Interior's $72.4M Cutter Lateral Water Treatment Plant contract awarded to CH2M HILL CONSTRUCTORS, INC. for heavy civil engineering

Contract Overview

Contract Amount: $72,413,450 ($72.4M)

Contractor: CH2M Hill Constructors, Inc.

Awarding Agency: Department of the Interior

Start Date: 2016-09-07

End Date: 2022-08-08

Contract Duration: 2,161 days

Daily Burn Rate: $33.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: IGF::OT::IGF CUTTER LATERAL WATER TREATMENT PLANT

Place of Performance

Location: BLOOMFIELD, SAN JUAN County, NEW MEXICO, 87413

State: New Mexico Government Spending

Plain-Language Summary

Department of the Interior obligated $72.4 million to CH2M HILL CONSTRUCTORS, INC. for work described as: IGF::OT::IGF CUTTER LATERAL WATER TREATMENT PLANT Key points: 1. The contract value of $72.4 million for a water treatment plant suggests a significant investment in infrastructure. 2. Awarded under full and open competition, the contract likely benefited from competitive pricing pressures. 3. The duration of 2161 days indicates a long-term, complex construction project. 4. The firm fixed-price contract type shifts significant risk to the contractor, potentially impacting final cost. 5. The project's location in New Mexico points to regional infrastructure development and potential local economic impact. 6. The North American Industry Classification System (NAICS) code 237990 signifies a focus on heavy and civil engineering construction.

Value Assessment

Rating: good

The contract value of $72.4 million for a water treatment plant is substantial, reflecting the scale and complexity of such infrastructure projects. Benchmarking against similar large-scale water treatment facilities would provide a clearer picture of value for money. The firm fixed-price nature of the contract suggests that the contractor bears the primary risk for cost overruns, which can be a positive indicator for the government if managed effectively. However, without detailed cost breakdowns or comparisons to industry standards for similar projects, a definitive assessment of cost-effectiveness is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach typically fosters a competitive environment, encouraging multiple bidders to offer their best pricing and technical solutions. The presence of 10 bids suggests a healthy level of interest and competition for this significant infrastructure project. A robust competition generally leads to better price discovery and potentially lower costs for the government.

Taxpayer Impact: A full and open competition for a project of this magnitude is beneficial for taxpayers as it increases the likelihood of securing the most cost-effective solution and reduces the risk of inflated pricing due to limited options.

Public Impact

The primary beneficiaries are likely residents and agricultural users in New Mexico who will receive improved water treatment services. The project delivers essential water infrastructure, enhancing the reliability and quality of water supply. The geographic impact is concentrated in New Mexico, supporting regional development and resource management. The construction phase will likely create numerous jobs for skilled and unskilled labor in the local area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Firm fixed-price contracts can lead to higher initial bids to account for contractor risk.
Long project duration (2161 days) increases exposure to potential cost escalations or unforeseen challenges.
The specific details of the water treatment technology and its long-term operational costs are not detailed here.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
The contractor, CH2M HILL CONSTRUCTORS, INC., is a known entity in large-scale engineering projects.
The project addresses a critical infrastructure need for water treatment.

Sector Analysis

This contract falls within the heavy and civil engineering construction sector, specifically related to water infrastructure. The market for water treatment plant construction is driven by population growth, aging infrastructure, and increasingly stringent environmental regulations. Spending in this sector can be substantial, with projects often running into tens or hundreds of millions of dollars. This contract represents a significant investment in public utility infrastructure, comparable to other large-scale water management and treatment projects undertaken by federal, state, and local governments.

Small Business Impact

The data indicates that small business participation was not a specific set-aside requirement for this contract (sb: false). While CH2M HILL CONSTRUCTORS, INC. may engage small businesses as subcontractors, the primary award was not directed towards small business entities. The impact on the small business ecosystem would depend on the subcontracting opportunities generated by the prime contractor, which are not detailed in this data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Bureau of Reclamation, a sub-agency of the Department of the Interior. Mechanisms likely include regular progress reports, site inspections, and financial reviews. Accountability is ensured through the contract terms, including performance milestones and payment schedules. Transparency is generally maintained through contract award databases and public reporting, though specific project details and oversight activities may not always be fully public.

Related Government Programs

Bureau of Reclamation Water Infrastructure Projects
Army Corps of Engineers Civil Works Projects
Environmental Protection Agency Water Infrastructure Funding

Risk Flags

Potential for cost overruns due to fixed-price contract on long-duration project.
Long project timeline increases exposure to market volatility (materials, labor).
Operational and maintenance costs not detailed within construction contract.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $72.4 million to CH2M HILL CONSTRUCTORS, INC.. IGF::OT::IGF CUTTER LATERAL WATER TREATMENT PLANT

Who is the contractor on this award?

The obligated recipient is CH2M HILL CONSTRUCTORS, INC..

Which agency awarded this contract?

Awarding agency: Department of the Interior (Bureau of Reclamation).

What is the total obligated amount?

The obligated amount is $72.4 million.

What is the period of performance?

Start: 2016-09-07. End: 2022-08-08.

What is the track record of CH2M HILL CONSTRUCTORS, INC. on similar large-scale civil engineering projects?

CH2M HILL CONSTRUCTORS, INC. (now part of Jacobs Engineering Group) has a significant history of undertaking large-scale civil engineering and infrastructure projects globally. They have been involved in numerous water and wastewater treatment facilities, transportation infrastructure, and environmental remediation projects. Their experience typically includes complex construction management, design-build capabilities, and adherence to stringent regulatory requirements. Evaluating their performance on past projects of similar scope and complexity, including their safety records, on-time delivery, and budget adherence, would provide context for their capability to execute the Cutter Lateral Water Treatment Plant project successfully. Publicly available information and past performance reviews from government agencies can offer insights into their reliability and expertise in the sector.

How does the awarded amount of $72.4 million compare to the estimated cost or industry benchmarks for similar water treatment plants?

The awarded amount of $72.4 million for the Cutter Lateral Water Treatment Plant is substantial and falls within the typical range for significant water infrastructure projects. However, a precise comparison to industry benchmarks requires detailed project specifications, such as the plant's capacity (e.g., millions of gallons per day), the complexity of the treatment processes required (e.g., advanced filtration, desalination), and the specific geographic location which influences labor and material costs. Generally, water treatment plants can range from tens of millions to hundreds of millions of dollars. Factors like the firm fixed-price contract type might also influence the initial bid amount, as contractors often include contingencies for risk. Without specific comparable project data (e.g., cost per million gallons of capacity), it's difficult to definitively state if $72.4 million represents excellent, fair, or concerning value.

What are the primary risks associated with a firm fixed-price contract for a long-duration construction project like this?

A firm fixed-price (FFP) contract shifts the majority of the cost risk to the contractor. For a long-duration project like the Cutter Lateral Water Treatment Plant (2161 days), the primary risks for the contractor include unforeseen increases in material costs, labor shortages or wage inflation, unexpected site conditions (e.g., geological issues), and potential delays caused by regulatory changes or external factors. If the contractor underestimates these risks or fails to manage them effectively, they may incur significant losses. Conversely, for the government, the main risk is that the contractor may have inflated the initial price to cover these potential risks, leading to a higher overall cost than might have been achieved with a cost-reimbursable contract. Effective contract management and clear scope definition are crucial to mitigate these risks.

What is the expected impact of this project on the local economy in New Mexico?

This $72.4 million infrastructure project is expected to have a positive impact on the local economy in New Mexico. The construction phase will create numerous direct jobs for engineers, construction workers, project managers, and support staff. Additionally, there will be indirect job creation through the demand for materials, equipment, and services from local suppliers and businesses. The project may also lead to induced economic activity as workers spend their wages in the local community. Furthermore, the completed water treatment plant will provide a critical public service, potentially supporting future economic development by ensuring a reliable and safe water supply for residents and industries in the region.

How does the competition level (10 bidders) influence the potential value for taxpayers?

Having 10 bidders for this contract is a strong indicator of robust competition, which generally benefits taxpayers. A higher number of bidders typically drives down prices as companies compete to win the contract. It also increases the likelihood that the government will receive technically sound proposals at a competitive market rate. This level of competition suggests that the Bureau of Reclamation likely received a range of pricing and technical approaches, allowing them to select the best value proposition. It reduces the risk of contractor collusion or the government being locked into a suboptimal solution due to limited options.

What are the potential long-term operational and maintenance implications of this water treatment plant?

While the contract focuses on the construction of the Cutter Lateral Water Treatment Plant, the long-term operational and maintenance (O&M) costs are a critical consideration for the government and taxpayers. The design and construction choices made during this phase will significantly influence future O&M expenses. Factors such as the type of treatment technology installed, the energy efficiency of the equipment, the durability of materials used, and the ease of access for maintenance will all impact ongoing costs. The firm fixed-price nature of the construction contract does not typically cover long-term O&M, which will likely be funded through separate operational budgets, potentially involving ongoing service contracts or direct government management.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction

Product/Service Code: ARCHITECT/ENGINEER SERVICES › ARCH-ENG SVCS - CONSTRUCTION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: R16PS00462

Offers Received: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Jacobs Engineering Group Inc

Address: 9189 S JAMAICA ST, ENGLEWOOD, CO, 80112

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

Financial Breakdown

Contract Ceiling: $72,413,450

Exercised Options: $72,413,450

Current Obligation: $72,413,450

Actual Outlays: $53,843,299

Subaward Activity

Number of Subawards: 136

Total Subaward Amount: $47,840,520

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline