State Department wastewater treatment contract awarded to Veolia for over $38M

Contract Overview

Contract Amount: $38,447,939 ($38.4M)

Contractor: Veolia Water West Operating Services Inc

Awarding Agency: Department of State

Start Date: 2010-09-02

End Date: 2015-09-30

Contract Duration: 1,854 days

Daily Burn Rate: $20.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: OPERATE AND MAINTAIN A WASTEWATER TREATMENT PLANT

Place of Performance

Location: SAN YSIDRO, SAN DIEGO County, CALIFORNIA, 92173

State: California Government Spending

Plain-Language Summary

Department of State obligated $38.4 million to VEOLIA WATER WEST OPERATING SERVICES INC for work described as: OPERATE AND MAINTAIN A WASTEWATER TREATMENT PLANT Key points: 1. Contract value appears reasonable for operating and maintaining a wastewater treatment plant over a 5-year period. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 4. Performance is located in California, a region with established environmental regulations. 5. The service provided is essential for facility operations and environmental compliance. 6. The contractor has experience in water and wastewater services.

Value Assessment

Rating: good

The contract value of approximately $38.4 million over five years for operating and maintaining a wastewater treatment plant is within a reasonable range for such services. Benchmarking against similar contracts for municipal or federal wastewater treatment facilities of comparable size and complexity would provide a more precise value-for-money assessment. However, given the duration and scope, the pricing appears competitive, especially considering the firm-fixed-price structure which limits cost overruns for the government.

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 bids. The presence of two bidders suggests a moderate level of competition for this specialized service. While two bidders are better than one, a higher number of bidders could potentially drive prices down further and offer a wider range of technical solutions.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and better service quality. The presence of multiple bidders helps ensure that the government is not overpaying for the services rendered.

Public Impact

The primary beneficiary is the U.S. Department of State, ensuring the proper functioning of its facilities. The service delivered is the operation and maintenance of a wastewater treatment plant, crucial for environmental protection and public health. The geographic impact is localized to the facility in California where the plant is situated. This contract supports specialized jobs in wastewater treatment operations and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs if unforeseen operational issues arise that are not adequately covered by the fixed-price contract.
Dependence on a single contractor for a critical infrastructure service.

Positive Signals

Firm-fixed-price contract structure transfers cost risk to the contractor.
Full and open competition suggests a robust bidding process.
Contractor has experience in operating similar facilities.

Sector Analysis

The wastewater treatment sector involves the operation and maintenance of facilities that process sewage and industrial wastewater. This contract falls within the broader environmental services industry, which is critical for public health and regulatory compliance. The market for such services includes specialized engineering and operations firms. Comparable spending benchmarks would typically be found in municipal budgets for public works departments or in contracts awarded by other federal agencies for similar infrastructure management.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature of operating a wastewater treatment plant, it is likely that larger, more experienced firms were the primary bidders. Subcontracting opportunities for small businesses might exist for specific maintenance, repair, or supply needs, but the primary contract is not structured to directly benefit small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer's representative (COR) within the Department of State, ensuring that the contractor meets performance standards and contractual obligations. Accountability is maintained through performance reviews and adherence to the firm-fixed-price terms. Transparency is generally provided through contract award databases, though detailed operational performance data may not always be publicly accessible.

Related Government Programs

Federal Buildings and Facilities Maintenance
Environmental Services Contracts
Public Works Operations

Risk Flags

Limited competition (2 bidders)
Potential for cost increases due to unforeseen operational issues despite FFP

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $38.4 million to VEOLIA WATER WEST OPERATING SERVICES INC. OPERATE AND MAINTAIN A WASTEWATER TREATMENT PLANT

Who is the contractor on this award?

The obligated recipient is VEOLIA WATER WEST OPERATING SERVICES INC.

Which agency awarded this contract?

Awarding agency: Department of State (International Boundary and Water Commission: U.S.-Mexico).

What is the total obligated amount?

The obligated amount is $38.4 million.

What is the period of performance?

Start: 2010-09-02. End: 2015-09-30.

What is the contractor's track record in operating wastewater treatment plants for federal agencies?

Veolia Water West Operating Services Inc. has a history of operating and maintaining water and wastewater facilities. While specific details on their performance with federal agencies for wastewater treatment plants of this exact scale are not provided in the summary data, Veolia is a major global player in water management and treatment. Their extensive experience across municipal and industrial sectors suggests a strong capability. Further investigation into past performance reviews, any documented disputes, or awards related to similar federal contracts would provide a more comprehensive understanding of their track record.

How does the awarded price compare to market rates for similar services?

The contract value of approximately $38.4 million over five years equates to roughly $7.68 million per year. This figure needs to be benchmarked against the size and complexity of the specific wastewater treatment plant, its daily capacity, and the regulatory environment in California. General market rates for operating and maintaining municipal wastewater treatment plants can vary significantly, but this annual figure appears to be within a plausible range for a facility requiring continuous, professional management. A detailed comparison would require access to data on similar-sized facilities and their operational costs.

What are the primary risks associated with this contract?

The primary risks include potential operational failures leading to environmental non-compliance or service disruption, although the firm-fixed-price contract shifts much of the cost risk to the contractor. There's also a risk related to the contractor's long-term financial stability and their ability to retain skilled personnel. Furthermore, unforeseen infrastructure issues or changes in environmental regulations could necessitate contract modifications or additional funding, despite the fixed-price nature. The reliance on a single contractor for such a critical service also presents a risk if performance issues arise.

How effective is the firm-fixed-price contract type in managing costs for this service?

The firm-fixed-price (FFP) contract type is generally effective in managing costs for services where the scope of work is well-defined and unlikely to change significantly. For operating and maintaining a wastewater treatment plant, FFP shifts the responsibility for managing operational costs and potential overruns to the contractor, Veolia Water West Operating Services Inc. This provides cost certainty for the Department of State. However, if unforeseen technical issues or major regulatory changes occur, the contractor may seek equitable adjustments, potentially increasing costs. The effectiveness hinges on the initial scope definition and the contractor's ability to manage their own expenses.

What is the historical spending pattern for wastewater treatment plant operations at this specific State Department facility or similar facilities?

The provided data indicates this is a definitive contract awarded in 2010 with an end date in 2015, totaling $38.4 million. This suggests an average annual spending of approximately $7.68 million. Without historical data prior to this contract or for comparable facilities within the State Department or other agencies, it's difficult to establish a long-term spending pattern. Analyzing previous contracts for this specific facility, if any, or comparing this contract's total value and annual cost to similar facilities managed by other federal entities would be necessary to understand historical spending trends and identify any significant deviations.

What are the implications of having only two bidders for this contract?

Having only two bidders suggests a moderately competitive market for this specific service and contract size. While competition is present, it is less robust than if there were numerous bidders. This could mean that the government did not receive the lowest possible price achievable in a more crowded field. It also implies that the barriers to entry for competing on such contracts might be high, potentially due to specialized expertise, bonding requirements, or established relationships. The government secured a contract, but the limited number of bidders warrants consideration for future procurements to ensure maximum competition.

Industry Classification

NAICS: Utilities › Water, Sewage and Other Systems › Sewage Treatment Facilities

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: IBM10R0003

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Veolia Water North America-West LLC (UEI: 362213261)

Address: 2300 CONTRA COSTA BLVD, STE 350, PLEASANT HILL, CA, 94523

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $38,447,939

Exercised Options: $38,447,939

Current Obligation: $38,447,939

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline