The Department of Energy in amendments made this week to its ongoing solicitation for a new multibillion-dollar prime contract at the Waste Isolation Pilot Plant in New Mexico is increasing the performance fee cap to 7% from 5%.
The amendments came out after some prospective bidders for the potential $3-billion, 10-year prime contract for the Waste Isolation Pilot Plant (WIPP) questioned the financial penalties possible for failing to finish a new ventilation system and other infrastructure projects, according to questions and answers published last week.
While most modifications rolled out Tuesday and Wednesday for the next WIPP Management and Operations Contract cover minor details, like page margins for bid packages due Aug. 3, the biggest change appears to be higher caps on performance fees.
The 150-page amendment document published Tuesday shows DOE raising the cap for performance fees to 7% rather than 5% for not only the five-year base period but also the subsequent five-year contract option periods.
Also, the winning contractor could see its earned fee reduced to the tune of $500,000 should one of its key managers leave or transfer out of the job within three years—whereas the prior request for proposal language only authorized this penalty if a key person left within two years.
The next WIPP contract could trigger significant fee cuts if the next prime cannot finish the Safety Significant Confined Ventilation System (SSCVS) in 2024 as DOE now expects.
“As we understand this clause, all award fee is partially held hostage to two Capital Asset Project CLINs,” said one questioner, referring to the contract line item numbers for the SSCVS and a new underground exhaust shaft. New Mexico regulators are weighing a request from the DOE and current WIPP prime Nuclear Waste Partnership to continue digging the shaft after the state put the project on hold last October in part over COVID-19 concerns.
As is standard DOE practice, questions and answers from potential bidders are published on the Environmental Management Consolidated Business Center website but identities of the firms are withheld.
Another questioner said it appears, “Management award fee criteria will be rated no higher than Satisfactory, and only up to 50% of the individual Capital Asset Project PBI [performance-based incentives] metric/milestone fees can be earned.”
To this line of commentary, DOE tried to straddle the line between reassuring bidders won’t be punished for circumstances beyond their control while stressing the importance of major infrastructure projects planned for completion in the near term.
WIPP has three ongoing line item capital asset projects being completed to improve the site’s operating efficiency and discharged air quality. The projects are the SSCVS, the new utility shaft and a hoisting capability project.
The DOE said completion of the capital asset projects “are considered critical” to WIPP, the transuranic waste generator sites and the overall mission for the Office of Environmental Management.
Failing to manage the infrastructure project completion well, “affects the evaluation of the Award Fee determinations, as well as potentially 50% of the specific project’s Performance-Based Incentives,” DOE said.
At the same time, the DOE contracting officer has authority to consider “excusable” delays. One commenter said project completion can be affected by everything from regulatory delays to delays in acquiring certain key materials or components.
“If a ‘failure to perform’ is determined by the Contracting Officer to be ‘excusable’” under the excusable delays clause, “appropriate delivery schedules shall be revised accordingly,” according to DOE. The delay should be beyond the control, “and without the fault or negligence” of the contractor, DOE said in reply.
The WIPP prime has already replaced the first subcontractor hired to build the SSCVS, which is designed to nearly triple the underground airflow to 540,000 cubic feet per minute. That volume of ventilation would allow personnel to mine out new disposal space while their colleagues emplace waste — something WIPP has not been able to do since the underground fire and radiation release of 2014.
In a response to a different set of questions, the top salary available to key people on this federal project under White House guidelines is now $568,000 annually compared with $525,000 originally listed in the request for proposals, DOE said.
Nuclear Waste Partnership, an Amentum-BWX Technologies team, holds the WIPP management contract, which is valued at $2.7 billion. The contract started in October 2012 and under the latest extension is set to run to March 2022.
