Army awards $179M energy efficiency contract to NORESCO, LLC for facility upgrades

Contract Overview

Contract Amount: $17,908,495 ($17.9M)

Contractor: Noresco, LLC

Awarding Agency: Department of Defense

Start Date: 2004-03-23

End Date: 2021-12-31

Contract Duration: 6,492 days

Daily Burn Rate: $2.8K/day

Competition Type: FOLLOW ON TO COMPETED ACTION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: 200410!000251!2100!W81K04!U.S. ARMY MEDICAL COMMAND !DADA1096D0018 !A!N! !N!0002 !03 !20040323!20220228!606727402!606727402!007915663!N!NORESCO, LLC !ONE RESEARCH DRIVE !WESTBOROUGH !MA!01581!50000!001!11!WASHINGTON !DISTRICT OF COLUMBIA !D.C. !+000001045200!N!N!000000000000!B543!ENERGY STUDIES !S1 !SERVICES !000 !* !221122!E! !5!B!M!D!D!D!20100610!B! ! !N!Z!C!N!J!1!001!N!1B!C!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! !W74KMR!0001! !

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20307

State: District of Columbia Government Spending

Plain-Language Summary

Department of Defense obligated $17.9 million to NORESCO, LLC for work described as: 200410!000251!2100!W81K04!U.S. ARMY MEDICAL COMMAND !DADA1096D0018 !A!N! !N!0002 !03 !20040323!20220228!606727402!606727402!007915663!N!NORESCO, LLC !ONE RESEARCH DRIVE !WESTBOROUGH !MA!01581!50000!001!11!WASHINGTON !DIST… Key points: 1. Contract focuses on energy conservation measures and facility improvements, aiming for long-term cost savings. 2. The award is a follow-on to a previously competed action, suggesting a successful prior performance. 3. Fixed-price contract type indicates that the contractor bears the risk of cost overruns. 4. The contract duration spans over 18 years, allowing for phased implementation and sustained benefits. 5. The geographic scope is primarily within the District of Columbia, impacting federal facilities there. 6. Performance is tied to energy savings, creating a direct link between contractor effort and value delivered.

Value Assessment

Rating: good

The contract value of $179 million over approximately 18 years represents a significant investment in energy infrastructure. While a direct comparison to similar large-scale energy efficiency contracts is difficult without more specific project details, the fixed-price nature suggests a commitment to cost control by the contractor. The long duration implies a comprehensive approach to energy management, which can yield substantial long-term savings if performance targets are met. The benchmark for value will ultimately be the realized energy savings compared to the initial investment and projected operational costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract is a 'FOLLOW ON TO COMPETED ACTION,' indicating that the initial award was competed, but this specific delivery order may have had limited competition. The data does not specify the number of bidders for this particular order. Limited competition can sometimes lead to less favorable pricing for the government compared to full and open competition, but it can also be justified if the follow-on work is a natural extension of a previously successful contract.

Taxpayer Impact: For taxpayers, a limited competition scenario on a follow-on action means that while the initial competition likely secured a reasonable price, subsequent orders might not achieve the same level of price discovery. However, if the contractor has already demonstrated value and efficiency, this can still represent a good use of funds.

Public Impact

Federal facilities within the District of Columbia will benefit from modernized energy systems and improved operational efficiency. The services delivered include energy conservation measures, potentially leading to reduced utility costs and a smaller environmental footprint for the Army. The geographic impact is concentrated in Washington D.C., affecting government buildings and infrastructure in the capital. Workforce implications may include specialized technical roles for installation, maintenance, and monitoring of energy systems, potentially creating local jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if energy savings targets are not met or if unforeseen technical challenges arise.
Reliance on a single contractor for a long-term, critical infrastructure project could pose risks if performance degrades.
The long contract duration might require careful management to ensure continued relevance of technologies and services.

Positive Signals

The fixed-price structure shifts cost risk to the contractor, incentivizing efficient project execution.
Being a follow-on to a competed action suggests a vetted and potentially successful initial selection process.
The focus on energy efficiency aligns with government sustainability goals and can lead to significant long-term operational cost reductions.
The extended performance period allows for comprehensive implementation and measurement of savings.

Sector Analysis

This contract falls within the Energy sector, specifically focusing on energy efficiency and infrastructure upgrades for federal facilities. The market for energy service companies (ESCOs) that provide such solutions is substantial, with many firms specializing in performance-based contracts. Federal agencies increasingly utilize ESCOs to achieve energy savings and meet sustainability mandates. Comparable spending benchmarks would involve analyzing other large-scale energy performance contracts awarded to federal agencies, which often run into tens or hundreds of millions of dollars over extended periods.

Small Business Impact

The contract details do not indicate any specific small business set-aside provisions or subcontracting goals. As a large contract awarded to NORESCO, LLC, a significant energy services company, it is possible that subcontracting opportunities may exist for smaller firms within specialized areas of energy efficiency or facility management. However, without explicit set-aside requirements, the direct impact on the small business ecosystem is not guaranteed and would depend on NORESCO's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Army Medical Command, the contracting agency. Performance monitoring, verification of energy savings, and adherence to contract terms are key oversight functions. Accountability is built into the performance-based nature of the contract, where payment is tied to achieved savings. Transparency is generally facilitated through contract award databases and reporting requirements, though specific project details and ongoing performance metrics may not always be publicly accessible.

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Federal Energy Management Program (FEMP)
Department of Defense Facility Modernization Programs
Utility Energy Services Contracts (UESCs)

Risk Flags

Long contract duration may lead to technological obsolescence.
Performance verification over extended periods can be complex.
Potential for energy price volatility impacting savings calculations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.9 million to NORESCO, LLC. 200410!000251!2100!W81K04!U.S. ARMY MEDICAL COMMAND !DADA1096D0018 !A!N! !N!0002 !03 !20040323!20220228!606727402!606727402!007915663!N!NORESCO, LLC !ONE RESEARCH DRIVE !WESTBOROUGH !MA!01581!50000!001!11!WASHINGTON !DISTRICT OF COLUMBIA !D.C. !+000001045200!N!N!000000000000!B543!ENERGY STUDIES !S1 !SERVICES !000 !* !221122!E! !5!B!M!D!D!D!201

Who is the contractor on this award?

The obligated recipient is NORESCO, 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 $17.9 million.

What is the period of performance?

Start: 2004-03-23. End: 2021-12-31.

What is the historical spending pattern for energy efficiency projects within the U.S. Army Medical Command?

Analyzing the historical spending patterns for energy efficiency projects within the U.S. Army Medical Command requires access to detailed procurement data over several fiscal years. Typically, federal agencies like the Army utilize various contract vehicles, including Energy Savings Performance Contracts (ESPCs) and Utility Energy Services Contracts (UESCs), to achieve energy efficiency goals. Spending in this area can fluctuate based on budget allocations, infrastructure needs, and the prioritization of sustainability initiatives. Larger, multi-year ESPCs, such as the one awarded to NORESCO, represent significant investments that may not occur annually but are crucial for long-term facility upgrades. Without specific historical data for this command, it's challenging to provide precise figures, but it's reasonable to assume a consistent, albeit variable, investment in energy-related improvements driven by federal mandates and operational cost-saving objectives.

How does the $179 million contract value compare to other similar energy efficiency contracts awarded by the Department of Defense?

The $179 million contract value for energy efficiency upgrades is substantial and falls within the upper range for large-scale Energy Savings Performance Contracts (ESPCs) awarded by federal agencies. The Department of Defense (DoD) is a major investor in energy efficiency, often awarding multi-million dollar contracts to firms like NORESCO. Contracts of this magnitude are typically long-term, spanning 10-20 years, and aim to achieve significant energy and operational cost savings through comprehensive facility retrofits. While specific comparable contract values can vary widely based on the scope of work, number of facilities, and geographic spread, a $179 million award for a single, albeit extensive, project is indicative of a major initiative. It aligns with the DoD's ongoing efforts to modernize its infrastructure, enhance energy resilience, and meet federal sustainability mandates.

What are the key performance indicators (KPIs) used to measure the success of this NORESCO contract?

For an Energy Savings Performance Contract (ESPC) like this one awarded to NORESCO, the primary Key Performance Indicator (KPI) is the actual, measured energy and cost savings achieved by the implemented energy conservation measures (ECMs). These savings are typically guaranteed by the contractor (NORESCO, in this case) and verified over the contract period. Specific KPIs would likely include: reduction in kilowatt-hours (kWh) consumed, reduction in natural gas usage, water savings, and associated cost reductions. The contract would stipulate the measurement and verification (M&V) protocols to be used, often adhering to standards like the International Performance Measurement and Verification Protocol (IPMVP). Success is directly tied to the contractor's ability to deliver savings that meet or exceed projections, often with a portion of the savings used to pay for the project costs.

What is NORESCO's track record with similar federal energy efficiency contracts?

NORESCO (National Energy & Gas Transmission Company) has a significant and established track record of successfully delivering energy efficiency projects for federal agencies, including the Department of Defense. They are a well-known Energy Services Company (ESCO) that specializes in performance-based contracts. Their portfolio includes numerous large-scale projects involving facility retrofits, renewable energy integration, and infrastructure upgrades across various government installations. NORESCO's experience often involves complex projects requiring deep technical expertise and long-term performance guarantees. Their history with the federal government suggests a familiarity with federal procurement processes, reporting requirements, and the stringent performance standards expected for public sector energy initiatives. Past performance is a critical factor in the award of such long-term contracts.

What are the potential risks associated with a long-term (18+ year) energy performance contract?

Long-term energy performance contracts, such as this 18+ year agreement, carry several potential risks. Firstly, technological obsolescence is a concern; the energy-efficient technologies installed may become outdated before the contract term ends, potentially reducing their effectiveness or requiring costly upgrades not initially planned for. Secondly, changes in energy prices (electricity, natural gas) can impact the calculation and realization of guaranteed savings, especially if market fluctuations deviate significantly from baseline projections. Thirdly, there's a risk of contractor underperformance or financial instability over such an extended period, although performance bonds and guarantees mitigate this. Finally, shifts in government policy or budget priorities could affect the perceived value or continued support for such long-term investments. Effective contract management and flexible M&V protocols are crucial to navigating these risks.

Competition & Pricing

Extent Competed: FOLLOW ON TO COMPETED ACTION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: ONE RESEARCH DRIVE, WESTBOROUGH, MA, 01581

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: DADA1096D0018

IDV Type: IDC

Timeline