Army awards $33.8M contract for dredging, exceeding initial estimates by over 50%

Contract Overview

Contract Amount: $33,862,515 ($33.9M)

Contractor: Crosby Dredging LLC

Awarding Agency: Department of Defense

Start Date: 2021-10-15

End Date: 2023-08-04

Contract Duration: 658 days

Daily Burn Rate: $51.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: CR&P DREDGING MILE 17 TO 36

Place of Performance

Location: LAKE CHARLES, CALCASIEU County, LOUISIANA, 70601

State: Louisiana Government Spending

Plain-Language Summary

Department of Defense obligated $33.9 million to CROSBY DREDGING LLC for work described as: CR&P DREDGING MILE 17 TO 36 Key points: 1. Contract value significantly higher than benchmarked projects, raising value-for-money concerns. 2. Sole bid received suggests potential issues with market engagement or competition. 3. Long contract duration and firm fixed-price structure may expose government to cost overruns if scope changes. 4. Project located in Louisiana, impacting regional waterways and potentially local economies. 5. Dredging services are critical for maintaining navigable waterways, supporting commerce and defense readiness.

Value Assessment

Rating: questionable

The contract's final value of $33.8 million appears high when compared to similar dredging projects. Benchmarking data suggests that projects of this scale typically fall within a lower range, especially considering the provided benchmark of $5.1 million. The significant deviation raises questions about the pricing strategy and whether the government received optimal value. Further analysis into the specific scope of work and market conditions at the time of award is needed to fully assess the value proposition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under full and open competition, but only two bids were received. This limited number of bidders, especially when compared to the potential market for such services, could indicate challenges in attracting a wider pool of qualified contractors or a lack of robust competition. The limited competition may have contributed to the final award price being higher than anticipated.

Taxpayer Impact: With only two bids, taxpayers may not have benefited from the most competitive pricing achievable through a broader bidding process. This could translate to a higher overall cost for the government.

Public Impact

The primary beneficiaries are the U.S. Army Corps of Engineers, ensuring the navigability of critical waterways. The services delivered include dredging to maintain or improve channel depths and widths. The geographic impact is concentrated in Louisiana, specifically along the Mississippi River. This contract supports specialized labor in the heavy construction and maritime industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have led to a higher price than a more robustly competed contract.
The firm fixed-price contract could pose risks if unforeseen site conditions or scope creep occur.
The contract duration is lengthy, increasing the potential for cost escalation or performance issues over time.

Positive Signals

The contract was awarded under full and open competition, adhering to procurement regulations.
The services provided are essential for maintaining vital navigation infrastructure.
The contractor, Crosby Dredging LLC, is a known entity in the dredging industry.

Sector Analysis

The dredging and heavy civil engineering construction sector is vital for maintaining and upgrading national infrastructure, including ports, waterways, and flood control systems. This contract falls within the broader category of infrastructure development and maintenance. The market size for such specialized services can be significant, driven by government and private sector needs for maritime access and flood mitigation. Comparable spending benchmarks for dredging projects vary widely based on scope, location, and environmental considerations.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. This suggests that the primary award went to a larger entity, and the direct impact on the small business ecosystem may be limited unless the prime contractor actively engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded in the contract terms, including performance standards and payment schedules. Transparency is generally maintained through contract award databases, though specific details of performance and cost management may not be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Army Corps of Engineers Civil Works Program
Inland Waterways Trust Fund
Port Infrastructure Development Program
Hurricane Protection Projects

Risk Flags

Potential for cost overruns due to firm fixed-price structure on a long-duration project.
Limited competition may have resulted in a suboptimal price.
Contract value significantly exceeds initial benchmark, indicating potential value-for-money concerns.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.9 million to CROSBY DREDGING LLC. CR&P DREDGING MILE 17 TO 36

Who is the contractor on this award?

The obligated recipient is CROSBY DREDGING 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 $33.9 million.

What is the period of performance?

Start: 2021-10-15. End: 2023-08-04.

What is the typical cost range for dredging projects of similar scope and location?

Benchmarking similar dredging projects is complex due to variations in scope, depth, material, and location. However, the provided benchmark of $5.1 million for this contract suggests a significant discrepancy. Typical costs can range from a few million dollars for smaller channel maintenance to tens or hundreds of millions for major capital dredging projects. Factors like environmental regulations, disposal site availability, and the specific type of dredging equipment used heavily influence costs. Without more detailed project specifications, a precise cost range is difficult to establish, but the initial benchmark indicates this award may be on the higher end.

What are the specific risks associated with a firm fixed-price contract for a long-duration dredging project?

A firm fixed-price (FFP) contract is intended to provide price certainty. However, for long-duration projects like this (658 days), risks can emerge. If unforeseen site conditions arise (e.g., harder material than expected, buried obstructions), the contractor is still obligated to complete the work at the fixed price, potentially leading to reduced profit margins or pressure to cut corners. Conversely, if the government requires changes to the scope or specifications, change orders can significantly increase the total cost. The extended duration also increases the risk of market price fluctuations for fuel, labor, and materials, which the contractor must absorb under an FFP agreement, potentially impacting their financial stability or willingness to bid on future similar projects.

How does the limited competition (2 bidders) impact the government's ability to secure competitive pricing?

Limited competition, such as receiving only two bids, generally reduces the government's leverage in negotiating the best possible price. When more bidders participate, they are incentivized to offer more competitive pricing to win the contract. With fewer bidders, the incumbent or the few available contractors may have more pricing power. This situation can lead to higher award prices than might be achieved in a more robustly competed scenario. It also raises questions about whether the solicitation effectively reached the entire potential market or if barriers to entry prevented other qualified firms from bidding.

What is the track record of Crosby Dredging LLC in completing similar federal contracts?

Crosby Dredging LLC has a history of performing dredging and marine construction services for federal agencies, including the U.S. Army Corps of Engineers. Reviewing their past performance on similar contracts is crucial. Key indicators include on-time completion rates, adherence to budget (especially on fixed-price contracts), quality of work, and any history of disputes or contract modifications. Information on their past performance can often be found in federal procurement databases or through agency performance evaluations. A strong track record suggests a lower risk of performance issues, while a history of challenges might warrant closer scrutiny of this current contract's execution.

What are the potential long-term implications of this dredging project for Louisiana's waterways and economy?

This dredging project, focused on specific miles of waterways in Louisiana, is critical for maintaining and potentially improving navigation. Enhanced navigability supports the efficient transport of goods via the state's extensive port system and inland waterways, benefiting industries such as agriculture, petrochemicals, and manufacturing. Improved channels can reduce shipping costs and increase the capacity for commerce. Economically, maintaining waterways supports jobs in maritime transport, logistics, and related industries. Furthermore, adequate dredging is often linked to flood control and coastal resilience efforts, which are vital for Louisiana's unique environmental and economic landscape.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: W912P821B0050

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 17771 HIGHWAY 3235, GALLIANO, LA, 70354

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

Financial Breakdown

Contract Ceiling: $41,941,423

Exercised Options: $33,862,515

Current Obligation: $33,862,515

Actual Outlays: $7,024,842

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline