DoD awards $84M contract for Old Hickory Turbine Generator Rehabilitation, with a 2030 completion date

Contract Overview

Contract Amount: $84,289,742 ($84.3M)

Contractor: Andritz Hydro Corp

Awarding Agency: Department of Defense

Start Date: 2023-02-02

End Date: 2030-10-05

Contract Duration: 2,802 days

Daily Burn Rate: $30.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: REHABILITATION OF OLD HICKORY TURBINE GENERATORS

Place of Performance

Location: HENDERSONVILLE, SUMNER County, TENNESSEE, 37075

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $84.3 million to ANDRITZ HYDRO CORP for work described as: REHABILITATION OF OLD HICKORY TURBINE GENERATORS Key points: 1. The contract value of $84.3 million represents a significant investment in critical infrastructure. 2. Competition dynamics for this large-scale rehabilitation project are crucial for ensuring cost-effectiveness. 3. The long duration of the contract (2802 days) suggests a complex and extensive scope of work. 4. Performance context will be key to understanding the successful execution of turbine generator upgrades. 5. This contract falls within the heavy and civil engineering construction sector, supporting essential energy infrastructure.

Value Assessment

Rating: fair

The contract value of $84.3 million for rehabilitation of turbine generators appears substantial. Benchmarking against similar large-scale infrastructure rehabilitation projects is necessary to fully assess value for money. The firm fixed-price nature of the contract shifts risk to the contractor, which can be beneficial if managed effectively, but may also lead to higher initial bids. Without specific performance metrics or comparisons to industry standards for turbine rehabilitation, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of two bids suggests a moderate level of competition for this specialized rehabilitation work. While competition is present, the specialized nature of turbine generator rehabilitation might limit the pool of qualified bidders, potentially impacting the intensity of price negotiation.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages competitive pricing and potentially leads to better value. However, the limited number of bidders in specialized fields can sometimes result in prices that are not as aggressively low as in more broadly competitive markets.

Public Impact

The primary beneficiaries are the Department of Defense and potentially the public through reliable energy infrastructure. The services delivered include the rehabilitation of turbine generators at the Old Hickory facility. The geographic impact is localized to Tennessee, where the Old Hickory facility is located. Workforce implications may include skilled labor for specialized engineering and construction tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during rehabilitation.
Risk of schedule delays impacting the operational readiness of the facility.
Ensuring the long-term reliability and performance of the rehabilitated generators.
Dependency on a single contractor for a critical infrastructure upgrade.

Positive Signals

Firm fixed-price contract structure provides cost certainty for the government.
Awarded through full and open competition, suggesting a competitive bidding process.
Long contract duration allows for thorough planning and execution of complex tasks.
Contractor's experience in similar large-scale projects is implied by the award.

Sector Analysis

This contract falls within the heavy and civil engineering construction sector, specifically focusing on power generation infrastructure. The market for large-scale turbine generator rehabilitation is specialized, often dominated by a few key manufacturers and service providers. The total federal spending on similar infrastructure projects can vary significantly year-to-year, but investments in maintaining and upgrading critical energy assets are ongoing priorities for agencies like the Department of Defense.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside (ss: false, sb: false). This suggests that the primary award was made to a large business, ANDRITZ HYDRO CORP. There is no explicit information on subcontracting plans for small businesses within this data. The impact on the small business ecosystem would depend on whether the prime contractor engages small businesses for specialized services or supplies, which is not detailed here.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officer and relevant program managers within the Department of the Army. Accountability measures are inherent in the firm fixed-price contract, requiring the contractor to deliver specified outcomes. Transparency is generally facilitated through contract award databases, but detailed performance reporting and inspection details may not be publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Army Corps of Engineers Civil Works Projects
Department of Energy Power Generation Infrastructure
Federal Energy Regulatory Commission (FERC) Regulated Facilities
Infrastructure Investment and Jobs Act Projects

Risk Flags

Long contract duration may increase risk of cost escalation or scope creep.
Specialized nature of work could limit competition, potentially impacting price.
Performance monitoring over an extended period requires robust oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $84.3 million to ANDRITZ HYDRO CORP. REHABILITATION OF OLD HICKORY TURBINE GENERATORS

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 $84.3 million.

