DOE's $1.32B Management and Operations contract awarded to DM Petroleum Operations Company shows long duration and cost-plus structure
Contract Overview
Contract Amount: $1,322,431,907 ($1.3B)
Contractor: DM Petroleum Operations Company
Awarding Agency: Department of Energy
Start Date: 2003-02-01
End Date: 2014-03-31
Contract Duration: 4,076 days
Daily Burn Rate: $324.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: Other
Official Description: MANAGENMENT AND OPERATIONS
Place of Performance
Location: NEW ORLEANS, JEFFERSON County, LOUISIANA, 70123
Plain-Language Summary
Department of Energy obligated $1.32 billion to DM PETROLEUM OPERATIONS COMPANY for work described as: MANAGENMENT AND OPERATIONS Key points: 1. The contract's cost-plus award fee structure suggests potential for cost overruns if not closely managed. 2. A long contract duration of over 10 years may indicate a stable, long-term need for these services. 3. The absence of small business set-asides warrants further investigation into subcontracting opportunities. 4. Facilities Support Services are critical for operational continuity, but performance metrics are not detailed here. 5. The contract's value places it as a significant expenditure within the Department of Energy's portfolio.
Value Assessment
Rating: fair
Benchmarking this $1.32 billion contract is challenging without specific performance data or comparable contracts for facilities support services at this scale. The cost-plus award fee (CPAF) structure, while allowing for flexibility, can lead to higher costs if incentives are not perfectly aligned with government objectives. The long duration of over 10 years also suggests a potentially higher overall cost compared to shorter-term contracts, though it may reflect stability and reduced re-competition costs.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete. However, the data does not specify the number of bids received. Full and open competition is generally favorable for price discovery, but the effectiveness depends on the number of qualified bidders and the complexity of the service requirements.
Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing inherent in full and open competition, which can lead to more efficient use of funds.
Public Impact
The primary beneficiaries are the Department of Energy and its operational facilities, which receive essential management and operations support. Services delivered include facilities support, crucial for maintaining the infrastructure and operational readiness of DOE sites. The geographic impact is concentrated in Louisiana, where the contract is managed and services are likely performed. Workforce implications include the potential for significant employment opportunities within Louisiana for personnel skilled in facilities management and operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus award fee structure could incentivize higher spending if not managed tightly.
- Long contract duration may mask inefficiencies that could be addressed through more frequent re-competition.
- Lack of explicit small business set-aside information raises concerns about subcontracting opportunities for smaller firms.
Positive Signals
- Awarded under full and open competition, suggesting a robust bidding process.
- The contract's long duration implies a consistent need and potentially stable service delivery.
- The scale of the contract indicates a significant operational requirement being met.
Sector Analysis
This contract falls within the Facilities Support Services sector, a broad category encompassing a wide range of services necessary for the operation and maintenance of physical infrastructure. The market for these services is substantial, with significant government spending driven by the need to manage complex facilities. This specific contract represents a large portion of spending for facilities management within the Department of Energy, particularly in its operational areas.
Small Business Impact
The contract data indicates that small business participation was not a primary set-aside consideration (ss: false, sb: false). While full and open competition was utilized, this lack of explicit small business focus may limit subcontracting opportunities for small businesses within the ecosystem. Further analysis would be needed to determine if subcontracting plans were mandated or achieved.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of Energy's contracting officers and program managers. Accountability measures are often tied to the award fee structure, incentivizing performance. Transparency is generally facilitated through contract award databases, though detailed performance reports may not be publicly accessible. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.
Related Government Programs
- Department of Energy Facilities Management
- Government Facilities Support Services
- Cost-Plus Contracts
- Long-Term Service Agreements
Risk Flags
- Long contract duration may reduce flexibility and increase risk of cost escalation.
- Cost-plus award fee structure requires diligent oversight to ensure value for money.
- Lack of explicit small business set-aside requires monitoring for subcontracting compliance.
Tags
management-and-operations, facilities-support-services, department-of-energy, definitive-contract, cost-plus-award-fee, full-and-open-competition, louisiana, large-contract, long-duration, federal-spending
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $1.32 billion to DM PETROLEUM OPERATIONS COMPANY. MANAGENMENT AND OPERATIONS
Who is the contractor on this award?
The obligated recipient is DM PETROLEUM OPERATIONS COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $1.32 billion.
What is the period of performance?
Start: 2003-02-01. End: 2014-03-31.
What is the historical spending trend for Management and Operations at the Department of Energy, and how does this contract compare?
