GSA's $113M energy project for 10 NYC federal buildings awarded to Trane U.S. Inc

Contract Overview

Contract Amount: $79,676,344 ($79.7M)

Contractor: Trane U.S. Inc.

Awarding Agency: General Services Administration

Start Date: 2016-04-20

End Date: 2036-06-30

Contract Duration: 7,376 days

Daily Burn Rate: $10.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 9

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: IGF::OT::IGF FOR OTHER FUNCTIONS GSA R2 2016 NYC ESPC PROJECT FOR 10 FEDERAL BUILDINGS. THE PROJECT CONSISTS OF THE INSTALLATION OF 98 ENERGY AND WATER CONSERVATION MEASURES TOTALING A CONSTRUCTION INVESTMENT VALUE OF $113,161,454 AT THE JACOB JAVITS FEDERAL BUILDING, THE U.S, COURT OF INTERNATIONAL TRADE, THE TED WEISS FEDERAL BUILDING, THE ALEXANDER HAMILTON U.S. CUSTOMS HOUSE, THE DANIEL P. MOYNIHAN FEDERAL COURTHOUSE, THE VARICK STREET FEDERAL BUILDING, THE RONALD BROWN U.S. MISSION TO THE UNITED NATIONS BUILDING, THE THEODORE ROOSEVELT COURTHOUSE, THE EMMANUEL CELLER COURTHOUSE, THE CONRAD DUBERSTEIN FEDERAL COURTHOUSE AND THE CHARLES BRIEANT FEDERAL COURTHOUSE. THESE IMPROVEMENTS ARE PROPOSED TO BE PRIVATELY FINANCED BY TRANE FOR 18 YEARS AT AN INTEREST RATE OF 3.44%, AND ARE TO BE PAID FROM ENERGY SAVINGS GUARANTEED EACH YEAR OVER THE 18-YEAR LOAN TERM. THE TOTAL COST OF THIS CONTRACT TO THE GOVERNMENT WILL BE $180,619,943 OVER THE 18-YEAR LOAN TERM.

Place of Performance

Location: NEW YORK, NEW YORK County, NEW YORK, 10278

State: New York Government Spending

Plain-Language Summary

General Services Administration obligated $79.7 million to TRANE U.S. INC. for work described as: IGF::OT::IGF FOR OTHER FUNCTIONS GSA R2 2016 NYC ESPC PROJECT FOR 10 FEDERAL BUILDINGS. THE PROJECT CONSISTS OF THE INSTALLATION OF 98 ENERGY AND WATER CONSERVATION MEASURES TOTALING A CONSTRUCTION INVESTMENT VALUE OF $113,161,454 AT THE JACOB JAVITS FEDERAL BUILDING, THE U.S, C… Key points: 1. The contract focuses on energy and water conservation measures across multiple federal buildings in New York City. 2. Private financing is secured through Trane U.S. Inc. with an 18-year term and a 3.44% interest rate. 3. The project's scope includes 98 distinct energy and water conservation measures. 4. The contract duration spans from April 2016 to June 2036, indicating a long-term commitment to energy efficiency. 5. The project is categorized under Engineering Services, suggesting a need for specialized technical expertise. 6. The contract was awarded through full and open competition, implying a broad market solicitation.

Value Assessment

Rating: good

The total construction investment value is $113,161,454. While a direct per-unit cost for the 98 measures is not provided, the average investment per building is approximately $11.3 million. The interest rate of 3.44% for private financing over 18 years appears competitive, especially given the long-term nature of the project and the current economic climate at the time of award. Benchmarking this specific type of ESPC project is challenging without more granular data on the specific conservation measures and their expected savings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, suggesting that multiple vendors had the opportunity to bid on the project. The specific number of bidders is not detailed, but this approach generally fosters a competitive environment, which can lead to better pricing and innovative solutions. The open competition is a positive indicator for price discovery and value for the government.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it increases the likelihood of securing the most cost-effective solutions and competitive pricing for the energy conservation measures implemented.

Public Impact

Federal buildings in New York City will benefit from improved energy efficiency and reduced water consumption. The project aims to deliver significant operational cost savings through the installation of 98 energy and water conservation measures. The geographic impact is concentrated within New York City, affecting 10 specific federal courthouses and office buildings. The project supports the federal government's sustainability goals and commitment to reducing its environmental footprint. The workforce implications include potential employment opportunities for skilled labor involved in the installation and maintenance of energy conservation technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term financing structure could obscure immediate cost-effectiveness if savings do not materialize as projected.
Reliance on a single contractor (Trane U.S. Inc.) for both financing and implementation may limit future flexibility or renegotiation options.
The complexity of implementing 98 measures across 10 buildings could lead to unforeseen challenges or delays.
Performance verification over an 18-year period requires robust monitoring and reporting mechanisms.

Positive Signals

Significant investment in energy and water conservation demonstrates a commitment to sustainability and operational efficiency.
Private financing model shifts upfront capital costs, potentially freeing up federal funds for other priorities.
The project addresses multiple federal buildings, indicating a strategic approach to improving infrastructure across a portfolio.
The use of an Energy Savings Performance Contract (ESPC) framework is a proven method for achieving energy efficiency upgrades.

Sector Analysis

This contract falls within the Energy Services sector, specifically focusing on Energy Savings Performance Contracts (ESPCs). ESPCs are a mechanism used by federal agencies to finance energy efficiency improvements with no upfront capital costs. The contractor is repaid through the savings generated by the improvements. The market for ESPCs is significant, driven by federal mandates for energy reduction and sustainability. This project's scale, involving multiple large federal buildings, is substantial within this sector.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions or subcontracting requirements for this contract. As a large-scale project awarded through full and open competition, it is possible that larger prime contractors, like Trane U.S. Inc., may engage small businesses for specific components or services. However, without explicit data on subcontracting plans or goals, the direct impact on the small business ecosystem remains unclear.

Oversight & Accountability

Oversight for this contract would typically be managed by the General Services Administration (GSA), specifically the Public Buildings Service. The long-term nature of the ESPC implies ongoing performance monitoring and verification to ensure that the energy savings meet the contractual obligations. The Inspector General of the GSA would have jurisdiction to investigate any potential fraud, waste, or abuse related to the contract. Transparency is facilitated through contract reporting mechanisms, though detailed public access to ongoing performance data may vary.

Related Government Programs

Federal Energy Management Program (FEMP)
Energy Savings Performance Contracts (ESPCs)
GSA Public Buildings Service
Federal Building Modernization Projects

Risk Flags

Long-term performance risk
Accuracy of energy savings projections
Technological obsolescence
Contractor performance and maintenance

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $79.7 million to TRANE U.S. INC.. IGF::OT::IGF FOR OTHER FUNCTIONS GSA R2 2016 NYC ESPC PROJECT FOR 10 FEDERAL BUILDINGS. THE PROJECT CONSISTS OF THE INSTALLATION OF 98 ENERGY AND WATER CONSERVATION MEASURES TOTALING A CONSTRUCTION INVESTMENT VALUE OF $113,161,454 AT THE JACOB JAVITS FEDERAL BUILDING, THE U.S, COURT OF INTERNATIONAL TRADE, THE TED WEISS FEDERAL BUILDING, THE ALEXANDER HAMILTON U.S. CUSTOMS HOUSE, THE DANIEL P. MOYNIHAN FEDERAL COURTHOUSE, THE VARICK STREET FEDERAL BUILDING, THE RONALD BROWN U.S. MISSION TO THE

Who is the contractor on this award?

The obligated recipient is TRANE U.S. INC..

Which agency awarded this contract?

Awarding agency: General Services Administration (Public Buildings Service).

What is the total obligated amount?

The obligated amount is $79.7 million.

What is the period of performance?

Start: 2016-04-20. End: 2036-06-30.

What is the track record of Trane U.S. Inc. in executing similar large-scale ESPC projects for federal agencies?

Trane U.S. Inc. is a well-established company with extensive experience in energy services and building technologies, including a significant history of executing Energy Savings Performance Contracts (ESPCs) for various federal agencies. They have been involved in numerous projects aimed at improving energy efficiency, reducing water consumption, and modernizing building systems. Their track record typically includes a wide range of project sizes and complexities, often involving HVAC upgrades, lighting retrofits, and building automation systems. While specific details on every project are not publicly aggregated, their long-standing presence in the market and numerous awarded contracts suggest a substantial capacity to manage and deliver on large-scale federal ESPC initiatives. Agencies often select contractors like Trane based on demonstrated performance, technical expertise, and financial stability, which are crucial for the long-term success of ESPCs.

How does the 3.44% interest rate compare to market rates for similar private financing of ESPCs at the time of award (2016)?

In April 2016, when this contract was awarded, the prevailing interest rates for long-term financing were relatively low. The Federal Reserve had maintained a target federal funds rate between 0.25% and 0.50% for several years following the 2008 financial crisis. While specific benchmark rates for private financing of ESPCs can vary based on contractor creditworthiness, project risk, and loan terms, a rate of 3.44% for an 18-year term was generally considered favorable. Comparable corporate bond yields and long-term loan rates at that time would likely have been in a similar range or higher, suggesting that Trane secured competitive financing terms for this project, which in turn benefits the government by potentially lowering the overall cost of the financed improvements.

What are the primary risks associated with a long-term ESPC project spanning 18 years?

Long-term ESPC projects, such as this 18-year contract, carry several inherent risks. A primary concern is the accuracy of the projected energy savings over such an extended period; actual savings may fall short due to changes in building usage, occupancy, weather patterns, or the degradation of installed equipment. Another risk involves technological obsolescence; energy-efficient technologies can advance rapidly, potentially making the installed systems less optimal over time. Contractor performance is also a risk; if Trane U.S. Inc. fails to meet performance guarantees or maintain the installed systems adequately, the projected savings may not materialize, and the government could be left with underperforming assets. Furthermore, changes in federal energy policies or budget priorities could impact the perceived value or necessity of the ongoing savings verification. Finally, the long duration makes the contract susceptible to economic fluctuations and potential changes in market conditions that could affect the cost of energy or maintenance.

How is the performance of the 98 energy and water conservation measures typically measured and verified in an ESPC?

Performance measurement and verification (M&V) in ESPCs are critical to ensuring that the projected energy and cost savings are realized. Typically, an M&V plan is established as part of the contract, outlining the methodologies, baseline data, and reporting frequencies. For energy conservation measures (ECMs), this often involves sub-metering specific systems, analyzing utility bills before and after implementation, and using sophisticated energy modeling software. For water conservation measures, it might involve tracking water usage data and comparing it to historical baselines. The contractor, Trane U.S. Inc. in this case, is usually responsible for conducting these M&V activities, often adhering to established protocols like the International Performance Measurement and Verification Protocol (IPMVP). The government agency (GSA) then reviews these reports and may conduct its own independent verification to confirm the savings. Discrepancies between projected and actual savings can lead to adjustments in payments or require the contractor to implement corrective actions.

What is the historical spending trend for energy efficiency projects by the General Services Administration (GSA)?

The General Services Administration (GSA) has consistently invested in energy efficiency and sustainability across its vast portfolio of federal buildings. Historically, GSA has been a leader in utilizing Energy Savings Performance Contracts (ESPCs) and Utility Energy Service Contracts (UESCs) to finance energy upgrades. Spending in this area has generally trended upwards over the past two decades, driven by federal mandates such as the Energy Policy Act of 2005 and subsequent executive orders promoting sustainability and reducing greenhouse gas emissions. GSA's annual spending on energy efficiency projects can fluctuate based on appropriations, available financing mechanisms, and the identification of suitable projects. However, the agency's commitment to improving the energy performance of federal facilities remains a core objective, making ESPCs a recurring and significant component of their capital improvement strategies.

Industry Classification

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

Product/Service Code: ARCHITECT/ENGINEER SERVICES › ARCH-ENG SVCS - CONSTRUCTION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 9

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3600 PAMMEL CREEK RD, LA CROSSE, WI, 54601

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

Financial Breakdown

Contract Ceiling: $185,241,873

Exercised Options: $79,676,344

Current Obligation: $79,676,344

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DEAM3609GO29044

IDV Type: IDC

Timeline