DoD's $44M environmental remediation contract with Environmental Chemical Corporation shows long duration and cost-plus structure

Contract Overview

Contract Amount: $44,159,406 ($44.2M)

Contractor: Environmental Chemical Corporation

Awarding Agency: Department of Defense

Start Date: 2004-10-29

End Date: 2023-11-27

Contract Duration: 6,968 days

Daily Burn Rate: $6.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Place of Performance

Location: LOS GATOS, SANTA CLARA County, CALIFORNIA, 95032

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $44.2 million to ENVIRONMENTAL CHEMICAL CORPORATION for work described as: Key points: 1. The contract's extended duration of nearly 20 years suggests a sustained need for environmental services. 2. A cost-plus fixed fee pricing structure can incentivize contractors to incur costs, potentially leading to higher overall expenditures. 3. The relatively low number of bids (2) for this contract may indicate limited competition or specialized service requirements. 4. The contract's focus on remediation services aligns with ongoing environmental cleanup efforts across federal agencies. 5. Performance is managed by the Defense Contract Management Agency, suggesting a focus on ensuring contract compliance and quality. 6. The contract's significant value over its lifespan warrants scrutiny of cost efficiency and effectiveness.

Value Assessment

Rating: fair

The contract's cost-plus fixed fee structure requires careful monitoring to ensure costs remain reasonable and that the fixed fee adequately compensates the contractor for their efforts without excessive profit. Benchmarking against similar environmental remediation contracts, especially those with fixed-fee components, is crucial. The long duration of the contract also raises questions about whether the initial pricing assumptions remained valid throughout its lifespan. Without more granular cost data and comparisons to industry benchmarks for specific remediation tasks, a definitive value assessment 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. However, with only two bids received, the level of competition was limited. This could suggest that the specialized nature of environmental remediation services, or the specific requirements of this contract, narrowed the field of potential bidders. A low number of bidders can sometimes lead to less competitive pricing, as the winning contractor faces less pressure to offer the lowest possible cost.

Taxpayer Impact: While full and open competition was advertised, the low bid count means taxpayers may not have benefited from the most aggressive pricing possible. The government should ensure that the selected contractor's price is still competitive and represents good value despite the limited bidding pool.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential environmental cleanup and remediation services at its facilities. This contract supports the cleanup of hazardous materials and environmental restoration, contributing to regulatory compliance and public health. Services are likely delivered at various DoD installations, potentially across California given the 'CA' designation, impacting local environments. The contract supports a workforce skilled in environmental engineering, hazardous waste management, and site remediation. Successful remediation efforts contribute to the long-term usability of federal land and reduce environmental liabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus fixed fee contracts can lead to cost overruns if not rigorously managed.
Limited competition (2 bidders) may result in suboptimal pricing for taxpayers.
The extended contract duration (nearly 20 years) increases the risk of scope creep and evolving cost structures.
Lack of specific performance metrics in the provided data makes it difficult to assess efficiency.
The absence of small business subcontracting data raises questions about broader economic impact.

Positive Signals

Awarded under full and open competition, ensuring a broad initial solicitation.
Managed by the Defense Contract Management Agency, indicating established oversight.
The contract addresses critical environmental remediation needs for the Department of Defense.
Long-term contract provides stability and continuity for essential environmental services.
The contractor, Environmental Chemical Corporation, has a sustained relationship with the DoD, suggesting experience.

Sector Analysis

Environmental remediation is a critical sector within government contracting, addressing the cleanup of contaminated sites and compliance with environmental regulations. This contract falls under the broader environmental services industry, which includes hazardous waste management, site assessment, and remediation technologies. The market is characterized by specialized firms with expertise in engineering, geology, and environmental science. Spending in this sector is driven by regulatory requirements, legacy contamination from industrial activities, and ongoing operational needs of federal agencies. Comparable spending benchmarks would involve analyzing other large-scale environmental cleanup contracts awarded by federal agencies like the EPA or other military branches.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a set-aside provision. However, the prime contractor, Environmental Chemical Corporation, may engage small businesses as subcontractors for specialized services or support roles. Without specific subcontracting plans or reports, the extent of small business participation remains unknown.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for overseeing contract performance, ensuring compliance with terms and conditions, and monitoring costs. The cost-plus fixed fee structure necessitates robust financial oversight to validate incurred costs and ensure the fixed fee remains appropriate. Transparency regarding specific performance metrics, cost breakdowns, and audit reports would enhance accountability. Inspector General jurisdiction would typically apply to investigate potential fraud, waste, or abuse related to this contract.

