Interior Department awards $3.18M for water treatment renovation, raising value-for-money questions

Contract Overview

Contract Amount: $3,177,027 ($3.2M)

Contractor: Arctic Peak LLC

Awarding Agency: Department of the Interior

Start Date: 2024-05-21

End Date: 2026-03-27

Contract Duration: 675 days

Daily Burn Rate: $4.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: WV-NATL CONSERV- WATER TREATMENT RENOVATION

Place of Performance

Location: SHEPHERDSTOWN, BERKELEY County, WEST VIRGINIA, 25443

State: West Virginia Government Spending

Plain-Language Summary

Department of the Interior obligated $3.2 million to ARCTIC PEAK LLC for work described as: WV-NATL CONSERV- WATER TREATMENT RENOVATION Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price contract structure offers some cost certainty but may not reflect true market value. 3. Limited competition raises concerns about whether the government secured the best possible price. 4. The project duration of 675 days suggests a significant undertaking requiring careful oversight. 5. The specific value-for-money assessment is challenging without comparable contract data. 6. The contract falls within the construction services sector, a common area for federal spending.

Value Assessment

Rating: questionable

Benchmarking the value of this $3.18 million contract is difficult without more specific details on the scope of work and comparable projects. The sole-source award mechanism inherently limits the ability to compare pricing against a competitive market. While a firm fixed-price contract provides cost certainty, it does not guarantee optimal value for taxpayer dollars when competition is absent. Further analysis would require understanding the specific renovation needs and market rates for similar water treatment infrastructure projects in West Virginia.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This approach is typically used when only one vendor can provide the required goods or services, or in specific emergency situations. The lack of competition means there were no other bidders to compare against, which can lead to higher prices than might be achieved in a competitive environment. The rationale for this sole-source award needs further justification to ensure it was appropriate.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most competitive pricing. Without open competition, there's a reduced incentive for the awarded contractor to offer their lowest possible price.

Public Impact

The U.S. Fish and Wildlife Service benefits from the renovation of essential water treatment infrastructure. The project will deliver construction services for water and sewer line and related structures. The geographic impact is localized to West Virginia, specifically the area where the facility is located. The contract supports the construction workforce through the execution of the renovation project.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for money.
Lack of transparency in the justification for sole-source procurement.
Potential for cost overruns if market rates were not accurately assessed for a fixed-price contract.
Limited public information on the specific technical requirements and scope of work.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Project addresses critical infrastructure needs for water treatment.
Contract awarded to a single entity, potentially simplifying management.
Project duration is defined, allowing for planning and oversight.

Sector Analysis

This contract falls within the construction sector, specifically focusing on water and sewer infrastructure. The federal government frequently procures construction services for maintaining and upgrading its facilities. The market for water treatment construction can be specialized, but typically involves numerous firms. Benchmarking this $3.18 million award would involve comparing it to similar renovation projects for water treatment facilities, considering factors like project complexity, location, and duration. The U.S. Fish and Wildlife Service's need for such renovations is consistent with its mission to manage natural resources.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not available for this contract. Given the sole-source nature of the award, it is less likely that specific small business goals were mandated as part of a competitive process. Further investigation into the contractor's own small business utilization policies would be needed to assess any indirect impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Fish and Wildlife Service, an agency within the Department of the Interior. As a definitive contract, it is subject to standard federal procurement regulations and oversight mechanisms. Transparency regarding the justification for the sole-source award and the project's progress would be key areas for accountability. The Inspector General for the Department of the Interior may have jurisdiction for audits and investigations if concerns arise.

Related Government Programs

Federal Water Infrastructure Projects
Environmental Remediation Contracts
Public Works Construction
Department of the Interior Facilities Management

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $3.2 million to ARCTIC PEAK LLC. WV-NATL CONSERV- WATER TREATMENT RENOVATION

Who is the contractor on this award?

The obligated recipient is ARCTIC PEAK LLC.

Which agency awarded this contract?

Awarding agency: Department of the Interior (U.S. Fish and Wildlife Service).

What is the total obligated amount?

The obligated amount is $3.2 million.

What is the period of performance?

Start: 2024-05-21. End: 2026-03-27.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for competitive contracting, and FAR Part 13.500(c) or Part 13.500(d) might be relevant for simplified acquisition procedures or specific justifications for other than full and open competition, such as unique capabilities or urgent needs. Without access to the specific justification document (e.g., a Justification and Approval - J&A), it's impossible to definitively state the reason. However, common reasons include the existence of only one responsible source, national security concerns, or specific agency requirements that only one contractor can meet. This lack of competition is a primary driver for questioning the value for money.

How does the firm fixed-price contract type impact risk and value for this project?

A firm fixed-price (FFP) contract shifts most of the risk to the contractor, as the price is set regardless of the contractor's actual costs. This provides the government with cost certainty, meaning the total expenditure will not exceed the $3.18 million award amount, assuming no contract modifications. For the contractor, it incentivizes efficiency to maximize profit. However, in a sole-source scenario, the 'firm' price might be inflated because there was no competitive pressure to drive it down. The value for money is therefore dependent on the accuracy of the initial price negotiation and the contractor's ability to perform efficiently within that fixed price. If the scope was underestimated or unforeseen issues arise, the contractor bears the cost, but if the initial price was too high, the government overpays.

What are the potential risks associated with a sole-source award for construction services?

The primary risk of a sole-source award for construction services is the potential for paying a non-competitive price. Without competing bids, the government loses the opportunity to leverage market forces to secure the best possible value. This can lead to inflated costs for materials, labor, and overhead. Additionally, sole-source awards can reduce the incentive for the contractor to innovate or perform exceptionally, as the pressure to win future work through demonstrated performance is lessened. There's also a risk that the chosen contractor may not possess the most optimal skillset or technology for the specific project compared to what might have been available through a competitive process. Transparency and robust justification are crucial to mitigate these risks.

Can the $3.18 million contract value be benchmarked against similar federal water treatment renovation projects?

Benchmarking this $3.18 million contract requires access to detailed project data, including the specific scope of work (e.g., types of equipment replaced, extent of structural repairs, system upgrades), location, and contract duration. The provided data is limited. However, general benchmarks for water infrastructure construction can be found through industry reports and government databases like USAspending.gov or FPDS. The duration of 675 days (approximately 22 months) suggests a substantial project. Without comparable sole-source projects or detailed scope information, a precise benchmark is difficult. However, the absence of competition makes direct value comparison challenging, as the price may not reflect market rates.

What is the track record of ARCTIC PEAK LLC in performing federal construction contracts?

Information on ARCTIC PEAK LLC's track record with federal contracts is not detailed in the provided data snippet. To assess their performance history, one would typically look at past contract awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any history of disputes or contract terminations. A review of federal procurement databases like SAM.gov or USAspending.gov would be necessary to identify previous contracts awarded to ARCTIC PEAK LLC, their values, agencies involved, and the types of services rendered. A strong performance history would provide some assurance, but it does not negate the concerns associated with a sole-source award.

Industry Classification

NAICS: Construction › Utility System Construction › Water and Sewer Line and Related Structures Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 140FC224R0006

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2553 DULLES VIEW DR, HERNDON, VA, 20171

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $3,177,027

Exercised Options: $3,177,027

Current Obligation: $3,177,027

Actual Outlays: $2,775,103

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline