Siemens awarded $74.4M ESPC for Naval Base Guantanamo Bay, including an LNG plant, spanning 25 years

Contract Overview

Contract Amount: $74,435,208 ($74.4M)

Contractor: Siemens Government Technologies Inc

Awarding Agency: Department of Defense

Start Date: 2019-07-24

End Date: 2043-04-24

Contract Duration: 8,675 days

Daily Burn Rate: $8.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: ENERGY SAVINGS PERFORMANCE CONTRACT FOR NAVAL BASE GUANTANAMO BAY, CUBA, TO INCLUDED AN LIQUIFIED NATURAL GAS PLANT

Plain-Language Summary

Department of Defense obligated $74.4 million to SIEMENS GOVERNMENT TECHNOLOGIES INC for work described as: ENERGY SAVINGS PERFORMANCE CONTRACT FOR NAVAL BASE GUANTANAMO BAY, CUBA, TO INCLUDED AN LIQUIFIED NATURAL GAS PLANT Key points: 1. The contract's long duration (25 years) suggests a focus on sustained energy infrastructure improvements and operational efficiencies. 2. The inclusion of an LNG plant indicates a significant investment in modernizing energy sources and potentially reducing reliance on traditional fuels. 3. The firm-fixed-price structure aims to provide cost certainty for the government, shifting performance risks to the contractor. 4. The contract's value of $74.4 million over 25 years implies an average annual commitment of approximately $3 million, requiring careful monitoring of project milestones and energy savings. 5. The project's location at Naval Base Guantanamo Bay presents unique logistical and operational challenges that could impact execution and cost. 6. The absence of small business set-asides suggests the primary contractor is a large entity, with potential for subcontracting opportunities.

Value Assessment

Rating: good

This Energy Savings Performance Contract (ESPC) awarded to Siemens Government Technologies Inc. for $74.4 million appears to be a substantial investment in energy infrastructure. While direct comparisons are difficult without specific project details, ESPCs are designed to be cost-neutral or cost-saving, with savings generated by the project paying for the improvements. The 25-year term is typical for large-scale energy projects that require significant upfront investment and long-term realization of savings. The firm-fixed-price nature provides budget certainty, but requires diligent oversight to ensure the projected savings are achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. This competitive process is generally expected to yield favorable pricing and innovative solutions. The number of bidders (8) suggests a healthy level of interest and competition for this significant energy infrastructure project.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down costs through market forces and encouraging a wider range of technical approaches.

Public Impact

Naval Base Guantanamo Bay personnel and operations will benefit from potentially more reliable and cost-effective energy supply. The project aims to deliver energy efficiency improvements and potentially new energy generation capabilities (LNG plant). The geographic impact is localized to Naval Base Guantanamo Bay, Cuba. The project may involve specialized labor for the construction and maintenance of the LNG plant and other energy infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term commitment (25 years) requires sustained oversight to ensure ongoing performance and savings realization.
The complexity of an LNG plant introduces potential technical and operational risks that need careful management.
Geopolitical considerations and logistical challenges specific to Guantanamo Bay could impact project execution.
Ensuring the projected energy savings are accurately measured and attributed over the contract's lifespan is critical.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
Firm-fixed-price contract provides cost certainty for the government.
Focus on energy savings and modernization aligns with long-term sustainability goals.
Inclusion of an LNG plant indicates a significant upgrade to energy infrastructure.

Sector Analysis

This contract falls within the Engineering Services sector, specifically related to energy infrastructure development and management. ESPCs are a common mechanism used by government agencies to finance energy efficiency upgrades and renewable energy projects. The market for such services is competitive, with specialized firms offering expertise in energy audits, system design, installation, and performance monitoring. The inclusion of an LNG plant suggests a project of considerable scale, potentially involving significant capital investment and specialized construction expertise.

Small Business Impact

The contract was not awarded as a small business set-aside, and there is no indication of a specific small business subcontracting plan being a primary driver for this award. This suggests the primary contractor, Siemens Government Technologies Inc., is a large business. While large prime contracts can create subcontracting opportunities for small businesses, the specific details of such arrangements are not provided in the award data. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight for this ESPC would typically be managed by the Department of the Navy, with specific program managers responsible for monitoring project progress, verifying energy savings, and ensuring compliance with contract terms. The firm-fixed-price nature shifts some risk to the contractor, but the government retains responsibility for performance verification. Transparency would be facilitated through regular reporting requirements from the contractor on energy savings and project milestones. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Department of Defense Energy Initiatives
Naval Base Infrastructure Modernization
Liquefied Natural Gas (LNG) Facility Construction
Engineering Services Contracts

Risk Flags

Long-term contract duration requires sustained oversight.
Complexity of LNG plant introduces technical and logistical risks.
Geopolitical and logistical challenges specific to Guantanamo Bay.
Ensuring accurate and consistent energy savings verification over 25 years.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.4 million to SIEMENS GOVERNMENT TECHNOLOGIES INC. ENERGY SAVINGS PERFORMANCE CONTRACT FOR NAVAL BASE GUANTANAMO BAY, CUBA, TO INCLUDED AN LIQUIFIED NATURAL GAS PLANT

Who is the contractor on this award?

