DOE's $130M Hanford ESPC contract to Johnson Controls awarded in 1999, ending Jan 2023
Contract Overview
Contract Amount: $130,475,726 ($130.5M)
Contractor: Johnson Controls Government Systems, LLC
Awarding Agency: Department of Energy
Start Date: 1999-12-15
End Date: 2023-01-20
Contract Duration: 8,437 days
Daily Burn Rate: $15.5K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: ENERGY SAVINGS PERFORMANCE CONTRACT FOR HANFORD 200 AND 200 AREA
Place of Performance
Location: RICHLAND, BENTON County, WASHINGTON, 99352
Plain-Language Summary
Department of Energy obligated $130.5 million to JOHNSON CONTROLS GOVERNMENT SYSTEMS, LLC for work described as: ENERGY SAVINGS PERFORMANCE CONTRACT FOR HANFORD 200 AND 200 AREA Key points: 1. Contract aimed to improve energy efficiency and reduce operational costs at the Hanford site. 2. Long contract duration suggests a focus on sustained performance and infrastructure upgrades. 3. The fixed-price with economic price adjustment structure aims to mitigate inflation risks. 4. Competition dynamics for large, long-term energy performance contracts can be complex. 5. Performance context is crucial for evaluating the actual energy savings achieved versus projections. 6. Sector positioning within federal energy efficiency initiatives is significant.
Value Assessment
Rating: fair
Benchmarking the value of this Energy Savings Performance Contract (ESPC) is challenging without detailed performance data on actual energy savings achieved. ESPCs are designed to be cost-neutral or cost-saving, with savings funding the project. However, the initial award value of $130.5 million represents the total contract ceiling, not necessarily the upfront investment or guaranteed savings. Comparing this to similar large-scale ESPCs at federal facilities requires access to post-award performance reports and the specific energy conservation measures implemented. The long duration (over 22 years) also complicates direct comparisons with shorter-term projects.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders likely had the opportunity to submit proposals. This method is generally preferred for ensuring fair pricing and access to the best available solutions. The specific number of bidders is not provided, but the full and open nature suggests a competitive process that should have driven value.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more cost-effective solutions and potentially lower overall project costs compared to sole-source or limited competition awards.
Public Impact
The primary beneficiaries are the Department of Energy and the Hanford site, through reduced energy consumption and operational costs. Services delivered include energy efficiency upgrades, potentially impacting steam and air-conditioning systems as indicated by the PSC code. Geographic impact is concentrated at the Hanford site in Washington state. Workforce implications could include specialized technical jobs for installation, maintenance, and monitoring of energy systems.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration may increase risk of cost overruns or performance degradation over time.
- Economic price adjustment clauses can lead to costs exceeding initial projections if inflation is high.
- Measuring and verifying actual energy savings over such an extended period can be complex and prone to dispute.
Positive Signals
- Full and open competition suggests a robust selection process, likely yielding a qualified contractor.
- Focus on energy savings aligns with federal sustainability goals and potential long-term cost reductions.
- The contract structure likely incentivizes the contractor to achieve measurable energy performance improvements.
Sector Analysis
Energy Savings Performance Contracts (ESPCs) are a key mechanism for federal agencies to improve energy efficiency and reduce utility costs without upfront capital appropriations. This contract fits within the broader energy services sector, where private companies partner with government entities to finance and implement energy conservation measures. The market for ESPCs is significant, driven by federal mandates for energy reduction and cost savings. Comparable spending benchmarks would involve looking at other large ESPCs awarded to federal facilities across different agencies.
Small Business Impact
Information regarding small business set-asides or subcontracting plans for this specific contract is not readily available in the provided data. Large, complex ESPCs often involve significant subcontracting opportunities, but the extent to which small businesses participate depends on the prime contractor's strategy and any specific federal requirements or goals set for the contract. Without explicit data, it's difficult to assess the direct impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy's contracting and program management offices. Accountability measures are typically tied to the achievement of specific energy savings targets outlined in the contract. Transparency would be enhanced through regular performance reporting and audits, potentially involving the DOE Inspector General's office, especially concerning financial performance and energy savings verification.
Related Government Programs
- Department of Energy Facility Operations
- Federal Energy Management Program
- Hanford Site Operations
- Energy Conservation Projects
- Utility Energy Services Contracts
Risk Flags
- Long contract duration
- Economic Price Adjustment clause
- Potential for performance degradation over time
- Complexity of measuring long-term energy savings
Tags
energy-savings-performance-contract, department-of-energy, hanford-site, johnson-controls-government-systems, definitive-contract, full-and-open-competition, fixed-price-with-economic-price-adjustment, washington, large-contract, energy-sector, infrastructure-upgrade, long-term-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $130.5 million to JOHNSON CONTROLS GOVERNMENT SYSTEMS, LLC. ENERGY SAVINGS PERFORMANCE CONTRACT FOR HANFORD 200 AND 200 AREA
Who is the contractor on this award?
The obligated recipient is JOHNSON CONTROLS GOVERNMENT SYSTEMS, LLC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $130.5 million.
What is the period of performance?
Start: 1999-12-15. End: 2023-01-20.
What specific energy conservation measures were implemented under this contract, and what were their projected versus actual savings?
The provided data indicates the contract is for an Energy Savings Performance Contract (ESPC) for the Hanford site, with a North American Industry Classification System (NAICS) code of 221330 (Steam and Air-Conditioning Supply). While the contract type is 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT', specific energy conservation measures (ECMs) are not detailed. Typically, ESPCs involve upgrades like improved insulation, high-efficiency lighting, HVAC system modernizations, and process optimization. To determine projected versus actual savings, one would need to access the contract's baseline energy consumption data, the detailed ECM proposals, and subsequent performance verification reports submitted by Johnson Controls Government Systems, LLC, and reviewed by the Department of Energy. These reports are crucial for validating the financial and energy performance of the contract over its lifespan.
How does the awarded value of $130.5 million compare to similar large-scale ESPCs at federal facilities?
The $130.5 million award value for this Hanford ESPC is substantial, reflecting the scale and complexity of energy upgrades at a major federal facility. Comparing it directly requires identifying ESPCs of similar duration and scope across other large federal sites (e.g., military bases, other DOE facilities, large GSA buildings). ESPCs can range from a few million to hundreds of millions of dollars. Factors influencing value include the size of the facility, the age and condition of existing infrastructure, the types of ECMs planned, and prevailing energy costs at the time of award. Without specific details on the ECMs and the baseline energy use at Hanford, a precise benchmark is difficult. However, contracts in the $100M+ range are typically reserved for comprehensive, long-term energy infrastructure overhauls.
What is the track record of Johnson Controls Government Systems, LLC, in executing large federal ESPCs?
Johnson Controls Government Systems, LLC, is a major player in the energy services and building automation industry, with a significant history of performing ESPCs for federal agencies. Their track record generally includes a wide range of projects involving HVAC upgrades, lighting retrofits, building controls, and renewable energy integration. Evaluating their specific performance on this Hanford contract would involve reviewing DOE's performance reports, any contract modifications, and any disputes or claims filed. Generally, large contractors like Johnson Controls have established processes for project management, financing, and performance measurement, but the success of individual contracts can vary based on project specifics, site conditions, and client collaboration.
What are the potential risks associated with a contract of this duration (over 22 years)?
A contract duration exceeding 22 years presents several potential risks. Firstly, technological obsolescence: energy-saving technologies can evolve rapidly, potentially making implemented solutions outdated before the contract ends. Secondly, performance degradation: the efficiency of installed systems may decline over time, requiring diligent maintenance and verification to ensure savings persist. Thirdly, economic uncertainty: long-term economic price adjustment clauses can expose the government to significant cost increases due to unforeseen inflation or changes in energy markets. Lastly, contractor viability: the long timeframe increases the risk that the contractor might undergo mergers, acquisitions, or financial difficulties, potentially impacting service continuity or support. Robust contract management and performance monitoring are essential to mitigate these risks.
How does the 'Fixed Price with Economic Price Adjustment' (FP-EPA) pricing structure impact cost certainty for the government?
The FP-EPA structure aims to balance cost certainty with protection against market fluctuations. 'Fixed Price' suggests a base price for services and equipment, providing a degree of predictability. However, the 'Economic Price Adjustment' clause allows for adjustments to the contract price based on specified economic factors, typically indices related to labor, materials, or energy costs. For the government, this means the final cost is not entirely fixed and could increase if the relevant economic indicators rise significantly over the contract's life. This structure is often used in long-term contracts to ensure the contractor remains financially whole despite inflation, but it introduces variability in the total expenditure compared to a pure fixed-price contract.
Industry Classification
NAICS: Utilities › Water, Sewage and Other Systems › Steam and Air-Conditioning Supply
Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Contractor Details
Parent Company: Johnson Controls International Public Limited Company
Address: 507 E MICHIGAN ST, MILWAUKEE, WI, 53202
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $1,213,559
Exercised Options: $1,213,559
Current Obligation: $130,475,726
Actual Outlays: $3,416,073
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Timeline
Start Date: 1999-12-15
Current End Date: 2023-01-20
Potential End Date: 2023-01-20 00:00:00
Last Modified: 2023-09-29
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