Mike Nartker
WC Monitor
4/10/2015
Despite marking an upturn in fee performance after years of steady decline, Fluor-B&W Portsmouth, LLC, is considering challenging its Fiscal Year 2014 award fee determination for the Portsmouth D&D project, WC Monitor has learned. At issue is DOE’s decision to give FBP a rating of only “satisfactory” in one of two subjective performance areas based on language in the contractor’s FY 2014 award fee plan that requires such a rating if the contractor’s actual cost exceeds estimated cost by more than 10 percent—DOE determined that FBP’s actual cost exceeded the estimated cost by 15 percent. Such a “satisfactory” rating limited FBP to only being able to earn no more than 50 percent of the fee tied to that subjective performance area. DOE did not finalize FBP’s award fee plan for FY 2014, though, until after the start of the fiscal year. FBP declined to comment on the issue this week. The DOE Portsmouth/Paducah Project Office did not respond to requests for comment late this week.
For its work in FY 2014, FBP earned 81.86 percent of the available award fee in FY14, or approximately $12.7 million out of an available $15.5 million. The contractor’s FY14 award fee marked the first time FBP had seen an increase in fee from the year before— for its first evaluation period, which ran March 29, 2011 to Sept. 30, 2011, FBP earned approximately 93 percent of the available fee; in FY 2012 the contractor earned approximately 86.5 percent of the available fee; and in FY 2013, FBP earned approximately 75 percent of the available fee.
FBP’s fee for last year included approximately $10.5 million—equaling 96.8 percent of the available fee—tied to a set of 12 performance-based incentives. The contractor fully met 11 of the PBIs, and partially met one related to shipping process gas equipment off-site for disposal, according to a March 2 DOE performance evaluation report. FBP’s FY 2014 fee determination also consisted of $2.2 million, or 47 percent of the available fee, tied to two subjective performance categories—Quality and Effectiveness in Performing the DOE mission, for which the contractor received the “satisfactory” rating; and Quality and Effectiveness in Performing Environmental, Safety, Health and Quality and Regulatory Requirements, for which the contractor received a “good” rating.
FBP Facing Challenging Fee Environment Going Forward
While FBP appears to be questioning the fee it earned last year, the contractor is also set to face a challenging environment for earning fee during the final 18 months of the base period of its contract for the Portsmouth D&D project. Under the award fee plan agreed upon for Fiscal Year 2015 through late March 2016, FBP is now at risk of losing significant amounts of fee for potential cost overruns as the contractor–even performing at an exceptionally high level–appears to only be able to earn less than 70 percent of the available award fee under a best-case scenario. The plan ties a significant portion of the fee the contractor can earn to having one of the three former enrichment process buildings at the Portsmouth site ready for demolition before the end of next March—a goal FBP officials have previously said is all but impossible to be achieved given current and past funding levels.
