Department of Defense awards $28.17M contract for Detroit Arsenal energy systems, with competition impacting value

Contract Overview

Contract Amount: $28,172,638 ($28.2M)

Contractor: Energy Systems Group LLC

Awarding Agency: Department of Defense

Start Date: 2010-06-21

End Date: 2027-06-01

Contract Duration: 6,189 days

Daily Burn Rate: $4.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ESPC - DETROIT ARSENAL PROJECT #2

Place of Performance

Location: ALGONAC, SAINT CLAIR County, MICHIGAN, 48001

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $28.2 million to ENERGY SYSTEMS GROUP LLC for work described as: ESPC - DETROIT ARSENAL PROJECT #2 Key points: 1. Contract awarded to Energy Systems Group LLC for energy efficiency upgrades at the Detroit Arsenal. 2. The contract utilizes a Firm Fixed Price structure, providing cost certainty for the government. 3. Full and open competition was employed, suggesting a potentially competitive bidding process. 4. The contract duration is substantial, spanning over 17 years, indicating a long-term project. 5. Performance is located in Michigan, with potential implications for the regional economy and workforce. 6. The contract falls under the Commercial and Institutional Building Construction sector.

Value Assessment

Rating: good

The contract value of $28.17 million for energy systems upgrades appears reasonable given the extensive 17-year duration and the scope of work likely involved in modernizing a military installation. Benchmarking against similar large-scale energy efficiency projects for federal facilities would provide a more precise value assessment. The firm fixed-price nature of the contract helps mitigate cost overrun risks for the government, contributing to its good value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, which can lead to better pricing and innovative solutions. The number of bidders is not specified, but the open competition suggests a robust process aimed at achieving the best value for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of receiving competitive pricing and ensures that the government is not limited to a single provider, potentially leading to cost savings.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Detroit Arsenal, which will receive modernized and more efficient energy systems. Services delivered include energy conservation measures and infrastructure improvements, aiming to reduce operational costs and enhance facility performance. The geographic impact is concentrated in Michigan, potentially creating or sustaining jobs in the local construction and energy sectors. Workforce implications may include opportunities for skilled trades, engineers, and project managers involved in the installation and maintenance of energy systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 17 years) could lead to potential scope creep or changes in technology rendering initial investments less effective over time.
Reliance on a single contractor for an extended period might reduce future competitive opportunities for other firms.
The specific energy savings and return on investment are not detailed, making it difficult to fully assess the financial performance aspect.
Potential for unforeseen maintenance or upgrade costs beyond the initial scope, despite the fixed-price nature.

Positive Signals

Firm fixed-price contract provides cost certainty and limits the government's exposure to cost overruns.
Full and open competition suggests a potentially competitive bidding process, likely resulting in favorable pricing.
Focus on energy efficiency aligns with federal sustainability goals and can lead to long-term operational cost reductions.
The contract addresses critical infrastructure needs for a Department of Defense facility, ensuring operational readiness.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on energy infrastructure upgrades. The market for energy service companies (ESCOs) and building modernization is substantial within the federal government, driven by mandates for energy efficiency and infrastructure renewal. Comparable spending benchmarks would involve looking at other large-scale energy performance contracts awarded to federal facilities, which often range from millions to tens of millions of dollars depending on the size and complexity of the installation.

Small Business Impact

The data indicates that small business participation was not a primary focus for this contract, as it was not set aside for small businesses and the prime contractor is Energy Systems Group LLC, which is not typically classified as a small business. There is no explicit information regarding subcontracting plans for small businesses. This suggests that opportunities for small businesses may be limited to specific subcontracts awarded by the prime contractor, rather than direct prime contract awards.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program office within the Department of the Army. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver specified outcomes. Transparency is generally maintained through contract award databases and reporting requirements, though detailed performance metrics may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Department of Defense Facilities Modernization
Federal Building Infrastructure Upgrades
Energy Efficiency and Conservation Block Grants

Risk Flags

Long contract duration may lead to technological obsolescence.
Potential for scope creep over the 17+ year term.
Lack of specific performance metrics in summary data.
Limited information on small business subcontracting opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.2 million to ENERGY SYSTEMS GROUP LLC. ESPC - DETROIT ARSENAL PROJECT #2

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 $28.2 million.

What is the period of performance?

Start: 2010-06-21. End: 2027-06-01.

What is the track record of Energy Systems Group LLC in performing similar large-scale energy infrastructure projects for the federal government?

Energy Systems Group LLC (ESG) has a history of performing energy conservation and infrastructure improvement projects for various federal agencies. While specific details on past projects of this exact scale and duration are not provided in the summary data, ESG is known for its work in areas such as HVAC upgrades, lighting retrofits, and renewable energy integration. A deeper dive into ESG's contract history with the government, including performance evaluations and past project outcomes, would be necessary to fully assess their track record for this specific Detroit Arsenal project. Reviewing past performance reports and any debriefings from previous solicitations could offer further insights into their capabilities and reliability.

How does the awarded value of $28.17 million compare to similar energy infrastructure upgrade contracts at other Department of Defense facilities?

Comparing the $28.17 million contract value requires context regarding the scope, duration, and specific upgrades included. Large-scale energy performance contracts for federal facilities can vary significantly. For instance, contracts for major base-wide retrofits or the installation of significant renewable energy sources can easily reach tens of millions of dollars. Given this contract spans over 17 years and involves comprehensive energy systems for the Detroit Arsenal, the value appears within a plausible range for such extensive projects. However, without specific details on the number of buildings, types of systems being upgraded (e.g., HVAC, lighting, water, renewables), and the projected energy savings, a precise benchmark is difficult. Benchmarking against similar ESPCs awarded by the Army or other DoD branches for facilities of comparable size and complexity would be the most relevant comparison.

What are the primary risks associated with a contract of this duration (over 17 years)?

The primary risks associated with a contract of over 17 years include technological obsolescence, where the installed systems may become outdated before the contract term ends, potentially diminishing the expected long-term benefits. There's also the risk of changing energy prices and government priorities, which could affect the perceived value or necessity of the original project goals. Furthermore, long-term contracts can present challenges in maintaining consistent oversight and contractor performance over such an extended period. Scope creep, where the project's objectives expand beyond the original intent, is another significant risk, potentially leading to cost increases or delays, although the firm fixed-price nature aims to mitigate this. Finally, the contractor's financial stability and operational capacity over such a long horizon are also factors to consider.

What specific energy efficiency measures are expected to be implemented under this contract?

The provided summary data does not specify the exact energy efficiency measures to be implemented. However, typical measures under such Energy Savings Performance Contracts (ESPCs) for federal facilities often include upgrades to HVAC systems (e.g., high-efficiency boilers, chillers, and air handlers), replacement of lighting systems with LEDs, building envelope improvements (e.g., insulation, window retrofits), installation of building automation systems (BAS) for better energy management, and potentially the integration of renewable energy sources like solar power. The contract likely details these measures, including projected energy savings and performance metrics, within its full scope.

How does the 'Full and Open Competition' award type influence the potential cost savings for taxpayers?

The 'Full and Open Competition' award type is designed to maximize cost savings for taxpayers by ensuring that a wide range of qualified contractors can bid on the contract. This broad competition typically drives down prices as contractors vie for the award by offering their most competitive terms. It also encourages innovation, as companies may propose more efficient or cost-effective solutions to win the bid. In contrast, sole-source or limited competition contracts often result in higher prices due to a lack of competitive pressure. Therefore, the use of full and open competition for this $28.17 million contract suggests a deliberate effort to secure the best possible value and minimize taxpayer expenditure.

What is the projected return on investment or payback period for the $28.17 million expenditure?

The provided summary data does not include information on the projected return on investment (ROI) or payback period for this contract. Energy Savings Performance Contracts (ESPCs) are typically structured such that the cost savings generated by the implemented energy efficiency measures are used to pay for the project over time. The specific payback period and ROI would depend on factors such as the baseline energy consumption, the efficiency improvements achieved, the cost of energy, and the contract's financing terms. A detailed analysis of the contract's energy savings projections and financial model would be required to determine the ROI and payback period.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › OTHER QUALITY, TEST, INSPECT SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Centerpoint Energy, Inc.

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: $28,172,638

Exercised Options: $28,172,638

Current Obligation: $28,172,638

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DACA8797D0073

IDV Type: IDC

Timeline