DoD's $30M Lease for Camp Lejeune Recovery Trailers Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $30,108,093 ($30.1M)

Contractor: Environmental Chemical Corporation

Awarding Agency: Department of Defense

Start Date: 2018-10-12

End Date: 2026-07-31

Contract Duration: 2,849 days

Daily Burn Rate: $10.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LEASE TRAILERS FOR CAMP LEJEUNE - HURRICANE FLORENCE RECOVERY

Place of Performance

Location: CAMP LEJEUNE, ONSLOW County, NORTH CAROLINA, 28547

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $30.1 million to ENVIRONMENTAL CHEMICAL CORPORATION for work described as: LEASE TRAILERS FOR CAMP LEJEUNE - HURRICANE FLORENCE RECOVERY Key points: 1. The contract's value, while significant, is primarily driven by the urgent need for recovery assets post-hurricane. 2. The sole-source nature of this award raises questions about potential overpayment and the absence of market-driven pricing. 3. A lack of competition suggests limited opportunities for cost savings and potentially higher per-unit costs. 4. The contract duration extends well beyond the immediate recovery phase, warranting an analysis of long-term necessity. 5. Performance context is critical, as the effectiveness of these leased trailers in supporting recovery operations needs to be evaluated. 6. The 'Environmental Chemical Corporation' is positioned as the sole provider, highlighting a concentrated supplier relationship.

Value Assessment

Rating: questionable

Benchmarking the value of this lease is challenging due to its specific, emergency-response nature and sole-source award. Without competitive bids, it's difficult to ascertain if the $30.1 million price reflects fair market value for leased trailers. Comparisons to similar disaster relief equipment leases would be necessary to assess pricing, but such data may be scarce or not directly comparable due to unique deployment needs. The extended duration of the contract also impacts the overall value proposition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach is typically justified under urgent and compelling circumstances, such as disaster recovery operations following Hurricane Florence. The lack of competition means there were no other bidders to compare against, and the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the contractor was the only option considered. This situation limits the government's ability to negotiate the best possible price.

Public Impact

Service members and their families at Camp Lejeune benefit from the provision of temporary housing and facilities. The contract delivers essential infrastructure support for recovery operations in the aftermath of Hurricane Florence. The geographic impact is concentrated at Marine Corps Base Camp Lejeune in North Carolina. Workforce implications are likely related to the setup, maintenance, and operation of these leased trailers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potentially inflates costs.
Extended contract duration raises questions about ongoing necessity and potential for long-term financial commitment.
Lack of competition hinders opportunities for innovation and alternative solutions.
Urgent need justification for sole-source award requires rigorous post-hoc validation of necessity and pricing.

Positive Signals

Addresses critical infrastructure needs in a disaster recovery scenario.
Ensures essential facilities are available to support military personnel and families.
Contract awarded promptly to meet immediate post-disaster requirements.

Sector Analysis

The market for specialized leased equipment, particularly for emergency response and temporary infrastructure, can be niche. While general non-residential building leasing falls under NAICS 531120, contracts for disaster recovery often involve unique logistical and deployment requirements. The size of this specific market segment is difficult to quantify but is driven by unpredictable events. This contract fits within the broader category of government support services and contingency planning.

Small Business Impact

This contract was not awarded to a small business, nor does it appear to have specific small business set-aside provisions. The sole-source nature further limits opportunities for small business subcontracting unless the prime contractor voluntarily includes them. The impact on the small business ecosystem is likely minimal given the specialized and urgent nature of this requirement.

Oversight & Accountability

Oversight would primarily fall under the Department of the Navy's contracting and facilities management divisions. Accountability measures would focus on the delivery and maintenance of the leased trailers as per contract specifications. Transparency is limited due to the sole-source award, with public visibility primarily through contract databases rather than a competitive process.

Related Government Programs

Hurricane Florence Disaster Relief Efforts
Military Base Infrastructure Support
Temporary Facilities Leasing
Emergency Response Equipment Procurement

Risk Flags

Sole-source award
Lack of competition
Extended contract duration
Potential for cost overruns
Urgent and compelling circumstances justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.1 million to ENVIRONMENTAL CHEMICAL CORPORATION. LEASE TRAILERS FOR CAMP LEJEUNE - HURRICANE FLORENCE RECOVERY

Who is the contractor on this award?

The obligated recipient is ENVIRONMENTAL CHEMICAL CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $30.1 million.

What is the period of performance?

Start: 2018-10-12. End: 2026-07-31.

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

The contract was awarded on a sole-source basis due to urgent and compelling circumstances arising from Hurricane Florence. The immediate need for recovery assets, including temporary facilities and housing for personnel and operations at Camp Lejeune, necessitated a rapid procurement. This justification typically allows agencies to bypass the standard competitive bidding process when delays associated with full and open competition could reasonably be expected to result in unacceptable delays and affordances to the government's ability to respond to the emergency.

How does the cost of leasing these trailers compare to purchasing similar assets, considering the contract duration?

Direct cost comparison between leasing and purchasing is complex without detailed specifications of the trailers and their intended lifespan post-recovery. However, for a 2849-day (approximately 7.8 years) lease valued at $30.1 million, the average annual cost is roughly $3.86 million. If the trailers were intended for long-term use beyond the immediate recovery, purchasing might have been more cost-effective. The decision to lease likely prioritized speed of deployment and flexibility over long-term ownership costs, a common trade-off in emergency situations.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

The primary risks associated with this sole-source contract include potential overpayment due to the lack of competitive pricing, and a reduced incentive for the contractor to provide optimal service or cost efficiencies. There's also a risk that the government may be locked into a contract that becomes less suitable or more expensive than alternative solutions that could emerge over the extended duration. Furthermore, the justification for the sole-source award needs continuous validation to ensure the continued necessity of this specific arrangement.

What performance metrics are being used to evaluate the effectiveness of these leased trailers in supporting recovery operations?

Specific performance metrics are not detailed in the provided data but would typically include factors such as the timely delivery and setup of trailers, their operational readiness, maintenance schedules, and overall suitability for the intended purpose (e.g., housing, office space, medical facilities). The contract's effectiveness is measured by its contribution to restoring base operations and supporting the well-being of personnel and their families during the recovery period. Adherence to environmental and safety standards would also be critical.

Has the Department of the Navy previously engaged in similar large-scale leasing for disaster recovery, and what were the outcomes?

Information on previous large-scale leasing for disaster recovery by the Department of the Navy is not provided in this data extract. However, government agencies frequently utilize leasing for temporary infrastructure during emergencies due to the speed and flexibility it offers compared to procurement and construction. Outcomes of such contracts can vary widely depending on the specific circumstances, the clarity of contract terms, and the effectiveness of oversight. Lessons learned from prior events often inform current procurement strategies for disaster response.

What is the total spending on trailer leasing or similar temporary infrastructure by the Department of Defense in the last five years?

Comprehensive data on total spending for trailer leasing or similar temporary infrastructure by the Department of Defense over the last five years is not available within this specific contract data. Such analysis would require aggregating data across numerous contracts, agencies, and potentially different NAICS codes or product service codes related to temporary structures and emergency response equipment. This specific contract represents a significant, albeit potentially isolated, expenditure for a particular recovery effort.

Industry Classification

NAICS: Real Estate and Rental and Leasing › Lessors of Real Estate › Lessors of Nonresidential Buildings (except Miniwarehouses)

Product/Service Code: LEASE/RENT EQUIPMENT › LEASE OR RENTAL OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N4008519R9028

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1240 BAYSHORE HGHWY, BURLINGAME, CA, 94010

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $63,808,365

Exercised Options: $58,955,807

Current Obligation: $30,108,093

Actual Outlays: $1,421,483

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: YES

Timeline