Navy's $36.9M energy upgrade contract with NORESCO, LLC shows long-term investment in facility efficiency
Contract Overview
Contract Amount: $36,902,498 ($36.9M)
Contractor: Noresco, LLC
Awarding Agency: Department of Defense
Start Date: 2007-09-17
End Date: 2027-10-31
Contract Duration: 7,349 days
Daily Burn Rate: $5.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Energy
Official Description: ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) FOR NAB LITTLE CREEK. ECMS INCLUDED HVAC/MECHANICAL UPGRADES, EMCS/DDC UPGRADES, ENERGY EFFICIENT LIGHTING UPGRADES, AND WATER FIXTURE UPGRADES.
Place of Performance
Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23511
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $36.9 million to NORESCO, LLC for work described as: ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) FOR NAB LITTLE CREEK. ECMS INCLUDED HVAC/MECHANICAL UPGRADES, EMCS/DDC UPGRADES, ENERGY EFFICIENT LIGHTING UPGRADES, AND WATER FIXTURE UPGRADES. Key points: 1. The contract focuses on comprehensive facility upgrades to enhance energy efficiency, including HVAC, lighting, and water systems. 2. A long performance period suggests a sustained commitment to realizing energy savings and operational improvements. 3. The use of a Firm Fixed Price contract type indicates that cost risks are largely borne by the contractor. 4. The contract was awarded through full and open competition, suggesting a competitive bidding process. 5. The project's scope addresses multiple facets of energy consumption within the facility. 6. The contract's duration and value point to a significant investment in infrastructure modernization.
Value Assessment
Rating: good
The contract value of $36.9 million over approximately 20 years represents a substantial investment in facility modernization. While specific performance metrics and savings guarantees are not detailed here, ESPCs are designed to generate cost savings that offset the investment. Benchmarking against similar large-scale ESPCs would be necessary for a precise value-for-money assessment, but the comprehensive nature of the upgrades (HVAC, lighting, water) suggests a holistic approach to energy reduction.
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 contractors had the opportunity to bid. This competitive process is generally expected to drive down prices and ensure fair market value. The number of bidders is not specified, but the open competition suggests a robust selection process was employed by the Department of the Navy.
Taxpayer Impact: Full and open competition is favorable for taxpayers as it maximizes the potential for cost savings through a competitive bidding environment, ensuring the government receives the best possible value.
Public Impact
The primary beneficiaries are the Department of the Navy and its personnel at NAB Little Creek, who will experience improved facility conditions and potentially lower utility costs. The services delivered include significant upgrades to HVAC, energy management systems, lighting, and water fixtures, aimed at reducing energy and water consumption. The geographic impact is localized to NAB Little Creek in Virginia. The contract supports the federal government's broader goals of energy efficiency and sustainability in its facilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (over 20 years) could introduce risks related to technology obsolescence or changing energy market conditions.
- Performance metrics and actual energy savings realization require ongoing monitoring to ensure value for money.
- Potential for scope creep or change orders over the extended performance period.
Positive Signals
- Focus on energy efficiency aligns with federal sustainability mandates.
- Comprehensive upgrade scope addresses multiple energy consumption points.
- Firm Fixed Price contract shifts cost risk to the contractor.
- Full and open competition suggests a competitive procurement process.
Sector Analysis
Energy Savings Performance Contracts (ESPCs) are a key mechanism for federal agencies to improve energy efficiency and reduce utility costs without upfront capital investment. These contracts leverage private sector expertise and financing to implement energy conservation measures. The market for ESPCs is significant, driven by government mandates for sustainability and cost reduction. This contract fits within the broader trend of federal facilities modernization and energy management.
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. As a large-scale ESPC awarded through full and open competition, the prime contractor, NORESCO, LLC, is likely a large entity. Further analysis would be needed to determine if small businesses are involved in subcontracting opportunities.
Oversight & Accountability
Oversight for ESPCs typically involves regular performance reviews, energy audits, and verification of energy savings by the contracting agency (Department of the Navy) and potentially the Department of Energy. Accountability is built into the contract's performance metrics and payment structure, which is often tied to achieved savings. Transparency is generally maintained through contract awards and reporting requirements, though detailed operational data may be proprietary.
Related Government Programs
- Energy Savings Performance Contracts (ESPCs)
- Department of Defense Facility Modernization
- Federal Energy Management Program
- Naval Facilities Engineering Command Contracts
Risk Flags
- Long-term contract performance risk
- Technology obsolescence
- Energy market volatility
- Verification of guaranteed savings
Tags
energy, espcs, facility-upgrades, department-of-defense, department-of-the-navy, virginia, full-and-open-competition, firm-fixed-price, engineering-services, large-contract, long-term-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $36.9 million to NORESCO, LLC. ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) FOR NAB LITTLE CREEK. ECMS INCLUDED HVAC/MECHANICAL UPGRADES, EMCS/DDC UPGRADES, ENERGY EFFICIENT LIGHTING UPGRADES, AND WATER FIXTURE UPGRADES.
Who is the contractor on this award?
The obligated recipient is NORESCO, LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $36.9 million.
What is the period of performance?
Start: 2007-09-17. End: 2027-10-31.
What is the track record of NORESCO, LLC in delivering similar Energy Savings Performance Contracts for the federal government?
NORESCO, LLC, a subsidiary of United Technologies Corporation (UTC), has a significant history of executing large-scale ESPCs for various federal agencies, including the Department of Defense, Department of Energy, and others. They are known for their expertise in implementing a wide range of energy conservation measures and often undertake complex projects involving multiple facilities. Their project portfolio typically includes upgrades to HVAC systems, lighting, building controls, and renewable energy installations. While specific performance details for individual contracts vary, NORESCO is generally considered a major player in the ESPC market, often competing for and winning substantial government contracts. Assessing their past performance would involve reviewing project completion records, documented energy savings, and any reported issues or disputes on prior federal ESPC projects.
How does the $36.9 million contract value compare to other ESPCs for similar naval facilities?
The $36.9 million contract value for this ESPC at NAB Little Creek is substantial, reflecting a comprehensive scope of work over a long performance period (approximately 20 years). ESPC values can vary widely based on facility size, age, existing energy infrastructure, and the scope of implemented measures. Large naval installations often require significant investments for modernization. Comparing this to other ESPCs for similar naval facilities would require analyzing contracts of comparable duration and scope. However, contracts in the tens of millions of dollars are not uncommon for large-scale ESPCs aimed at achieving significant energy and operational cost reductions across major federal installations. The value suggests a significant commitment to improving energy efficiency at the base.
What are the primary risks associated with a 20-year performance period for an ESPC?
A 20-year performance period for an ESPC presents several potential risks. Firstly, technology obsolescence is a concern; systems installed today might be outdated or less efficient compared to newer technologies available in 10-15 years, potentially impacting long-term savings projections. Secondly, energy market fluctuations (e.g., volatile electricity or natural gas prices) can affect the accuracy of savings calculations and the guaranteed savings amounts if not properly modeled. Thirdly, changes in facility usage or mission requirements over two decades could alter energy consumption patterns, potentially impacting the effectiveness of the installed measures. Finally, contractor performance and financial stability over such a long duration need to be continuously monitored to ensure the government continues to receive the contracted benefits.
What specific energy conservation measures (ECMs) are typically included in such contracts?
This contract specifically includes HVAC/mechanical upgrades, EMCS/DDC upgrades (Energy Management Control Systems/Direct Digital Controls), energy-efficient lighting upgrades, and water fixture upgrades. Beyond these, typical ESPC ECMs can encompass a broader range of improvements aimed at reducing energy and water consumption. This often includes building envelope improvements (insulation, windows), renewable energy generation (solar panels), water conservation measures beyond fixtures (e.g., irrigation systems), waste heat recovery, and upgrades to other building systems like boilers, chillers, and motors. The goal is to implement a suite of measures that collectively achieve significant, measurable, and verifiable energy and cost savings.
How is the success of this ESPC measured and verified?
The success of an ESPC like this is typically measured and verified through a Measurement and Verification (M&V) plan, which is a critical component of the contract. This plan outlines the methodologies used to calculate energy and cost savings achieved by the implemented energy conservation measures (ECMs). Savings are often 'guaranteed' by the contractor, meaning the contractor is responsible for ensuring that the projected savings are realized. Verification involves comparing baseline energy consumption data (before the upgrades) with post-installation consumption data, adjusted for factors like weather, occupancy, and operational changes. Regular M&V reports are submitted by the contractor and reviewed by the government contracting officer or a designated technical representative. If savings fall short of the guarantee, the contractor is typically obligated to compensate the government.
What is the typical structure of financing for an ESPC of this magnitude?
ESPCs are designed so that the cost savings generated by the energy conservation measures (ECMs) finance the project. The financing structure typically involves the contractor upfront financing the cost of the upgrades. The government then repays the contractor over the contract's performance period using the documented energy and cost savings achieved. This 'naturally funded' approach allows agencies to implement significant facility improvements without requiring direct appropriations or capital budgets. The repayment schedule is carefully structured to ensure that the annual savings generated by the ECMs are sufficient to cover the annual payments to the contractor, often with a positive cash flow for the government from the outset or shortly thereafter.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Contractor Details
Address: ONE RESEARCH DRIVE, WESTBOROUGH, MA, 01581
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $39,553,604
Exercised Options: $39,553,604
Current Obligation: $36,902,498
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: DEAM3699EE73680
IDV Type: IDC
Timeline
Start Date: 2007-09-17
Current End Date: 2027-10-31
Potential End Date: 2027-10-31 00:00:00
Last Modified: 2026-03-09
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