Army's $75M hazardous substance removal contract awarded to Shaw Environmental, Inc. shows significant cost growth

Contract Overview

Contract Amount: $75,027,982 ($75.0M)

Contractor: Aptim Federal Services, LLC

Awarding Agency: Department of Defense

Start Date: 2003-10-24

End Date: 2008-10-23

Contract Duration: 1,826 days

Daily Burn Rate: $41.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: 200407!000354!96CE!W912DQ!USA ENGINEER DISTRICT KANSAS CTY!DACA4596D0007 !A!N! !N!DK02 ! !20031024!20041231!085256282!109514559!180038382!N!SHAW ENVIRONMENTAL, INC !9201 EAST DRY CREEK ROAD !CENTENNIAL !CO!80112!04906!189!29!BERKELEY !ST. LOUIS !MISSOURI !+000001444662!N!N!000000000000!F108!HAZARDOUS SUBSTANCE REMOVAL/CLEANUP/DISPOSAL SVCS !S1 !SERVICES !ZOP !* !562910!E! !5!B!S! ! ! !99990909!B! ! !A! !A!U!U!2!007!B! !Z!N!Z! ! !N!C!N! ! ! !C!C!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63132

State: Missouri Government Spending

Plain-Language Summary

Department of Defense obligated $75.0 million to APTIM FEDERAL SERVICES, LLC for work described as: 200407!000354!96CE!W912DQ!USA ENGINEER DISTRICT KANSAS CTY!DACA4596D0007 !A!N! !N!DK02 ! !20031024!20041231!085256282!109514559!180038382!N!SHAW ENVIRONMENTAL, INC !9201 EAST DRY CREEK ROAD !CENTENNIAL !CO!80112!04906!189!29!BERKELEY !ST. … Key points: 1. The contract experienced a substantial increase from its initial award value, indicating potential cost overruns or scope changes. 2. Awarded under full and open competition, the contract saw multiple bids, suggesting a competitive market for these services. 3. The significant cost growth warrants scrutiny into the factors driving the price escalation. 4. The contract's performance period spanned over five years, allowing for extended execution and potential for evolving requirements. 5. This contract falls within the environmental services sector, a critical area for government operations and compliance. 6. The contractor, Shaw Environmental, Inc., has a track record in handling complex environmental remediation projects.

Value Assessment

Rating: questionable

The contract's final value significantly exceeded its initial estimated cost, raising concerns about cost control and management. While the initial award was for a substantial amount, the final expenditure suggests either unforeseen complexities, scope creep, or potential inefficiencies. Benchmarking against similar hazardous substance removal contracts would be necessary to determine if the final price was justified by the services rendered or if it represents a deviation from market norms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple qualified vendors had the opportunity to bid. This competitive process is generally expected to yield fair market prices. The presence of multiple bidders suggests a healthy market for hazardous substance removal services. However, the significant cost growth post-award may warrant an investigation into whether the initial competition adequately captured the full scope of potential costs or if subsequent modifications led to price increases.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure services at the best possible price. However, the substantial cost growth in this contract suggests that the initial competitive pricing may not have fully accounted for the final scope or that cost controls were insufficient, potentially leading to a higher overall expenditure than initially anticipated.

Public Impact

The primary beneficiaries are federal agencies requiring hazardous substance removal and cleanup services, ensuring compliance with environmental regulations. Services delivered include the identification, containment, removal, and disposal of hazardous materials, mitigating environmental risks. The contract's geographic impact is tied to the locations where hazardous substance removal activities were required by the Army. The contract supported a workforce skilled in environmental remediation, including scientists, engineers, and technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth from initial award to final expenditure.
Potential for scope creep or unforeseen complexities driving up costs.
Need for detailed analysis of cost justifications for modifications.
Ensuring adequate oversight to prevent future cost escalations.

Positive Signals

Awarded through full and open competition, indicating market availability of services.
Contractor has experience in environmental remediation services.
Contract addressed critical environmental compliance needs for the agency.

Sector Analysis

This contract falls within the environmental services sector, specifically focusing on hazardous substance removal and cleanup. This sector is crucial for government agencies to manage environmental liabilities and comply with regulations. The market for such services is often specialized, requiring specific expertise and certifications. Comparable spending benchmarks would typically involve analyzing other large-scale environmental remediation contracts awarded by federal agencies for similar types of hazardous materials and cleanup operations.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not explicitly detailed in the provided data. However, given the nature and scale of hazardous substance removal, it is common for prime contractors to utilize specialized small businesses for specific tasks or as subcontractors, provided they meet the necessary qualifications and certifications.

Oversight & Accountability

Oversight mechanisms for such contracts typically involve contract officers, program managers, and potentially Inspector General offices to monitor performance, costs, and compliance. Transparency is usually maintained through contract reporting systems and performance reviews. Accountability measures would include adherence to contract terms, delivery schedules, and quality standards, with penalties for non-compliance.

Related Government Programs

Environmental Remediation Services
Hazardous Waste Management
Defense Environmental Cleanup Programs
Superfund Site Remediation

Risk Flags

Significant Cost Growth
Potential for Unforeseen Conditions
Contract Modifications

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.0 million to APTIM FEDERAL SERVICES, LLC. 200407!000354!96CE!W912DQ!USA ENGINEER DISTRICT KANSAS CTY!DACA4596D0007 !A!N! !N!DK02 ! !20031024!20041231!085256282!109514559!180038382!N!SHAW ENVIRONMENTAL, INC !9201 EAST DRY CREEK ROAD !CENTENNIAL !CO!80112!04906!189!29!BERKELEY !ST. LOUIS !MISSOURI !+000001444662!N!N!000000000000!F108!HAZARDOUS SUBSTANCE REMOVAL/CLEANUP/DISPOSAL SVCS !S1 !SERVICES !ZOP !* !562910!E! !5!B!S! ! ! !999

Who is the contractor on this award?

The obligated recipient is APTIM FEDERAL SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $75.0 million.

What is the period of performance?

Start: 2003-10-24. End: 2008-10-23.

What were the primary drivers for the significant cost growth from the initial award value to the final expenditure?

The provided data indicates a substantial increase from the initial award value to the final expenditure. While the exact drivers are not detailed, common reasons for such growth in environmental remediation contracts include unforeseen site conditions (e.g., discovering more extensive contamination than initially assessed), changes in regulatory requirements during the contract period, scope creep due to evolving agency needs, or the need for specialized equipment or techniques not anticipated at the time of award. A thorough review of contract modifications, change orders, and contractor performance reports would be necessary to pinpoint the specific causes for this significant cost escalation.

How does the final cost of this contract compare to similar hazardous substance removal contracts awarded by the Department of the Army or other federal agencies?

Without specific data on comparable contracts (e.g., scope of work, volume of material removed, complexity of contamination, geographic location, and contract duration), a direct cost comparison is challenging. However, the significant increase in expenditure suggests that this contract may have been more costly than initially projected or compared to similar-sized contracts. Benchmarking would require identifying contracts with similar service requirements, contract types (e.g., Cost Plus Fixed Fee), and performance periods. Factors like prevailing labor rates, material disposal costs, and regional environmental regulations also influence pricing, making direct comparisons complex.

What was the track record of Shaw Environmental, Inc. in handling hazardous substance removal prior to this contract?

Shaw Environmental, Inc. (which later became part of APTIM Federal Services) was a known entity in the environmental services sector. Prior to and during this contract, the company had experience in various environmental remediation projects, including hazardous substance removal, site cleanup, and compliance services for government and commercial clients. Their track record would typically be assessed based on past performance evaluations, project completion history, safety records, and technical expertise in handling complex environmental challenges. The award of this significant contract by the U.S. Army Engineer District suggests they met the required qualifications and demonstrated capability at the time of bidding.

Were there any performance issues or disputes associated with this contract that might explain the cost growth?

The provided data does not explicitly detail performance issues or disputes. However, significant cost growth can sometimes be an indicator of underlying performance challenges, such as delays, rework, or disagreements over scope and quality. If performance issues arose, they could have led to contract modifications, change orders, or extended timelines, all of which can contribute to increased costs. A comprehensive review of contract administration records, including any formal disputes, claims, or performance deficiency reports, would be needed to ascertain if such issues were present and contributed to the final expenditure.

What is the typical duration and cost range for similar hazardous substance removal contracts awarded by the Army?

The duration and cost range for similar hazardous substance removal contracts can vary widely depending on the specific scope of work, the nature and volume of contaminants, the geographic location, and the complexity of the remediation required. Contracts can range from a few months to several years, with costs potentially spanning from hundreds of thousands to tens or even hundreds of millions of dollars. This particular contract, with a duration of approximately five years and a final expenditure of over $75 million, falls within the higher end for significant, long-term environmental remediation projects undertaken by the Army, suggesting a substantial and complex undertaking.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Shaw Group Inc., the (UEI: 180038382)

Address: 2370 TOWNE CENTER BLVD, BATON ROUGE, LA, 70806

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DACA4596D0007

IDV Type: IDC

Timeline