Should Only Small Businesses Have Fixed-Price Work?
Mike Nartker
WC Monitor
7/3/2014
Some industry officials are questioning the Department of Energy’s recently announced plans to compete new contracts at the Idaho site, including the decision to set aside only fixed-price scope for small businesses. DOE’s new acquisition plan for post-Fiscal Year 2015 cleanup work at Idaho envisions two contracts for small businesses that will be firm fixed-price—one covering management of Nuclear Regulatory Commission-licensed spent nuclear fuel storage facilities and one that would cover construction and D&D activities. In contrast, the planned contracts to be competed on an unrestricted basis would be either cost-plus-incentive-fee or cost-plus-award-fee. “The highest risk is on small businesses and the other ones not. There is a pattern. They are putting fixed price everywhere,” one industry official said this week.
The official added, “Some things can be fixed price but others shouldn’t be. It can’t be one-size fits all. And they should really be looking at whether they are putting fixed price for small businesses and then cost plus for large companies. Why are they switching the risk? Why is it a higher risk profile for small businesses?”
One industry official noted that among the work to be covered by the planned construction/D&D services contract is what DOE has described as “strip-out” of the Idaho Integrated Waste Treatment Unit—a facility intended to prepare the remaining liquid waste at the site for disposal and one that has yet to go into operation, raising questions as to what such work would actually entail. “You’re asking a small business to bid a fixed price for stripping out a facility that DOE and CWI [CH2M-WG Idaho] can’t even get to work yet. Who knows what it will look like or what condition it will be in after operation?” the official said.
Will New D&D Contract Have Multiple Awards?
Some industry officials also are unclear as to how DOE’s planned construction/D&D services contract would work. In its announcement last week, the Department said that along with the IWTU work, the contract would cover operation of the Idaho site’ CERCLA Disposal Facility (ICDF); Accelerated Retrieval Project (ARP) IX construction; and interim cap construction over the site’s Tank Farm. The contract will be firm fixed-price with an Indefinite Delivery Indefinite Quantity (IDIQ) Contract Line Item Number (CLIN), DOE said. “Will they award a pool of IDIQ contracts and then bid each piece of work as it comes up? Or award separate contracts?” one industry official said. “Maybe the intent is to cross train a workforce across these multiple scope areas? [It] will be very difficult to staff and retain staff during different phases of this work if it is all one contract.”
Another industry official said, “In the D&D I don’t know if they will do many procurements. It would make sense to make it like a BPA, but since they are saying fixed price I think they may break it into pieces and do a fixed price. Or else how can they do fixed price?”
Why No Option Years?
Industry officials are also questioning DOE’s current plans to have none of the four post-FY 2015 contracts at Idaho include option years. Along with the two small businesses set-aside contracts, DOE is looking to compete on an unrestricted basis a contract dubbed ‘Idaho Cleanup Project Core’ that would largely replace those currently held by CWI and Idaho Treatment Group, which operates the Advanced Mixed Waste Treatment Project. The ICP Core contract would run for five years, beginning Oct. 1, 2015, and would cover work such as EM facility infrastructure, environmental remediation, waste management and spent nuclear fuel surveillance, maintenance and stabilization. The other planned unrestricted contract would be to provide architecture and engineering services for the Calcine Disposition Project and a receiving, packaging and shipping facility for spent nuclear fuel. That contract is set to run for nine years.
One industry official said, “One of the problems I see is the lack of any option years. Why wouldn’t you want to continue on if the contractor is performing well? That doesn’t make sense.” Another said, “Why five years? … We would have thought it would at least tie into the spent fuel milestone of 2023,” referring to a commitment DOE has to the state of Idaho for having all spent fuel at the site in dry storage. “So you’re going to get a new contractor and have them basically in for one-to-two years before you get close to that milestone. Do you really want to do that?”
