Duke Engineering & Services, Inc., B-284605, May 17, 2000

B-284605 May 17, 2000 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Sec. 3324(a) (1994) is denied where record does not establish that the firm included costs for later phases of work in its price for initial contract work. The contractor is required to prepare its design and an application for a Nuclear Regulatory Commission (NRC) license for an SNF storage facility. The contractor is required to obtain the license from the NRC. The contractor is required to construct the facility. The contractor is required to place SNF that is currently stored elsewhere into the storage facility. Under Phase IV (which is optional). The contractor is required to operate and maintain the facility for a period of time. One format (referred to in the record as pricing method 1) was to be based on the agency not paying the contractor for work done in any of the phases until completion of the work under that phase (with certain exceptions and conditions not relevant here). View Decision Matter of: Duke Engineering & Services, Inc. File: B-284605 Date: May 17, 2000 DIGEST Attorneys DECISION Duke Engineering and Services, Inc. protests the proposed award of a contract to Foster Wheeler Environmental Corporation by the Department of Energy under request for proposals (RFP) No. DE-RP07-99ID13729, for the design, construction, operation and maintenance of an interim dry storage facility for spent nuclear fuel (SNF) at the agency's Idaho National Engineering and Environmental Laboratory. Duke maintains that the proposed award violates the advance payment prohibition in 31 U.S.C. Sec. 3324(a) (1994) and an additional statutory provision that the protester reads as prohibiting frontloading. /1/ We deny the protest. BACKGROUND The RFP contemplated a four-phase project for the design, licensing, construction, and operation and maintenance of an interim facility for the dry storage of several different types of nuclear waste referred to generically as SNF. RFP at B-1. Under Phase I-A, the contractor is required to prepare its design and an application for a Nuclear Regulatory Commission (NRC) license for an SNF storage facility. Id. Under Phase I-B, the contractor is required to obtain the license from the NRC. Id. Under Phase II, the contractor is required to construct the facility. Id. Under Phase III, the contractor is required to place SNF that is currently stored elsewhere into the storage facility. Id. Under Phase IV (which is optional), the contractor is required to operate and maintain the facility for a period of time. Id. The RFP required offerors to submit pricing using two different formats, depending on when the contractor would be paid for the work. One format (referred to in the record as pricing method 1) was to be based on the agency not paying the contractor for work done in any of the phases until completion of the work under that phase (with certain exceptions and conditions not relevant here); the second format, (referred to in the record as pricing method 2) was more conventional and assumed that the agency would provide progress payments throughout the course of the design and construction phases. Pricing method 1, under which no progress payments are provided, reflects the provisions of section 3132 of the National Defense Authorization Act for Fiscal Year 1998 (the 1998 Act), Pub. L. No. 105-85, Sec. 3132, 111 Stat. 1629, 2034 (1997), which provides, in relevant part, as follows: (a) Authority to Enter Into Contracts.--The Secretary of Energy may, using funds authorized to be appropriated by [a particular section] for a project referred to in that section, enter into a contract that-- (1) is awarded on a competitive basis; (2) requires the contractor to construct or acquire any equipment or facilities required to carry out the contract; (3) requires the contractor to bear any of the costs of the construction, acquisition, and operation of such equipment or facilities that arise before the commencement of the provision of goods or services under the contract; and (4) provides for payment to the contractor under the contract only upon the meeting of performance specifications in the contract. This protest concerns the meaning and impact of paragraph (3), requiring the contractor to "bear any of the costs of the construction, acquisition, and operation" until "the commencement of the provision of goods or services." The RFP reflected the statutory provision by stating that payment for Phase I-A work (the design work and preparation of the license application) would be made in the form of a lump sum provided upon completion of Phase I-A. /2/ During Phase II work (the construction work), the contractor would receive no payment for that construction work; instead, the contractor would be paid for the construction work only during performance of Phase III (through amortization of the Phase II price over a fixed quantity of units of SNF stored during Phase III).