Related Government Programs

Environmental Services
Hazardous Waste Management
Site Remediation
Defense Contract Management
Federal Environmental Compliance

Risk Flags

Cost-Plus Contract Type
Long Contract Duration
Limited Competition (2 Bidders)
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.2 million to ENVIRONMENTAL CHEMICAL CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is ENVIRONMENTAL CHEMICAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $44.2 million.

What is the period of performance?

Start: 2004-10-29. End: 2023-11-27.

What is the historical spending trend for this specific contract over its nearly 20-year duration?

The provided data summarizes the total award amount ($44,159,405.81) but does not detail the annual or periodic spending. To understand the historical spending trend, one would need access to the contract's financial execution data. This would involve analyzing the disbursement of funds over the contract's lifespan, from its start date of October 29, 2004, to its end date of November 27, 2023. Such an analysis would reveal if spending has been consistent, or if there have been periods of significantly higher or lower expenditure, potentially correlating with specific remediation phases, unforeseen issues, or changes in contract scope. Understanding these patterns is crucial for assessing cost management and forecasting future needs.

How does the per-unit cost of remediation services under this contract compare to industry benchmarks?

Determining the per-unit cost requires breaking down the total contract value by specific remediation services rendered (e.g., per cubic yard of soil treated, per gallon of water remediated, per site investigated). The provided data lacks this granular service-level detail and associated costs. To perform this comparison, one would need access to the contractor's detailed task orders and invoices, along with industry cost databases or reports specific to environmental remediation services in California. Benchmarking would involve identifying comparable projects (e.g., similar contaminants, site conditions, geographic location) and comparing the cost per unit of work. Without this detailed breakdown, a meaningful per-unit cost comparison is not feasible.

What specific environmental risks or challenges has this contract addressed, and how effectively?

The contract's objective is 'Remediation Services,' implying it addresses existing environmental contamination. The specific risks and challenges are not detailed in the summary data. These could range from soil and groundwater contamination by hazardous substances (e.g., solvents, heavy metals, petroleum products) to asbestos abatement or munitions clearance at former military sites. Assessing effectiveness would require reviewing performance reports, site closure documentation, environmental monitoring data (pre- and post-remediation), and compliance records with regulatory agencies (e.g., EPA, state environmental agencies). The long duration suggests ongoing or complex challenges that may not have been fully resolved within initial timelines.

What is the track record of Environmental Chemical Corporation on similar government contracts?

Environmental Chemical Corporation has been awarded this significant contract by the Department of Defense, indicating a level of qualification and experience recognized by the agency. To assess their broader track record, a review of their contract history with various federal agencies would be necessary. This would involve examining past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), any past disputes or contract terminations, and the types and scale of environmental services they have previously provided. Their sustained engagement with the DoD on this long-duration contract suggests a generally positive performance history, but a comprehensive review would provide a more complete picture.

Given the cost-plus fixed fee structure, what mechanisms are in place to control contractor profit and prevent cost inflation?

Cost-plus fixed fee (CPFF) contracts include a fixed fee that is intended to represent the contractor's profit. This fee is determined at the outset and does not change with the actual costs incurred. However, the 'cost' portion of the contract is subject to audit and review. The Defense Contract Management Agency (DCMA) plays a crucial role in overseeing these costs, ensuring they are allowable, allocable, and reasonable according to federal acquisition regulations. Mechanisms to control profit and inflation include rigorous auditing of incurred costs, clear definitions of direct and indirect costs, limitations on overhead rates, and potentially incentive clauses tied to cost savings or performance targets, although these are not specified in the provided data. The government's ability to negotiate the fixed fee and its vigilance in cost auditing are key controls.

How does the $44M total award value compare to overall DoD spending on environmental remediation?

The Department of Defense has a substantial and ongoing commitment to environmental cleanup and compliance, with annual spending often in the billions of dollars across various programs and contracts. A single contract valued at approximately $44 million over nearly two decades represents a significant but not exceptionally large portion of the DoD's total environmental budget. It is indicative of a substantial, long-term remediation project at one or more installations. To contextualize this further, one would compare this contract's value against the DoD's overall environmental restoration budget and other large remediation contracts to understand its relative scale within the DoD's environmental portfolio.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1240 BAYSHORE HGHWY, BURLINGAME, CA, 94010

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business

Financial Breakdown

Contract Ceiling: $38,493,743

Exercised Options: $38,493,743

Current Obligation: $44,159,406

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA890304D8672

IDV Type: IDC

Timeline