GSA's $53.7M Energy Retrofit Contract with NORESCO, LLC Shows Long-Term Performance Focus

Contract Overview

Contract Amount: $53,732,103 ($53.7M)

Contractor: Noresco, LLC

Awarding Agency: General Services Administration

Start Date: 2014-01-01

End Date: 2023-06-30

Contract Duration: 3,467 days

Daily Burn Rate: $15.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 15

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: IGF::OT::IGF DE-AM36-09G0229039/GS-P-05-14-GA-0004,GSA NATIONAL DEEP ENERGY RETROFIT (NDER), ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) TASK ORDER, FOR REGION 5, NORESCO, LLC, METCALFE FEDERAL BUILDING, 536 S. CLARK FEDERAL BUILDING, U.S. CUSTOM HOUSE, FEDERAL ARCHIVES&RECORDS CENTER, EVERETT M. DIRKSEN U.S. COURTHOUSE, JOHN C. KLUCZYNSKI FEDERAL BUILDING, AND U.S. POST OFFICE/LOOP STATION, CHICAGO, IL.

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60604

State: Illinois Government Spending

Plain-Language Summary

General Services Administration obligated $53.7 million to NORESCO, LLC for work described as: IGF::OT::IGF DE-AM36-09G0229039/GS-P-05-14-GA-0004,GSA NATIONAL DEEP ENERGY RETROFIT (NDER), ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) TASK ORDER, FOR REGION 5, NORESCO, LLC, METCALFE FEDERAL BUILDING, 536 S. CLARK FEDERAL BUILDING, U.S. CUSTOM HOUSE, FEDERAL ARCHIVES&RECORDS CE… Key points: 1. This contract represents a significant investment in energy efficiency for federal buildings in Chicago. 2. The long duration (over 9 years) suggests a focus on sustained performance and measurable energy savings. 3. The firm-fixed-price structure aims to control costs and ensure predictable spending. 4. Competition was full and open, indicating a broad market engagement for this service. 5. The contract's value is substantial, reflecting the scale of the retrofitting project. 6. Performance is tied to energy savings, a key value-for-money indicator. 7. The specific buildings targeted suggest a strategic approach to upgrading critical federal infrastructure.

Value Assessment

Rating: good

The contract value of $53.7 million over nearly 10 years for energy retrofitting services is substantial. While direct comparisons are difficult without specific project scopes, Energy Savings Performance Contracts (ESPCs) are designed to be cost-neutral or cost-saving through guaranteed energy reductions. The long-term nature suggests a commitment to achieving these savings. Benchmarking against similar large-scale federal building retrofits would provide further context on pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple qualified contractors had the opportunity to bid. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The number of bidders (15) indicates a healthy interest in this type of federal contract, further supporting the likelihood of a well-priced award.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down prices through market forces, ensuring that federal dollars are used more efficiently.

Public Impact

Federal employees working in the Metcalfe Federal Building, U.S. Custom House, Federal Archives & Records Center, Everett M. Dirksen U.S. Courthouse, John C. Kluczynski Federal Building, and U.S. Post Office/Loop Station will benefit from improved building environments. The contract delivers energy retrofitting services, aiming to reduce utility consumption and operational costs for these federal facilities. The geographic impact is concentrated in Chicago, Illinois, improving the energy efficiency of key federal properties in the region. The project supports the energy services sector and potentially creates or sustains jobs in engineering, construction, and energy management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could pose risks if energy savings projections are not met over the full term.
Reliance on a single contractor (NORESCO, LLC) for a large project requires robust oversight to ensure performance.
Potential for scope creep or unforeseen technical challenges in retrofitting older federal buildings.

Positive Signals

Focus on energy savings aligns with federal sustainability goals and potential long-term cost reductions.
Firm-fixed-price contract provides cost certainty for the government.
Full and open competition suggests a competitive award process.

Sector Analysis

This contract falls within the Engineering Services (NAICS 541330) and Energy Savings Performance Contract (ESPC) sector. ESPCs are a key mechanism for federal agencies to improve energy efficiency and reduce utility costs without upfront capital appropriations. The market for energy retrofitting and performance contracting is substantial, driven by government mandates for sustainability and cost savings. This contract with NORESCO, LLC, a known player in the energy services market, fits within the broader trend of federal agencies modernizing their infrastructure.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. The award to NORESCO, LLC, a large energy services company, suggests that the primary contract was likely competed broadly. Further analysis would be needed to determine if small businesses were involved as subcontractors, which is common in large construction and retrofitting projects.

Oversight & Accountability

Oversight for this contract would primarily fall under the General Services Administration (GSA), specifically the Public Buildings Service. As an Energy Savings Performance Contract (ESPC), there are inherent performance metrics tied to energy savings that serve as a key accountability measure. The contract's long duration necessitates ongoing monitoring of energy usage and savings. Transparency would be enhanced through regular reporting from the contractor and potential reviews by GSA's internal oversight bodies or the Government Accountability Office (GAO).

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Federal Building Modernization Programs
GSA Public Buildings Service Contracts
Energy Efficiency and Conservation Block Grants
Department of Energy Federal Energy Management Program

Risk Flags

Long-term performance risk
Accuracy of energy savings projections
Contractor performance and oversight needs
Potential for technological obsolescence

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $53.7 million to NORESCO, LLC. IGF::OT::IGF DE-AM36-09G0229039/GS-P-05-14-GA-0004,GSA NATIONAL DEEP ENERGY RETROFIT (NDER), ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) TASK ORDER, FOR REGION 5, NORESCO, LLC, METCALFE FEDERAL BUILDING, 536 S. CLARK FEDERAL BUILDING, U.S. CUSTOM HOUSE, FEDERAL ARCHIVES&RECORDS CENTER, EVERETT M. DIRKSEN U.S. COURTHOUSE, JOHN C. KLUCZYNSKI FEDERAL BUILDING, AND U.S. POST OFFICE/LOOP STATION, CHICAGO, IL.

Who is the contractor on this award?

The obligated recipient is NORESCO, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $53.7 million.

What is the period of performance?

Start: 2014-01-01. End: 2023-06-30.

What is the historical spending pattern for Energy Savings Performance Contracts (ESPCs) by the General Services Administration?

The General Services Administration (GSA) has historically utilized Energy Savings Performance Contracts (ESPCs) as a significant tool for improving energy efficiency in its vast portfolio of federal buildings. While specific aggregate spending figures for GSA's ESPCs fluctuate annually, they represent a substantial portion of the agency's sustainability and infrastructure upgrade investments. ESPCs allow GSA to implement energy conservation measures without upfront capital costs, with repayment coming from the documented energy savings achieved. The total value of ESPCs awarded by federal agencies has been in the billions of dollars over the past decade, with GSA being a major contributor. Factors influencing spending include appropriations for energy management, agency-wide sustainability mandates, and the availability of qualified Energy Service Companies (ESCOs) like NORESCO, LLC. Analyzing GSA's budget justifications and annual performance reports would provide more granular historical spending data on ESPCs.

How does the $53.7 million value of this NORESCO, LLC contract compare to other GSA ESPCs?

The $53.7 million value of this Energy Savings Performance Contract (ESPC) awarded to NORESCO, LLC by the General Services Administration (GSA) is a significant, but not unprecedented, figure for large-scale federal building retrofits. GSA manages a massive inventory of buildings, and ESPCs can range from a few million dollars for smaller projects to tens of millions for comprehensive overhauls of multiple large facilities. Contracts in the $50 million to $100 million range are common for major ESPC task orders or indefinite-delivery/indefinite-quantity (IDIQ) task orders that encompass multiple buildings or extensive upgrades. For instance, other ESPCs awarded by GSA or other agencies for major campus retrofits or portfolios of buildings have reached similar or even higher values. The long performance period (over 9 years) also contributes to the total contract value. Therefore, while substantial, this contract is in line with the scale of major ESPC initiatives undertaken by GSA to achieve significant energy savings across its real estate holdings.

