Homeland Security's $12M energy savings contract with Honeywell Inc. awarded without competition

Contract Overview

Contract Amount: $12,021,302 ($12.0M)

Contractor: Honeywell Inc

Awarding Agency: Department of Homeland Security

Start Date: 2006-11-30

End Date: 2021-02-01

Contract Duration: 5,177 days

Daily Burn Rate: $2.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ESPC (ENERGY SAVINGS) - MLCPAC

Place of Performance

Location: OAKLAND, ALAMEDA County, CALIFORNIA, 94606

State: California Government Spending

Plain-Language Summary

Department of Homeland Security obligated $12.0 million to HONEYWELL INC for work described as: ESPC (ENERGY SAVINGS) - MLCPAC Key points: 1. Contract awarded to a single vendor, raising questions about price competitiveness. 2. Long contract duration of over 14 years suggests potential for cost overruns or scope creep. 3. The contract's focus on energy savings aligns with broader government sustainability goals. 4. Awarded by the U.S. Coast Guard, indicating a need for facility energy efficiency improvements. 5. The firm fixed-price structure aims to control costs, but the lack of competition limits benchmarking. 6. No small business participation noted, potentially missing opportunities for smaller contractors.

Value Assessment

Rating: questionable

The total award amount of $12,021,302 for energy savings performance contracts (ESPCs) is difficult to benchmark without detailed project scope and performance metrics. However, the lack of competition is a significant concern, as it prevents a thorough assessment of whether the pricing represents good value for money compared to alternative solutions or other ESPCs. The long duration of the contract (over 14 years) also introduces risk, as energy markets and technology can change substantially over such a period. Without competitive bidding, it's challenging to ascertain if the selected vendor's pricing is optimal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source purchase order, meaning it was not competed among multiple vendors. This approach bypasses the standard competitive bidding process, which typically ensures a wider range of offers and potentially lower prices. The lack of competition here means that the U.S. Coast Guard did not explore options from other qualified contractors, which could have led to better price discovery and potentially more innovative solutions. The rationale for a sole-source award would need to be clearly justified, often due to unique capabilities or urgent needs.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price pressures inherent in a competitive bidding environment. This limits the government's ability to secure the best possible value.

Public Impact

The U.S. Coast Guard facilities in California are the primary beneficiaries, receiving energy efficiency upgrades. The contract aims to deliver cost savings through reduced energy consumption and improved operational efficiency. Geographic impact is concentrated in California, where the U.S. Coast Guard facilities are located. Potential workforce implications could include specialized energy technicians for installation and maintenance, though the contract is with Honeywell Inc., suggesting they may manage these aspects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and suboptimal value for taxpayer funds.
The extended contract duration increases the risk of technological obsolescence and market shifts impacting cost-effectiveness.
Sole-source awards can stifle innovation by not encouraging a broader market response.
Absence of small business participation means missed opportunities to support smaller enterprises.

Positive Signals

The contract's objective of energy savings aligns with federal sustainability mandates and can lead to long-term operational cost reductions.
Firm fixed-price contract type provides cost certainty for the government, assuming the scope is well-defined.
Honeywell Inc. is a large, established company with significant experience in energy performance contracting.

Sector Analysis

This contract falls within the Commercial and Institutional Building Construction sector, specifically focusing on energy efficiency improvements. Energy Savings Performance Contracts (ESPCs) are a common mechanism used by federal agencies to finance energy efficiency upgrades without upfront capital investment. The market for ESPCs is substantial, driven by government mandates for energy reduction and cost savings. Comparable spending benchmarks are difficult to establish without specific project details, but large-scale ESPCs can run into tens or hundreds of millions of dollars over their lifecycles.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there information indicating significant subcontracting opportunities for small businesses. The award to a large corporation like Honeywell Inc. suggests that the primary contract is managed by a prime contractor capable of handling large-scale projects. This could mean missed opportunities for small businesses to participate in the energy efficiency market, particularly in specialized installation or maintenance roles, unless Honeywell actively engages them as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Coast Guard's contracting and program management offices. As an Energy Savings Performance Contract, it likely involves specific reporting requirements related to energy savings achieved and project milestones. The Department of Homeland Security's Inspector General may also have jurisdiction to audit or investigate the contract's performance and financial aspects, particularly given the significant dollar amount and the sole-source nature of the award. Transparency could be enhanced by public reporting of achieved energy savings.

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Federal Building Energy Efficiency Initiatives
Department of Homeland Security Facility Management
U.S. Coast Guard Operations Support
Commercial Building Retrofits

Risk Flags

Sole-source award
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $12.0 million to HONEYWELL INC. ESPC (ENERGY SAVINGS) - MLCPAC

Who is the contractor on this award?

The obligated recipient is HONEYWELL INC.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $12.0 million.

What is the period of performance?

Start: 2006-11-30. End: 2021-02-01.

What specific energy-saving measures were included in this contract, and what were the projected savings?

The provided data does not detail the specific energy-saving measures implemented under this contract. Energy Savings Performance Contracts (ESSPs) typically encompass a range of upgrades such as HVAC system modernization, lighting retrofits, building envelope improvements, and installation of renewable energy sources. Projected savings are usually calculated based on baseline energy consumption data and the expected performance of the installed technologies. Without access to the contract's statement of work or performance reports, it is impossible to quantify the exact measures or their projected financial and energy impact. The success of such contracts is often measured by the actual verified savings against these initial projections.

How does the $12 million cost compare to similar energy savings contracts awarded by the U.S. Coast Guard or DHS?

Direct comparison of the $12 million cost is challenging without knowing the scope, duration, and specific energy-saving measures included. However, ESPCs can vary widely in cost depending on the size and complexity of the facilities being retrofitted. For large installations or multiple facilities, $12 million over a 14-year period might be within a reasonable range. The key concern here is the lack of competition, which prevents an assessment of whether this price represents good value compared to what might have been achieved through a competitive process. Benchmarking against other sole-source awards is also problematic for the same reasons.

What is Honeywell Inc.'s track record with federal Energy Savings Performance Contracts?

Honeywell Inc. is a major global corporation with extensive experience in building technologies, energy management, and performance contracting. They have a significant track record of executing large-scale ESPCs for various federal agencies, including the Department of Defense, General Services Administration, and others. Their experience typically involves designing, installing, and maintaining energy conservation measures, often guaranteeing a certain level of savings. While their established presence suggests capability, the specific performance and value delivered on individual contracts, especially sole-source awards, would require detailed review of past performance information and any associated audits or reviews.

What are the risks associated with a sole-source award for an energy savings contract of this duration?

A sole-source award for a long-duration contract like this presents several risks. Firstly, the lack of competition means the government may be paying a premium price, as there was no market pressure to offer the lowest possible cost. Secondly, over a 14-year period, energy technologies, market prices, and government needs can change significantly. A sole-source contract might lock the government into outdated or less efficient solutions, or prevent them from taking advantage of more cost-effective alternatives that emerge later. There's also a risk of vendor complacency or reduced incentive to innovate and optimize performance when competition is absent. Finally, without a competitive baseline, verifying the true value and savings achieved can be more difficult.

How does this contract align with the U.S. Coast Guard's broader mission and sustainability goals?

This contract directly supports the U.S. Coast Guard's operational readiness and sustainability goals by aiming to reduce energy consumption and associated costs at its facilities. By improving energy efficiency, the Coast Guard can lower its utility expenditures, freeing up funds for other critical mission-related activities. Furthermore, reducing its carbon footprint aligns with broader federal mandates and environmental stewardship objectives. Investing in energy-efficient infrastructure can also enhance the reliability and resilience of facilities, which is crucial for supporting the Coast Guard's diverse and often demanding operational requirements.

What oversight mechanisms are in place to ensure Honeywell Inc. meets its energy savings obligations?

Oversight for this ESPC would typically involve regular performance monitoring and reporting by the U.S. Coast Guard. The contract likely includes specific metrics and verification procedures to measure actual energy savings against baseline data. Honeywell Inc. would be contractually obligated to provide regular reports detailing energy consumption, savings achieved, and the performance of installed equipment. The contracting officer's representative (COR) would be responsible for overseeing the contractor's performance and ensuring compliance with contract terms. The Department of Energy (DOE) often plays a role in overseeing ESPCs, providing technical assistance and guidance on measurement and verification (M&V) protocols.

Industry Classification

NAICS: Construction › Nonresidential Building Construction › Commercial and Institutional Building Construction

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Honeywell International Inc (UEI: 139691877)

Address: 101 COLUMBIA ROAD, MORRISTOWN, NJ, 07960

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

Financial Breakdown

Contract Ceiling: $12,021,302

Exercised Options: $12,021,302

Current Obligation: $12,021,302

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline