Interior Department's $27.8M Turbine Overhaul Contract Awarded to ANDRITZ HYDRO CORP

Contract Overview

Contract Amount: $27,860,706 ($27.9M)

Contractor: Andritz Hydro Corp

Awarding Agency: Department of the Interior

Start Date: 2011-04-18

End Date: 2018-02-19

Contract Duration: 2,499 days

Daily Burn Rate: $11.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: PALISADES POWERPLANT UNIT 1-4 OVERHAUL

Place of Performance

Location: IRWIN, BONNEVILLE County, IDAHO, 83428

State: Idaho Government Spending

Plain-Language Summary

Department of the Interior obligated $27.9 million to ANDRITZ HYDRO CORP for work described as: PALISADES POWERPLANT UNIT 1-4 OVERHAUL Key points: 1. Contract value represents a significant investment in critical power infrastructure. 2. The award was made under full and open competition, suggesting a robust bidding process. 3. The fixed-price structure with economic price adjustment introduces some cost variability. 4. The contract duration of approximately 7 years indicates a long-term commitment to maintenance. 5. The specific NAICS code points to manufacturing of turbine and generator set units. 6. The contractor, ANDRITZ HYDRO CORP, is a key player in the hydropower equipment sector.

Value Assessment

Rating: good

The contract value of $27.8 million for the overhaul of four power plant units appears reasonable given the scope of work. While direct comparisons are difficult without specific project details, major overhauls of this nature typically involve substantial costs for specialized labor, parts, and engineering. The fixed-price with economic price adjustment (FP-EPA) contract type aims to balance cost certainty for the government with protection for the contractor against unforeseen market fluctuations in material and labor costs. Benchmarking against similar large-scale turbine overhauls would provide a more precise value assessment, but the amount is within the expected range for such critical infrastructure maintenance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and allowed to submit proposals. This approach is generally favored as it promotes a competitive environment, potentially leading to better pricing and quality for the government. The number of bidders and the specific evaluation criteria used would further illuminate the intensity of the competition. A robust competition suggests that the government received a range of offers, allowing for selection of the best value proposition.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down prices through market forces and ensuring that the government is not overpaying due to a lack of alternatives. It also increases the likelihood of selecting a contractor with proven capabilities at a competitive rate.

Public Impact

The primary beneficiaries are the Department of the Interior and the Bureau of Reclamation, ensuring the continued operation and efficiency of the Palisades Powerplant. The services delivered include the overhaul of turbine and turbine generator set units, crucial for electricity generation. The geographic impact is localized to the region served by the Palisades Powerplant in Idaho. The contract supports specialized manufacturing and engineering jobs within the hydropower sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The fixed-price with economic price adjustment (FP-EPA) contract type introduces potential for cost increases due to market fluctuations, requiring careful monitoring.
The long contract duration (approx. 7 years) necessitates ongoing performance management to ensure sustained quality and adherence to schedule.
Reliance on a single contractor for a critical infrastructure overhaul could pose risks if performance issues arise.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that likely secured favorable terms.
The contractor, ANDRITZ HYDRO CORP, is a specialized firm with likely expertise in hydropower equipment, indicating a strong capability for the task.
The contract addresses essential maintenance for a significant power generation facility, ensuring reliable energy supply.

Sector Analysis

The hydropower sector is a critical component of the U.S. energy infrastructure, contributing significantly to renewable energy generation. This contract falls within the 'Turbine and Turbine Generator Set Units Manufacturing' industry, a specialized segment focused on the production and maintenance of core components for power plants. Spending in this area is often driven by the need to maintain aging infrastructure, improve efficiency, and comply with environmental regulations. Comparable spending benchmarks would typically be found within large-scale capital improvement projects for federal power facilities.

Small Business Impact

There is no indication from the provided data that this contract included a small business set-aside. The prime contractor, ANDRITZ HYDRO CORP, is likely a large business. Subcontracting opportunities for small businesses may exist, particularly in areas like specialized parts manufacturing, logistics, or on-site support services, but this would depend on the prime contractor's procurement strategy. The overall impact on the small business ecosystem is likely minimal unless significant subcontracting is mandated or pursued.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Interior's Bureau of Reclamation contracting officers and project managers. They are responsible for monitoring performance, ensuring compliance with contract terms, and approving payments. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's lifecycle.

Related Government Programs

Federal Power Marketing Administrations
Bureau of Reclamation Capital Improvement Projects
Department of Energy Grid Modernization Initiatives
Army Corps of Engineers Civil Works Projects

Risk Flags

Potential cost overruns due to Economic Price Adjustment clause.
Performance risks associated with a long-duration contract for critical infrastructure.
Dependency on a single contractor for essential maintenance.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $27.9 million to ANDRITZ HYDRO CORP. PALISADES POWERPLANT UNIT 1-4 OVERHAUL

Who is the contractor on this award?

