Army Corps of Engineers awards $133.6M dredging contract to joint venture, exceeding initial estimates

Contract Overview

Contract Amount: $23,306,389 ($23.3M)

Contractor: Luhr Bros Inc & King Fisher Marine LP, JV

Awarding Agency: Department of Defense

Start Date: 2003-07-30

End Date: 2006-12-24

Contract Duration: 1,243 days

Daily Burn Rate: $18.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE

Sector: Construction

Official Description: 200311!003212!96CE!CW64 !USA ENGINEER DISTRICT GALVESTON !DACW6403C0027 !A!N! !N! !20030730!20050801!133618871!133618871!133618871!N!LUHR BROS INC & KING FISHER MA!250 W SAND BANK RD !COLUMBIA !IL!62236!17000!273!48!CORPUS CHRISTI !KLEBERG !TEXAS !+000000050000!N!N!000000000000!Y216!DREDGING, EXCL. DUSTPAN AND SEA-GOING HOPPERS !C2 !CONSTRUCTION !5000!NOT DISCERNABLE OR CLASSIFIED !237990!E! !3! ! ! ! ! !99990909!B! ! !A! !A!U!J!2!002!A! !D!N!Z! ! !N!C!N! ! ! !C!C!A!A!000!A!C!Y! !N! ! ! ! !0001! !

Place of Performance

Location: CORPUS CHRISTI, NUECES County, TEXAS, 78401

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $23.3 million to LUHR BROS INC & KING FISHER MARINE LP, JV for work described as: 200311!003212!96CE!CW64 !USA ENGINEER DISTRICT GALVESTON !DACW6403C0027 !A!N! !N! !20030730!20050801!133618871!133618871!133618871!N!LUHR BROS INC & KING FISHER MA!250 W SAND BANK RD !COLUMBIA !IL!62236!17000!273!48!CORPUS CHRISTI !KLEBE… Key points: 1. Contract value significantly surpassed initial estimates, suggesting potential for cost overruns or scope expansion. 2. Awarded through full and open competition, indicating a competitive bidding process. 3. The contractor, a joint venture, has experience in heavy civil engineering construction. 4. Contract duration was extended, potentially impacting overall project timelines and costs. 5. The service falls under heavy and civil engineering construction, a critical infrastructure sector. 6. Fixed-price contract type aims to control costs, but the final value exceeded projections.

Value Assessment

Rating: fair

The final award amount of $133.6 million for dredging services significantly exceeded the initial estimated value of $17 million. This substantial increase raises questions about the accuracy of the initial estimate, potential scope creep, or unforeseen challenges during the contract execution. While the contract type is fixed-price, the magnitude of the increase warrants scrutiny to ensure taxpayer value was maintained. Benchmarking against similar large-scale dredging projects would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders were likely considered. The presence of two bidders (no=2) indicates a degree of competition, which is generally favorable for price discovery. However, without knowing the number of proposals received or the specific bidding dynamics, it's difficult to definitively assess the intensity of the competition and its impact on the final negotiated price.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer funds are used efficiently by driving down prices. The full and open competition for this dredging contract suggests that the government sought the best value from the market, potentially leading to cost savings compared to a sole-source award.

Public Impact

The primary beneficiaries are entities requiring deep-water port access and navigation channel maintenance, likely in the Corpus Christi area. The contract delivers essential dredging services to maintain and improve maritime infrastructure. Geographic impact is concentrated in Texas, specifically Kleberg County and the Corpus Christi port area. The contract supports the maritime construction workforce involved in specialized dredging operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant increase in contract value from initial estimate to final award.
Potential for cost overruns or scope expansion due to the large value increase.
Contract duration was extended, which could indicate project complexities or delays.

Positive Signals

Awarded through full and open competition, promoting market fairness.
Fixed-price contract type provides a degree of cost certainty.
The contractor is a joint venture, potentially bringing combined expertise to the project.

Sector Analysis

This contract falls within the heavy and civil engineering construction sector, specifically focusing on dredging. This sector is crucial for maintaining and developing maritime infrastructure, including ports and waterways. The market for large-scale dredging is often characterized by specialized equipment and a limited number of experienced contractors. Comparable spending benchmarks would typically involve analyzing other major port improvement or maintenance contracts awarded by agencies like the Army Corps of Engineers or the Department of Transportation.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb=false). As a large-scale infrastructure project, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or easily achievable, though specific subcontracting plans are not detailed here. The focus is likely on large, specialized firms capable of executing complex dredging operations.

Oversight & Accountability

The Army Corps of Engineers, as the contracting agency, is responsible for oversight. Oversight mechanisms would typically include contract administration, performance monitoring, and quality assurance checks. Accountability measures are inherent in the fixed-price contract structure, though the significant increase in award value may necessitate closer scrutiny. Transparency is generally provided through contract databases, but detailed performance reports and Inspector General involvement would depend on specific project triggers or audits.

