DoD's $19.7M contract for pipeline construction awarded to Weston Solutions, Inc. shows a significant price variance
Contract Overview
Contract Amount: $19,714,839 ($19.7M)
Contractor: Weston Solutions, Inc.
Awarding Agency: Department of Defense
Start Date: 2012-07-20
End Date: 2018-01-14
Contract Duration: 2,004 days
Daily Burn Rate: $9.8K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: Construction
Official Description: M: TANK GROUP 16 (AIR FORCE&ARMY LOCATIONS)
Place of Performance
Location: HAMPTON, HAMPTON CITY County, VIRGINIA, 23630
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $19.7 million to WESTON SOLUTIONS, INC. for work described as: M: TANK GROUP 16 (AIR FORCE&ARMY LOCATIONS) Key points: 1. The contract's final value exceeded the initial estimate by over 100%, indicating potential underestimation or scope creep. 2. Competition was robust, with a full and open process suggesting a competitive market for these services. 3. The long duration of the contract (2012-2018) may have contributed to cost fluctuations and required adaptive management. 4. The fixed-price contract type suggests a defined scope, making the cost overrun a point of concern. 5. The significant difference between the awarded amount and the estimated cost warrants further investigation into cost drivers. 6. The contract was awarded as a delivery order, implying it was part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.
Value Assessment
Rating: questionable
The final award of $19.7 million is substantially higher than the initial estimated cost of $9.8 million, representing a nearly 100% increase. This significant variance suggests that the initial cost estimation may have been inaccurate or that the project scope evolved considerably during its execution. Benchmarking against similar pipeline construction contracts is difficult without more detailed scope information, but such a large deviation from the estimate raises concerns about cost control and predictability for this specific contract.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under a full and open competition, indicating that multiple bidders were likely solicited and considered. The specific number of bidders is not provided, but the nature of the competition suggests a healthy market for oil and gas pipeline construction services. A full and open competition generally promotes price discovery and allows the government to select the most advantageous offer based on a combination of price and technical factors.
Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it encourages competitive pricing and can lead to cost savings compared to less competitive procurement methods.
Public Impact
The primary beneficiaries are the Department of Defense (Air Force and Army) through the construction and maintenance of critical pipeline infrastructure. The services delivered include the construction of oil and gas pipelines and related structures, essential for military operational support. The geographic impact is concentrated at Air Force and Army locations, likely supporting fuel or other essential resource distribution. The contract supports the construction and engineering workforce, including skilled labor in the pipeline industry.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Significant cost overrun from estimate to final award.
- Long contract duration may have introduced unforeseen costs or complexities.
- Lack of detailed information on the specific reasons for the cost increase.
Positive Signals
- Awarded through full and open competition, suggesting market availability of services.
- Fixed-price contract type, which can provide cost certainty if managed effectively.
- Contract supported critical infrastructure for military operations.
Sector Analysis
This contract falls within the construction sector, specifically focusing on oil and gas pipeline infrastructure. The market for such services is often specialized, involving a limited number of large engineering and construction firms capable of undertaking complex projects. Government spending in this area is typically driven by the need to maintain and upgrade critical infrastructure supporting military bases and operations. Comparable spending benchmarks would depend on the specific type and scale of the pipeline constructed.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale infrastructure project, it is likely that the prime contractor, Weston Solutions, Inc., would engage subcontractors. The extent to which small businesses participate as subcontractors would depend on the prime contractor's subcontracting plan and the availability of qualified small business providers in the relevant geographic areas.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and the relevant Department of the Army contracting command. The fixed-price nature of the contract implies that the government's primary oversight would focus on ensuring the contractor meets the defined scope, quality standards, and delivery schedule. Transparency is generally facilitated through contract award databases, but detailed performance and cost justification data may be less accessible to the public.
Related Government Programs
- Defense Infrastructure Projects
- Military Base Construction
- Energy Infrastructure Contracts
- Pipeline Construction Services
- Department of Defense Procurement
Risk Flags
- Significant Cost Variance
- Potential for Scope Creep
- Long Contract Duration
Tags
defense, department-of-defense, department-of-the-army, construction, oil-and-gas-pipeline, firm-fixed-price, full-and-open-competition, delivery-order, weston-solutions-inc, virginia, infrastructure
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $19.7 million to WESTON SOLUTIONS, INC.. M: TANK GROUP 16 (AIR FORCE&ARMY LOCATIONS)
Who is the contractor on this award?
The obligated recipient is WESTON SOLUTIONS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $19.7 million.
What is the period of performance?
Start: 2012-07-20. End: 2018-01-14.
What were the primary drivers for the significant cost increase from the initial estimate to the final award?
The provided data does not detail the specific reasons for the substantial cost increase from the initial estimate ($9.8M) to the final award ($19.7M). Potential drivers for such a significant variance in a fixed-price contract could include unforeseen site conditions, changes in material costs, scope creep that was formally or informally incorporated, or initial underestimation of project complexity and resource requirements. Further investigation would be needed, potentially through reviewing contract modification documentation or post-award performance reports, to ascertain the precise factors contributing to the nearly 100% cost overrun.
How does the final award amount compare to the typical market rates for similar pipeline construction projects of this scale?
Benchmarking this contract's final award of $19.7 million against market rates is challenging without specific details on the pipeline's length, diameter, material, terrain, and complexity. However, the nearly doubling of the cost from the initial estimate suggests that either the initial estimate was significantly low or the project encountered substantial complexities. Generally, large-scale pipeline construction projects are capital-intensive, and costs can vary widely. A comparison would require identifying comparable projects in terms of scope and execution challenges, which are not detailed in the provided data.
What is the track record of Weston Solutions, Inc. in managing large-scale infrastructure and pipeline construction contracts for the federal government?
Weston Solutions, Inc. has a history of performing work for the federal government, including contracts related to environmental services and construction. To assess their track record specifically for large-scale pipeline construction, a review of their past performance on similar projects, including contract values, timeliness of completion, and any instances of cost overruns or disputes, would be necessary. Information on their performance on this specific $19.7M contract, particularly regarding the cost variance and project execution, would be crucial in evaluating their capabilities in this domain.
Given the fixed-price contract type, what mechanisms were in place to manage the scope and prevent cost overruns?
In a firm fixed-price contract, the contractor assumes the risk of cost overruns, provided the scope of work remains as defined. Mechanisms to manage scope and prevent overruns typically include a detailed Statement of Work (SOW), clear milestones, rigorous change order processes, and regular progress reviews. If costs escalated significantly, it could indicate that the initial SOW was insufficient, that changes were approved, or that the contractor underestimated their costs. The government's role would involve diligent oversight to ensure adherence to the SOW and to scrutinize any requests for contract modifications or equitable adjustments.
How has the Department of Defense historically allocated funds for oil and gas pipeline construction and related infrastructure?
The Department of Defense (DoD) allocates funds for infrastructure projects, including pipelines, through various channels, often tied to specific base operations, modernization efforts, or national security requirements. Historical spending patterns would likely show fluctuations based on military readiness needs, infrastructure aging, and strategic priorities. Analyzing historical data for similar construction projects, particularly those supporting fuel distribution or critical utilities at military installations, would provide context for the $19.7M awarded to Weston Solutions, Inc. This specific contract appears to be a delivery order, suggesting it was part of a broader contracting strategy.
Industry Classification
NAICS: Construction › Utility System Construction › Oil and Gas Pipeline and Related Structures Construction
Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: W9128F09R0082
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Weston Solutions Holdings, Inc. (UEI: 118341234)
Address: 7050 S 110TH ST STE 100, LA VISTA, NE, 68128
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $19,714,839
Exercised Options: $19,714,839
Current Obligation: $19,714,839
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W9128F10D0072
IDV Type: IDC
Timeline
Start Date: 2012-07-20
Current End Date: 2018-01-14
Potential End Date: 2018-01-14 00:00:00
Last Modified: 2018-03-19
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