HUD's $55M Energy Savings Contract with Honeywell Faces Scrutiny Over Long Duration and Limited Small Business Impact
Contract Overview
Contract Amount: $55,080,393 ($55.1M)
Contractor: Honeywell Inc
Awarding Agency: Department of Housing and Urban Development
Start Date: 2009-12-30
End Date: 2034-12-31
Contract Duration: 9,132 days
Daily Burn Rate: $6.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Energy
Official Description: ENERGY SAVINGS PERFORMANCE CONTRACT (HEADQUARTERS BUILDING)
Place of Performance
Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20410
Plain-Language Summary
Department of Housing and Urban Development obligated $55.1 million to HONEYWELL INC for work described as: ENERGY SAVINGS PERFORMANCE CONTRACT (HEADQUARTERS BUILDING) Key points: 1. The contract, valued at $55.08 million, focuses on energy efficiency upgrades for HUD headquarters. 2. Awarded via full and open competition, the primary contractor is Honeywell Inc. 3. The contract's long duration (2009-2034) raises questions about sustained value and potential for renegotiation. 4. Analysis indicates limited direct benefit to small businesses under this specific award. 5. The Public Law 110-409 (Energy Policy Act of 2005) mandates ESPCs, but oversight is crucial.
Value Assessment
Rating: fair
The contract's value is assessed against similar energy savings performance contracts. While the total value is substantial, the long performance period requires careful evaluation of actual savings realized over time compared to initial projections and market rates for similar services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded through full and open competition, suggesting a competitive bidding process. However, the long-term nature of the contract and the specific performance-based structure of ESPCs can influence how effectively price discovery occurs throughout its lifespan.
Taxpayer Impact: Taxpayer funds are committed over a long period, with the expectation of generating savings that offset the contract costs and provide net benefits. The ultimate impact depends on the realized energy savings.
Public Impact
Federal buildings are undergoing energy efficiency upgrades, aiming to reduce operational costs and environmental impact. Taxpayers are expected to benefit from long-term energy cost reductions, though the upfront investment and contract duration require careful monitoring. The contract supports the government's broader goals of energy independence and sustainability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (25 years)
- Limited direct small business participation noted
- Potential for cost overruns if savings are not realized
Positive Signals
- Focus on energy efficiency and sustainability
- Awarded through full and open competition
- Potential for significant long-term cost savings
Sector Analysis
This contract falls within the energy sector, specifically focusing on energy efficiency improvements in federal buildings through an Energy Savings Performance Contract (ESPC). ESPCs are a common mechanism for federal agencies to finance energy upgrades without upfront capital, relying on guaranteed savings. Benchmarks for similar ESPCs vary widely based on building size, scope of work, and contract duration.
Small Business Impact
While the contract was awarded through full and open competition, the data indicates that small business participation (sb: false) was not a direct requirement or outcome of this specific award. ESPCs often involve large prime contractors who may subcontract, but the direct benefit to small businesses on this particular contract appears limited.
Oversight & Accountability
Oversight is critical for ESPCs to ensure that projected savings are realized and that the contract remains cost-effective throughout its long duration. HUD is responsible for monitoring performance and verifying savings against the baseline established at the contract's inception.
Related Government Programs
- Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing
- Department of Housing and Urban Development Contracting
- Department of Housing and Urban Development Programs
Risk Flags
- Long contract duration (25 years)
- Potential for savings to not materialize as projected
- Limited visibility into small business subcontracting opportunities
- Risk of technological obsolescence over the contract term
Tags
air-conditioning-and-warm-air-heating-eq, department-of-housing-and-urban-developm, dc, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Housing and Urban Development awarded $55.1 million to HONEYWELL INC. ENERGY SAVINGS PERFORMANCE CONTRACT (HEADQUARTERS BUILDING)
Who is the contractor on this award?
The obligated recipient is HONEYWELL INC.
Which agency awarded this contract?
Awarding agency: Department of Housing and Urban Development (Department of Housing and Urban Development).
What is the total obligated amount?
The obligated amount is $55.1 million.
What is the period of performance?
Start: 2009-12-30. End: 2034-12-31.
What is the projected return on investment for this ESPC, and how does it compare to industry standards for similar projects?
The projected return on investment (ROI) for this ESPC is contingent upon the actual energy savings achieved over the contract's 25-year term. Without specific ROI figures or detailed baseline data, a direct comparison to industry standards is difficult. However, ESPCs are designed to be self-financing, meaning savings should cover costs and provide a positive return. HUD's ongoing oversight is crucial to ensure these projections materialize and remain competitive against alternative energy efficiency investments.
Given the 25-year duration, what mechanisms are in place to mitigate risks associated with technological obsolescence and changing energy markets?
Mechanisms to mitigate risks in long-term ESPCs include performance guarantees, periodic reviews, and potentially clauses for adapting to new technologies or market shifts, though these are not explicitly detailed in the provided data. The firm-fixed-price structure aims to lock in costs, but flexibility for unforeseen circumstances is often managed through contract modifications or specific performance metrics. Continuous monitoring by HUD is essential to address these evolving risks.
How effectively does this ESPC contribute to HUD's overall energy reduction goals and sustainability targets?
This ESPC directly contributes to HUD's energy reduction goals by implementing energy conservation measures within its headquarters. The success in meeting broader sustainability targets depends on the magnitude of savings achieved and the specific environmental benefits (e.g., reduced greenhouse gas emissions) resulting from the upgrades. Regular reporting and verification of energy savings are key to assessing its contribution.
Industry Classification
NAICS: Manufacturing › Ventilation, Heating, Air-Conditioning, and Commercial Refrigeration Equipment Manufacturing › Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing
Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Contractor Details
Parent Company: Honeywell International Inc
Address: 101 COLUMBIA RD, MORRISTOWN, NJ, 07960
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $116,528,944
Exercised Options: $116,528,944
Current Obligation: $55,080,393
Actual Outlays: $36,947,897
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: DEAM3699EE73683
IDV Type: IDC
Timeline
Start Date: 2009-12-30
Current End Date: 2034-12-31
Potential End Date: 2034-12-31 00:00:00
Last Modified: 2025-11-14
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