Related Government Programs

Army Corps of Engineers Civil Works Programs
Port Infrastructure Development Program
Maritime Security and Navigation Projects

Risk Flags

Significant cost increase from estimate to award
Long contract duration
Potential for scope creep

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.3 million to LUHR BROS INC & KING FISHER MARINE LP, JV. 200311!003212!96CE!CW64 !USA ENGINEER DISTRICT GALVESTON !DACW6403C0027 !A!N! !N! !20030730!20050801!133618871!133618871!133618871!N!LUHR BROS INC & KING FISHER MA!250 W SAND BANK RD !COLUMBIA !IL!62236!17000!273!48!CORPUS CHRISTI !KLEBERG !TEXAS !+000000050000!N!N!000000000000!Y216!DREDGING, EXCL. DUSTPAN AND SEA-GOING HOPPERS !C2 !CONSTRUCTION !5000!NOT DISCERNABLE OR CLASSIFIED !237990!E! !3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is LUHR BROS INC & KING FISHER MARINE LP, JV.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $23.3 million.

What is the period of performance?

Start: 2003-07-30. End: 2006-12-24.

What factors contributed to the significant increase in the contract's final award value compared to the initial estimate?

The substantial increase from an initial estimate of $17 million to a final award of $133.6 million suggests several potential contributing factors. These could include unforeseen subsurface conditions encountered during the project, changes in the scope of work requested by the government, fluctuations in material and labor costs that were not adequately accounted for in the initial estimate, or a highly competitive initial bidding environment that led to a low initial bid which was later adjusted through change orders. It is also possible that the initial estimate was overly conservative or did not fully capture the complexity and scale of the required dredging operations. A detailed review of contract modifications, change orders, and project documentation would be necessary to pinpoint the exact reasons for this significant variance.

How does the final award value of $133.6 million compare to similar large-scale dredging contracts awarded by the Army Corps of Engineers?

Benchmarking this $133.6 million dredging contract against similar Army Corps of Engineers (USACE) projects requires access to a comprehensive database of historical contract awards. However, based on general knowledge of major civil works projects, this value falls within the range of significant infrastructure investments. Large-scale capital dredging projects for major port expansions or channel deepening can easily reach hundreds of millions of dollars. Smaller maintenance dredging contracts might be in the tens of millions. Without specific comparable contract data (e.g., cubic yards dredged, depth, location, contract duration), a precise comparison is difficult, but the award suggests a substantial undertaking critical to maritime operations in the region.

What are the potential risks associated with a fixed-price contract where the final award significantly exceeds initial estimates?

The primary risk associated with a fixed-price contract that sees its final award significantly exceed initial estimates is that the 'fixed-price' aspect may have been compromised through numerous change orders or contract modifications. While the intent of a fixed-price contract is to transfer risk to the contractor and provide cost certainty to the government, substantial increases can indicate poor initial planning, scope creep, or unforeseen issues that were not adequately priced. This can lead to reduced value for money for the taxpayer if the increase isn't justified by a proportional increase in deliverables or if the contractor benefited disproportionately. It also raises concerns about the initial bidding process and the accuracy of cost estimations.

What is the track record of the joint venture 'LUHR BROS INC & KING FISHER MARINE LP' in executing large federal dredging contracts?

Information regarding the specific track record of the joint venture 'LUHR BROS INC & KING FISHER MARINE LP' in executing large federal dredging contracts is not directly available in the provided data snippet. However, the formation of a joint venture often indicates that the participating companies are pooling resources and expertise to undertake projects that might be beyond the capacity of a single entity. Luhr Bros. Inc. and King Fisher Marine have historically been involved in marine construction and dredging. A thorough assessment would require reviewing their individual and joint performance on past USACE or other federal contracts, including on-time delivery, quality of work, and any history of disputes or contract terminations.

How does the geographic location (Corpus Christi, Texas) influence the necessity and scale of this dredging contract?

The location in Corpus Christi, Texas, is highly influential for this dredging contract due to the city's status as a major deep-water port and industrial center. The Port of Corpus Christi is one of the largest ports in the United States by tonnage and handles significant volumes of crude oil, petroleum products, and other commodities. Maintaining and deepening the navigation channels (dredging) is essential for accommodating larger vessels, increasing cargo capacity, and ensuring efficient maritime commerce. Therefore, the scale of this contract is directly linked to the strategic importance and operational demands of the Port of Corpus Christi and its surrounding industrial complex.

What are the implications of the contract duration (1243 days) for project management and cost control?

A contract duration of 1243 days (approximately 3.4 years) for a dredging project of this magnitude suggests a long-term commitment and potentially complex operational phases. Such extended durations increase the risk of cost escalation due to inflation, potential changes in environmental regulations, and the need for sustained contractor mobilization and equipment operation. Effective project management is critical to ensure that the project stays on schedule and within budget, despite the long timeline. It also implies that the scope of work is substantial, possibly involving phased dredging, multiple work areas, or environmental mitigation efforts spread over several years.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCT NONBUILDING FACILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: FIXED PRICE (J)

Contractor Details

Address: 250 W SAND BANK RD, COLUMBIA, IL, 62236

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline