DoD's $158.7M contract for technical services awarded to CH2M HILL, INC. shows fair value

Contract Overview

Contract Amount: $158,711,911 ($158.7M)

Contractor: CH2M Hill, Inc

Awarding Agency: Department of Defense

Start Date: 2011-01-06

End Date: 2018-03-31

Contract Duration: 2,641 days

Daily Burn Rate: $60.1K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: BTRP GEORGIA

Plain-Language Summary

Department of Defense obligated $158.7 million to CH2M HILL, INC for work described as: BTRP GEORGIA Key points: 1. The contract's value appears reasonable when benchmarked against similar professional services. 2. Full and open competition was utilized, suggesting a competitive pricing environment. 3. The contract duration of over 7 years indicates a long-term need for these services. 4. The Cost Plus Award Fee (CPA) structure incentivizes performance but requires careful oversight. 5. The services provided fall under a broad category, making direct performance comparisons challenging. 6. No small business set-aside was applied, with no subcontracting plan details provided.

Value Assessment

Rating: fair

The total award amount of approximately $158.7 million over more than seven years suggests a moderate annual spend. Benchmarking against other large, multi-year professional services contracts within the Department of Defense indicates that the pricing structure and overall value are within an expected range for the scope of work. The Cost Plus Award Fee (CPA) pricing model, while offering flexibility and performance incentives, can sometimes lead to higher costs if not managed diligently. However, without specific performance metrics and award fee payouts, a definitive value assessment is difficult, but the overall expenditure appears justifiable for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The specific number of bidders is not provided, but the use of this procurement method generally fosters a competitive environment, which is beneficial for price discovery and achieving fair market value. The agency's decision to use full and open competition suggests confidence in the market's ability to provide qualified contractors and competitive pricing for these specialized technical services.

Taxpayer Impact: Taxpayers benefit from the competitive nature of this award, as it likely drove down costs compared to a sole-source or limited competition scenario. The open competition process increases the likelihood that the government secured the best possible value for its investment.

Public Impact

The Department of Defense benefits from specialized technical and scientific support services. Services delivered likely enhance national security through threat reduction capabilities. The geographic impact is national, supporting defense initiatives across various locations. Workforce implications include the employment of highly skilled scientists, engineers, and technical professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Award Fee (CPA) structure requires robust oversight to ensure costs remain reasonable and award fees are justified by performance.
The broad nature of 'All Other Professional, Scientific, and Technical Services' can make it challenging to precisely measure and benchmark performance outcomes.
The long contract duration (over 7 years) necessitates continuous monitoring to ensure ongoing relevance and value.

Positive Signals

The use of full and open competition suggests a strong market response and potential for competitive pricing.
The award to a single contractor (CH2M HILL, INC) for a significant duration implies a level of trust and proven capability.
The contract supports critical defense missions, contributing to national security objectives.

Sector Analysis

The contract falls within the Professional, Scientific, and Technical Services sector, specifically under NAICS code 541990. This sector is characterized by a wide range of specialized expertise, often supporting government agencies in areas requiring deep technical knowledge. The market size for such services is substantial, driven by ongoing government needs in defense, research, and development. This specific contract likely represents a significant portion of spending within its niche, supporting the Defense Threat Reduction Agency's mission.

Small Business Impact

This contract does not appear to have included a small business set-aside, as indicated by 'sb': false. There is no information provided regarding subcontracting plans or performance. This suggests that the primary award went to a large business, and opportunities for small businesses would likely be through direct subcontracting by CH2M HILL, INC., the details of which are not specified in this data.

Oversight & Accountability

Oversight for this contract would primarily reside with the Defense Threat Reduction Agency (DTRA) and potentially the Department of Defense's Inspector General. The CPA structure necessitates careful monitoring of performance metrics against which award fees are determined, as well as rigorous auditing of costs incurred. Transparency would be enhanced through regular reporting requirements and contract performance reviews. The effectiveness of oversight depends on the agency's resources and diligence in managing the contract.

Related Government Programs

Defense Threat Reduction Agency Support Services
Professional and Technical Services Contracts
Department of Defense Scientific and Engineering Support
Cost Plus Award Fee Contracts

Risk Flags

Potential for cost creep due to CPA structure.
Difficulty in precisely measuring performance for broad service categories.
Risk of scope misalignment over the long contract duration.
Lack of specific small business subcontracting details.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $158.7 million to CH2M HILL, INC. BTRP GEORGIA

Who is the contractor on this award?

The obligated recipient is CH2M HILL, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Threat Reduction Agency).

What is the total obligated amount?

The obligated amount is $158.7 million.

What is the period of performance?

Start: 2011-01-06. End: 2018-03-31.

What was the specific nature of the 'All Other Professional, Scientific, and Technical Services' provided under this contract?

The provided data categorizes this contract under NAICS code 541990, 'All Other Professional, Scientific, and Technical Services.' This is a broad classification that can encompass a wide array of activities. Given the awarding agency is the Defense Threat Reduction Agency (DTRA), it is highly probable that the services involved specialized scientific analysis, technical consulting, research support, program management, or engineering services directly related to threat reduction, non-proliferation, and consequence management. Without more granular data, the exact deliverables remain unspecified, but they would align with DTRA's mission to counter weapons of mass destruction threats.

How does the Cost Plus Award Fee (CPA) structure typically impact contractor performance and cost?

The Cost Plus Award Fee (CPA) contract type allows the contractor to recover all allowable costs plus an additional fee that is composed of a fixed base fee and an award amount. The award amount is determined by the government based on the contractor's performance against pre-defined criteria. This structure is intended to incentivize superior performance by offering a higher potential profit margin than a standard cost-plus-fixed-fee contract. However, it requires robust government oversight to establish objective performance metrics and to fairly assess the contractor's achievements. If not managed carefully, the potential for higher fees could lead to increased costs for the government, although the performance incentives aim to offset this by driving better outcomes and efficiency.

What is the typical performance period and value range for similar large-scale technical services contracts within the Department of Defense?

Large-scale technical services contracts within the Department of Defense often span multiple years, typically ranging from 3 to 10 years, including option periods. The total value can vary significantly based on the scope and criticality of the services, but multi-million dollar awards are common. Contracts in the range of $100 million to $500 million for specialized support services over their lifetime are not unusual. The duration of this contract (over 7 years) and its value ($158.7 million) place it within the expected parameters for significant, long-term technical support requirements within the DoD, particularly for agencies like DTRA that require sustained expertise.

What are the potential risks associated with a long-duration contract for 'All Other Professional, Scientific, and Technical Services'?

Long-duration contracts for broad service categories like 'All Other Professional, Scientific, and Technical Services' carry several potential risks. Firstly, the scope of work may become outdated or misaligned with evolving agency needs over time, leading to inefficiencies or the need for costly modifications. Secondly, the lack of specific performance metrics inherent in such broad categories can make it difficult to hold contractors accountable for suboptimal outcomes. Thirdly, the extended period increases the risk of contractor performance degradation or the emergence of better-value solutions from the market. Finally, the Cost Plus Award Fee structure, while incentivizing, requires sustained vigilance from the government to prevent cost overruns and ensure award fees are genuinely earned.

How does the 'full and open competition' procurement method influence the selection of contractors for specialized technical services?

The 'full and open competition' method is designed to maximize the pool of potential offerors, thereby increasing the likelihood of receiving competitive proposals and achieving the best value for the government. For specialized technical services, this means that any responsible source, regardless of size or previous relationship with the agency, can compete. This process typically involves a detailed Request for Proposal (RFP) outlining the requirements, followed by a rigorous evaluation of technical capabilities, past performance, and price. While it can be more time-consuming and resource-intensive for both the agency and the bidders, it generally leads to more innovative solutions and cost savings compared to limited or sole-source procurements. The agency's choice of this method suggests confidence in the market's ability to meet its complex needs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HDTRA107R0004

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Jacobs Engineering Group Inc

Address: 2411 DULLES CORNER PARK STE 500, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $170,349,633

Exercised Options: $169,811,623

Current Obligation: $158,711,911

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDTRA108D0008

IDV Type: IDC

Timeline