Interior's $40.7M turbine runner contract with GE Renewables saw 6 bidders, indicating robust competition for manufacturing

Contract Overview

Contract Amount: $40,761,414 ($40.8M)

Contractor: GE Renewables US LLC

Awarding Agency: Department of the Interior

Start Date: 2004-01-05

End Date: 2015-07-31

Contract Duration: 4,225 days

Daily Burn Rate: $9.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: GLEN CANYON TURBINE RUNNERS

Place of Performance

Location: PAGE, COCONINO County, ARIZONA, 86040

State: Arizona Government Spending

Plain-Language Summary

Department of the Interior obligated $40.8 million to GE RENEWABLES US LLC for work described as: GLEN CANYON TURBINE RUNNERS Key points: 1. The contract achieved a competitive outcome with six bidders vying for the turbine runner manufacturing work. 2. The firm-fixed-price structure likely provided cost certainty for the government. 3. The contract duration of over 11 years suggests a long-term need for these critical components. 4. The award was made to a major player in the power generation equipment market. 5. The absence of small business set-asides means opportunities for smaller firms were not specifically carved out. 6. The geographic location of the award in Arizona is relevant for regional energy infrastructure.

Value Assessment

Rating: good

Benchmarking the value of this contract is challenging without specific performance metrics or detailed cost breakdowns. However, the firm-fixed-price contract type suggests that the price was determined upfront and was intended to be stable. The presence of six bidders implies a competitive environment that should have driven a reasonable price. The total value of over $40 million spread over more than 11 years indicates a significant investment in essential power generation equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The solicitation attracted six bidders, which is a healthy number and suggests that the market had sufficient interest and capacity to respond. A higher number of bidders generally leads to more competitive pricing and a greater likelihood of the government receiving the best value.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers as it likely resulted in a more favorable price than a sole-source or limited competition award would have. It ensures that taxpayer funds are used efficiently by leveraging market forces to drive down costs.

Public Impact

The primary beneficiaries are the Department of the Interior and the Bureau of Reclamation, ensuring the operational capacity of hydroelectric power generation facilities. The contract delivers essential turbine runners, critical components for hydroelectric power generation. The geographic impact is primarily within Arizona, where the Glen Canyon Dam is located, contributing to regional energy supply. The contract supports the manufacturing workforce involved in producing specialized heavy machinery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 11 years) could introduce risks related to technological obsolescence or changing market conditions.
Firm-fixed-price contracts can sometimes lead to less flexibility if unforeseen issues arise during manufacturing or installation.
Reliance on a single large manufacturer (GE Renewables) could pose supply chain risks if not managed carefully.

Positive Signals

Awarded under full and open competition with six bidders, indicating a competitive market.
Firm-fixed-price contract provides cost certainty for the government.
The contract addresses a critical need for essential power generation equipment.

Sector Analysis

This contract falls within the heavy machinery manufacturing sector, specifically focusing on equipment for the energy industry, particularly hydroelectric power. The market for large-scale turbine manufacturing is concentrated among a few global players. Spending on such infrastructure is crucial for maintaining and upgrading national energy resources. Comparable spending benchmarks would involve other large capital equipment procurements for power generation facilities, which often run into tens or hundreds of millions of dollars.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This means that opportunities for small businesses were not explicitly prioritized within this specific procurement. The primary award went to a large corporation, GE Renewables, suggesting that the scale and technical requirements of manufacturing turbine runners were likely beyond the typical capabilities of small businesses in this specialized field.

Oversight & Accountability

The Bureau of Reclamation, under the Department of the Interior, is responsible for the oversight of this contract. As a definitive contract with a firm-fixed-price structure, oversight would likely focus on adherence to specifications, delivery schedules, and quality control. Transparency is generally maintained through contract award databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Bureau of Reclamation Capital Investments
Hydroelectric Power Generation Equipment
Department of the Interior Major Procurements
Energy Infrastructure Modernization

Risk Flags

Long contract duration
Potential for technological obsolescence
Reliance on a single large supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $40.8 million to GE RENEWABLES US LLC. GLEN CANYON TURBINE RUNNERS

Who is the contractor on this award?

The obligated recipient is GE RENEWABLES US LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $40.8 million.

What is the period of performance?

Start: 2004-01-05. End: 2015-07-31.

What is the historical spending pattern for turbine runners by the Bureau of Reclamation?

Historical spending data for turbine runners by the Bureau of Reclamation would reveal trends in procurement volume, contract values, and the types of contractors utilized over time. Analyzing this would help understand if this $40.7 million contract is an outlier or part of a consistent investment strategy. It could also highlight shifts in technology or manufacturing sources. Without specific historical data, it's difficult to provide precise figures, but major infrastructure projects like those managed by the Bureau of Reclamation often involve significant, multi-year capital expenditures for equipment replacement and upgrades, making contracts of this magnitude not uncommon for critical components like turbine runners.

How does the price per unit for these turbine runners compare to industry benchmarks?

Determining the price per unit for these turbine runners requires knowing the exact number of units procured under the $40.7 million contract. The provided data indicates the total contract value but not the quantity of turbine runners. If, for example, six large turbine runners were procured, the approximate cost per unit would be around $6.78 million. Benchmarking this figure against industry standards for similar-sized and specified turbine runners is crucial for assessing value for money. Factors influencing price include material costs, manufacturing complexity, brand reputation, and warranty provisions. A detailed comparison would necessitate access to market intelligence reports or data from similar competitive procurements.

What is the track record of GE Renewables US LLC in fulfilling large federal contracts?

GE Renewables US LLC, as a major player in the energy sector, likely has an extensive track record with federal agencies, including the Department of the Interior. Their history would typically involve supplying turbines, generators, and related equipment for various power projects. Assessing their performance on past contracts would involve reviewing metrics such as on-time delivery, adherence to budget, quality of work, and any disputes or contract modifications. Federal procurement databases often contain past performance information, which agencies use in source selection. A review of their contract history would indicate their reliability and capability in managing complex, high-value projects like the Glen Canyon Dam turbine runners.

What are the potential risks associated with a contract spanning over 11 years?

A contract duration of over 11 years, like this one for turbine runners, presents several potential risks. Firstly, technological advancements in turbine design and manufacturing could render the procured equipment less efficient or obsolete by the end of its service life or even during the contract term if manufacturing is prolonged. Secondly, economic fluctuations could impact the cost of raw materials or labor, potentially affecting the contractor's profitability or leading to requests for price adjustments, despite the firm-fixed-price nature. Thirdly, changes in regulatory requirements or environmental standards could necessitate modifications to the equipment or manufacturing process. Finally, long-term contracts can sometimes lead to complacency or reduced urgency if not actively managed and monitored by the contracting agency.

How does the number of bidders (6) influence the perceived value for money in this contract?

The presence of six bidders for this turbine runner contract is a strong positive indicator for value for money. A competitive bidding process, especially with a healthy number of participants, typically drives down prices as contractors vie for the award. It suggests that the market has sufficient capacity and interest, reducing the likelihood of the government overpaying due to a lack of alternatives. This level of competition allows the Bureau of Reclamation to select not only the most cost-effective offer but also one that meets the technical specifications and performance requirements. The firm-fixed-price structure further enhances this by locking in costs, making the outcome more predictable and auditable.

What is the significance of the 'Turbine and Turbine Generator Set Units Manufacturing' NAICS code?

The North American Industry Classification System (NAICS) code 333611, 'Turbine and Turbine Generator Set Units Manufacturing,' signifies the specific industrial sector this contract supports. This code identifies establishments primarily engaged in manufacturing turbines and turbine generator sets. This includes steam turbines, gas turbines, hydraulic turbines, wind turbines, and related components. For this contract, it specifically points to the manufacturing of hydraulic turbine runners for hydroelectric power. Understanding this NAICS code helps in analyzing the market landscape, identifying potential competitors, and benchmarking spending against similar manufacturing activities within the federal procurement system.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: General Electric Company

Address: 8000 E MAPLEWOOD AVE, GREENWOOD VILLAGE, CO, 80111

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $40,761,414

Exercised Options: $40,761,414

Current Obligation: $40,761,414

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline