Department of the Army awards $14.4M contract for asbestos abatement services to American Ordnance LLC

Contract Overview

Contract Amount: $14,408,884 ($14.4M)

Contractor: American Ordnance LLC

Awarding Agency: Department of Defense

Start Date: 2023-03-23

End Date: 2026-07-01

Contract Duration: 1,196 days

Daily Burn Rate: $12.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: ABSESTOS ABATEMENT

Place of Performance

Location: MIDDLETOWN, DES MOINES County, IOWA, 52638

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $14.4 million to AMERICAN ORDNANCE LLC for work described as: ABSESTOS ABATEMENT Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can incentivize cost control but also carries inherent risk. 3. The duration of the contract is over 3 years, indicating a significant, long-term need for these services. 4. The contractor, American Ordnance LLC, is a known entity, potentially indicating a track record with government contracts. 5. The services fall under Facilities Support Services, a broad category with various potential applications. 6. The contract is a Delivery Order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar framework.

Value Assessment

Rating: fair

Benchmarking the value of this asbestos abatement contract is challenging without specific details on the scope of work and the nature of the facilities involved. The Cost Plus Fixed Fee (CPFF) contract type means the government reimburses the contractor for allowable costs plus a fixed fee, which can lead to cost overruns if not managed carefully. Comparing this to similar asbestos abatement contracts would require detailed analysis of square footage, abatement complexity, and location. The fixed fee component, while intended to provide contractor incentive, needs careful scrutiny to ensure it represents fair compensation for the services rendered.

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 number of bidders is not specified, but this method generally promotes price discovery and allows the government to select the best value offer. The open competition suggests that the market for these services is robust enough to support multiple qualified providers, which is a positive sign for cost-effectiveness.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is expected to drive down prices through market forces and encourage a wider range of innovative solutions.

Public Impact

The primary beneficiaries are likely military personnel and civilian employees who will work in facilities free from asbestos hazards. The services delivered include the critical task of removing or encapsulating asbestos-containing materials to ensure safety. The geographic impact is centered in Iowa, where the contract is being performed. Workforce implications may include the need for specialized abatement technicians and project managers, potentially creating or sustaining jobs in this niche field.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can lead to cost overruns if not closely monitored.
The duration of the contract (over 3 years) requires sustained oversight to ensure performance remains on track.
Asbestos abatement is a hazardous activity requiring strict adherence to safety protocols and environmental regulations.

Positive Signals

Awarded through full and open competition, suggesting a competitive market and potential for good value.
The contractor, American Ordnance LLC, is likely experienced in handling government contracts.
The contract addresses a critical health and safety requirement for federal facilities.

Sector Analysis

The facilities support services sector encompasses a wide range of activities essential for the operation and maintenance of government infrastructure. Asbestos abatement is a specialized sub-segment within this sector, driven by regulatory requirements and the need to manage legacy building materials. The market for these services is influenced by environmental regulations, building age, and government spending priorities. Comparable spending benchmarks would depend on the scale and complexity of the abatement projects undertaken.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside requirement. However, the prime contractor may still engage small businesses as subcontractors, depending on their own procurement practices and the availability of qualified small business providers in the market.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and their representatives (CORs) within the Department of the Army. The Cost Plus Fixed Fee structure necessitates rigorous oversight of incurred costs to ensure they are allowable, allocable, and reasonable. Accountability measures would include performance reviews, adherence to contract terms, and compliance with safety and environmental regulations. Transparency is generally maintained through contract award databases, though specific project details may be sensitive.

Related Government Programs

Environmental Remediation Services
Facilities Maintenance Contracts
Department of Defense Construction Contracts
Hazardous Material Abatement

Risk Flags

Cost Plus Fixed Fee contract type requires diligent cost oversight.
Long contract duration necessitates sustained performance monitoring.
Asbestos abatement involves significant health and safety risks.
Potential for cost overruns inherent in CPFF structure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.4 million to AMERICAN ORDNANCE LLC. ABSESTOS ABATEMENT

Who is the contractor on this award?

The obligated recipient is AMERICAN ORDNANCE LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $14.4 million.

What is the period of performance?

Start: 2023-03-23. End: 2026-07-01.

What is the typical profit margin for Cost Plus Fixed Fee (CPFF) contracts in the facilities support services sector?

Profit margins for Cost Plus Fixed Fee (CPFF) contracts can vary significantly based on the industry, the complexity of the work, and the specific terms negotiated. For facilities support services, including specialized areas like asbestos abatement, the fixed fee is intended to represent the contractor's profit. This fee is negotiated upfront as a fixed dollar amount and does not change with the actual costs incurred. However, the government reimburses the contractor for all allowable costs. Typical fixed fees might range from 5% to 15% of the estimated cost, but this is highly variable. Factors influencing the fee include the level of risk, the contractor's experience, competition, and the duration of the contract. Without specific details on the estimated cost base for this $14.4 million contract, it's difficult to pinpoint the exact fee percentage. However, the CPFF structure requires diligent oversight to ensure the fee remains reasonable relative to the services performed and the risks undertaken by the contractor.

How does the duration of this contract (1196 days) compare to typical asbestos abatement projects?

The duration of 1196 days (approximately 3.27 years) for this asbestos abatement contract is relatively long for a single, discrete abatement project. Typically, asbestos abatement projects are scoped and executed within much shorter timeframes, often ranging from a few weeks to several months, depending on the size and complexity of the area being remediated. A contract duration of this length suggests that it may encompass multiple abatement tasks over an extended period, potentially across various facilities or as part of a larger, ongoing facility management and renovation program. It could also indicate a phased approach to abatement or a contract that includes ongoing monitoring and maintenance related to asbestos-containing materials. Without further context on the specific scope of work, it's difficult to definitively assess if this duration is standard, but it implies a sustained, long-term requirement rather than a single, intensive cleanup effort.

What are the potential risks associated with American Ordnance LLC performing this asbestos abatement contract?

Potential risks associated with American Ordnance LLC performing this asbestos abatement contract include several factors inherent to the nature of the work and the contract type. Firstly, asbestos abatement itself is a high-risk activity due to the hazardous nature of the material, requiring strict adherence to safety protocols and environmental regulations to prevent exposure to workers and the public. Non-compliance can lead to significant fines, legal liabilities, and reputational damage. Secondly, the Cost Plus Fixed Fee (CPFF) contract type carries the risk of cost overruns if the contractor's actual costs exceed initial estimates. While the fee is fixed, the government bears the burden of reimbursing allowable costs, necessitating robust oversight to prevent unnecessary expenditures. Thirdly, performance risks include potential delays, inadequate quality of work, or failure to meet project milestones, which could impact facility readiness or ongoing operations. Finally, the contractor's track record and experience specifically in large-scale government asbestos abatement projects would be a key factor in assessing these risks.

How does the 'Facilities Support Services' classification (NAICS 561210) relate to asbestos abatement?

The NAICS code 561210, 'Facilities Support Services,' is a broad classification that encompasses a wide range of services aimed at operating and maintaining buildings and other facilities. Asbestos abatement falls under this umbrella because it is a critical service required for the safe operation, maintenance, and renovation of facilities that contain asbestos-containing materials. Facilities support services can include everything from janitorial services and landscaping to security, pest control, and specialized maintenance. Asbestos abatement is considered a specialized maintenance and remediation service within this category, addressing health and safety hazards associated with building infrastructure. Therefore, a contract for asbestos abatement is appropriately categorized under Facilities Support Services, as it directly contributes to the upkeep and safety of government-owned or operated facilities.

What does the 'IA' status code signify for this contract?

The status code 'IA' for this contract typically signifies 'In Progress' or 'Active.' This indicates that the contract has been awarded and is currently being performed or is within its active performance period. It means the contract is not yet completed, expired, or terminated. For a contract with an award date of March 23, 2023, and an estimated completion date of July 1, 2026, an 'IA' status is expected. This code is important for tracking the lifecycle of federal contracts and understanding which contracts are currently obligating government funds and requiring ongoing oversight and performance management. It differentiates active contracts from those that are awarded but not yet started, or those that have been fully completed.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 17575 HIGHWAY 79, MIDDLETOWN, IA, 52638

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $14,408,884

Exercised Options: $14,408,884

Current Obligation: $14,408,884

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W52P1J09G0001

IDV Type: IDC

Timeline