Commerce awarded $245.8M for environmental consulting, but competition was limited, raising value concerns

Contract Overview

Contract Amount: $245,759,108 ($245.8M)

Contractor: Industrial Economics Inc

Awarding Agency: Department of Commerce

Start Date: 2011-09-23

End Date: 2017-03-22

Contract Duration: 2,007 days

Daily Burn Rate: $122.5K/day

Competition Type: NOT COMPETED

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: TASK ORDER 1 - DEEPWATER HORIZON OIL SPILL NATURAL RESOURCE DAMAGE ASSESSMENT SUPPORT EFFORT (ACTIVITIES A, B AND E)

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02140

State: Massachusetts Government Spending

Plain-Language Summary

Department of Commerce obligated $245.8 million to INDUSTRIAL ECONOMICS INC for work described as: TASK ORDER 1 - DEEPWATER HORIZON OIL SPILL NATURAL RESOURCE DAMAGE ASSESSMENT SUPPORT EFFORT (ACTIVITIES A, B AND E) Key points: 1. The contract's significant value suggests a need for robust oversight and competitive sourcing. 2. Limited competition for this large award warrants scrutiny of pricing and potential for overpayment. 3. The duration of the contract (over 5 years) indicates a long-term need for these services. 4. Environmental consulting services are critical for regulatory compliance and natural resource management. 5. The specific task order focuses on natural resource damage assessment, highlighting a specialized service area.

Value Assessment

Rating: questionable

The contract value of $245.8 million over approximately five years for environmental consulting services is substantial. Without comparable contract data or detailed cost breakdowns, it is difficult to definitively benchmark the value for money. However, the lack of competition for such a large award raises concerns about whether the government secured the most favorable pricing. The 'time and materials' pricing structure can also lead to cost overruns if not carefully managed and monitored.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source 'delivery order' under a larger contract vehicle, indicating a lack of full and open competition for this specific task order. While sole-source awards can be justified under certain circumstances (e.g., unique capabilities, urgent needs), they limit the government's ability to leverage market competition to drive down prices and ensure the best value. The absence of multiple bidders means potential cost savings through competitive bidding were forgone.

Taxpayer Impact: The sole-source nature of this award means taxpayers may have paid a premium compared to what might have been achieved through a competitive bidding process. This limits the government's leverage in price negotiation.

Public Impact

The primary beneficiaries are federal agencies responsible for environmental protection and natural resource management, such as NOAA. The services delivered are crucial for assessing and mitigating damage to natural resources, particularly in the context of environmental incidents like oil spills. The geographic impact is likely national, given the scope of natural resource damage assessment, but specific project locations would vary. The contract supports a specialized workforce of environmental scientists, consultants, and analysts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a large contract value increases risk of suboptimal pricing.
Time and materials contract type can lead to cost escalation if not tightly managed.
Sole-source award limits transparency and potential for cost savings.
Long contract duration requires sustained oversight to ensure continued value.

Positive Signals

Award supports critical environmental assessment functions for natural resource damage.
Contracting through an existing vehicle may offer some administrative efficiencies.
The contractor is likely providing specialized expertise required for the task.

Sector Analysis

Environmental consulting services represent a significant sector within professional services, encompassing a wide range of expertise from ecological assessments to regulatory compliance. The market is characterized by both large, established firms and smaller, specialized consultancies. This contract falls within the government's broader spending on environmental services, which is often driven by regulatory requirements and the need for scientific expertise in areas like natural resource damage assessment. Benchmarking would require comparison to other large-scale environmental consulting contracts awarded by federal agencies.

Small Business Impact

The contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary focus was on securing specialized expertise, potentially from larger firms, rather than specifically promoting small business participation. The absence of set-asides means opportunities for small businesses in this specific contract are likely limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the National Oceanic and Atmospheric Administration (NOAA) within the Department of Commerce. As a large, sole-source award, it warrants rigorous oversight to ensure adherence to the contract terms, manage costs effectively, and verify the quality of services delivered. Transparency would be enhanced through regular reporting requirements and potentially through public access to non-sensitive deliverables. The Inspector General's office for the Department of Commerce would have jurisdiction for audit and investigation.

Related Government Programs

Environmental Consulting Services
Natural Resource Damage Assessment
Oil Spill Response Support
Professional Services Contracts
NOAA Contracts

Risk Flags

Limited Competition
Potential for Cost Overruns (T&M)
Lack of Transparency (Sole Source)

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $245.8 million to INDUSTRIAL ECONOMICS INC. TASK ORDER 1 - DEEPWATER HORIZON OIL SPILL NATURAL RESOURCE DAMAGE ASSESSMENT SUPPORT EFFORT (ACTIVITIES A, B AND E)

Who is the contractor on this award?

