DoD's $249M environmental remediation contract awarded to Shaw Environmental, Inc. for Iraq operations

Contract Overview

Contract Amount: $24,909,120 ($24.9M)

Contractor: Shaw Environmental, Inc.

Awarding Agency: Department of Defense

Start Date: 2004-04-15

End Date: 2005-12-31

Contract Duration: 625 days

Daily Burn Rate: $39.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: 200410!001608!5700!GW05 !HSW/PKV !FA890304D8676 !A!N! !N!0015 ! !20040415!20050115!083760293!109514559!180038382!N!SHAW ENVIRONMENTAL, INC !8081 ROYAL RIDGE PARKWAY, !IRVING !TX!75063!00000! !IZ!* !* !IRAQ !+000019491301!N!N!000000000000!C219!OTHER ARCHITECT&ENGINEERING SERVICES !C2 !CONSTRUCTION !ZOP !* !562910!E! !5!B!S! ! ! !99990909!B! ! !A! !A!U!U!2!002!B! !Z!Y!Z! ! !N!M!N! ! ! ! ! !A!A!00 !A!B!N! ! ! !Y! ! !0001! !

Plain-Language Summary

Department of Defense obligated $24.9 million to SHAW ENVIRONMENTAL, INC. for work described as: 200410!001608!5700!GW05 !HSW/PKV !FA890304D8676 !A!N! !N!0015 ! !20040415!20050115!083760293!109514559!180038382!N!SHAW ENVIRONMENTAL, INC !8081 ROYAL RIDGE PARKWAY, !IRVING !TX!75063!00000! !IZ!* !* !IRAQ !+000019491301!N!N!000000000000!C219!OTHER ARCHITECT&ENGINEERING SERVICES … Key points: 1. Contract value of nearly $250 million indicates a significant investment in environmental services. 2. Awarded to a single contractor, raising questions about the extent of competition. 3. The contract duration of over 600 days suggests a complex and long-term project. 4. Operating in Iraq presents unique logistical and security risks impacting project execution. 5. The 'Other Architect & Engineering Services' category suggests a broad scope of work beyond simple cleanup. 6. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed tightly.

Value Assessment

Rating: fair

The contract value of $249 million for environmental remediation services in Iraq is substantial. Benchmarking this against similar large-scale, overseas environmental projects is challenging due to unique operational complexities and risks. The Cost Plus Fixed Fee (CPFF) contract type, while allowing flexibility, can be prone to cost escalation if not rigorously overseen. Without detailed cost breakdowns or comparisons to similar services in comparable environments, it's difficult to definitively assess value for money, but the scale suggests a high level of expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition,' suggesting that multiple bidders were theoretically allowed to compete. However, the data does not specify the number of bids received or proposals evaluated. A full and open competition is generally preferred as it maximizes the pool of potential offerors and can drive down prices through market forces. The absence of details on the number of bidders makes it hard to assess the actual level of competition achieved.

Taxpayer Impact: A full and open competition, in principle, offers the best opportunity for taxpayers to receive competitive pricing. However, the effectiveness depends on the actual number of bids submitted and the rigor of the evaluation process.

Public Impact

The primary beneficiaries are likely military operations and personnel in Iraq, by ensuring environmental compliance and mitigating hazards. Services delivered include environmental remediation, potentially addressing hazardous waste, contaminated sites, and infrastructure support. The geographic impact is concentrated in Iraq, supporting U.S. military presence and reconstruction efforts. Workforce implications could involve significant employment opportunities for both U.S. and local personnel, depending on subcontracting and hiring practices.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to increase costs to maximize profit.
Operating in a conflict zone like Iraq introduces significant risks to personnel, equipment, and project timelines.
Lack of specific details on the number of bidders limits the assessment of true competitive pressure.
The broad 'Other Architect & Engineering Services' category may obscure specific cost drivers and performance metrics.

Positive Signals

Awarded under 'Full and Open Competition' suggests an attempt to leverage market forces.
The contract's substantial value indicates a critical need for these environmental services.
The contractor, Shaw Environmental, Inc., has a track record in large-scale projects, implying capability.

Sector Analysis

This contract falls within the broader environmental services sector, which includes remediation, consulting, and waste management. The market for these services is substantial, driven by regulatory requirements and the need to address historical contamination. This specific contract, however, is unique due to its scale and its location in a high-risk, overseas operational environment, making direct comparisons to domestic environmental contracts difficult.

Small Business Impact

The contract data indicates that small business participation was not a primary focus, as the award was not set aside for small businesses and the prime contractor is a large entity. There is no explicit information on subcontracting plans for small businesses. This suggests that the primary benefits for small businesses would likely come through indirect opportunities if Shaw Environmental, Inc. chooses to subcontract portions of the work.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and inspection mechanisms. Given the overseas location, oversight might involve a combination of on-site government representatives, contract officers, and potentially Inspector General (IG) functions. Transparency is often limited in deployed operational environments, but the CPFF structure necessitates detailed financial reporting and auditing to manage costs.

Related Government Programs

Iraq Reconstruction Contracts
Environmental Remediation Services
Department of Defense Overseas Operations Support
Hazardous Waste Management Contracts

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost escalation.
Operation in a conflict zone (Iraq) introduces significant security and logistical risks.
Limited information on the number of bidders makes assessing the effectiveness of 'Full and Open Competition' difficult.
Broad service category ('Other Architect & Engineering Services') may obscure specific cost drivers.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.9 million to SHAW ENVIRONMENTAL, INC.. 200410!001608!5700!GW05 !HSW/PKV !FA890304D8676 !A!N! !N!0015 ! !20040415!20050115!083760293!109514559!180038382!N!SHAW ENVIRONMENTAL, INC !8081 ROYAL RIDGE PARKWAY, !IRVING !TX!75063!00000! !IZ!* !* !IRAQ !+000019491301!N!N!000000000000!C219!OTHER ARCHITECT&ENGINEERING SERVICES !C2 !CONSTRUCTION !ZOP !* !562910!E! !5!B!S! ! ! !99990909!B! ! !A! !A!U!U!2!002!B! !Z!Y!Z! ! !N!M!N! ! ! ! ! !A!A!00 !A!B!N! ! ! !Y! ! !0001! !

Who is the contractor on this award?

The obligated recipient is SHAW ENVIRONMENTAL, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $24.9 million.

What is the period of performance?

Start: 2004-04-15. End: 2005-12-31.

What is Shaw Environmental, Inc.'s track record with large federal contracts, particularly those involving overseas operations or environmental remediation?

Shaw Environmental, Inc. (and its predecessors/related entities) has a history of performing large-scale environmental and construction projects for the federal government. This includes significant work for the Department of Defense and the Army Corps of Engineers, often involving hazardous waste management, site cleanup, and infrastructure support. Their experience in complex, sometimes overseas, environments suggests a capacity to handle the logistical and technical challenges associated with contracts like the one in Iraq. However, a detailed review of past performance, including any past performance issues, disputes, or contract terminations, would be necessary for a comprehensive assessment.

How does the $249 million contract value compare to similar environmental remediation efforts in overseas or conflict zones?

Direct comparisons for environmental remediation contracts in active conflict zones like Iraq are inherently difficult due to unique risk premiums, logistical complexities, and security costs. While $249 million is a substantial sum, it may be within the expected range for large-scale, multi-year environmental services required to support significant military operations or reconstruction efforts in such an environment. Domestic large-scale remediation projects can also reach hundreds of millions, but typically without the extreme overhead associated with overseas deployment in a potentially unstable region. The specific scope of work (e.g., types of contaminants, scale of sites) would heavily influence cost.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude and nature?

The primary risk with a CPFF contract is the potential for cost overruns. While the contractor receives a fixed fee, their allowable costs are reimbursed. This structure can incentivize the contractor to incur higher costs, as their fee remains constant regardless of the total project cost. For taxpayers, this means the final expenditure could significantly exceed initial estimates if cost controls are weak. Effective oversight, detailed cost tracking, and robust auditing are critical to mitigate this risk. For this contract, the CPFF structure combined with the complexities of operating in Iraq amplifies these inherent risks.

What specific environmental services are encompassed by 'Other Architect & Engineering Services' in this context?

The classification 'Other Architect & Engineering Services' (NAICS code 541330, though 562910 is listed as the specific remediation code) is broad. In the context of environmental remediation for the DoD in Iraq, this likely includes a range of activities beyond simple cleanup. It could encompass site assessment, investigation, design of remediation strategies, engineering support for cleanup operations, environmental compliance planning, hazardous materials management, and potentially oversight of subcontractors performing the physical remediation. It suggests a comprehensive, integrated approach to managing environmental liabilities and compliance.

What does the duration of 625 days (approx. 21 months) imply about the complexity and scope of the environmental remediation work?

A contract duration of 625 days suggests that the environmental remediation required is substantial and complex, likely involving multiple sites or extensive cleanup operations. Short-term, simple remediation tasks are typically completed much faster. This extended timeline implies the need for phased approaches, long-term monitoring, and potentially ongoing management of environmental hazards. It also indicates a significant commitment of resources and personnel over an extended period, consistent with large-scale infrastructure support or base closure/transition activities.

How might the geopolitical situation in Iraq impact the execution and cost of this environmental contract?

The geopolitical situation in Iraq presents numerous challenges that directly impact contract execution and cost. Security risks necessitate protective measures for personnel and equipment, increasing operational costs. Logistical hurdles related to transportation, supply chains, and access to sites can cause delays and inflate expenses. Political instability or changes in operational requirements can lead to scope adjustments or unforeseen work. Furthermore, the need for specialized security personnel and adherence to stringent safety protocols in a high-risk environment adds significant layers of complexity and cost compared to domestic projects.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Remediation and Other Waste Management Services › Remediation Services

Product/Service Code: ARCHITECT/ENGINEER SERVICES › ARCH-ENG SVCS - GENERAL

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Chicago Bridge & Iron Company N.V. (UEI: 386491765)

Address: 8081 ROYAL RIDGE PARKWAY,, IRVING, TX, 75063

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA890304D8676

IDV Type: IDC

Timeline