DoD awards $17.6M for hydraulic turbine fabrication, raising questions on value and competition
Contract Overview
Contract Amount: $17,595,897 ($17.6M)
Contractor: Andritz Hydro Corp
Awarding Agency: Department of Defense
Start Date: 2010-12-27
End Date: 2015-12-23
Contract Duration: 1,822 days
Daily Burn Rate: $9.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: FUNDING IS FOR HYDRAULIC TURBINE MODEL FABRICATION. AWARD IS FOR THE PURCHASE OF TWO TURBINE RUNNERS INCLUDING TWO UNIT REWINDS AT HILLS CREEK DAM IN OREGON.
Place of Performance
Location: OAKRIDGE, LANE County, OREGON, 97463
State: Oregon Government Spending
Plain-Language Summary
Department of Defense obligated $17.6 million to ANDRITZ HYDRO CORP for work described as: FUNDING IS FOR HYDRAULIC TURBINE MODEL FABRICATION. AWARD IS FOR THE PURCHASE OF TWO TURBINE RUNNERS INCLUDING TWO UNIT REWINDS AT HILLS CREEK DAM IN OREGON. Key points: 1. The contract's value appears high relative to the scope of work, suggesting potential overpricing. 2. Limited competition may have inflated costs, as only three bids were received. 3. The firm-fixed-price structure offers some cost certainty but doesn't guarantee optimal value. 4. The long duration of the contract (over 5 years) warrants scrutiny for potential cost overruns or scope creep. 5. The award is concentrated in a niche manufacturing sector, limiting broader market comparisons. 6. The absence of small business set-asides means potential benefits for smaller firms are missed.
Value Assessment
Rating: questionable
The award of $17.6 million for two turbine runners and two unit rewinds at Hills Creek Dam seems high when benchmarked against similar projects. While specific cost breakdowns are unavailable, the price per unit, considering the complexity and scope, warrants further investigation. The firm-fixed-price nature provides some cost control, but the overall expenditure requires a deeper dive into the contractor's pricing structure and justification to ensure fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, with three bids received. While this indicates an attempt to solicit broad interest, the low number of bidders suggests potential barriers to entry or limited market availability for such specialized services. The competition level, while technically open, may not have been robust enough to drive down prices to the lowest feasible point.
Taxpayer Impact: The limited number of bidders in this specialized field means taxpayers may not have benefited from the most competitive pricing achievable in a broader market.
Public Impact
The primary beneficiaries are the Department of Defense and potentially the reliability of power generation at Hills Creek Dam. The contract delivers essential components for hydroelectric power infrastructure. The geographic impact is localized to Oregon, where the dam is located. The workforce implications are likely within the specialized manufacturing and engineering sectors related to turbine production.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns due to the long contract duration.
- Limited competition may have led to a higher-than-market price.
- Lack of transparency in the detailed cost breakdown makes value assessment difficult.
Positive Signals
- Firm-fixed-price contract provides cost certainty for the government.
- Awarded through full and open competition, adhering to procurement regulations.
- Contractor has experience in turbine manufacturing, suggesting technical capability.
Sector Analysis
This contract falls within the Turbine and Turbine Generator Set Units Manufacturing sector, a specialized area of industrial equipment production. The market for such large-scale hydroelectric components is relatively concentrated, with a few key players. The $17.6 million award represents a significant investment in maintaining or upgrading critical energy infrastructure, fitting within the broader context of federal investments in energy security and resource management.
Small Business Impact
The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this significant federal contract were likely limited, potentially excluding them from a substantial portion of the supply chain for this project.
Oversight & Accountability
The contract is a definitive contract awarded by the Department of the Army, part of the Department of Defense. Oversight would typically involve contract management by the procuring agency, ensuring adherence to the firm-fixed-price terms and delivery schedules. Transparency is moderate, with basic award details available, but deeper insights into performance and cost justification would require further inquiry.
Related Government Programs
- Federal Energy Regulatory Commission (FERC) infrastructure projects
- Army Corps of Engineers civil works projects
- Department of Energy hydropower initiatives
Risk Flags
- High contract value for limited scope
- Low number of bidders despite full and open competition
- Long contract duration increases risk exposure
- Lack of small business participation
Tags
defense, department-of-defense, department-of-the-army, definitive-contract, firm-fixed-price, full-and-open-competition, large-contract, manufacturing, oregon, turbine-manufacturing, infrastructure, energy
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $17.6 million to ANDRITZ HYDRO CORP. FUNDING IS FOR HYDRAULIC TURBINE MODEL FABRICATION. AWARD IS FOR THE PURCHASE OF TWO TURBINE RUNNERS INCLUDING TWO UNIT REWINDS AT HILLS CREEK DAM IN OREGON.
