Mike Nartker
WC Monitor
10/24/2014
AMELIA ISLAND, Fla.—Senior executives from most major Department of Energy cleanup contractors gave a resounding thumbs down here this week to DOE’s new Idaho cleanup contract as currently planned in draft form, and it remains to be seen if, and to what degree, DOE makes changes when it issues a final Request for Proposals for the job. During a panel session at this year’s Weapons Complex Monitor Decisionmakers’ Forum, industry officials expressed concern with language in the draft RFP for the new contract that would make the contractor liable for costs above the target cost combined with uncertainties in the work scope to be performed. “If you have projects with significant unknowns [and] what I’ll consider … severe terms and conditions—marginal upside, unlimited downside—it’s going to be extremely difficult for my company to bid a job like that,” said EnergySolutions Government Group President Billy Morrison. Fluor E&N Operations Senior Vice President Greg Meyer put it even more succinctly: “We’re all willing to put our fees at risk. None of us are allowed to put our companies at risk.”
The panel included representatives from AREVA, B&W, Bechtel, CB&I, CH2M Hill, EnergySolutions, Fluor, Newport News Shipbuilding, and URS, all of whom emphasized that a bid on the contract would be virtually impossible to get approved by their respective companies, because of the terms and conditions outlined in the draft RFP. “Most of the companies up here are willing to take on risk and share risk with DOE, but the risk that we take should be risk that our companies are responsible for. And the risk of the unknown, of what you find doing this type of work, is really something that none of our companies can really afford to take. Unlimited liability is really a showstopper for us,” AREVA Federal Services President Tara Neider said. James Taylor, General Manager for URS’ Global Management and Operations Services, said, “If you accept additional risk from the contract, then the rewards have to be there. Certainly as structured in this contract, I don’t see the reward by taking on the additional risk.”
Latest Front in Debate Over How to Balance Risk/Reward
The new Idaho cleanup contract—dubbed Idaho Cleanup Project (ICP) Core—appears to be shaping up as the latest front in the ongoing debate over how DOE should look to better balance risk and reward with its contractors. In recent years, the Department has sought to shift more cost risks to its contractors through the increased use of cost caps and fixed price contracting. Last year, concerns over a number of provisions in the planned Paducah deactivation contract led to a number of companies choosing not to bid on that job, though ultimately DOE did get two proposals from teams led by Fluor and AECOM, with the Fluor-led team emerging as the winner.
Four teams are believed to have formed 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. 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.
DOE ‘Actively Considering’ Idaho Feedback
In separate remarks at this week’s meeting, DOE Office of Environmental Management Deputy Assistant Secretary for Acquisition and Project Management Jack Surash said the Department is “actively considering” the feedback it has received so far on the draft RFP for the new Idaho contract. Surash, however, declined to provide details as to what, if any, changes the Department is considering making. “We appreciate the issues that were raised” during recent industry one-on-one sessions with DOE, Surash said, noting that the Department “typically” makes what he described as “adjustments” between a draft and a final RFP. “Right here today, I can’t tell you what we’re going to do, but pay attention to the website and you’ll start seeing some updates,” he said.