What are the primary risks associated with a long-term (9+ year) ESPC like this one?

Long-term Energy Savings Performance Contracts (ESPCs), such as this 9+ year agreement, carry several inherent risks. A primary concern is the accuracy of the energy savings projections made at the outset. If actual energy savings fall short of projections due to unforeseen building performance issues, changes in building usage, or inadequate maintenance, the contractor may not meet its guaranteed savings, potentially leading to disputes or the government not realizing the expected financial benefits. Another risk is technological obsolescence; while the retrofits are intended to be durable, advancements in energy efficiency technology could make the installed systems less optimal over the contract's lifespan. Contractor performance risk is also present; ensuring consistent quality and responsiveness from NORESCO, LLC over nearly a decade requires diligent contract management and oversight from GSA. Finally, changes in federal energy policy or budget priorities could indirectly impact the perceived value or necessity of the contract's ongoing savings.

How is the 'performance' in this Energy Savings Performance Contract measured and verified?

Performance in an Energy Savings Performance Contract (ESPC) is fundamentally measured by the verified reduction in energy consumption and associated costs. For this contract with NORESCO, LLC, the 'performance' is tied to the guaranteed energy savings achieved in the specified Chicago federal buildings. Measurement and Verification (M&V) protocols are crucial and are typically established in the contract itself, often following established methodologies like the International Performance Measurement and Verification Protocol (IPMVP). GSA, through its Public Buildings Service, would be responsible for overseeing the M&V process. This involves regularly monitoring utility data, building system performance, and occupancy levels to calculate the actual energy savings realized compared to a baseline established before the retrofits. The contractor, NORESCO, LLC, is obligated to provide regular M&V reports, and GSA would independently verify these findings to ensure the savings guarantees are met. If savings fall short, the contractor is typically required to compensate the agency.

What is NORESCO, LLC's track record with federal ESPCs?

NORESCO, LLC has a significant and established track record as an Energy Service Company (ESCO) working with federal agencies, including the General Services Administration (GSA). They are a well-recognized provider of energy efficiency solutions and performance-based contracts across various sectors. NORESCO has been involved in numerous large-scale ESPC projects for federal facilities, encompassing a wide range of energy conservation measures such as HVAC upgrades, lighting retrofits, building envelope improvements, and renewable energy installations. Their history includes successfully delivering projects that meet guaranteed energy savings targets and contribute to federal sustainability goals. Given their longevity and the scale of projects they undertake, it can be inferred that they have experience navigating the complexities of federal contracting, compliance, and performance verification required for ESPCs. This specific contract, valued at over $53 million, further underscores their capacity to handle substantial federal energy retrofitting initiatives.

What are the potential long-term cost savings for taxpayers resulting from this $53.7M investment?

The primary objective of this $53.7 million Energy Savings Performance Contract (ESPC) is to generate long-term cost savings for taxpayers through reduced energy expenditures in federal buildings. While the exact savings are guaranteed by NORESCO, LLC and depend on the specific retrofits and energy prices, ESPCs are structured so that the annual savings generated are intended to cover the contract's costs and provide a net benefit. Over the contract's duration of nearly 10 years, and potentially beyond if savings persist, the cumulative reduction in electricity, natural gas, and water bills for the targeted Chicago federal buildings could be substantial. These savings directly reduce the operational costs funded by taxpayers. Furthermore, by improving energy efficiency, these retrofits contribute to federal sustainability mandates and reduce the government's carbon footprint, offering indirect societal benefits. The firm-fixed-price nature helps ensure that the government pays a set amount, making the financial planning for these savings more predictable.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR NONBUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 15

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 RESEARCH DR STE 400 C, WESTBOROUGH, MA, 01581

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $80,443,630

Exercised Options: $53,732,103

Current Obligation: $53,732,103

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $33,484,712

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DEAM3609GO29039

IDV Type: IDC

Timeline