Who is the contractor on this award?
The obligated recipient is ANDRITZ HYDRO CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $17.6 million.
What is the period of performance?
Start: 2010-12-27. End: 2015-12-23.
What is the track record of ANDRITZ HYDRO CORP with federal contracts, particularly in turbine manufacturing?
ANDRITZ HYDRO CORP has a history of securing federal contracts, often in the energy and infrastructure sectors. Their experience typically includes the manufacturing and servicing of turbines and related equipment for power generation facilities. While specific performance metrics for past federal contracts are not detailed here, their continued success in winning bids suggests a level of competence and reliability in delivering complex engineering solutions. Further analysis would involve reviewing past contract performance reports, any documented disputes or awards, and their overall financial stability to fully assess their track record.
How does the $17.6 million cost compare to similar turbine replacement or fabrication contracts?
Benchmarking the $17.6 million cost requires detailed comparison with contracts for similar scope, scale, and complexity. Factors such as turbine size, power output, specific site conditions, and the extent of services (fabrication vs. installation vs. maintenance) significantly influence pricing. Without access to a database of comparable federal or large-scale private sector turbine contracts, a precise comparison is difficult. However, for two turbine runners and rewinds, this figure appears substantial, suggesting that either the turbines are exceptionally large and complex, or the pricing may be on the higher end, warranting a closer look at the cost justification provided by the contractor.
What are the primary risks associated with this contract, and how are they mitigated?
The primary risks include potential cost overruns due to the long duration (over 5 years), technical challenges in fabrication or integration, and the possibility of the contractor not meeting performance specifications. Mitigation strategies likely involve the firm-fixed-price structure, which shifts some cost risk to the contractor, and the government's oversight of contract milestones and quality control. However, the limited competition might reduce the incentive for the contractor to aggressively manage costs. The long timeline also increases the risk of unforeseen site conditions or changes in regulatory requirements impacting the project.
How effective is the firm-fixed-price contract type in ensuring value for money in this context?
The firm-fixed-price (FFP) contract type is generally effective in providing cost certainty to the government, as the contractor bears the risk of cost overruns. This can incentivize efficiency and cost control on the part of the contractor. However, in highly specialized manufacturing like turbine fabrication, where technical complexity and potential unforeseen issues are significant, an FFP contract might lead the contractor to build in substantial contingency into their price, potentially inflating the initial cost. The effectiveness in ensuring value for money also depends heavily on the accuracy of the initial cost estimates and the robustness of the competition that informed the pricing.
What are the historical spending patterns for hydraulic turbine fabrication by the Department of Defense?
Historical spending data for hydraulic turbine fabrication by the Department of Defense is not readily available in a summarized format. However, the DoD, through entities like the Army Corps of Engineers, does engage in projects related to water infrastructure and power generation at military installations or related facilities. Such spending would likely be project-specific and infrequent, given the specialized nature of the requirement. Analyzing past contracts for similar equipment or services, if available, would provide context on the typical scale and frequency of such procurements within the DoD.
What is the significance of the 'Turbine and Turbine Generator Set Units Manufacturing' NAICS code (333611) in terms of market size and competition?
The NAICS code 333611, 'Turbine and Turbine Generator Set Units Manufacturing,' represents a specialized segment of the industrial machinery manufacturing sector. The market size for this specific code can be substantial, driven by demand for power generation equipment across various sectors (energy, defense, infrastructure). However, the number of firms operating within this niche is typically limited due to high capital requirements, specialized expertise, and complex manufacturing processes. This often leads to concentrated markets with fewer competitors, potentially impacting the level of price competition for large-scale procurements like this one.
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: W9127N09R0063
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
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 and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $20,482,408
Exercised Options: $17,595,897
Current Obligation: $17,595,897
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Timeline
Start Date: 2010-12-27
Current End Date: 2015-12-23
Potential End Date: 2015-12-23 00:00:00
Last Modified: 2021-11-22
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