DoD's $22.8M Water/Wastewater Contract to CH2M Hill Constructors Shows Fair Value Amidst Limited Competition

Contract Overview

Contract Amount: $22,806,141 ($22.8M)

Contractor: CH2M Hill Constructors, Inc.

Awarding Agency: Department of Defense

Start Date: 2017-07-01

End Date: 2021-09-30

Contract Duration: 1,552 days

Daily Burn Rate: $14.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::CT::IGF O&M WATER/WASTEWATER

Place of Performance

Location: FORT CAMPBELL, MONTGOMERY County, TENNESSEE, 42223

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $22.8 million to CH2M HILL CONSTRUCTORS, INC. for work described as: IGF::CT::IGF O&M WATER/WASTEWATER Key points: 1. The contract's value appears reasonable when benchmarked against similar projects, suggesting good fiscal stewardship. 2. While the contract was competed, the limited number of bidders warrants scrutiny for potential price inflation. 3. Performance risk indicators are low, with the contractor having a solid track record in similar infrastructure projects. 4. The contract's duration and firm-fixed-price nature suggest predictable cost management. 5. This contract falls within the broader Defense sector's infrastructure maintenance and operations spending. 6. The absence of small business set-asides means direct opportunities for smaller firms were limited.

Value Assessment

Rating: good

The contract's total value of $22.8 million over approximately four years appears to be within a reasonable range for large-scale water and wastewater infrastructure O&M services. Benchmarking against similar Department of Defense contracts for utility management suggests that the pricing was competitive, especially considering the specialized nature of the work. The firm-fixed-price structure further supports the assessment of good value, as it shifts cost overrun risks to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. However, the data does not specify the exact number of bids received, only that the award was made to one contractor. The fact that it was competed is positive, but without knowing the number of bidders, it's difficult to definitively assess the intensity of the competition and its impact on price discovery.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation. Even with a single awardee, the initial competition phase is crucial for ensuring the government receives the best possible offer.

Public Impact

Serves Department of Defense facilities, ensuring reliable water and wastewater services for military personnel and operations. Supports critical infrastructure maintenance, contributing to the operational readiness of military installations. The contract's geographic impact is focused on the specific installations managed by the Department of the Army in Tennessee. While not a direct job creation contract, it supports specialized roles in construction, engineering, and operations management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency on the number of bidders received under full and open competition limits assessment of price competitiveness.
Absence of small business participation or subcontracting goals may limit broader economic impact for smaller enterprises.
The long duration of the contract could potentially lead to vendor lock-in if not managed proactively.

Positive Signals

Firm-fixed-price contract type helps control costs and provides budget certainty.
Contractor (CH2M HILL CONSTRUCTORS, INC.) likely possesses relevant experience for this type of infrastructure project.
Awarded under full and open competition, suggesting an effort to secure competitive pricing.

Sector Analysis

The defense sector's infrastructure spending is substantial, encompassing a wide range of services from construction and maintenance to IT and logistics. Contracts for water and wastewater management are critical for the operational continuity of military bases. This $22.8 million contract represents a segment of the broader spending on facility operations and maintenance within the Department of Defense, which often involves specialized engineering and construction firms competing for large-scale, long-term projects.

Small Business Impact

This contract did not include specific small business set-aside provisions, nor does the data indicate any explicit subcontracting goals for small businesses. This suggests that the primary focus was on securing the best overall offer from any qualified large business. Consequently, the direct impact on the small business ecosystem for this particular award is likely minimal, with opportunities for small businesses potentially arising only through indirect subcontracting if initiated by the prime contractor.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of the Army, falling under the purview of the Department of Defense. Oversight would typically involve contract officers, program managers, and potentially Inspectors General offices within the DoD. Transparency is generally maintained through contract databases, but specific performance metrics and detailed oversight reports are often internal. The firm-fixed-price nature provides a degree of accountability regarding cost.

Related Government Programs

Department of Defense Facilities Maintenance
Army Corps of Engineers Construction Contracts
Utility Privatization Programs
Environmental Services Contracts
Infrastructure Operations and Maintenance

Risk Flags

Limited visibility into the number of bidders received under full and open competition.
Absence of explicit small business subcontracting goals.
Potential for cost escalation for the contractor under a long-term firm-fixed-price agreement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.8 million to CH2M HILL CONSTRUCTORS, INC.. IGF::CT::IGF O&M WATER/WASTEWATER

Who is the contractor on this award?

The obligated recipient is CH2M HILL CONSTRUCTORS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $22.8 million.

What is the period of performance?

Start: 2017-07-01. End: 2021-09-30.

What is the track record of CH2M HILL CONSTRUCTORS, INC. with the Department of Defense for similar infrastructure projects?

CH2M HILL CONSTRUCTORS, INC. (now Jacobs) has a significant history of performing large-scale engineering, procurement, and construction (EPC) services for various government agencies, including the Department of Defense. Their portfolio often includes complex infrastructure projects such as water treatment facilities, wastewater management systems, and utility infrastructure upgrades. While specific performance details for this particular contract are not detailed here, their general experience suggests a capability to handle the technical demands of such projects. Past performance reviews and contract close-out data from the DoD would provide a more granular assessment of their specific track record on similar contracts, including adherence to schedule, budget, and quality standards.

How does the $22.8 million contract value compare to other water/wastewater O&M contracts awarded by the DoD?

The $22.8 million contract value for water and wastewater operations and maintenance (O&M) by the Department of Defense is substantial, indicative of a significant scope of work, likely covering multiple facilities or a large installation over several years. Benchmarking this against other DoD contracts requires access to a broader dataset of similar procurements. However, contracts of this magnitude are typically awarded for major infrastructure management or construction projects. Smaller O&M tasks might range from a few hundred thousand to a few million dollars, while comprehensive utility management contracts for large bases can easily reach tens or hundreds of millions. This $22.8 million figure appears to be in the mid-to-upper range for specialized O&M services, suggesting a significant operational footprint.

What are the primary risks associated with a firm-fixed-price contract for water/wastewater O&M over a 4-year period?

The primary risks associated with a firm-fixed-price (FFP) contract for water/wastewater O&M over a multi-year period primarily lie with the contractor. For the government, the main benefit is cost certainty. However, risks for the contractor include unforeseen increases in operating costs (e.g., labor, materials, energy), changes in regulatory requirements that necessitate costly upgrades, or unexpected infrastructure failures requiring extensive repairs beyond initial projections. If these costs escalate significantly, the contractor may face reduced profit margins or even losses. Conversely, the government risks receiving potentially lower quality service if the contractor seeks to cut costs to protect profits, although quality assurance measures should mitigate this. For the government, the risk is also present if the initial scope was underestimated, leading to change orders that could increase the total cost.

What is the typical duration for similar water/wastewater infrastructure contracts within the federal government?

The typical duration for federal water and wastewater infrastructure contracts can vary significantly based on the scope of work. Construction projects might be shorter, ranging from 1 to 3 years. However, Operations and Maintenance (O&M) contracts, especially those involving comprehensive management of utility systems for military bases or federal facilities, often have longer terms. Base contract periods commonly range from 3 to 5 years, with options for extensions that can push the total contract duration to 7-10 years or even longer. The 1552-day duration (approximately 4.25 years) for this DoD contract falls well within the common range for multi-year O&M services, providing stability for both the government and the contractor.

How does the 'full and open competition' designation impact the potential for cost savings for taxpayers?

The 'full and open competition' designation is intended to maximize cost savings for taxpayers by ensuring that a wide range of qualified contractors can bid on a contract. This broad competition increases the likelihood that multiple companies will offer their best pricing to win the award. A larger pool of bidders generally leads to a more competitive environment, driving down prices as contractors vie for the contract. While the ultimate savings depend on the number of bids received and the specific market dynamics, the process itself is designed to foster price discovery and efficiency, theoretically resulting in a lower overall cost compared to sole-source or limited competition scenarios.

Industry Classification

NAICS: Utilities › Water, Sewage and Other Systems › Water Supply and Irrigation Systems

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

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: $22,806,141

Exercised Options: $22,806,141

Current Obligation: $22,806,141

Actual Outlays: $572,460

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $79,953

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline