NASA's $58M Liquid Hydrogen Contract with Linde Inc. Faces Scrutiny Over Pricing and Competition
Contract Overview
Contract Amount: $58,183,614 ($58.2M)
Contractor: Linde Inc.
Awarding Agency: National Aeronautics and Space Administration
Start Date: 2000-12-15
End Date: 2010-11-30
Contract Duration: 3,637 days
Daily Burn Rate: $16.0K/day
Competition Type: COMPETITIVE DELIVERY ORDER
Number of Offers Received: 2
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Official Description: LIQUID HYDROGEN, MIL SPEC MIL-PRF-27201C, TYPE II IN ACCORDANCE WITH KCS CONTRACT NAS13-12100
Place of Performance
Location: STENNIS SPACE CENTER, HANCOCK County, MISSISSIPPI, 39529
Plain-Language Summary
National Aeronautics and Space Administration obligated $58.2 million to LINDE INC. for work described as: LIQUID HYDROGEN, MIL SPEC MIL-PRF-27201C, TYPE II IN ACCORDANCE WITH KCS CONTRACT NAS13-12100 Key points: 1. Contract awarded for liquid hydrogen (MIL-PRF-27201C, Type II) to Linde Inc. 2. Total value of $58,183,613.66 over its duration. 3. Awarded as a competitive delivery order under a larger contract. 4. Sector is Industrial Gas Manufacturing, with a PSC code not specified. 5. Concerns exist regarding the pricing structure and taxpayer impact.
Value Assessment
Rating: questionable
The contract uses a Fixed Price with Economic Price Adjustment (FPEPA) structure, which can lead to cost overruns if not carefully managed. Benchmarking against similar contracts for specialized industrial gases is difficult without more granular cost data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
Awarded as a competitive delivery order, suggesting some level of competition existed at the time of award. However, the specific competition method and how it ensured price discovery for this specialized product are not detailed, raising questions about the final price.
Taxpayer Impact: The FPEPA clause introduces potential for increased costs to taxpayers if market prices for raw materials or production rise significantly.
Public Impact
Taxpayers may be exposed to price volatility due to the economic price adjustment clause. NASA's reliance on a single supplier for critical industrial gas could pose supply chain risks. The lack of detailed cost breakdowns makes it challenging to assess the true value for money.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic Price Adjustment (EPA) clause
- Lack of detailed cost transparency
- Potential for price escalation
- Limited competition details
Positive Signals
- Awarded under a competitive delivery order
- Contract addresses a specific military specification (MIL-PRF-27201C)
Sector Analysis
The Industrial Gas Manufacturing sector is characterized by high capital investment and specialized production processes. Benchmarking for specific military-grade liquid hydrogen can be challenging due to niche market demands and stringent quality requirements.
Small Business Impact
There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. The nature of specialized industrial gas production often favors larger, established companies.
Oversight & Accountability
While awarded as a competitive delivery order, the oversight of the economic price adjustment mechanism and the overall cost-effectiveness of this contract require further examination to ensure accountability and prevent potential overspending.
Related Government Programs
- Industrial Gas Manufacturing
- National Aeronautics and Space Administration Contracting
- National Aeronautics and Space Administration Programs
Risk Flags
- Economic Price Adjustment (EPA) clause introduces cost uncertainty.
- Lack of detailed cost breakdown hinders value assessment.
- Potential for limited competition in specialized industrial gas market.
- Contract duration is extensive (nearly 10 years).
- PSC code is not specified, limiting sector-specific analysis.
Tags
industrial-gas-manufacturing, national-aeronautics-and-space-administr, ms, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
National Aeronautics and Space Administration awarded $58.2 million to LINDE INC.. LIQUID HYDROGEN, MIL SPEC MIL-PRF-27201C, TYPE II IN ACCORDANCE WITH KCS CONTRACT NAS13-12100
Who is the contractor on this award?
The obligated recipient is LINDE INC..
Which agency awarded this contract?
Awarding agency: National Aeronautics and Space Administration (National Aeronautics and Space Administration).
What is the total obligated amount?
The obligated amount is $58.2 million.
What is the period of performance?
Start: 2000-12-15. End: 2010-11-30.
What was the rationale for selecting a Fixed Price with Economic Price Adjustment (FPEPA) contract for liquid hydrogen, and how were the economic adjustment factors determined to protect taxpayer inte
The FPEPA structure is often used for long-term contracts involving commodities with volatile raw material costs. For this contract, the specific rationale likely involved anticipating fluctuations in energy or precursor material prices. The economic adjustment factors would typically be tied to established indices or formulas agreed upon during contract negotiation to reflect market changes, aiming to balance risk between the government and the contractor.
How effectively did the competitive delivery order process ensure fair market pricing for MIL-SPEC liquid hydrogen, given its specialized nature and potential for limited suppliers?
The effectiveness of the competitive delivery order hinges on the breadth of the initial solicitation and the number of responsive bids received. For specialized items like MIL-SPEC liquid hydrogen, the pool of qualified suppliers might be limited. While 'competitive' implies multiple offers, the degree of price discovery achieved depends on the specific market conditions and the rigor of the evaluation process used by NASA to select the winning bid.
What is the potential taxpayer impact of the economic price adjustment clause over the contract's duration, and are there mechanisms in place to mitigate excessive price increases?
The primary taxpayer impact stems from potential price escalations if the underlying economic factors (e.g., energy costs, raw material prices) rise significantly. Mechanisms to mitigate this include carefully defined adjustment formulas, caps on price increases, and regular reviews of the adjustment indices. Without transparency into these specific contract clauses, the exact potential impact remains uncertain, but it represents a risk of higher costs than initially budgeted.
Industry Classification
NAICS: Manufacturing › Basic Chemical Manufacturing › Industrial Gas Manufacturing
Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES
Competition & Pricing
Extent Competed: COMPETITIVE DELIVERY ORDER
Offers Received: 2
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Contractor Details
Address: 39 OLD RIDGEBURY RD, DANBURY, CT, 05
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $58,183,614
Exercised Options: $58,183,614
Current Obligation: $58,183,614
Timeline
Start Date: 2000-12-15
Current End Date: 2010-11-30
Potential End Date: 2010-11-30 00:00:00
Last Modified: 2011-08-22
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