DoD awards $128.7M for Camp Lejeune water treatment plant, exceeding benchmark by 30% in a full and open competition

Contract Overview

Contract Amount: $128,673,717 ($128.7M)

Contractor: Environmental Chemical Corporation

Awarding Agency: Department of Defense

Start Date: 2022-07-08

End Date: 2026-01-28

Contract Duration: 1,300 days

Daily Burn Rate: $99.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: DESIGN-BID-BUILD, P1043 WATER TREATMENT PLANT REPLACEMENT, HADNOT POINT, MARINE CORPS BASE, CAMP LEJEUNE, NORTH CAROLINA

Place of Performance

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

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $128.7 million to ENVIRONMENTAL CHEMICAL CORPORATION for work described as: DESIGN-BID-BUILD, P1043 WATER TREATMENT PLANT REPLACEMENT, HADNOT POINT, MARINE CORPS BASE, CAMP LEJEUNE, NORTH CAROLINA Key points: 1. The contract's value is 30% higher than the estimated benchmark, raising questions about cost efficiency. 2. Environmental Chemical Corporation, the sole awardee, has a limited public track record for projects of this scale. 3. The project's long duration (1300 days) and fixed-price nature suggest potential for cost overruns if scope changes. 4. This contract falls within the construction sector, specifically water and sewer infrastructure, a critical but often costly area. 5. The award was made under full and open competition, indicating a broad market search, yet the price outcome warrants scrutiny. 6. The project's success hinges on effective project management and adherence to the fixed-price terms to control costs.

Value Assessment

Rating: questionable

The contract value of $128.7 million significantly exceeds the provided benchmark of $9.9 million by approximately 1200%, or $118.8 million. This substantial difference suggests the awarded price is considerably higher than anticipated for this type of project. While fixed-price contracts aim to control costs, the initial award price being so far above the benchmark raises concerns about the initial cost estimation and the overall value for money. Further analysis would be needed to understand the specific scope and complexity that might justify such a deviation, but on its face, the value appears questionable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, meaning that all responsible sources were permitted to submit a bid. The data indicates there were 3 bids received. While the competition was open, the fact that the awarded price significantly exceeded the benchmark suggests that either the benchmark was not representative of market realities for this specific project, or that the competitive process did not drive the price down to a more optimal level. The limited number of bids (3) for a contract of this magnitude might also warrant further investigation into market dynamics.

Taxpayer Impact: Taxpayers may have paid a premium due to the significant difference between the awarded price and the benchmark. While full and open competition is generally beneficial, the outcome here suggests potential inefficiencies in the bidding or estimation process that could lead to higher costs.

Public Impact

The primary beneficiaries are the residents and personnel at Marine Corps Base Camp Lejeune, North Carolina, who will receive improved water and sewer infrastructure. The project will deliver essential upgrades to the water treatment plant, ensuring a reliable and safe water supply. The geographic impact is localized to Hadnot Point, Marine Corps Base, Camp Lejeune, North Carolina. The construction activities will likely create temporary employment opportunities for skilled trades and laborers in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost overrun compared to benchmark raises concerns about fiscal responsibility.
Limited public information on the contractor's past performance for similar large-scale infrastructure projects.
The long project duration increases the risk of unforeseen issues and potential cost escalations despite fixed-price terms.
The substantial difference between awarded price and benchmark may indicate issues with the initial cost estimation or market analysis.

Positive Signals

Awarded under full and open competition, suggesting an effort to maximize market participation.
The use of a definitive contract type (firm fixed price) aims to provide cost certainty for the government.
The project addresses critical infrastructure needs at a major military installation, ensuring operational readiness and quality of life.

Sector Analysis

This contract falls within the construction sector, specifically focusing on heavy civil engineering and infrastructure. The North American Industry Classification System (NAICS) code 237110 covers Water and Sewer Line and Related Structures Construction. The market for such projects is typically characterized by specialized engineering firms and large construction companies. Benchmarking this contract would involve comparing its cost per unit of capacity or per linear foot of pipe to similar water treatment plant projects undertaken by federal, state, or local governments, as well as private entities. The scale of this $128.7 million project places it among significant infrastructure investments.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale infrastructure project, it is likely that the prime contractor, Environmental Chemical Corporation, may engage subcontractors. However, there is no specific information provided regarding subcontracting plans or goals related to small businesses. The absence of a small business set-aside suggests that the competition was aimed at larger firms capable of handling the project's complexity and value.

Oversight & Accountability

Oversight for this Department of Defense contract would typically fall under the purview of the Department of the Navy's contracting and engineering commands. Inspector General (IG) investigations could be initiated if fraud, waste, or abuse is suspected. Transparency is generally maintained through contract award databases like FPDS, which provide basic details of the contract. However, detailed project progress reports and specific oversight mechanisms beyond standard contract administration are not detailed in the provided data.

Related Government Programs

Military Base Infrastructure Modernization
Water and Wastewater Treatment Facility Construction
Department of Defense Facilities Engineering
Environmental Remediation and Infrastructure Projects

Risk Flags

Cost significantly exceeds benchmark
Limited contractor performance data for similar scale projects
Long project duration increases risk exposure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $128.7 million to ENVIRONMENTAL CHEMICAL CORPORATION. DESIGN-BID-BUILD, P1043 WATER TREATMENT PLANT REPLACEMENT, HADNOT POINT, MARINE CORPS BASE, CAMP LEJEUNE, NORTH CAROLINA

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 $128.7 million.

What is the period of performance?

Start: 2022-07-08. End: 2026-01-28.

What is the track record of Environmental Chemical Corporation in executing large-scale water treatment plant projects?

Information regarding Environmental Chemical Corporation's specific track record on large-scale water treatment plant projects is limited in publicly accessible databases. While they were awarded this $128.7 million contract, a deeper dive into their project portfolio, client satisfaction, and history of delivering similar infrastructure on time and within budget would be necessary for a comprehensive assessment. Without this detailed performance history, it is difficult to definitively gauge their capability and reliability for this specific project, especially given the significant value and duration.

How does the awarded price of $128.7 million compare to similar water treatment plant construction projects in North Carolina or the Southeast region?

Comparing the awarded price of $128.7 million requires detailed project specifications (e.g., capacity, technology, scope of work) for benchmarking. However, the provided benchmark of $9.9 million is drastically lower, suggesting a significant discrepancy. General industry knowledge indicates that water treatment plants can range widely in cost, from tens of millions to hundreds of millions, depending on scale and complexity. A $128.7 million project is substantial. To provide a precise comparison, one would need to analyze recent contracts for similar-sized facilities in the same geographic region, considering factors like labor costs, material prices, and regulatory requirements prevalent in the Southeast.

What are the primary risk indicators associated with this firm fixed-price contract for a long-duration project?

The primary risk indicators for this firm fixed-price contract, especially given its 1300-day duration, include potential scope creep, unforeseen site conditions, and contractor performance issues. While firm fixed-price contracts aim to cap the government's cost, they shift the risk of cost overruns to the contractor. If the contractor underestimates costs or encounters unexpected challenges (e.g., subsurface issues, material price volatility, labor shortages), they may seek change orders or face financial distress, potentially impacting project completion. The long duration amplifies these risks, as more can go wrong over an extended period. Effective government oversight and robust contract management are crucial to mitigate these risks.

What is the expected effectiveness of the new water treatment plant in meeting the needs of Camp Lejeune?

The effectiveness of the new water treatment plant is expected to be high, as it is intended to replace an existing facility and likely incorporates modern standards and technologies. The primary goal is to ensure a reliable, safe, and compliant water supply for the base's population and operations. While the contract details the construction, the operational effectiveness will depend on the final design, the quality of construction, and the subsequent operational and maintenance protocols implemented by the base. Assuming the project meets its technical specifications, it should significantly enhance the water infrastructure's capacity and reliability.

How does the historical spending on water and sewer infrastructure construction at Camp Lejeune compare to this single award?

Historical spending data specifically for water and sewer infrastructure at Camp Lejeune is not provided in the current dataset. To assess this, one would need to analyze past contracts awarded for similar projects at the base over several fiscal years. This would involve identifying trends in contract values, competition levels, and cost performance. Comparing this $128.7 million award to historical patterns would reveal whether this represents a significant increase in investment, a typical expenditure for major upgrades, or an outlier. Without historical context, it's difficult to determine if this award aligns with past spending or signifies a new level of investment.

What are the implications of awarding a contract of this size to a single entity under full and open competition?

Awarding a contract of this magnitude ($128.7 million) to a single entity under full and open competition, despite receiving multiple bids (3), can have several implications. It suggests that the market may have limited players capable of undertaking such a large and complex project. While competition was sought, the outcome might indicate that only a few firms possessed the necessary qualifications, capacity, and willingness to bid. This could potentially reduce the downward pressure on pricing compared to a scenario with more bidders. It also concentrates the execution risk and responsibility with one contractor, making their performance critical to the project's success.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N4008521R0052

Offers Received: 3

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: $131,006,076

Exercised Options: $128,673,717

Current Obligation: $128,673,717

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline