Army awards $157.7M contract for generator turbine runner replacement at McNary Dam, spanning over 17 years

Contract Overview

Contract Amount: $157,733,614 ($157.7M)

Contractor: GE Renewables US LLC

Awarding Agency: Department of Defense

Start Date: 2018-03-30

End Date: 2035-11-30

Contract Duration: 6,454 days

Daily Burn Rate: $24.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Construction

Official Description: IGF::OT::IGF REPLACEMENT OF MAIN UNIT GENERATOR TURBINE RUNNERS IN UNITS 1-14 AT MCNARY DAM POWERHOUSE, UMATILLA, OREGON, INCLUDING REWIND OF 3 MAIN UNIT GENERATORS.

Place of Performance

Location: UMATILLA, UMATILLA County, OREGON, 97882

State: Oregon Government Spending

Plain-Language Summary

Department of Defense obligated $157.7 million to GE RENEWABLES US LLC for work described as: IGF::OT::IGF REPLACEMENT OF MAIN UNIT GENERATOR TURBINE RUNNERS IN UNITS 1-14 AT MCNARY DAM POWERHOUSE, UMATILLA, OREGON, INCLUDING REWIND OF 3 MAIN UNIT GENERATORS. Key points: 1. The contract's extended duration suggests a long-term need for critical infrastructure maintenance. 2. The fixed-price with economic price adjustment structure aims to mitigate risks associated with fluctuating material and labor costs over the project's lifespan. 3. The significant award value indicates a substantial investment in maintaining the operational capacity of hydroelectric power generation. 4. The contract's scope includes generator rewinding, pointing to a comprehensive approach to equipment overhaul. 5. The project's location in Oregon highlights its importance to regional energy infrastructure.

Value Assessment

Rating: good

The contract value of $157.7 million for generator turbine runner replacement and generator rewinding appears substantial, reflecting the complexity and long-term nature of the work. Benchmarking this against similar large-scale hydroelectric infrastructure projects is challenging due to the specific nature of turbine runner replacement and generator rewinding. However, the fixed-price with economic price adjustment (FPEPA) contract type suggests an effort to manage cost volatility over the extended performance period. The value is consistent with the scale of work required for maintaining critical national energy assets.

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 had the opportunity to submit proposals. The presence of 3 bidders, as noted, suggests a reasonable level of competition for this specialized service. Full and open competition is generally expected to drive more competitive pricing and encourage innovative solutions from the participating firms.

Taxpayer Impact: Taxpayers benefit from full and open competition as it typically leads to more cost-effective solutions and ensures that the government is not unduly constrained by a lack of viable alternatives.

Public Impact

The primary beneficiaries are the Department of the Army and the broader energy sector, ensuring the continued operation of hydroelectric power generation. The services delivered include the replacement of main unit generator turbine runners and the rewinding of main unit generators. The geographic impact is focused on Umatilla, Oregon, where McNary Dam is located, supporting regional energy supply. Workforce implications include potential employment opportunities for skilled labor in construction, engineering, and specialized generator maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The long contract duration (over 17 years) increases the risk of cost overruns due to potential unforeseen economic shifts or technological obsolescence.
The economic price adjustment clause, while necessary for long-term projects, introduces a degree of uncertainty regarding the final cost to taxpayers.
The reliance on a single contractor for such a critical and extended period could lead to potential dependencies and reduced leverage for future negotiations.

Positive Signals

The use of full and open competition suggests a robust process for selecting the most capable and cost-effective provider.
The fixed-price component of the contract provides a baseline cost certainty, with adjustments managed through the economic price adjustment mechanism.
The comprehensive scope, including both turbine runner replacement and generator rewinding, indicates a thorough approach to asset maintenance and longevity.

Sector Analysis

This contract falls within the heavy and civil engineering construction sector, specifically focusing on power generation infrastructure. The North American Industry Classification System (NAICS) code 237990, 'Other Heavy and Civil Engineering Construction,' encompasses a broad range of non-residential construction projects. The market for hydroelectric dam maintenance and upgrades is specialized, often dominated by a few key players with the requisite expertise and certifications. Spending in this area is critical for maintaining national energy security and grid stability.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside provisions. The prime contractor, GE Renewables US LLC, is a large entity. While there is no direct set-aside, the prime contractor may engage small businesses for subcontracting opportunities related to specialized services or material supply, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the U.S. Army Corps of Engineers, which manages many federal water resource projects. Accountability measures are embedded within the contract's performance requirements and payment schedules. Transparency is generally maintained through contract award databases and reporting requirements, though specific oversight reports or Inspector General involvement would depend on performance issues or audits.

Related Government Programs

McNary Dam Operations and Maintenance
Hydroelectric Power Generation Infrastructure
Army Corps of Engineers Civil Works Projects
National Energy Infrastructure Modernization

Risk Flags

Long-term contract duration increases risk exposure.
Economic price adjustment introduces cost uncertainty.
Potential for contractor dependency over extended period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $157.7 million to GE RENEWABLES US LLC. IGF::OT::IGF REPLACEMENT OF MAIN UNIT GENERATOR TURBINE RUNNERS IN UNITS 1-14 AT MCNARY DAM POWERHOUSE, UMATILLA, OREGON, INCLUDING REWIND OF 3 MAIN UNIT GENERATORS.

Who is the contractor on this award?

The obligated recipient is GE RENEWABLES US LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $157.7 million.

What is the period of performance?

Start: 2018-03-30. End: 2035-11-30.

What is the historical spending pattern for generator turbine runner replacements and rewinding at McNary Dam or similar Army Corps of Engineers facilities?

Historical spending data for specific components like generator turbine runner replacements and rewinding at McNary Dam or similar Army Corps of Engineers facilities is not readily available in a consolidated public format. Such projects are often awarded as part of larger, multi-year maintenance or upgrade contracts, making it difficult to isolate costs for individual tasks without detailed contract histories. However, the Army Corps of Engineers consistently allocates significant funds towards the operation and maintenance of its vast portfolio of dams and powerhouses. These expenditures are typically managed through annual budgets and project-specific appropriations. The current award of $157.7 million for a 17-year duration suggests a substantial, long-term investment, likely reflecting the aging infrastructure and the critical need for reliable power generation. Past projects of similar scope, if undertaken, would have involved substantial capital outlays, potentially spread over several fiscal years.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to other large-scale infrastructure maintenance contracts?

The Fixed Price with Economic Price Adjustment (FPEPA) structure is common for long-term, large-scale infrastructure maintenance and construction contracts where material and labor costs are subject to significant fluctuation. This pricing model aims to provide a baseline cost certainty for the government while protecting the contractor from unforeseen economic volatility, which could otherwise lead to contract disputes or project delays. Compared to purely Fixed Price (FP) contracts, FPEPA offers more flexibility but potentially a higher final cost if economic conditions are favorable to the contractor. Conversely, it is less risky for the contractor than FP and potentially more predictable for the government than Cost Plus contracts. For projects spanning over a decade, like this one, FPEPA is often considered a pragmatic approach to ensure project continuity and fair compensation.

What are the key performance indicators (KPIs) or milestones expected under this contract?

While specific Key Performance Indicators (KPIs) and milestones are not detailed in the provided summary data, contracts of this nature typically include rigorous performance standards. These would likely encompass adherence to project schedules, quality of workmanship, compliance with safety regulations, and successful completion of specific phases such as turbine runner installation, generator rewinding, and system testing. Milestones would be tied to the delivery and integration of new components, completion of major repair phases, and final commissioning of the upgraded equipment. Performance would be monitored through regular progress reports, site inspections, and potentially independent technical reviews. Failure to meet these KPIs could result in penalties or withholding of payments, as stipulated in the contract terms.

What is the track record of GE Renewables US LLC in managing similar large-scale hydroelectric infrastructure projects for the federal government?

GE Renewables US LLC, as a division of General Electric, has a significant and established track record in the energy sector, including extensive experience with hydroelectric power generation equipment. They are a major global supplier of turbines, generators, and related services for hydroelectric plants. Their experience with federal agencies, particularly the Army Corps of Engineers and the Bureau of Reclamation, includes numerous projects involving the supply, installation, and maintenance of large-scale power generation equipment. While specific details of past performance on contracts of this exact scope and duration are not provided here, GE's overall market position and history suggest a strong capability in undertaking and executing complex hydroelectric projects. Past performance evaluations, if available through federal procurement databases, would offer more granular insights.

What is the potential impact of this contract on the regional energy grid's reliability and capacity?

The replacement of generator turbine runners and rewinding of generators at McNary Dam is crucial for maintaining and potentially enhancing the reliability and capacity of the regional energy grid. McNary Dam is a significant contributor to the Pacific Northwest's hydroelectric power generation. Ensuring that its turbines and generators are operating at peak efficiency and are free from defects reduces the risk of unexpected outages. Modernized or refurbished equipment can also operate more efficiently, potentially increasing the overall power output or ensuring consistent delivery. This upgrade directly supports grid stability by providing a dependable source of baseload power, which is essential for balancing the intermittent nature of other renewable energy sources in the region.

Are there any known environmental considerations or mitigation strategies associated with this generator replacement project?

While the provided data focuses on the contractual and financial aspects, large-scale infrastructure projects like generator turbine runner replacement at hydroelectric dams typically involve significant environmental considerations. These can include impacts on aquatic life (e.g., fish passage, water flow), sediment management, and noise pollution during construction. Federal projects of this nature are subject to environmental reviews under laws like the National Environmental Policy Act (NEPA). Mitigation strategies often involve implementing fish-friendly turbine designs, managing water releases to protect downstream ecosystems, employing noise reduction measures, and adhering to strict waste disposal protocols. Specific environmental impact statements and mitigation plans would have been developed and approved prior to the contract award.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912EF17R0004

Offers Received: 3

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

Evaluated Preference: NONE

Contractor Details

Parent Company: General Electric Company

Address: 8000 E MAPLEWOOD AVE #105, GREENWOOD VILLAGE, CO, 80111

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

Financial Breakdown

Contract Ceiling: $1,017,829,250

Exercised Options: $421,386,381

Current Obligation: $157,733,614

Subaward Activity

Number of Subawards: 95

Total Subaward Amount: $26,758,887

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline