DoD's $30.6M remediation contract with LKR, LLC shows fair value despite limited competition

Contract Overview

Contract Amount: $30,614,227 ($30.6M)

Contractor: LKR, LLC

Awarding Agency: Department of Defense

Start Date: 2011-07-22

End Date: 2021-02-22

Contract Duration: 3,503 days

Daily Burn Rate: $8.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TEXAS BASES PERFORMANCE BASED REMEDIATION

Place of Performance

Location: DYESS AFB, TAYLOR County, TEXAS, 79607

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $30.6 million to LKR, LLC for work described as: TEXAS BASES PERFORMANCE BASED REMEDIATION Key points: 1. Contract value appears reasonable when benchmarked against similar remediation services. 2. Competition was limited, raising questions about optimal price discovery. 3. Performance history of LKR, LLC is a key indicator for future success. 4. The contract duration of nearly 10 years suggests a long-term need for these services. 5. This contract falls within the broader environmental remediation sector for the Department of Defense. 6. The firm-fixed-price structure shifts performance risk to the contractor.

Value Assessment

Rating: fair

The contract's total value of approximately $30.6 million over its period of performance suggests a moderate level of spending for environmental remediation services. Benchmarking against similar contracts for base cleanup and hazardous material removal indicates that the pricing is within an expected range, though without detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm-fixed-price contract type implies that the contractor bears the risk of cost overruns, which can sometimes lead to higher initial bids but provides budget certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded. The presence of two bidders suggests a limited competitive landscape for this specific requirement. A low number of bidders can sometimes result in higher prices as the incentive to underbid competitors is reduced. However, the specific reasons for excluding other sources would be critical to understanding the full competitive dynamic.

Taxpayer Impact: Limited competition may have led to taxpayers paying a premium compared to a scenario with broader participation. The government may not have achieved the most cost-effective solution due to the restricted bidder pool.

Public Impact

The primary beneficiaries are the Department of Defense and its installations in Texas, ensuring environmental compliance and safety. Services delivered include remediation of contaminated sites, likely involving hazardous materials management and site cleanup. The geographic impact is concentrated in Texas, where the military bases are located. Workforce implications include employment for environmental scientists, engineers, technicians, and construction labor involved in remediation activities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to suboptimal pricing.
Contract duration is long, increasing exposure to potential performance issues over time.
Exclusion of sources warrants further investigation into the justification.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Contract is for essential environmental remediation services, supporting base operations.
Contract awarded to a specific LLC, potentially indicating specialized capabilities.

Sector Analysis

The environmental remediation services sector is a critical component of government contracting, particularly for agencies managing large land holdings like the Department of Defense. This sector involves cleaning up contaminated sites, managing hazardous waste, and ensuring regulatory compliance. Spending in this area can fluctuate based on environmental regulations, base realignment, and infrastructure needs. Comparable spending benchmarks are difficult to establish without specific site conditions and remediation technologies, but the overall market is substantial, driven by both government and private sector needs.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a set-aside provision. The primary contractor, LKR, LLC, is identified, but its size status is not provided, nor are details on any small business subcontracting plans.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring LKR, LLC to deliver specified remediation services within agreed-upon costs. Transparency is generally maintained through contract award databases and reporting requirements, though detailed performance metrics and cost breakdowns may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Environmental Remediation Services
Base Realignment and Closure (BRAC) Cleanup
Hazardous Waste Management
Department of Defense Environmental Programs

Risk Flags

Limited competition
Long contract duration
Exclusion of sources

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.6 million to LKR, LLC. TEXAS BASES PERFORMANCE BASED REMEDIATION

Who is the contractor on this award?

The obligated recipient is LKR, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $30.6 million.

What is the period of performance?

Start: 2011-07-22. End: 2021-02-22.

What is the track record of LKR, LLC in performing similar environmental remediation contracts for the federal government?

Assessing the track record of LKR, LLC is crucial for understanding the reliability and effectiveness of this contractor. A review of past performance evaluations, contract awards, and any documented issues or successes on previous federal contracts would provide insight into their capabilities. Specifically, looking at contracts of similar size, scope, and complexity, particularly those involving hazardous material remediation on military installations, would be most relevant. Information on their safety record, adherence to timelines, and quality of work would inform the risk assessment for this ongoing contract. Without specific past performance data, it is difficult to definitively gauge their suitability beyond the initial award.

How does the pricing of this contract compare to other federal remediation contracts awarded in Texas or similar geographic regions?

To benchmark the value, this contract's pricing should be compared against similar environmental remediation contracts awarded by federal agencies in Texas and comparable regions. Key metrics for comparison would include cost per acre remediated, cost per ton of hazardous material removed, or cost per cubic yard of contaminated soil treated, depending on the specific nature of the work. Factors such as site complexity, type of contaminants, remediation technology employed, and prevailing labor costs in the region would need to be considered. If this contract's unit costs are significantly higher than comparable contracts, it could indicate potential overpricing or unique site challenges not immediately apparent.

What specific environmental risks or challenges were identified that justified the exclusion of certain sources during the competition phase?

The justification for excluding specific sources in a 'Full and Open Competition After Exclusion of Sources' award is critical for understanding the competitive landscape. Agencies typically exclude sources when only a limited number of responsible contractors can meet the specific requirements, often due to unique technical capabilities, proprietary information, or urgent needs tied to specific existing systems. For environmental remediation, this could relate to specialized equipment, patented cleanup technologies, or extensive knowledge of a particular site's contamination history. Understanding these justifications helps determine if the exclusion was necessary and if it unduly limited competition, potentially impacting price and innovation.

What are the key performance indicators (KPIs) used to measure the success of LKR, LLC's remediation efforts under this contract?

Effective oversight requires clearly defined Key Performance Indicators (KPIs) to measure the success of environmental remediation projects. These KPIs should align with the contract's objectives and regulatory requirements. Examples could include the percentage of contaminant levels reduced to meet regulatory standards, the volume of hazardous material safely removed and disposed of, adherence to project timelines and milestones, and compliance with environmental health and safety protocols. Regular reporting against these KPIs by LKR, LLC, and verification by the contracting officer's representative (COR), are essential for ensuring the contractor is meeting its obligations and achieving the desired environmental outcomes.

How has federal spending on environmental remediation services for the Department of Defense evolved over the past five years, and where does this contract fit in?

Federal spending on environmental remediation services for the Department of Defense (DoD) has historically been substantial, driven by legacy contamination issues, ongoing operational impacts, and evolving environmental regulations. Over the past five years, spending patterns may have shifted due to budget priorities, new environmental mandates, or base closure initiatives. This $30.6 million contract, awarded over a period of nearly ten years, represents a significant but likely typical investment for a large-scale remediation project at a specific installation or set of installations. Understanding the broader trend of DoD environmental spending can provide context for the scale and importance of this particular contract within the agency's overall environmental management strategy.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Remediation and Other Waste Management Services › Remediation Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: LOS Alamos Technical Associates, Inc. (UEI: 089416002)

Address: 756 PARK MEADOW RD, WESTERVILLE, OH, 43081

Business Categories: Category Business, Limited Liability Corporation, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $30,614,227

Exercised Options: $30,614,227

Current Obligation: $30,614,227

Contract Characteristics

Consolidated Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA890309D8571

IDV Type: IDC

Timeline