At Least Four Teams Have Formed to Compete for New Work
Mike Nartker
WC Monitor
10/3/2014
In the wake of the Department of Energy issuing this week a partial draft Request for Proposals for the new Idaho Cleanup Project (ICP) Core contract, industry officials have already begun to question proposed provisions related to fee. At issue is language in the draft that would severely restrict a contractor’s ability to earn fee if the target cost for the new contract is exceeded and make the contractor liable for costs above the target cost. “I cannot even take this to my Board for a review,” one industry official said late this week. “No one is going to sign up for a contract with zero upside and the downside is it’ll take your company under.”
Work to be performed under the ICP Core contract, which is set to run for five years, will include EM facility infrastructure, environmental remediation, waste management and spent nuclear fuel surveillance, maintenance and stabilization. DOE is planning for the new Idaho cleanup contract to have cost-plus-incentive-fee (CPIF) Contract Line Item Numbers (CLINs) with hybrid fee structures for both CPIF and milestone fees. The successful bidder will have the ability to earn a target fee of 7 percent, with a maximum fee of 10 percent available, for the two major CLINs in the contract that would cover the bulk of the planned cleanup work and work for the Naval Nuclear Propulsion Program. Approximately 35 percent of the fee available will be tied to a cost incentive, with the remainder tied to a set of schedule Milestones, annual Milestones and performance incentives. However, the successful bidder could be at risk of losing its entire fee and be responsible for a sliding scale of project costs if the contract’s “Performance Ceiling” is exceeded.
The draft RFP states that “If the Contract Performance Ceiling is exceeded, the Contractor shall pay all costs on a dollar-for-dollar cost share basis (0% Government/100% Contractor) up to the amount of fee earned in CLIN 00001 and CLIN 00002 (this fee calculation will be made in accordance with Section B.10). Once the Contract Performance Ceiling is exceeded, any available cost incentive fee under CLINs 00001 or 00002 will no longer be available to be earned by the Contractor. If available unearned fee still exists for any of the SMs, AMs, or PIs under CLINs 00001 or 00002 per Sections B.3 or B.4, the Contractor may still earn this fee. However, once the Cost Performance Ceiling is exceeded any future earned fee from the SMs, AMs, or PIs under CLINs 00001 or 00002 shall be applied to the Contractor’s cost share responsibility for the cost overruns.”
The draft RFP goes on to say, “After the Contractor has paid all of earned fee from CLIN 00001 and CLIN 00002, then the Government shall pay costs of continued work for cost overruns using a share ratio of 80%/20% (Government/Contractor). However if the Contract Performance Ceiling is exceeded by $150M in allowable costs, then the Contractor shall pay all costs of continued work for cost overruns using a share ratio of 0%/100% (Government/Contractor).”
Will Draft Provisions Scare Off Bidders?
According to industry officials, at least four teams appear to have come together to go after the new ICP Core contract—B&W-URS; Bechtel-EnergySolutions; CH2M Hill-Huntington Ingalls Industries; and Fluor-North Wind-Portage. CH2M Hill and URS make up the current ICP cleanup contractor, CH2M-WG Idaho; while B&W, URS and EnergySolutions make up Idaho Treatment Group, responsible for the Advanced Mixed Waste Treatment Project at the Idaho site.
It remains to be seen, however, if DOE’s tough stance on fee and cost as outlined in the draft RFP for the new Idaho contract will scare off potential bidders. DOE has been working in recent years to better align risks and rewards on projects between the Department and contractors—a process that appeared to have reached a peak with DOE’s Request for Task Proposals for the new Paducah deactivation services contract. Due to concerns over a number of provisions in that contract, only two teams chose to bid on the work, which was ultimately won by a team led by Fluor.
Current Idaho Contracts Appear Set for Extension
The new ICP Core contract is intended to replace those held by CWI and ITG, both of which are set to come to an end at the end of Fiscal Year 2015. According to the draft RFP, though, both CWI and ITG appear likely to get extensions. “For proposal preparation purpose, Offerors shall assume a 90 day Contract Transition Period, with a Transition start date of January 1, 2016. Offerors shall assume full responsibility for the performance of the contract requirements, or contract effective date, of April 1, 2016,” the draft states.
Past Performance, Tech. Approach Top Evaluation Criteria
DOE is proposing to use four criteria to evaluate bids for the new ICP Core contract, with past performance and technical and management approach the most important, followed by key personnel and organizational structure and then relevant experience. “Relevant Past Performance and Technical and Management Approach will be considered equal in importance and, when combined, are significantly more important than Key Personnel and Organizational Structure and Relevant Experience. Key Personnel and Organizational Structure is considered more important than Relevant Experience,” the draft RFP says.
