DOE's $40.8M contract with Foster Wheeler for environmental cleanup in New Jersey raises questions about value and competition
Contract Overview
Contract Amount: $40,818,747 ($40.8M)
Contractor: Foster Wheeler Environmental C
Awarding Agency: Department of Energy
Start Date: 2002-09-15
End Date: 2004-09-30
Contract Duration: 746 days
Daily Burn Rate: $54.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Place of Performance
Location: AVENEL, MIDDLESEX County, NEW JERSEY, 07001
Plain-Language Summary
Department of Energy obligated $40.8 million to FOSTER WHEELER ENVIRONMENTAL C for work described as: Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize increased spending rather than cost efficiency. 2. Limited competition for this contract could lead to suboptimal pricing and reduced value for taxpayers. 3. The contract's duration and cost warrant scrutiny for potential cost overruns and scope creep. 4. Performance context is limited due to the absence of detailed performance metrics in the provided data. 5. This contract falls within the environmental remediation sector, a critical but often complex area of government spending.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee (CPFF) pricing structure, while common for complex environmental projects, can present challenges in ensuring optimal value. Without detailed performance data and comparison to similar remediation projects in New Jersey or nationally, it is difficult to definitively benchmark the $40.8 million award. The fixed fee component provides some incentive for completion, but the cost-reimbursement aspect means that actual costs incurred by Foster Wheeler are covered, potentially leading to less pressure on cost control compared to fixed-price contracts. Further analysis of the project's scope and deliverables against its final cost would be necessary for a more precise value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was awarded on a sole-source basis, indicating that the Department of Energy did not conduct a competitive bidding process. This could be due to a variety of reasons, such as a need for specialized expertise, urgency, or a lack of available qualified contractors. However, sole-source awards generally limit price discovery and can potentially lead to higher costs for the government compared to contracts awarded through full and open competition. The absence of multiple bids means there was no direct comparison of technical approaches or pricing from competing firms.
Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that can arise from competitive bidding. This can result in a higher overall expenditure for the services rendered.
Public Impact
The primary beneficiaries are the Department of Energy and potentially the public through the remediation of environmental hazards. The services delivered involve environmental cleanup and remediation activities within New Jersey. The geographic impact is localized to the specific sites in New Jersey requiring environmental remediation. Workforce implications would include employment opportunities for environmental scientists, engineers, and technicians involved in the cleanup efforts.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus-fixed-fee structure may not incentivize maximum cost efficiency.
- Sole-source award limits competitive pressure on pricing.
- Lack of detailed performance metrics makes value assessment difficult.
- Long contract duration (746 days) increases risk of scope creep and cost overruns.
Positive Signals
- Foster Wheeler is a known entity in environmental services, suggesting some level of established capability.
- The contract addresses critical environmental cleanup needs, which is a positive public service.
Sector Analysis
This contract falls within the environmental services sector, specifically focusing on remediation of contaminated sites. The federal government is a significant player in this market, contracting for services related to hazardous waste management, site cleanup, and environmental restoration. The market for environmental remediation is characterized by specialized firms with expertise in engineering, geology, and regulatory compliance. Comparable spending benchmarks would typically involve analyzing the cost per unit of contaminant removed or per acre remediated for similar projects managed by agencies like the EPA or DoD.
Small Business Impact
The provided data does not indicate any small business set-aside provisions for this contract. As a sole-source award, it is unlikely that subcontracting opportunities for small businesses were a primary consideration during the initial award. Further investigation would be needed to determine if any subcontracting plans were implemented by Foster Wheeler to engage small businesses in the execution of this contract.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Energy's contracting and program management offices. Inspector General (IG) jurisdiction would likely apply, allowing for audits and investigations into the contract's performance and financial integrity. Transparency would depend on the DOE's public reporting practices regarding contract details, progress, and expenditures. Without specific details on reporting mechanisms, a full assessment of transparency is limited.
Related Government Programs
- Department of Energy Environmental Management Program
- Superfund Program (EPA)
- Defense Environmental Restoration Program (DoD)
Risk Flags
- Sole-source award lacks competitive justification.
- Cost-plus-fixed-fee structure may lead to higher costs.
- Limited performance data hinders value assessment.
- Contract duration is substantial, increasing risk.
Tags
doe, environmental-remediation, new-jersey, cost-plus-fixed-fee, sole-source, large-contract, environmental-services, federal-contract, us-department-of-energy
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $40.8 million to FOSTER WHEELER ENVIRONMENTAL C. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is FOSTER WHEELER ENVIRONMENTAL C.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $40.8 million.
What is the period of performance?
Start: 2002-09-15. End: 2004-09-30.
What is Foster Wheeler's track record with the Department of Energy on similar environmental remediation contracts?
Foster Wheeler, now part of Amec Foster Wheeler, has a history of performing environmental services for various government agencies, including the Department of Energy. Their experience often includes complex remediation projects involving hazardous waste, site characterization, and cleanup operations. Specific details on their performance with the DOE on contracts prior to or concurrent with this $40.8 million award would require a deeper dive into federal procurement databases and agency performance reports. Generally, large environmental firms have a portfolio of projects, and their track record is assessed based on successful project completion, adherence to budget and schedule, and compliance with environmental regulations. Past performance reviews and contract award histories are key indicators.
How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for environmental remediation in terms of value for money?
The Cost-Plus-Fixed-Fee (CPFF) contract type is often used for research and development or complex services where the scope is not well-defined, or significant uncertainties exist. For environmental remediation, it allows the contractor to be reimbursed for actual costs incurred, plus a fixed fee representing profit. While this can be advantageous when dealing with unforeseen site conditions or evolving regulatory requirements, it offers less incentive for cost control compared to fixed-price contracts. Value for money can be harder to guarantee as the government bears the risk of cost overruns. Fixed-price contracts, conversely, provide greater cost certainty for the government but may require a more precisely defined scope upfront and can lead to contractor risk if estimates are inaccurate. Incentive fee contracts are another option that can align contractor and government interests by adjusting the fee based on performance against targets.
What are the primary risks associated with a sole-source award for environmental remediation services?
The primary risks associated with a sole-source award for environmental remediation services include a lack of competitive pricing, potentially leading to higher costs for the government. Without competition, there is less pressure on the contractor to be efficient or innovative in their approach. Furthermore, the government may not be exposed to the best available technologies or methodologies that might have been proposed by other firms. There's also a risk that the selected contractor may not be the most qualified or experienced, as a full market analysis and comparison of capabilities were not conducted. Transparency and accountability can also be diminished, as the justification for not competing the award needs to be robust and is often subject to scrutiny.
What historical spending patterns exist for environmental remediation contracts awarded by the Department of Energy in New Jersey?
The Department of Energy has a significant historical presence in environmental remediation, particularly related to its legacy nuclear weapons production sites. New Jersey, with its industrial history, has also been a focus for various federal and state environmental cleanup efforts. Analyzing historical spending patterns would involve examining the total amount obligated by the DOE for environmental services in New Jersey over time, identifying key contractors, and understanding the types of remediation activities undertaken. This could reveal trends in contract values, durations, and the prevalence of specific contract types like CPFF. Such analysis would help contextualize the $40.8 million award to Foster Wheeler within a broader spending landscape and identify any significant shifts or anomalies.
How are environmental remediation projects typically measured for success and effectiveness?
Environmental remediation projects are typically measured for success and effectiveness through a combination of technical, regulatory, and programmatic metrics. Key indicators include the extent of contaminant removal or containment, achievement of cleanup standards set by regulatory agencies (e.g., EPA, state environmental departments), and long-term protectiveness of human health and the environment. Effectiveness is also assessed by adherence to project schedules and budgets, though this can be challenging given the inherent uncertainties in remediation. Post-remediation monitoring is crucial to ensure that cleanup goals are maintained over time. Public and stakeholder engagement, as well as compliance with all applicable environmental laws and regulations, are also important aspects of overall project success.
Competition & Pricing
Extent Competed: NOT COMPETED
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Contractor Details
Address: 1000 THE AMERICAN RD, MORRIS PLAINS, NJ, 11
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $6,318,747
Exercised Options: $6,318,747
Current Obligation: $40,818,747
Timeline
Start Date: 2002-09-15
Current End Date: 2004-09-30
Potential End Date: 2004-09-30 00:00:00
Last Modified: 2009-08-25
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