The obligated recipient is SIEMENS GOVERNMENT TECHNOLOGIES INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $74.4 million.

What is the period of performance?

Start: 2019-07-24. End: 2043-04-24.

What is the projected annual energy savings from this contract, and how will it be measured and verified over the 25-year period?

The specific projected annual energy savings are not detailed in the provided award data. However, ESPCs are structured such that the energy savings generated by the implemented measures are intended to cover the cost of the project and provide a net benefit to the government. Measurement and Verification (M&V) plans are a critical component of all ESPCs, typically following established protocols like the International Performance Measurement and Verification Protocol (IPMVP). Over the 25-year period, the Department of the Navy will likely employ a combination of real-time energy monitoring systems, periodic audits, and baseline comparisons to verify that the promised savings are being achieved. Siemens Government Technologies Inc. will be responsible for providing data and reports to support these verifications, and the contract likely includes provisions for adjustments if savings fall short of projections.

What are the specific energy efficiency measures and technologies included in this contract, beyond the LNG plant?

The award data specifically mentions the inclusion of a Liquefied Natural Gas (LNG) plant, indicating a significant focus on energy generation and potentially fuel diversification. However, the data does not detail other specific energy efficiency measures or technologies. ESPCs typically encompass a range of upgrades such as lighting retrofits, HVAC system modernizations, building envelope improvements (insulation, windows), water conservation measures, and the integration of renewable energy sources. Given the scale and duration of this contract, it is probable that a comprehensive suite of energy conservation measures (ECMs) will be implemented across Naval Base Guantanamo Bay to maximize overall energy savings and operational resilience.

What is Siemens Government Technologies Inc.'s track record with similar large-scale ESPCs, particularly those involving LNG facilities?

Siemens Government Technologies Inc. is a major player in the energy services sector and has a significant history of executing large-scale ESPCs for government clients. They have been involved in numerous projects focused on energy efficiency, renewable energy integration, and infrastructure upgrades. While specific details on their experience with LNG plant construction within an ESPC framework are not immediately available from the award data, Siemens as a parent company has extensive global expertise in energy infrastructure, including LNG terminals and power generation. Their track record with ESPCs generally suggests a capability to manage complex projects, although the unique challenges of an LNG facility within a military base context would require specialized attention and proven execution.

How does the $74.4 million contract value compare to other large ESPCs awarded by the Department of the Navy or other military branches?

The $74.4 million contract value for this ESPC is substantial, placing it among larger energy infrastructure investments. ESPCs can range widely in value, from hundreds of thousands to hundreds of millions of dollars, depending on the scope of work, facility size, and energy savings potential. For the Department of the Navy and other military branches, contracts in the tens of millions are common for significant facility upgrades. Projects involving new power generation facilities, like the LNG plant mentioned here, tend to be at the higher end of the ESPC value spectrum. Without access to a comprehensive database of all ESPC awards, a precise benchmark is difficult, but this award signifies a major commitment to modernizing energy infrastructure at the base.

What are the potential risks associated with the long 25-year performance period of this contract, and what mitigation strategies are likely in place?

The 25-year performance period presents several potential risks. Firstly, technology obsolescence is a concern; energy-efficient technologies deployed today might be outdated or less efficient in 10-15 years. Secondly, changes in energy markets, regulations, or the base's operational needs could impact the relevance or effectiveness of the implemented solutions. Thirdly, ensuring consistent performance and savings verification over such a long duration requires robust long-term management and accountability. Mitigation strategies likely include performance-based contract clauses that allow for adjustments or upgrades, strong Measurement and Verification (M&V) protocols, and potentially incorporating flexibility into the system designs to accommodate future technological advancements or changing requirements. The firm-fixed-price nature also means Siemens bears the risk of cost overruns or performance shortfalls over the contract term.

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: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Siemens Aktiengesellschaft

Address: 2231 CRYSTAL DR STE 700, ARLINGTON, VA, 22202

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

Financial Breakdown

Contract Ceiling: $928,817,036

Exercised Options: $928,817,036

Current Obligation: $74,435,208

Actual Outlays: $31,652,033

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