range for specialized industrial services. However, without direct comparable contracts for similar scale helium plant operations or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm fixed-price structure provides predictability, but the lack of competition means there's no direct market benchmark to confirm optimal pricing. Further analysis would require understanding the specific operational requirements and market rates for specialized helium extraction and processing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary specialized capabilities, proprietary technology, or when urgent circumstances preclude a competitive process. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the best possible value. It also raises questions about whether alternative solutions or vendors were adequately explored.

Taxpayer Impact: A sole-source award means taxpayers may not be receiving the most competitive pricing available in the market. Without competition, there is less pressure on the contractor to offer the lowest possible cost, potentially leading to higher overall expenditures.

Public Impact

The Bureau of Land Management benefits from the continued operation of essential helium production facilities. This contract ensures the supply of helium, a critical component for various industrial, medical, and scientific applications. Operations are geographically focused in Texas, supporting the regional industrial economy. The contract supports specialized jobs within the industrial gas manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award raises concerns about market exploration and potential vendor lock-in.
Limited transparency into the justification for sole-source procurement.

Positive Signals

Firm Fixed Price contract provides cost certainty.
Long-term contract ensures operational continuity for a critical resource.
Focus on specialized industrial gas manufacturing aligns with sector needs.

Sector Analysis

The industrial gas manufacturing sector is vital for numerous downstream industries, including healthcare, electronics, and aerospace. Helium, in particular, is a non-renewable resource with critical applications in MRI machines, semiconductor manufacturing, and scientific research. The market for industrial gases is often characterized by significant capital investment and specialized technical expertise, which can lead to concentrated market structures. This contract for helium plant operations fits within this specialized niche, ensuring the production of a strategic commodity.

Small Business Impact

This contract was not set aside for small businesses, nor was there any indication of subcontracting requirements. This suggests that the primary contractor, Cliffside Refiners L.P., is expected to handle all aspects of the operation directly. Consequently, there is no direct benefit or opportunity for small businesses to participate in this specific contract, either as prime contractors or as subcontractors, which could limit their engagement within this particular federal spending area.

Oversight & Accountability

Oversight for this contract would primarily fall under the Bureau of Land Management (BLM) within the Department of the Interior. As a definitive contract, it is subject to standard federal procurement regulations and oversight. However, the sole-source nature of the award warrants specific scrutiny to ensure the justification was sound and that the pricing is fair and reasonable. Transparency regarding the justification for the sole-source award and ongoing performance monitoring are key accountability measures.

Related Government Programs

Federal Helium Reserve
Industrial Gas Supply Contracts
Bureau of Land Management Operations

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to lack of competition.
Limited transparency in the justification for sole-source procurement.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $38.6 million to CLIFFSIDE REFINERS L P. IGF::OT::IGF - HELIUM PLANT OPERATIONS

Who is the contractor on this award?

The obligated recipient is CLIFFSIDE REFINERS L P.

Which agency awarded this contract?

Awarding agency: Department of the Interior (Bureau of Land Management).

What is the total obligated amount?

The obligated amount is $38.6 million.

What is the period of performance?

Start: 2018-04-01. End: 2024-09-30.

What is the historical spending pattern for helium plant operations by the Department of the Interior?

Historical spending data for helium plant operations by the Department of the Interior is not readily available in a consolidated public format. The Bureau of Land Management (BLM) manages the Federal Helium Reserve, and its operational expenditures can fluctuate based on production needs, maintenance cycles, and market conditions. This specific contract, awarded in 2018 and ending in 2024, represents a significant expenditure for a defined period. Analyzing past contracts, if available, would require deep dives into specific BLM procurement records. Without more granular historical data, it's difficult to establish a precise spending trend, but this $38.6 million award indicates a substantial investment in maintaining helium production capabilities.

How does the cost per unit for helium production under this contract compare to industry benchmarks?

Determining a precise per-unit cost for helium production under this contract is challenging without access to detailed operational data and the specific volume of helium produced. The contract is for 'Helium Plant Operations,' which encompasses a range of activities beyond just raw extraction, including processing, purification, and maintenance. Furthermore, the 'per-unit cost' can vary significantly based on the source of helium (e.g., natural gas extraction byproducts vs. dedicated helium wells) and market demand. Given the sole-source nature of the award and the lack of publicly disclosed production volumes or cost breakdowns, a direct comparison to industry benchmarks for per-unit helium cost is not feasible with the provided data.

What is Cliffside Refiners L.P.'s track record with federal contracts, particularly in industrial gas operations?

Cliffside Refiners L.P. appears to have a specialized focus, with this contract being a primary indicator of their federal engagement in helium plant operations. Information on their broader federal contracting history is limited in public databases. However, securing a sole-source definitive contract of this magnitude from the Department of the Interior suggests a level of established capability and trust required for such specialized, long-term operations. Further due diligence would involve examining any past performance reviews, contract modifications, or other awards to assess their overall track record and experience in managing complex industrial facilities for the government.

What are the specific risks associated with a sole-source contract for critical resource operations like helium?

Sole-source contracts for critical resources like helium present several risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from competitive bidding to secure the best value. This can result in higher costs for taxpayers. Secondly, there's a risk of vendor lock-in, where the government becomes dependent on a single provider, potentially limiting future flexibility or the adoption of more innovative or cost-effective solutions. Lastly, without competitive pressure, there might be reduced incentive for the contractor to optimize efficiency or proactively address potential operational issues, although contract performance clauses and oversight aim to mitigate this.

What is the strategic importance of helium, and how does this contract support national interests?

Helium is a strategically vital element due to its unique properties and non-renewable nature. It is indispensable for critical applications such as cooling superconducting magnets in MRI machines and NMR spectrometers, enabling advanced scientific research (like in particle accelerators), and supporting the semiconductor manufacturing industry. The United States holds significant helium reserves, and maintaining domestic production capabilities is crucial for national security, economic competitiveness, and public health. This contract ensures the continued operation of facilities that contribute to the domestic supply of helium, thereby supporting these essential sectors and reducing reliance on foreign sources.

Industry Classification

NAICS: Manufacturing › Basic Chemical Manufacturing › Industrial Gas Manufacturing

Product/Service Code: SPECIAL INDUSTRY MACHINERY

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: L17PS00317

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 159 HUDSON AVE, HAVERSTRAW, NY, 10927

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $67,615,006

Exercised Options: $38,600,319

Current Obligation: $38,600,319

Actual Outlays: $28,737,193

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline