EPA's $9.9M energy performance contract for Oklahoma lab awarded non-competitively to Johnson Controls

Contract Overview

Contract Amount: $9,894,108 ($9.9M)

Contractor: Johnson Controls Government Systems, LLC

Awarding Agency: Environmental Protection Agency

Start Date: 2000-09-27

End Date: 2025-09-27

Contract Duration: 9,131 days

Daily Burn Rate: $1.1K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: ESPC FOR ADA, OK LABORATORY

Place of Performance

Location: ADA, PONTOTOC County, OKLAHOMA, 74820

State: Oklahoma Government Spending

Plain-Language Summary

Environmental Protection Agency obligated $9.9 million to JOHNSON CONTROLS GOVERNMENT SYSTEMS, LLC for work described as: ESPC FOR ADA, OK LABORATORY Key points: 1. Contract awarded without competition, raising questions about potential cost savings and market fairness. 2. Long contract duration of over 25 years suggests a significant, long-term commitment to energy services. 3. The firm-fixed-price structure aims to control costs, but the lack of competition limits price discovery. 4. Performance is tied to energy savings, a common metric in Energy Savings Performance Contracts (ESPCs). 5. The contract is for an Environmental Protection Agency (EPA) facility in Oklahoma. 6. No small business set-aside was applied, indicating potential missed opportunities for smaller contractors.

Value Assessment

Rating: fair

The $9.9 million contract value for an ESPC is moderate. Without competitive bids, it's difficult to benchmark the value for money. The long duration implies a significant scope of work, but the absence of competition prevents a direct comparison to market rates or other ESPCs that underwent a competitive bidding process. The firm-fixed-price nature provides cost certainty, but the initial price may not reflect the best possible value achievable through competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a non-competitive delivery order. This means that the agency did not solicit bids from multiple potential contractors. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities or urgent needs), the lack of competition here limits the agency's ability to ensure it is receiving the most cost-effective solution. It is unclear why this contract was not competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, potentially missing out on cost savings that a competitive process could have generated.

Public Impact

The primary beneficiaries are the Environmental Protection Agency (EPA) through improved energy efficiency and reduced operating costs at its Oklahoma laboratory. The contract delivers energy conservation measures and services aimed at reducing utility consumption. The geographic impact is localized to the EPA's facility in Oklahoma. The contract supports the federal government's broader goals of energy efficiency and sustainability in its facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about whether the government secured the best possible price and value.
The extended contract duration of over 25 years could lock the government into a specific service provider, limiting future flexibility.
Without a competitive process, it's harder to assess if the chosen contractor's proposed solutions are truly innovative or cost-effective compared to market alternatives.

Positive Signals

The contract focuses on energy savings, aligning with federal sustainability mandates and potentially leading to long-term operational cost reductions.
The firm-fixed-price structure provides budget certainty for the EPA.
The contract is for an established ESPC, a mechanism designed to deliver energy efficiency improvements with minimal upfront capital investment from the agency.

Sector Analysis

Energy Savings Performance Contracts (ESPCs) are a key mechanism for federal agencies to improve energy efficiency and reduce utility costs. The market for ESPCs involves specialized energy service companies (ESCOs) that finance and implement energy conservation measures. This contract fits within the broader federal energy management sector, where agencies are mandated to reduce energy consumption. Comparable spending benchmarks are difficult to establish without competitive data, but ESPCs typically aim for significant energy cost reductions over their lifespan.

Small Business Impact

This contract does not appear to have a small business set-aside. The prime contractor, Johnson Controls Government Systems, LLC, is a large business. There is no information provided regarding subcontracting plans or opportunities for small businesses within this contract. This suggests that the primary focus was not on leveraging the small business industrial base for this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Environmental Protection Agency's contracting and program management offices. The long-term nature of the contract suggests ongoing performance monitoring and verification of energy savings. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected. Transparency is limited by the non-competitive award, making it harder for the public to scrutinize the value proposition.

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Federal Energy Management Program
Environmental Protection Agency Facility Operations

Risk Flags

Non-competitive award
Long contract duration
Lack of transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Environmental Protection Agency awarded $9.9 million to JOHNSON CONTROLS GOVERNMENT SYSTEMS, LLC. ESPC FOR ADA, OK LABORATORY

Who is the contractor on this award?

The obligated recipient is JOHNSON CONTROLS GOVERNMENT SYSTEMS, LLC.

Which agency awarded this contract?

Awarding agency: Environmental Protection Agency (Environmental Protection Agency).

What is the total obligated amount?

The obligated amount is $9.9 million.

What is the period of performance?

Start: 2000-09-27. End: 2025-09-27.

What is the track record of Johnson Controls Government Systems, LLC in delivering similar energy performance contracts for federal agencies?

Johnson Controls Government Systems, LLC is a well-established entity with a significant presence in the government contracting space, particularly in building controls, energy efficiency, and facility services. They have a history of executing large-scale ESPCs for various federal agencies, including the Department of Defense and other civilian agencies. Their experience typically involves implementing a range of energy conservation measures such as HVAC upgrades, lighting retrofits, building automation system enhancements, and renewable energy integration. While specific performance metrics for past contracts are not detailed here, their continued success in securing government contracts suggests a generally positive track record. However, the effectiveness and value derived from each specific ESPC can vary based on project scope, baseline energy usage, and the specific technologies implemented.

How does the $9.9 million contract value compare to similar ESPCs awarded by the EPA or other federal agencies?

Benchmarking the $9.9 million contract value for an ESPC is challenging without knowing the specific scope of work, the facility's size and energy baseline, and the duration of the savings period. However, ESPCs can range from hundreds of thousands to tens or even hundreds of millions of dollars, depending on the complexity and scale of the energy conservation measures. For a single laboratory facility, $9.9 million over a long contract term (implied by the 25-year duration) is a substantial investment. Without competitive bids, it's difficult to ascertain if this represents a fair market price or if a more competitive process could have yielded better value. The EPA has awarded numerous ESPCs, and a comparative analysis would require access to detailed data on similar projects, including their scope, pricing, and achieved savings.

What are the primary risks associated with a sole-source award for an Energy Savings Performance Contract?

The primary risk of a sole-source award for an ESPC is the potential for inflated pricing and suboptimal value. Without competition, the government loses the benefit of multiple bidders vying to offer the most cost-effective solutions and the lowest prices. This can lead to the agency paying more than necessary for the services and technologies provided. Another risk is that the selected contractor may not offer the most innovative or appropriate solutions available in the market, as there was no external pressure to differentiate through superior offerings. Furthermore, a sole-source award can create a perception of favoritism or a lack of due diligence, potentially undermining public trust and accountability, even if the award is technically justified.

What are the expected performance outcomes and how are energy savings measured and verified under this contract?

Under an ESPC, the expected performance outcome is a measurable reduction in energy consumption and associated utility costs for the facility. The contract likely specifies a baseline of energy usage against which actual consumption will be measured post-implementation of energy conservation measures (ECMs). Measurement and Verification (M&V) protocols, often following established standards like the International Performance Measurement and Verification Protocol (IPMVP), are crucial. These protocols detail how energy savings will be calculated, adjusted for variables like weather or facility occupancy, and verified over the contract period. The contractor is typically compensated based on the verified savings achieved, ensuring their financial incentive is aligned with delivering actual performance improvements.

What is the historical spending trend for ESPCs at the Environmental Protection Agency?

The Environmental Protection Agency (EPA), like many federal agencies, has utilized ESPCs as a tool to meet its energy efficiency mandates and reduce operational costs. Historical spending on ESPCs by the EPA would reflect its commitment to sustainability and facility modernization. While specific aggregate spending figures fluctuate year-to-year based on agency priorities, budget allocations, and available projects, the EPA has consistently engaged in ESPC projects. These contracts are often awarded through various mechanisms, including direct solicitations and task orders against indefinite-delivery, indefinite-quantity (IDIQ) contracts. Analyzing EPA's historical ESPC spending would reveal trends in the types of ECMs pursued, the average contract values, and the overall investment in improving the energy performance of its real property portfolio.

Does the long contract duration (over 25 years) pose any specific risks or benefits for the government?

A long contract duration, such as the over 25 years for this ESPC, presents both risks and benefits. The primary benefit is the potential for sustained energy savings and operational improvements over an extended period, allowing the government to realize significant long-term cost reductions and achieve its sustainability goals. It also provides the contractor with the necessary time horizon to recoup their investment in potentially capital-intensive ECMs and realize a return. However, risks include technological obsolescence, where the implemented technologies may become outdated before the contract ends. There's also the risk of contractor underperformance or financial instability over such a long term. Furthermore, a lengthy contract can reduce the agency's flexibility to adapt to changing energy needs, adopt newer technologies, or renegotiate terms if market conditions change significantly.

Competition & Pricing

Extent Competed: NON-COMPETITIVE DELIVERY ORDER

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 507 E MICHIGAN ST, MILWAUKEE, WI, 53202

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $10,977,055

Exercised Options: $10,977,055

Current Obligation: $9,894,108

Actual Outlays: $533,388

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: DEAM3698G010329

IDV Type: IDC

Timeline