What is the period of performance?

Start: 2023-02-02. End: 2030-10-05.

What is the track record of ANDRITZ HYDRO CORP in performing similar turbine generator rehabilitation projects for the federal government?

ANDRITZ HYDRO CORP is a global supplier of plants, equipment, and services for the hydropower industry. While specific details on their past federal contracts for turbine generator rehabilitation are not provided in this data snippet, their extensive experience in the hydropower sector suggests a strong capability. To assess their track record thoroughly, one would need to examine their past performance evaluations on federal contracts, including any awards or penalties related to schedule adherence, budget management, and quality of work on similar projects. Publicly available contract databases and agency performance reports would be the primary sources for this information.

How does the awarded amount of $84.3 million compare to the estimated cost or benchmark for rehabilitating similar turbine generators?

Benchmarking the $84.3 million award for the rehabilitation of Old Hickory turbine generators requires comparison with similar projects in terms of scale, complexity, and geographic location. Without access to the original cost estimates or data from comparable projects (e.g., rehabilitation of generators at other Army Corps of Engineers facilities or other federal power installations), it is difficult to definitively state whether this amount represents excellent, fair, or concerning value. Factors such as the age and condition of the existing equipment, the specific scope of work (e.g., replacement of components vs. general overhaul), and prevailing market rates for specialized labor and materials would influence the cost. A detailed analysis would involve comparing this contract's unit costs or total cost against a portfolio of similar rehabilitation efforts.

What are the primary risks associated with the long contract duration of 2802 days (approximately 7.7 years)?

The long contract duration of 2802 days presents several risks. Firstly, there is an increased risk of scope creep, where additional requirements or modifications may be added over time, potentially leading to cost increases if not managed strictly through contract modifications. Secondly, technological advancements in turbine generator technology could occur during the contract period, potentially making the rehabilitated equipment less cutting-edge by the end of the project. Thirdly, contractor performance can degrade over extended periods, and maintaining consistent quality and oversight becomes more challenging. Finally, economic fluctuations, such as inflation or changes in material costs, pose a greater risk over a longer timeframe, even with a fixed-price contract, if contingency planning is inadequate.

What is the expected impact of this rehabilitation project on the operational capacity and reliability of the Old Hickory facility?

The rehabilitation of turbine generators is expected to significantly enhance the operational capacity and reliability of the Old Hickory facility. Modernized or refurbished generators typically operate more efficiently, leading to increased power output and reduced energy losses. Improved reliability translates to fewer unplanned outages, ensuring a more consistent power supply. This is crucial for the Department of Defense's operational needs and potentially for the regional power grid. The project aims to extend the service life of critical infrastructure, ensuring its continued contribution to energy security and operational readiness for many years post-rehabilitation.

How has federal spending on heavy and civil engineering construction, particularly for power infrastructure, trended in recent years?

Federal spending on heavy and civil engineering construction, especially for power infrastructure, has seen fluctuations influenced by national priorities, infrastructure initiatives, and defense needs. In recent years, there has been a growing emphasis on modernizing aging infrastructure, including power generation and transmission systems, across various federal agencies. Initiatives like the Infrastructure Investment and Jobs Act have allocated significant funds towards upgrading critical infrastructure, which includes energy projects. While specific figures for 'turbine generator rehabilitation' are not always granularly tracked, overall spending in the power infrastructure sub-sector of civil engineering construction has likely seen increased attention and investment to ensure grid reliability and support renewable energy integration, alongside maintaining existing conventional power sources.

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: W912P522R0003

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Andritz AG

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

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

Financial Breakdown

Contract Ceiling: $102,519,141

Exercised Options: $84,289,742

Current Obligation: $84,289,742

Actual Outlays: $1,745,715

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline