Army awards $150M contract for energy systems maintenance, with a significant portion for facility support

Contract Overview

Contract Amount: $149,949,838 ($149.9M)

Contractor: Energy Systems Group LLC

Awarding Agency: Department of Defense

Start Date: 2005-06-02

End Date: 2028-09-30

Contract Duration: 8,521 days

Daily Burn Rate: $17.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 200512!501068!2100!W15QKN!TACOM - PICATINNY !DAAE3097D1002 !A!N! !N!0004 !02 !20050602!20220601!127762412!009140559!001382555!N!CHEVRON U S A INC !345 CALIFORNIA ST STE 3200!SAN FRANCISCO !CA!94104!58410!027!34!PICATINNY ARSENAL !MORRIS !NEW JERSEY!+000002449404!N!N!000000000000!J045!MAINT&REPAIR OF EQ/PLUMBING&HEATING EQUIPMENT !S1 !SERVICES !000 !* !541690!E! !5!B!S!D! ! !20200930!B! ! !A! !A!U!J!1!001!B! !Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: PICATINNY ARSENAL, MORRIS County, NEW JERSEY, 07806

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $149.9 million to ENERGY SYSTEMS GROUP LLC for work described as: 200512!501068!2100!W15QKN!TACOM - PICATINNY !DAAE3097D1002 !A!N! !N!0004 !02 !20050602!20220601!127762412!009140559!001382555!N!CHEVRON U S A INC !345 CALIFORNIA ST STE 3200!SAN FRANCISCO !CA!94104!58410!027!34!PICATINNY ARSENAL !MORR… Key points: 1. Contract focuses on maintenance and repair of energy and plumbing systems, indicating a need for ongoing facility upkeep. 2. The contract's duration of over 8 years suggests a long-term commitment to maintaining critical infrastructure. 3. A substantial portion of the award value is allocated to facility support services, highlighting the breadth of the contractor's responsibilities. 4. The contract was awarded on a sole-source basis, raising questions about potential cost efficiencies and market competition. 5. The contractor, Chevron U.S.A. Inc., has a history of large federal contracts, suggesting established capabilities. 6. The contract's performance period extends significantly beyond the initial award date, implying potential for future modifications and spending.

Value Assessment

Rating: fair

The total award of $149,949,838.32 over a period of approximately 8.5 years represents a significant investment in facility maintenance. While the contract is for a long duration, the lack of competitive bidding makes it difficult to benchmark the value against market rates or other similar contracts. The fixed-price nature of the contract provides some cost certainty, but the absence of competition could lead to less favorable pricing than if multiple vendors had vied for the work. Further analysis would be needed to determine if the pricing is reasonable given the scope of services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning that only one vendor was considered for the award. This approach bypasses the standard competitive bidding process, which typically involves soliciting proposals from multiple interested parties. The rationale for a sole-source award is often based on factors such as the unique capabilities of a specific contractor, urgent needs, or the unavailability of other qualified sources. Without competition, it is challenging to assess whether the government secured the best possible price and terms.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no direct price pressure from competing offers. This can limit the government's ability to achieve cost savings through market competition.

Public Impact

The primary beneficiaries are the Department of the Army and its personnel at Picatinny Arsenal, who will receive reliable maintenance for essential energy and plumbing systems. Services delivered include the maintenance and repair of equipment and plumbing, ensuring operational continuity and safety. The geographic impact is concentrated at Picatinny Arsenal in New Jersey, a key Army installation. The contract supports a workforce involved in facility maintenance and repair, contributing to employment in the skilled trades sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a large-value contract raises concerns about potential overpricing and reduced value for taxpayer dollars.
The extended performance period, with an end date in 2028, creates a long-term financial commitment that may be difficult to adjust if needs change.
The sole-source nature of the award limits transparency into the contractor selection process and the justification for not seeking competitive bids.

Positive Signals

The contract ensures the continued operation and maintenance of critical energy and plumbing infrastructure, vital for the functioning of the military installation.
The fixed-price contract type provides a degree of cost predictability for the government over the contract's duration.
The contractor, Chevron U.S.A. Inc., is a large, established entity, suggesting a capacity to handle the scope and complexity of the required services.

Sector Analysis

This contract falls within the broader category of facilities maintenance and support services, a significant segment of the federal contracting market. The energy systems and plumbing repair aspects are critical for the operational readiness of military installations. The total federal spending on maintenance, repair, and operating supplies (MRO) is substantial, with a considerable portion directed towards infrastructure upkeep. This contract's value is notable, representing a significant investment in a single installation's essential services.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'N' for small business status. The large value of the contract suggests it is likely beyond the scope of typical small business set-asides. There is no explicit information provided regarding subcontracting plans for small businesses. Without this information, it is difficult to assess the potential impact on the small business ecosystem, though it is likely minimal given the sole-source nature and the contractor's size.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The contract's fixed-price nature provides some level of cost control. Transparency is limited due to the sole-source award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. The extended duration necessitates ongoing monitoring to ensure performance and value.

Related Government Programs

Army Facilities Maintenance Contracts
Energy Infrastructure Support Services
Plumbing and HVAC Repair Contracts
Department of Defense Facility Operations
Sole-Source Service Contracts

Risk Flags

Sole-source award may limit cost savings.
Long contract duration increases long-term financial commitment.
Lack of competition reduces transparency in pricing.
Potential for vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $149.9 million to ENERGY SYSTEMS GROUP LLC. 200512!501068!2100!W15QKN!TACOM - PICATINNY !DAAE3097D1002 !A!N! !N!0004 !02 !20050602!20220601!127762412!009140559!001382555!N!CHEVRON U S A INC !345 CALIFORNIA ST STE 3200!SAN FRANCISCO !CA!94104!58410!027!34!PICATINNY ARSENAL !MORRIS !NEW JERSEY!+000002449404!N!N!000000000000!J045!MAINT&REPAIR OF EQ/PLUMBING&HEATING EQUIPMENT !S1 !SERVICES !000 !* !541690!E! !5!B!S!D! ! !2020093

Who is the contractor on this award?

The obligated recipient is ENERGY SYSTEMS GROUP 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 $149.9 million.

What is the period of performance?

Start: 2005-06-02. End: 2028-09-30.

What is the specific justification for awarding this contract on a sole-source basis to Chevron U.S.A. Inc.?

The provided data indicates the contract was awarded as 'NOT COMPETED' (CT: NOT COMPETED) and the contract type is 'DELIVERY ORDER' (AW: DELIVERY ORDER), suggesting it might be part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a specific justification was made for a sole-source award. Without access to the contract's justification for other than full and open competition (J&A), the precise reason remains unknown. Typically, sole-source awards are justified when only one responsible source can provide the required supplies or services, such as unique technical capabilities, urgent and compelling needs, or when it's impractical to obtain competition. For a large energy systems contract, potential justifications could include specialized proprietary technology, existing infrastructure integration, or a critical need for continuity of operations where switching vendors would be excessively costly or disruptive.

How does the total contract value of approximately $150 million compare to similar energy systems maintenance contracts within the Department of Defense?

Benchmarking this $150 million contract against similar energy systems maintenance contracts within the Department of Defense (DoD) is challenging without more specific details on the scope of services and the specific types of energy systems covered. However, the value is substantial, indicating a significant, long-term requirement for comprehensive maintenance and repair. Large-scale facility support and energy management contracts for major military installations can easily reach tens to hundreds of millions of dollars over their performance periods. Given the contract's duration of over 8 years (from 2005-06-02 to 2028-09-30, though the award date is 2005-06-02 and the end date is 2022-06-01, with a potential extension to 2028-09-30 based on the data), the annual value would be in the range of $15-20 million. This is consistent with major service contracts for large federal facilities, but a direct comparison would require analyzing contracts with identical service lines and installation sizes.

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

The primary risks associated with a sole-source contract of this magnitude ($150 million) and duration (over 8 years) are related to cost and performance. Without competition, there is a reduced incentive for the contractor to offer the most competitive pricing, potentially leading to higher costs for the government and taxpayers. Price escalations over the contract's long term could also be a concern if not adequately managed. Furthermore, the lack of competitive pressure might diminish the contractor's drive for innovation or exceptional performance. Performance risks include potential service disruptions, quality issues, or failure to meet evolving operational needs, as the government has fewer immediate alternatives to address shortcomings compared to a competitively awarded contract. There's also a risk of vendor lock-in, making it difficult and costly to transition to a different provider in the future.

What is Chevron U.S.A. Inc.'s track record with federal contracts, particularly in facility maintenance and energy systems?

Chevron U.S.A. Inc. is a subsidiary of Chevron Corporation, a major global energy company. While primarily known for oil and gas exploration and production, its subsidiaries often engage in a wide range of services, including those related to energy infrastructure and facility management. Federal contract data indicates that Chevron entities have a history of receiving large government contracts, though often in areas related to fuel supply, logistics, or specialized energy services rather than broad facility maintenance. The specific entity listed, CHEVRON U.S.A. INC., with an address in San Francisco, CA, suggests a corporate entity capable of managing large-scale service agreements. Its track record in facility maintenance and energy systems specifically for the government would need further detailed investigation beyond this summary data, but its size and corporate structure imply the capacity to perform such work.

How has federal spending on maintenance and repair of equipment and plumbing evolved over the period this contract spans?

Federal spending on maintenance and repair of equipment and plumbing has generally been a consistent and significant area of expenditure for government agencies, particularly for large installations like military bases. Over the period this contract spans (from its award in 2005 through its potential end in 2028), overall federal spending on infrastructure maintenance has seen fluctuations driven by budget priorities, economic conditions, and specific needs. Agencies like the Department of Defense consistently allocate substantial funds to ensure the operational readiness and safety of their facilities. While specific year-over-year trends for 'maintenance & repair of eq/plumbing & heating equipment' (PSC code 541690) would require detailed historical data analysis, it's reasonable to assume a steady demand, with potential increases during periods of infrastructure modernization or heightened operational tempo. This contract's value reflects the ongoing need for such services.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Energy Systems Group, LLC

Address: 4655 ROSEBUD LN, NEWBURGH, IN, 47630

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

Financial Breakdown

Contract Ceiling: $73,259,304

Exercised Options: $73,259,304

Current Obligation: $149,949,838

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAAE3097D1002

IDV Type: IDC

Timeline