VA's $25.3M Energy Savings Contract with NORESCO, LLC for West Coast Facilities
Contract Overview
Contract Amount: $25,320,208 ($25.3M)
Contractor: Noresco, LLC
Awarding Agency: Department of Veterans Affairs
Start Date: 2012-04-09
End Date: 2022-09-01
Contract Duration: 3,797 days
Daily Burn Rate: $6.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: IGF::OT::IGF OTHER FUNCTIONS - ENERGY SAVINGS PERFORMANCE CONTRACT FOR VISN 22 FACILITIES: WEST LOS ANGELES MEDICAL CENTER, SEPULVEDA AMBULATORY CARE CENTER AND LOS ANGELES AMBULATORY CARE CENTER.
Place of Performance
Location: LOS ANGELES, LOS ANGELES County, CALIFORNIA, 90073
Plain-Language Summary
Department of Veterans Affairs obligated $25.3 million to NORESCO, LLC for work described as: IGF::OT::IGF OTHER FUNCTIONS - ENERGY SAVINGS PERFORMANCE CONTRACT FOR VISN 22 FACILITIES: WEST LOS ANGELES MEDICAL CENTER, SEPULVEDA AMBULATORY CARE CENTER AND LOS ANGELES AMBULATORY CARE CENTER. Key points: 1. Contract awarded through full and open competition, suggesting a competitive pricing environment. 2. Long contract duration of nearly 10 years may indicate complex, long-term energy efficiency goals. 3. The contract's fixed-price nature shifts performance risk to the contractor. 4. Focus on energy savings performance contracts (ESPCs) aligns with federal sustainability mandates. 5. The value of the contract is moderate within the context of large federal energy projects.
Value Assessment
Rating: good
The contract value of $25.3 million over approximately 10 years for energy savings performance contracts (ESPCs) appears reasonable for the scope of work involving multiple large medical facilities. Benchmarking against similar ESPCs is challenging without specific project details, but the fixed-price structure suggests the contractor bears the risk of cost overruns. The success of the contract hinges on the realization of projected energy savings, which is the primary metric for value in ESPCs.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of three bids (as suggested by 'no': 3) is a positive sign for price discovery and ensures the government received competitive proposals. This approach generally leads to better pricing and service options compared to sole-source or limited competition scenarios.
Taxpayer Impact: Taxpayers benefit from a competitive process that is likely to have driven down costs and ensured the VA secured a cost-effective solution for energy efficiency improvements.
Public Impact
The primary beneficiaries are the Department of Veterans Affairs (VA) facilities in California, which will experience improved energy efficiency and reduced utility costs. Services delivered include the implementation of energy conservation measures and ongoing performance monitoring. The geographic impact is concentrated in Southern California, specifically at the West Los Angeles, Sepulveda, and Los Angeles Medical Centers. The contract supports federal goals for sustainability and reduced environmental impact.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if energy savings projections are not met, though the fixed-price contract mitigates this for the government.
- Long-term nature of the contract requires sustained oversight to ensure ongoing performance and compliance.
Positive Signals
- Awarded through full and open competition, indicating a robust bidding process.
- Fixed-price contract structure transfers performance risk to the contractor.
- Focus on energy savings aligns with federal sustainability initiatives and potential long-term cost reductions.
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, with payment tied to verified energy savings. The market for ESPCs is significant, driven by federal mandates for sustainability and cost reduction. This contract fits within the broader federal energy management sector, where agencies like the VA are major consumers of energy.
Small Business Impact
The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As a large ESPC, it is likely that the prime contractor, NORESCO, LLC, would manage the project, and any subcontracting would be at their discretion, potentially involving specialized energy service providers.
Oversight & Accountability
Oversight for ESPCs typically involves rigorous measurement and verification (M&V) of energy savings by the contractor, with government review. The Department of Veterans Affairs' own contracting and facility management offices would be responsible for monitoring performance against contract terms. Inspector General involvement would likely occur if specific allegations of fraud, waste, or abuse arise.
Related Government Programs
- Energy Savings Performance Contracts (ESPCs)
- Federal Energy Management Program (FEMP)
- Department of Veterans Affairs Medical Facility Operations
Risk Flags
- Long contract duration requires sustained oversight.
- Energy savings realization is critical for contract value.
Tags
energy-savings-performance-contract, department-of-veterans-affairs, engineering-services, full-and-open-competition, firm-fixed-price, california, medical-center, sustainability, long-term-contract, noresco-llc
Frequently Asked Questions
What is this federal contract paying for?
Department of Veterans Affairs awarded $25.3 million to NORESCO, LLC. IGF::OT::IGF OTHER FUNCTIONS - ENERGY SAVINGS PERFORMANCE CONTRACT FOR VISN 22 FACILITIES: WEST LOS ANGELES MEDICAL CENTER, SEPULVEDA AMBULATORY CARE CENTER AND LOS ANGELES AMBULATORY CARE CENTER.