The obligated recipient is INDUSTRIAL ECONOMICS INC.

Which agency awarded this contract?

Awarding agency: Department of Commerce (National Oceanic and Atmospheric Administration).

What is the total obligated amount?

The obligated amount is $245.8 million.

What is the period of performance?

Start: 2011-09-23. End: 2017-03-22.

What is the track record of Industrial Economics Inc. in performing similar environmental consulting services for the federal government?

Industrial Economics Inc. (IEc) has a history of providing environmental consulting services, including work related to natural resource damage assessment. Their experience often involves economic analysis, ecological impact studies, and policy recommendations. To fully assess their track record for this specific contract, a review of past performance evaluations, any past performance questionnaires (PPQs) submitted by government evaluators on previous contracts, and any documented issues or successes would be necessary. Without access to this detailed performance data, it is difficult to provide a comprehensive assessment beyond their general area of expertise.

How does the awarded amount compare to typical contract values for similar environmental consulting services?

The awarded amount of $245.8 million is substantial for a single contract, even for comprehensive environmental consulting services over several years. Typical contract values can vary widely depending on the scope, duration, and complexity of the services. Smaller, more focused environmental consulting task orders might range from tens of thousands to a few million dollars. Larger, multi-year contracts for broad environmental support could reach tens or hundreds of millions. However, the 'sole-source' nature of this award, combined with its significant value, suggests it may be at the higher end of the spectrum, warranting careful comparison against other large, sole-source or competitively awarded environmental support contracts to ascertain true value for money.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude include: 1) Potential for inflated pricing due to the lack of competitive pressure, meaning the government may not achieve the best possible price. 2) Reduced incentive for the contractor to innovate or provide exceptional service, as there is no direct competition for future work. 3) Limited transparency in the procurement process, making it harder for external observers to assess fairness and value. 4) Risk that the chosen contractor may not possess the absolute best or most cost-effective solution available in the market. Robust contract management and oversight are crucial to mitigate these risks.

How effective are 'time and materials' contracts in managing costs for long-term environmental consulting projects?

Time and Materials (T&M) contracts can be effective for projects where the scope of work is not clearly defined at the outset or is expected to evolve, such as in complex environmental consulting. They allow flexibility by reimbursing the contractor for direct labor hours at specified rates and for the actual cost of materials. However, T&M contracts carry inherent risks of cost escalation if not managed diligently. The government must implement strong oversight, including detailed monitoring of labor hours, validation of material costs, and clear definition of 'level of effort' ceilings to prevent uncontrolled spending. Without such controls, T&M contracts can become significantly more expensive than fixed-price arrangements.

What is the historical spending trend for environmental consulting services by NOAA or the Department of Commerce?

Historical spending data for environmental consulting services by NOAA and the Department of Commerce would reveal trends in demand for such expertise. Analyzing past expenditures can indicate whether spending in this area is increasing, decreasing, or remaining stable. It can also highlight the typical contract vehicles used (e.g., GSA schedules, IDIQs, sole-source awards) and the average contract values. Such analysis is crucial for understanding the context of this $245.8 million award, determining if it represents a significant deviation from historical patterns, and assessing the overall budget allocation towards environmental services within these agencies.

What specific environmental consulting activities are covered under Task Order 1 for Deepwater Horizon oil spill support?

Task Order 1, specifically addressing Activities A, B, and E related to the Deepwater Horizon oil spill natural resource damage assessment, likely encompasses a range of specialized environmental consulting services. Activity A might involve initial data collection and assessment planning. Activity B could focus on the scientific and economic methodologies for quantifying damages to natural resources (e.g., fisheries, habitats, wildlife). Activity E might pertain to the development of restoration alternatives and cost-benefit analyses for proposed restoration projects. The precise nature of these activities would be detailed in the task order's statement of work, outlining the specific scientific studies, economic modeling, and reporting requirements.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Environmental Consulting Services

Product/Service Code: NATURAL RESOURCES MANAGEMENT › NATURAL RESOURCES - OTHER SVCS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: AB133C-11-RP-0059

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 2067 MASS AVE STE 4, CAMBRIDGE, MA, 02140

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $245,759,108

Exercised Options: $245,759,108

Current Obligation: $245,759,108

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DOCAB133C11CQ0050

IDV Type: IDC

Timeline