DOE awards $110.8M for construction management, raising questions on competition and value
Contract Overview
Contract Amount: $110,771,524 ($110.8M)
Contractor: Asrc Federal Gulf State Constructors LLC
Awarding Agency: Department of Energy
Start Date: 2008-09-01
End Date: 2013-12-16
Contract Duration: 1,932 days
Daily Burn Rate: $57.3K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: Construction
Official Description: CONSTRUCTION MANAGEMENT SERVICES
Place of Performance
Location: NEW ORLEANS, JEFFERSON County, LOUISIANA, 70123
Plain-Language Summary
Department of Energy obligated $110.8 million to ASRC FEDERAL GULF STATE CONSTRUCTORS LLC for work described as: CONSTRUCTION MANAGEMENT SERVICES Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery. 2. Significant duration of over 5 years suggests a long-term need. 3. Cost-plus award fee structure can incentivize cost escalation. 4. The contract's value is substantial, requiring careful oversight. 5. Focus on oil and gas pipeline construction indicates a specialized service. 6. The contractor has a significant award amount, suggesting prior experience.
Value Assessment
Rating: fair
The contract value of $110.8 million over approximately five years is substantial. Without comparable contract data or detailed cost breakdowns, assessing value for money is challenging. The cost-plus award fee (CPAF) pricing structure, while allowing flexibility, can sometimes lead to higher costs compared to fixed-price contracts if not managed rigorously. Benchmarking this specific type of construction management for oil and gas pipelines is difficult without more granular data on the scope of services and market rates for similar projects.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This means that only one contractor, ASRC FEDERAL GULF STATE CONSTRUCTORS LLC, was solicited. The lack of competition means there was no opportunity for multiple vendors to bid, which typically drives down prices and fosters innovation. The rationale for this sole-source award is not provided, but it suggests potential reasons such as unique capabilities, urgent need, or lack of market availability.
Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible pricing through competitive bidding, potentially leading to higher costs for taxpayers. It also reduces opportunities for other qualified businesses to secure federal work.
Public Impact
The Department of Energy benefits from specialized construction management services for critical infrastructure. Services likely support the construction, maintenance, or expansion of oil and gas pipelines. The geographic impact is focused on Louisiana, where the contractor is based. Workforce implications include employment opportunities for construction management professionals and skilled labor in Louisiana.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition raises concerns about potential overpricing and reduced value for taxpayer dollars.
- The cost-plus award fee structure requires diligent oversight to prevent unnecessary cost growth.
- The long contract duration (over 5 years) necessitates continuous monitoring of performance and cost-effectiveness.
- Limited transparency on the justification for sole-source award hinders public accountability.
Positive Signals
- The contractor, ASRC FEDERAL GULF STATE CONSTRUCTORS LLC, has secured a significant contract, indicating a level of trust and capability.
- The contract addresses a specific need within the Department of Energy's infrastructure portfolio.
- The award is tied to a specific geographic region (Louisiana), potentially supporting local economic activity.
Sector Analysis
This contract falls within the construction sector, specifically focusing on oil and gas pipeline and related structures. The North American Industry Classification System (NAICS) code 237120 confirms this specialization. The construction industry is vast, but projects involving energy infrastructure like pipelines are often large-scale and require specialized expertise. Comparable spending benchmarks would depend heavily on the specific type and scale of pipeline construction managed, but federal spending on energy infrastructure is a significant category.
Small Business Impact
The provided data indicates that small business participation (ss and sb fields) was not a specified factor in this contract award. As a large sole-source award, there is no explicit small business set-aside. Subcontracting opportunities for small businesses would depend on the prime contractor's policies and the nature of the work, but are not mandated by the contract details provided. This contract does not appear to directly support the small business ecosystem through set-asides.
Oversight & Accountability
Oversight for this contract would primarily reside with the Department of Energy's contracting officers and program managers. The cost-plus award fee structure necessitates robust monitoring of costs incurred and performance achieved to ensure the award fee is justified. Transparency is limited due to the sole-source nature and lack of detailed public justification. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.
Related Government Programs
- Department of Energy Infrastructure Projects
- Oil and Gas Pipeline Construction
- Federal Construction Contracts
- Sole-Source Procurements
- Cost-Plus Award Fee Contracts
Risk Flags
- Sole-source award limits competition.
- Cost-plus structure may lead to higher costs.
- Long contract duration increases risk exposure.
- Lack of detailed justification for sole-source award.
Tags
construction, department-of-energy, louisiana, definitive-contract, large-contract, sole-source, cost-plus-award-fee, oil-and-gas, pipeline-construction, infrastructure
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $110.8 million to ASRC FEDERAL GULF STATE CONSTRUCTORS LLC. CONSTRUCTION MANAGEMENT SERVICES
Who is the contractor on this award?
The obligated recipient is ASRC FEDERAL GULF STATE CONSTRUCTORS LLC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $110.8 million.
What is the period of performance?
Start: 2008-09-01. End: 2013-12-16.
What was the specific justification for awarding this construction management contract on a sole-source basis?
The provided data indicates the contract was awarded 'NOT AVAILABLE FOR COMPETITION,' signifying a sole-source procurement. However, the specific justification for this determination is not detailed in the provided data. Typically, sole-source awards are justified when only one responsible source is available or capable of meeting the government's needs, such as in cases of unique capabilities, urgent and compelling requirements, or when full and open competition is not feasible or cost-effective. Without further documentation from the Department of Energy, the precise rationale remains unknown. This lack of transparency is a common concern with sole-source awards, as it limits the public's understanding of why competitive processes were bypassed.
How does the Cost Plus Award Fee (CPAF) structure compare to other contract types in terms of cost efficiency for construction management?
Cost Plus Award Fee (CPAF) contracts reimburse the contractor for allowable costs plus a fee that is composed of a base amount and an award amount. The award amount is based on the contractor meeting or exceeding certain performance objectives. While CPAF offers flexibility and can be suitable for complex projects where scope is difficult to define precisely upfront, it carries a higher risk of cost growth compared to fixed-price contracts. The 'award' component is intended to incentivize performance, but the 'cost-plus' element means the government bears the cost risk. For construction management, if performance metrics are well-defined and achievable, CPAF can drive quality and efficiency. However, without stringent oversight and clear performance standards, it can lead to higher overall costs for the government than a well-defined fixed-price contract.
What is the typical market rate or benchmark for construction management services for oil and gas pipelines of this scale?
Determining a precise market rate or benchmark for construction management services for oil and gas pipelines of this scale ($110.8 million contract value) is challenging without specific details on the project scope, duration, complexity, and geographic location. Construction management fees can vary significantly based on factors like the number of personnel required, the level of expertise needed, the risk involved, and the specific services provided (e.g., planning, scheduling, cost control, quality assurance, safety management). Generally, management fees for large construction projects can range from a few percent to over ten percent of the total project cost, depending on the contract type and services. The Cost Plus Award Fee structure here adds another layer of complexity to direct benchmarking. A more accurate benchmark would require access to data on similar, competitively procured projects.
What is the track record of ASRC FEDERAL GULF STATE CONSTRUCTORS LLC with Department of Energy contracts?
The award of a $110.8 million contract to ASRC FEDERAL GULF STATE CONSTRUCTORS LLC by the Department of Energy suggests a prior relationship and a demonstrated capability to handle significant projects for the agency. While the provided data confirms this specific award, it does not detail the contractor's complete history with the DOE or other federal agencies. To assess their track record thoroughly, one would need to examine past performance evaluations, other contracts awarded, and any history of disputes or issues. However, securing a contract of this magnitude typically implies a level of established performance and trust with the awarding agency, especially in specialized fields like energy infrastructure construction management.
What are the potential risks associated with a contract of this duration and value awarded non-competitively?
A contract valued at $110.8 million and spanning over five years (1932 days duration) carries inherent risks, particularly when awarded non-competitively. The primary risk is financial: without competition, the government may not be achieving the best possible price or value for its money. The Cost Plus Award Fee (CPAF) structure, while incentivizing performance, also introduces the risk of cost escalation if not managed meticulously. Long durations increase the exposure to changing market conditions, technological advancements, and potential shifts in project requirements, which can lead to contract modifications and cost increases. Furthermore, a sole-source award can create a perception of favoritism or a lack of due diligence in exploring alternative solutions, potentially impacting public trust and accountability.
Industry Classification
NAICS: Construction › Utility System Construction › Oil and Gas Pipeline and Related Structures Construction
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: DERP9608PO92954
Offers Received: 1
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Arctic Slope Regional Corporation (UEI: 076637073)
Address: 3900 C ST STE 305, ANCHORAGE, AK, 99503
Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, Emerging Small Business, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $170,557,240
Exercised Options: $133,925,973
Current Obligation: $110,771,524
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2008-09-01
Current End Date: 2013-12-16
Potential End Date: 2013-12-16 00:00:00
Last Modified: 2018-02-06
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