Who is the contractor on this award?
The obligated recipient is NORESCO, LLC.
Which agency awarded this contract?
Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).
What is the total obligated amount?
The obligated amount is $25.3 million.
What is the period of performance?
Start: 2012-04-09. End: 2022-09-01.
What is the historical spending pattern for Energy Savings Performance Contracts (ESPCs) within the Department of Veterans Affairs?
The Department of Veterans Affairs (VA) has a history of utilizing Energy Savings Performance Contracts (ESPCs) to achieve energy efficiency goals across its vast network of facilities. While specific historical spending figures for ESPCs alone are not readily available in this dataset, the VA's overall commitment to sustainability and infrastructure modernization suggests consistent investment in such programs. ESPCs are a favored tool because they allow for significant upgrades without upfront capital appropriations, with payments derived from the realized energy cost savings. The VA's large footprint and energy-intensive operations, particularly in its medical centers, make it a prime candidate for leveraging ESPCs to meet federal energy reduction mandates and improve operational resilience. Analyzing past VA ESPC awards would reveal trends in project scope, technology adoption, and contractor engagement over time.
How does the $25.3 million contract value compare to other federal ESPC awards?
The $25.3 million contract value for this VA ESPC is a substantial but not extraordinary figure within the landscape of federal energy savings projects. ESPCs can range from a few million dollars for smaller facility upgrades to tens or even hundreds of millions for large-scale, multi-facility initiatives. Given that this contract covers three major medical centers (West Los Angeles, Sepulveda, and Los Angeles), the value appears commensurate with the scope. Larger ESPCs often involve comprehensive overhauls of building systems, renewable energy integration, and advanced metering across extensive campuses or multiple agency sites. The VA, as one of the largest federal real property holders, frequently engages in significant ESPC projects. This particular award falls within the mid-to-upper range for single-agency ESPC task orders or delivery orders.
What are the key performance indicators (KPIs) typically used to measure the success of such ESPCs?
The primary Key Performance Indicator (KPI) for an Energy Savings Performance Contract (ESPC) is the verified amount of energy savings achieved, directly impacting the financial return for the government and the contractor's payment. This is typically measured in terms of kilowatt-hours (kWh) of electricity saved, British Thermal Units (BTUs) of natural gas or other fuel saved, and the resulting dollar cost savings. Beyond direct energy savings, other KPIs can include water savings, reduction in greenhouse gas emissions, improvements in facility comfort and operational reliability, and successful implementation of specific energy conservation measures (ECMs) like HVAC upgrades, lighting retrofits, or building envelope improvements. For the VA, maintaining facility uptime and patient comfort during retrofits would also be critical, though perhaps not explicitly defined as a primary financial KPI.
What is NORESCO, LLC's track record with federal ESPC projects?
NORESCO, LLC is a significant player in the energy services industry and has a substantial track record of executing Energy Savings Performance Contracts (ESPCs) for federal agencies, including the Department of Veterans Affairs. They are known for undertaking large-scale projects involving complex energy infrastructure upgrades. Their portfolio includes numerous ESPCs across various federal departments and military branches, demonstrating experience in navigating federal procurement processes and meeting stringent performance requirements. While this specific contract is for $25.3 million, NORESCO has managed ESPC projects that are considerably larger in value and scope. Their continued success in winning competitive federal ESPC bids suggests a strong reputation for technical expertise, project management, and delivering measurable energy and cost savings.
What are the potential risks associated with a long-duration contract like this (nearly 10 years)?
Long-duration contracts, such as this nearly 10-year ESPC, present several potential risks. For the government, there's the risk of technological obsolescence; the energy conservation measures implemented early in the contract might become outdated or less efficient compared to newer technologies available later. There's also the risk of contractor underperformance over the long term, requiring sustained oversight to ensure savings continue to be realized. Changes in energy prices can affect the baseline for savings calculations, potentially leading to disputes if not managed carefully. For the contractor, risks include unforeseen increases in maintenance or operational costs, changes in regulations, and the possibility that projected energy savings might not materialize due to factors beyond their control (e.g., changes in facility usage patterns). Effective contract management, clear performance metrics, and flexible adjustment clauses are crucial to mitigate these risks.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
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)
Evaluated Preference: NONE
Contractor Details
Parent Company: RTX Corp
Address: 1 RESEARCH DR STE 400 C, WESTBOROUGH, MA, 01581
Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $25,425,620
Exercised Options: $25,425,620
Current Obligation: $25,320,208
Subaward Activity
Number of Subawards: 4
Total Subaward Amount: $9,555,290
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: DEAM3609GO29039
IDV Type: IDC
Timeline
Start Date: 2012-04-09
Current End Date: 2022-09-01
Potential End Date: 2022-09-01 00:00:00
Last Modified: 2023-01-27
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