The obligated recipient is ANDRITZ HYDRO CORP.

Which agency awarded this contract?

Awarding agency: Department of the Interior (Bureau of Reclamation).

What is the total obligated amount?

The obligated amount is $27.9 million.

What is the period of performance?

Start: 2011-04-18. End: 2018-02-19.

What is the track record of ANDRITZ HYDRO CORP with federal contracts, particularly for similar overhaul projects?

ANDRITZ HYDRO CORP has a significant history of engaging with federal agencies, primarily through contracts related to hydropower equipment manufacturing, installation, and maintenance. While specific details on past overhaul projects for the Bureau of Reclamation are not provided in this summary, the company's specialization in turbine and generator technology suggests a strong technical capability. A deeper analysis would involve reviewing their contract performance history, including any past performance evaluations, awards, or disputes on similar federal projects. Examining their portfolio of work on other large-scale hydropower facilities, both federal and private, would offer further insight into their reliability and expertise in executing complex overhauls.

How does the awarded amount compare to the estimated cost or budget for this overhaul?

The provided data does not include the estimated cost or budget allocated for this overhaul project. Therefore, a direct comparison between the awarded amount ($27.8 million) and the initial budget cannot be made. To assess value for money, it would be necessary to obtain the government's independent government cost estimate (IGCE) or the initial budget ceiling for this procurement. Comparing the awarded price to the IGCE can indicate whether the competition drove the price down or if the award was close to the government's expectation. Without this information, it's challenging to definitively state if the contract represents exceptional value or if it was awarded at a premium.

What are the key performance indicators (KPIs) and milestones for this contract, and how is performance being tracked?

The provided data does not specify the key performance indicators (KPIs) or milestones for this contract. Typically, for major overhaul contracts of this nature, KPIs would include adherence to schedule, quality of work performed, equipment performance post-overhaul (e.g., efficiency, output), safety compliance, and timely delivery of reports and documentation. Performance tracking would be managed by the Bureau of Reclamation's contracting officer's representative (COR) or project manager, who would conduct regular site visits, review progress reports, conduct inspections, and hold progress meetings with ANDRITZ HYDRO CORP. Contractual remedies for non-performance would also be outlined.

What is the potential risk associated with the 'Economic Price Adjustment' clause in this fixed-price contract?

The 'Economic Price Adjustment' (EPA) clause in this fixed-price contract introduces a degree of risk for the government regarding cost escalation. This clause allows for adjustments to the contract price based on fluctuations in specific economic factors, typically labor rates and material costs, as defined in the contract. The primary risk is that unforeseen or significant increases in these input costs could lead to a higher final contract price than initially anticipated, potentially exceeding the government's budget if not carefully managed or capped. The government's risk is mitigated by clearly defining the indices used for adjustment, setting reasonable adjustment periods, and potentially including price ceilings or floors within the EPA terms.

What is the historical spending trend for turbine and generator overhauls at the Bureau of Reclamation or similar facilities?

Historical spending data for turbine and generator overhauls at the Bureau of Reclamation or similar facilities is not provided in the summary data. To establish a trend, one would need to analyze past contracts awarded by the Bureau of Reclamation, other federal agencies (like the Army Corps of Engineers or DOE), and potentially state or public utility entities for comparable overhaul projects over several fiscal years. This analysis would reveal average contract values, frequency of overhauls, and the typical cost drivers. Understanding these historical patterns is crucial for benchmarking the current $27.8 million award and assessing whether it aligns with past investments or represents a significant deviation.

How does the competition level (full and open) typically influence the final price for such specialized industrial equipment manufacturing and overhaul services?

A 'full and open competition' environment generally exerts downward pressure on prices for specialized industrial equipment manufacturing and overhaul services. When multiple qualified vendors are allowed to bid, they are incentivized to offer competitive pricing to win the contract. This process allows the government to compare various proposals based on technical merit and price, potentially selecting the offer that provides the best overall value. In contrast, limited or sole-source procurements often result in higher prices due to the lack of direct competition. Therefore, the full and open nature of this award suggests that the government likely benefited from competitive market forces in determining the final price.

Industry Classification

NAICS: Manufacturing › Engine, Turbine, and Power Transmission Equipment Manufacturing › Turbine and Turbine Generator Set Units Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: R11PS10010

Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Andritz AG (UEI: 300197993)

Address: 10735 DAVID TAYLOR DR STE 500, CHARLOTTE, NC, 28262

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $27,860,706

Exercised Options: $27,860,706

Current Obligation: $27,860,706

Actual Outlays: $454,136

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline