Coast Guard Awards $11.4M Contract for Alaskan Utility Conduits to Makai Ocean Engineering

Contract Overview

Contract Amount: $11,400,293 ($11.4M)

Contractor: Makai Ocean Engineering Inc

Awarding Agency: Department of Defense

Start Date: 2024-10-21

End Date: 2026-06-30

Contract Duration: 617 days

Daily Burn Rate: $18.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Engineering Services

Official Description: THE CONTRACTOR SHALL DESIGN AND INSTALL TWO UTILITY CONDUITS USING HORIZONTAL DIRECTIONAL DRILLING (HDD) ON U.S. COAST GUARD PROPERTY LOCATED AT SPRUCE CAPE, KODIAK ISLAND, ALASKA IN ACCORDANCE WITH THE PERFORMANCE WORK STATEMENT.

Place of Performance

Location: KODIAK, KODIAK ISLAND County, ALASKA, 99615

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $11.4 million to MAKAI OCEAN ENGINEERING INC for work described as: THE CONTRACTOR SHALL DESIGN AND INSTALL TWO UTILITY CONDUITS USING HORIZONTAL DIRECTIONAL DRILLING (HDD) ON U.S. COAST GUARD PROPERTY LOCATED AT SPRUCE CAPE, KODIAK ISLAND, ALASKA IN ACCORDANCE WITH THE PERFORMANCE WORK STATEMENT. Key points: 1. Contract focuses on specialized horizontal directional drilling for utility conduits in a remote Alaskan location. 2. Makai Ocean Engineering Inc. secured the award, indicating potential specialization or limited competition in this niche. 3. The project's remote Alaskan setting presents logistical and environmental risks. 4. Spending falls within the Engineering Services sector, with potential for high costs due to location and complexity.

Value Assessment

Rating: fair

The contract value of $11.4M for two utility conduits via HDD seems substantial. Benchmarking is difficult without specific details on conduit length, diameter, and complexity, but the remote Alaskan location likely inflates costs significantly compared to mainland projects.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' suggesting a limited competition scenario. This method may have impacted price discovery, potentially leading to higher costs than a truly open competition.

Taxpayer Impact: Taxpayer funds are allocated for critical infrastructure on U.S. Coast Guard property, but the limited competition raises questions about cost-effectiveness.

Public Impact

Enhances critical infrastructure for the U.S. Coast Guard in a remote and strategically important location. Supports specialized engineering and construction services, potentially creating jobs in the engineering sector. The project's success is vital for the operational capabilities of the Spruce Cape facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to suboptimal pricing.
Remote Alaskan location introduces logistical and environmental risks.
Cost-plus fixed-fee contract type can incentivize cost overruns.

Positive Signals

Addresses critical infrastructure needs for a key government facility.
Utilizes specialized HDD technology for challenging terrain.

Sector Analysis

This contract falls under Engineering Services (NAICS 541330). Spending in this sector can vary widely based on project scope, complexity, and location. The remote Alaskan setting and specialized HDD technique suggest this project is likely at the higher end of cost benchmarks for similar-sized projects.

Small Business Impact

The contract was awarded to Makai Ocean Engineering Inc., which is not indicated as a small business. There is no information provided on subcontracting opportunities for small businesses within this award.

Oversight & Accountability

The contract type is Cost Plus Fixed Fee, which requires robust oversight to ensure costs are reasonable and the fixed fee is justified. The 'exclusion of sources' in the competition method warrants scrutiny to ensure fair and appropriate justification.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Potential for cost overruns due to CPFF structure.
Limited competition may result in a higher price.
Logistical challenges and higher costs associated with remote Alaskan operations.
Environmental risks inherent in HDD technology in a sensitive ecosystem.
Dependence on a single contractor's specialized expertise.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.4 million to MAKAI OCEAN ENGINEERING INC. THE CONTRACTOR SHALL DESIGN AND INSTALL TWO UTILITY CONDUITS USING HORIZONTAL DIRECTIONAL DRILLING (HDD) ON U.S. COAST GUARD PROPERTY LOCATED AT SPRUCE CAPE, KODIAK ISLAND, ALASKA IN ACCORDANCE WITH THE PERFORMANCE WORK STATEMENT.

Who is the contractor on this award?

The obligated recipient is MAKAI OCEAN ENGINEERING INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $11.4 million.

What is the period of performance?

Start: 2024-10-21. End: 2026-06-30.

What specific factors justified the exclusion of other potential sources in this full and open competition?

The justification for excluding other sources likely relates to Makai Ocean Engineering Inc.'s specialized expertise in horizontal directional drilling (HDD) for complex environments, particularly in remote or challenging terrains like Alaska. This could include proprietary technology, unique experience with similar geological conditions, or established performance history on government projects that made them the only viable or most qualified bidder, despite the 'full and open' designation.

How will the Cost Plus Fixed Fee structure be managed to mitigate potential cost overruns given the project's remote location and complexity?

Effective management of a Cost Plus Fixed Fee (CPFF) contract in this context requires stringent oversight of allowable costs, regular audits, and clear performance metrics. The government contracting officer must ensure that Makai Ocean Engineering Inc. adheres strictly to the performance work statement and budget. Regular progress reviews and transparent reporting on expenditures will be crucial to identify and address any potential cost escalations early on.

What are the potential environmental risks associated with HDD in the Spruce Cape, Kodiak Island area, and what mitigation strategies are in place?

HDD in sensitive coastal or permafrost environments like Kodiak Island carries risks such as groundwater contamination, soil erosion, and disturbance to local ecosystems. Mitigation strategies typically include detailed geotechnical surveys, advanced drilling fluid management, real-time monitoring of drilling pressures and potential 'frac-outs' (loss of drilling fluid to the surface), and comprehensive environmental protection plans developed in coordination with environmental agencies.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N3943018R2004

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 41-305 KALANIANAOLE HWY, WAIMANALO, HI, 96795

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $11,400,293

Exercised Options: $11,400,293

Current Obligation: $11,400,293

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N3943018D2047

IDV Type: IDC

Timeline