DOE awards $2.1B contract for Fernald site remediation, a significant investment in environmental cleanup
Contract Overview
Contract Amount: $2,137,780,711 ($2.1B)
Contractor: Fluor Fernald Inc
Awarding Agency: Department of Energy
Start Date: 2000-11-15
End Date: 2008-12-31
Contract Duration: 2,968 days
Daily Burn Rate: $720.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE
Sector: Other
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45253
State: Ohio Government Spending
Plain-Language Summary
Department of Energy obligated $2.14 billion to FLUOR FERNALD INC for work described as: Key points: 1. The contract represents a substantial federal investment in environmental remediation, focusing on a high-priority cleanup site. 2. The chosen contract type, Cost Plus Incentive Fee, suggests a need for flexibility and performance-based incentives in a complex project. 3. The duration of the contract (over 8 years) indicates a long-term commitment to the remediation effort. 4. The geographic focus on Ohio highlights the localized impact of federal environmental cleanup initiatives. 5. The absence of small business set-asides suggests the primary contractor is a large entity, with potential subcontracting opportunities.
Value Assessment
Rating: fair
The contract value of over $2.1 billion for remediation services over nearly 8 years is substantial. Benchmarking this requires specific data on comparable large-scale environmental cleanup projects. The Cost Plus Incentive Fee (CPIF) structure aims to control costs by incentivizing the contractor to stay within budget and meet performance targets. However, CPIF contracts can be complex to manage and may still incur significant costs if targets are not met or if unforeseen issues arise. Without detailed cost breakdowns and performance metrics, a definitive value-for-money assessment is challenging, but the scale suggests a significant, albeit necessary, expenditure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. This competitive process is generally expected to yield better pricing and innovative solutions. The fact that it was competed fully suggests that the government sought the best value from the market for this complex remediation task. The number of bidders is not specified, but the full and open nature is a positive indicator for price discovery.
Taxpayer Impact: A full and open competition for a contract of this magnitude is beneficial for taxpayers as it increases the likelihood of securing the most cost-effective solution and encourages market competition, which can drive down prices.
Public Impact
The primary beneficiaries are the residents and environment of Ohio, through the cleanup of the Fernald site. The services delivered include the safe and effective remediation of radioactive and hazardous materials. The geographic impact is concentrated in the Fernald area of Ohio, addressing long-standing environmental contamination. The contract supports a significant workforce involved in specialized environmental cleanup and management.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The Cost Plus Incentive Fee (CPIF) contract type can lead to cost overruns if not managed meticulously, especially given the complexity of environmental remediation.
- The long contract duration (nearly 8 years) presents risks related to changing environmental regulations, technological advancements, and potential contractor performance degradation over time.
- The sheer scale of the project and the associated budget raise concerns about the potential for unforeseen environmental challenges and associated cost increases.
- Lack of specific performance metrics and detailed cost breakdowns in the provided data makes it difficult to fully assess efficiency and potential waste.
Positive Signals
- Awarded through full and open competition, suggesting a robust selection process and potential for competitive pricing.
- The CPIF structure includes incentives, which can drive contractor performance and cost control if effectively implemented and monitored.
- The contract addresses a critical environmental cleanup need, demonstrating the government's commitment to public health and safety.
- The contractor, FLUOR FERNALD INC, was selected for a significant and complex project, implying a level of expertise and capability.
Sector Analysis
This contract falls within the environmental services sector, specifically focusing on hazardous waste remediation. The market for such services is driven by regulatory requirements and the need to address legacy contamination from industrial and government activities. Large-scale remediation projects like Fernald represent significant, albeit specialized, segments of the broader environmental services industry. Comparable spending benchmarks would typically be found in other Department of Energy (DOE) cleanup sites or EPA Superfund sites, which often involve multi-billion dollar, multi-year efforts.
Small Business Impact
The provided data indicates that small business participation (ss and sb flags) was not a specific set-aside requirement for this contract. This suggests that the primary contract was awarded to a large business entity. While this may limit direct small business prime contracting opportunities, large prime contractors are often required to subcontract portions of the work to small businesses. The extent of subcontracting to the small business ecosystem would depend on the specific terms of the contract and the prime contractor's subcontracting plan.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy's Office of Inspector General (OIG) and relevant program offices. The CPIF contract structure necessitates rigorous oversight to monitor costs, performance against milestones, and adherence to safety and environmental regulations. Transparency would be facilitated through regular reporting requirements from the contractor and potential public disclosures by the DOE regarding project progress and environmental outcomes. The OIG's role is crucial in ensuring accountability and preventing fraud, waste, and abuse.
Related Government Programs
- Department of Energy Environmental Management
- Superfund Program (EPA)
- Defense Environmental Cleanup Program (DoD)
- Radioactive Waste Management
- Hazardous Waste Remediation Services
Risk Flags
- Potential for cost overruns due to contract type and project complexity.
- Long contract duration may lead to performance degradation or outdated methodologies.
- Unforeseen environmental conditions could significantly increase costs and timelines.
- Complexity of managing large-scale hazardous waste remediation.
Tags
environmental-remediation, department-of-energy, cost-plus-incentive-fee, full-and-open-competition, large-contract, ohio, hazardous-waste, radioactive-cleanup, long-term-project, federal-spending
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $2.14 billion to FLUOR FERNALD INC. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is FLUOR FERNALD INC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $2.14 billion.
What is the period of performance?
Start: 2000-11-15. End: 2008-12-31.
What was the specific performance history of FLUOR FERNALD INC on similar large-scale environmental remediation projects prior to this award?
Assessing FLUOR FERNALD INC's prior performance is crucial for understanding their capability to manage a contract of this magnitude. While the provided data doesn't detail past performance, a thorough review would examine their track record on projects involving radioactive and hazardous material cleanup, cost control, schedule adherence, safety compliance, and stakeholder engagement. Agencies typically request and evaluate past performance information during the solicitation process. For the Fernald contract, the Department of Energy would have scrutinized Fluor's experience with similar sites, potentially including other DOE facilities or large industrial cleanup operations. A history of successful, on-time, and within-budget project completion would be a strong positive indicator, whereas past issues could raise concerns about potential risks and the need for enhanced oversight.
How does the awarded amount of $2.1 billion compare to the estimated cost of remediation for the Fernald site prior to the contract award?
The awarded amount of approximately $2.1 billion represents the total estimated cost for the remediation services under this contract, which spanned from November 2000 to December 2008. To assess value, this figure needs to be compared against pre-award cost estimates for the Fernald site cleanup. Government agencies typically develop detailed cost estimates based on site characterization, remediation technologies, and regulatory requirements. If the awarded amount was significantly higher than initial estimates, it could indicate unforeseen complexities or a less competitive bidding process. Conversely, if it was in line with or below estimates, it might suggest effective cost management and competitive pricing. Without access to the original cost estimates for the Fernald site remediation, it's difficult to definitively state whether $2.1 billion represented good or poor value from a budgetary perspective, though it clearly signifies a major federal commitment.
What were the key performance indicators (KPIs) and incentive structures within the Cost Plus Incentive Fee (CPIF) contract, and how were they measured?
The Cost Plus Incentive Fee (CPIF) contract structure implies that the final fee paid to the contractor is tied to achieving specific performance objectives, alongside the reimbursement of allowable costs. Key performance indicators (KPIs) for a contract like Fernald's remediation would likely include metrics related to the volume and type of material remediated, achievement of cleanup standards for soil and groundwater, waste disposal rates, project schedule milestones, safety incident rates (e.g., lost time injuries), and environmental compliance. The incentive structure would define how deviations from target costs and performance targets affect the contractor's fee. For example, exceeding cost targets might reduce the fee, while meeting or exceeding environmental cleanup goals or safety targets could increase it. Detailed measurement and reporting mechanisms, subject to government oversight, would be essential to track progress against these KPIs and determine the final fee.
What is the historical spending trend for environmental remediation contracts at the Department of Energy over the past two decades?
Historical spending on environmental remediation contracts at the Department of Energy (DOE) has been substantial and relatively consistent over the past two decades, driven by the Legacy Management program and the cleanup of former nuclear weapons production sites. While specific figures fluctuate annually based on project lifecycles and new initiatives, the DOE consistently allocates billions of dollars each fiscal year to environmental management. Spending has been influenced by major cleanup efforts at sites like Hanford, Savannah River, and Oak Ridge, in addition to Fernald. Trends may show shifts towards more complex waste treatment technologies, long-term stewardship, and addressing emerging contaminants. The Fernald contract, awarded in 2000, falls within a period of significant investment in addressing these legacy environmental liabilities. Analyzing broader DOE spending trends provides context for the scale and importance of individual contracts like the one for Fernald.
What are the potential long-term environmental and economic impacts of the Fernald remediation project on the surrounding community?
The Fernald remediation project, upon its completion, aims to have significant positive long-term environmental impacts by removing hazardous and radioactive contaminants from the site, thereby protecting groundwater, soil, and local ecosystems. This cleanup is crucial for public health and safety in the surrounding Ohio community. Economically, the project involved substantial federal investment, creating numerous jobs during its operational phase in specialized fields like environmental engineering, construction, and waste management. Post-remediation, the site's future use will determine its ongoing economic impact; a successfully remediated site could be redeveloped for commercial, recreational, or conservation purposes, potentially revitalizing the local economy. However, long-term monitoring and stewardship may still be required, representing a smaller, ongoing federal commitment.
Industry Classification
NAICS: Administrative and Support and Waste Management and Remediation Services › Remediation and Other Waste Management Services › Remediation Services
Product/Service Code: NATURAL RESOURCES MANAGEMENT › ENVIRONMENTAL SYSTEMS PROTECTION
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE (V)
Contractor Details
Address: 7400 WILLEY RD, CINCINNATI, OH, 90
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Timeline
Start Date: 2000-11-15
Current End Date: 2008-12-31
Potential End Date: 2008-12-31 00:00:00
Last Modified: 2013-05-01
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