Historical spending data for Management and Operations (M&O) contracts within the Department of Energy (DOE) reveals a consistent and substantial investment in maintaining its vast infrastructure and supporting its research and development missions. M&O contracts are a cornerstone of DOE's operational budget, often representing billions of dollars annually across various sites and functions. This specific $1.32 billion contract, awarded to DM Petroleum Operations Company, is a significant single award within that broader M&O spending category. While this contract spans over a decade (2003-2014), DOE's overall M&O spending fluctuates based on national priorities, budget allocations, and the specific needs of its diverse facilities, including nuclear weapons complex sites, energy research laboratories, and environmental cleanup operations. Analyzing trends requires looking at the aggregate spending across all M&O contracts, not just individual awards, to understand the DOE's long-term commitment and resource allocation strategies in this critical area.
How does the Cost Plus Award Fee (CPAF) structure typically impact contractor performance and costs compared to other contract types?
The Cost Plus Award Fee (CPAF) contract structure is designed to provide flexibility in pricing while incentivizing contractor performance. Under CPAF, the contractor is reimbursed for all allowable costs incurred, plus a fee that consists of a base amount (often fixed) and an award amount. The award amount is determined by the government based on how well the contractor meets or exceeds pre-defined performance objectives and criteria. This structure aims to motivate contractors to achieve high levels of performance, quality, and efficiency beyond minimum requirements. Compared to Cost Plus Fixed Fee (CPFF), CPAF offers greater potential for rewarding exceptional performance, potentially leading to better outcomes. However, it also introduces subjectivity in the fee determination process, which can lead to disputes if not managed carefully. Compared to Firm-Fixed-Price (FFP) contracts, CPAF generally carries more cost risk for the government, as the final cost is not fixed upfront. The government's ability to effectively define and measure performance criteria is crucial for the success of CPAF, ensuring that the award fee truly reflects value for money and drives desired outcomes without excessive cost escalation.
What are the potential risks associated with a contract duration of over 10 years for facilities support services?
A contract duration exceeding 10 years for facilities support services, like the one awarded to DM Petroleum Operations Company, presents several potential risks. Firstly, there's the risk of 'contractor complacency' or 'institutionalization,' where the long-standing relationship might lead to reduced innovation or a less aggressive approach to cost savings over time. Secondly, the government's needs and the technological landscape for facilities support can evolve significantly over a decade. A long-term contract might not be agile enough to adapt to these changes without costly modifications or change orders. Thirdly, the fixed nature of the pricing or fee structure, even with award incentives, might not reflect current market rates or efficiencies achieved through technological advancements or competitive pressures that arise later in the contract term. Finally, extended durations can sometimes mask underlying performance issues that might be more readily identified and addressed through more frequent re-competition cycles, which inherently bring new perspectives and competitive pressures.
Given the 'Facilities Support Services' NAICS code (561210), what is the typical market size and competitive landscape for such contracts?
The North American Industry Classification System (NAICS) code 561210, 'Facilities Support Services,' encompasses a broad range of services essential for the operation and maintenance of buildings and grounds. This sector is characterized by a large and diverse market, serving both government and commercial clients. The market size is substantial, driven by the continuous need for services such as maintenance, repair, custodial, security, and groundskeeping across various types of facilities. The competitive landscape within NAICS 561210 is typically fragmented, featuring a mix of large, diversified service providers capable of handling complex, large-scale contracts (like the DOE's $1.32B award) and numerous smaller, specialized firms focusing on niche services or specific geographic regions. Government contracts within this sector are highly sought after due to their scale and stability, often involving significant competition, especially when awarded under full and open procedures. However, the specific nature of the services required, the security clearances needed, and the geographic location can influence the number and type of competitors for any given contract.
What does the 'LA' state code signify in the contract data, and what are its implications for geographic impact?
The 'LA' state code in the contract data signifies that the contract is associated with the state of Louisiana. This implies that the primary place of performance for the services rendered under this contract is likely within Louisiana, or that the contractor's operational base relevant to this contract is located there. For geographic impact, this means that the economic benefits, such as job creation and local spending, are expected to be concentrated in Louisiana. This could include employment opportunities for residents of Louisiana in facilities management, operations, and related support roles. Furthermore, local businesses within Louisiana might benefit from subcontracting opportunities or supply chain activities related to the contract. The concentration of federal spending in a specific state can have a notable impact on the local economy, supporting industries and contributing to the overall economic activity of the region.
Industry Classification
NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Contractor Details
Parent Company: Computer Sciences Corporation (UEI: 009581091)
Address: 850 S CLEARVIEW PKWY, NEW ORLEANS, LA, 70123
Business Categories: Category Business, Corporate Entity Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $1,322,431,907
Exercised Options: $1,322,431,907
Current Obligation: $1,322,431,907
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2003-02-01
Current End Date: 2014-03-31
Potential End Date: 2014-03-31 00:00:00
Last Modified: 2017-05-04
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