Interior's $38.9M Energy Contract with Siemens Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $38,945,655 ($38.9M)

Contractor: Siemens Government Technologies Inc

Awarding Agency: Department of the Interior

Start Date: 2014-09-24

End Date: 2039-03-31

Contract Duration: 8,954 days

Daily Burn Rate: $4.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: IGF::OT::IGF NATIONAL CAPITAL REGION ENERGY SAVINGS PERFORMANCE CONTRACT

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20242

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Interior obligated $38.9 million to SIEMENS GOVERNMENT TECHNOLOGIES INC for work described as: IGF::OT::IGF NATIONAL CAPITAL REGION ENERGY SAVINGS PERFORMANCE CONTRACT Key points: 1. The contract's significant value raises questions about cost-effectiveness and potential for savings. 2. Siemens Government Technologies Inc. is the sole awardee, prompting an examination of the competition method. 3. Long duration (25 years) introduces risks related to technological obsolescence and changing energy needs. 4. The Engineering Services sector often involves complex projects where pricing can be difficult to benchmark.

Value Assessment

Rating: questionable

The contract's total value of $38.9 million over nearly 25 years requires detailed analysis to determine if it represents a fair price for the energy savings achieved. Benchmarking against similar ESPCs is crucial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

While advertised as full and open competition, the award to a single entity, Siemens Government Technologies Inc., warrants investigation into the bidding process and whether it truly fostered competitive pricing.

Taxpayer Impact: The long-term nature of the contract means taxpayers are committed to payments over decades, making upfront cost-benefit analysis critical for ensuring value.

Public Impact

Taxpayers are committed to a significant financial outlay over a 25-year period for energy efficiency upgrades. The National Park Service aims to achieve energy savings, potentially reducing operational costs and environmental impact. The contract's success hinges on the accurate projection and realization of energy savings. Long-term contracts can lock the government into specific technologies, potentially missing out on future innovations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (25 years)
Potential for cost overruns
Risk of technological obsolescence
Limited transparency in pricing

Positive Signals

Potential for significant energy savings
Modernization of energy infrastructure
Contribution to sustainability goals

Sector Analysis

This Energy Savings Performance Contract (ESPC) falls within the Engineering Services sector. ESPCs are designed to achieve energy efficiency upgrades with no upfront capital costs to the government, with payments tied to realized savings. Benchmarks vary widely based on project scope and technology.

Small Business Impact

The data does not indicate specific subcontracting opportunities for small businesses. Further review is needed to determine if small businesses were involved in the execution of this contract and if there were efforts to maximize their participation.

Oversight & Accountability

Oversight is critical for a contract of this duration and value. Regular performance reviews, verification of energy savings, and monitoring of contract modifications are essential to ensure accountability and taxpayer protection.

Related Government Programs

Engineering Services
Department of the Interior Contracting
National Park Service Programs

Risk Flags

Long contract duration may lead to outdated technology.
Potential for inflated savings projections.
Lack of detailed cost breakdown for specific measures.
Limited visibility into Siemens' profit margins.
Risk of contract modifications increasing overall cost.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $38.9 million to SIEMENS GOVERNMENT TECHNOLOGIES INC. IGF::OT::IGF NATIONAL CAPITAL REGION ENERGY SAVINGS PERFORMANCE CONTRACT

Who is the contractor on this award?

The obligated recipient is SIEMENS GOVERNMENT TECHNOLOGIES INC.

Which agency awarded this contract?

Awarding agency: Department of the Interior (National Park Service).

What is the total obligated amount?

The obligated amount is $38.9 million.

What is the period of performance?

Start: 2014-09-24. End: 2039-03-31.

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

The contract details specific energy conservation measures (ECMs) such as lighting retrofits, HVAC upgrades, and building envelope improvements. Savings calculations are typically based on baseline energy usage data, estimated consumption reductions from each ECM, and current utility rates. Independent verification of these projections is crucial to ensure the government is not overpaying.

Given the 25-year term, what mechanisms are in place to address potential technological obsolescence or changes in energy market conditions?

Long-term ESPCs often include provisions for technology refresh or renegotiation clauses to address obsolescence. However, the specific terms of this contract regarding such adjustments need thorough examination. Market condition changes could impact the realized savings, necessitating careful monitoring and potential contract modifications to maintain the intended financial benefits.

How does the awarded price compare to industry benchmarks for similar energy savings performance contracts, considering the scope and duration?

A comprehensive benchmark analysis against similar ESPCs is necessary. Factors like the specific technologies implemented, the baseline energy consumption, the geographic location, and the contract's duration significantly influence pricing. Without this comparison, it's difficult to ascertain if the $38.9 million represents a fair and reasonable price for the anticipated energy savings.

Industry Classification

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

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Siemens Aktiengesellschaft

Address: 1881 CAMPUS COMMONS DR, RESTON, VA, 20191

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

Financial Breakdown

Contract Ceiling: $87,738,694

Exercised Options: $38,945,655

Current Obligation: $38,945,655

Actual Outlays: $25,512,247

Subaward Activity

Number of Subawards: 9

Total Subaward Amount: $1,334,678

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DEAM3609GO29041

IDV Type: IDC

Timeline