DoD's $86M Energy Savings Contract with Siemens Faces Scrutiny Over Long Duration and Limited Oversight

Contract Overview

Contract Amount: $86,114,839 ($86.1M)

Contractor: Siemens Government Technologies Inc

Awarding Agency: Department of Defense

Start Date: 2015-09-23

End Date: 2037-07-01

Contract Duration: 7,952 days

Daily Burn Rate: $10.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 19

Pricing Type: FIRM FIXED PRICE

Sector: Engineering Services

Official Description: ENERGY SAVINGS IMPROVEMENTS IGF::OT::IGF

Place of Performance

Location: CORPUS CHRISTI, NUECES County, TEXAS, 78419

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $86.1 million to SIEMENS GOVERNMENT TECHNOLOGIES INC for work described as: ENERGY SAVINGS IMPROVEMENTS IGF::OT::IGF Key points: 1. Significant contract value of $86.1M for energy savings improvements. 2. Siemens Government Technologies Inc. is the sole awardee, raising questions about competition. 3. The contract spans over 15 years, presenting potential risks of cost escalation and evolving needs. 4. Engineering Services sector, with a focus on energy efficiency, is the primary domain.

Value Assessment

Rating: questionable

The contract's value of $86.1M for engineering services is substantial. Benchmarking is difficult without specific performance metrics and comparable projects, but the long duration and sole awardee raise concerns about potential overpricing or suboptimal value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Awarded under full and open competition, the contract utilized a delivery order mechanism. However, the long-term nature and single awardee suggest potential limitations in ongoing price discovery and competitive pressure throughout its lifespan.

Taxpayer Impact: Taxpayer funds are committed for an extended period, with the ultimate value dependent on realized energy savings and efficient contract management. Potential for cost overruns exists given the 15-year term.

Public Impact

Long-term commitment of taxpayer funds for energy efficiency projects. Potential for significant cost savings if energy efficiency goals are met. Reliance on a single contractor for an extended period may limit innovation and cost competitiveness. Impact on military base operations and sustainability goals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration exceeds typical project lifecycles.
Potential for scope creep or changing technological needs over 15 years.
Limited visibility into ongoing performance and cost-effectiveness.
Sole awardee may reduce competitive pressure.

Positive Signals

Aims to achieve significant energy savings, potentially reducing long-term operational costs.
Focus on energy efficiency aligns with sustainability and environmental goals.
Contract structure may provide predictable funding for necessary upgrades.

Sector Analysis

This contract falls within the Engineering Services sector, specifically focusing on energy savings improvements for the Department of the Army. Spending in this area is critical for modernizing infrastructure and meeting environmental mandates, with benchmarks varying widely based on project scope and technology.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses in this contract. The awardee, Siemens Government Technologies Inc., is a large corporation, suggesting limited direct opportunities for small businesses through this specific award.

Oversight & Accountability

The extended duration of this contract necessitates robust oversight to ensure performance targets are met and costs remain justified. Regular reviews of energy savings, contractor performance, and adherence to the contract's terms are crucial for accountability.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Extended contract duration (over 15 years) increases risk of obsolescence and changing needs.
Sole awardee may limit ongoing competitive pressure and price discovery.
Potential for cost overruns or failure to achieve projected savings over the long term.
Lack of explicit small business participation noted.
Requires significant and continuous oversight to ensure value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $86.1 million to SIEMENS GOVERNMENT TECHNOLOGIES INC. ENERGY SAVINGS IMPROVEMENTS IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is SIEMENS GOVERNMENT TECHNOLOGIES INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $86.1 million.

What is the period of performance?

Start: 2015-09-23. End: 2037-07-01.

What are the specific, measurable energy savings targets and the methodology for verifying them throughout the contract's 15-year term?

The contract details should outline specific Key Performance Indicators (KPIs) for energy reduction (e.g., percentage decrease in kWh, BTU, or cost). Verification methods likely involve regular energy audits, meter readings, and comparison against baseline data established at the contract's outset. The process must be transparent and allow for independent review to ensure accountability and validate the claimed savings.

How does the government ensure continued cost-effectiveness and competitive pricing when the contract spans over 15 years with a single awardee?

Mechanisms like periodic price reviews, incorporating inflation adjustments capped at reasonable levels, and performance-based incentive structures can help maintain cost-effectiveness. While competition was established initially, the government should explore options for re-competition or incorporating market-based adjustments if feasible during the contract's long term to mitigate risks associated with a sole awardee.

What are the contingency plans if Siemens Government Technologies Inc. fails to meet the energy savings targets or faces significant performance issues?

The contract should include clear remedies for non-performance, such as liquidated damages, termination clauses, or incentive clawbacks. Contingency plans might involve bringing in alternative technical experts to assess performance, renegotiating terms, or, in severe cases, initiating termination for default and seeking a new contractor, though this would be disruptive.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912DY08R0019

Offers Received: 19

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Siemens Aktiengesellschaft

Address: 1881 CAMPUS COMMONS DR STE 300, RESTON, VA, 20191

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

Financial Breakdown

Contract Ceiling: $121,731,050

Exercised Options: $121,700,686

Current Obligation: $86,114,839

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $24,062,241

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W912DY09D0021

IDV Type: IDC

Timeline