DoD's $48.8M Energy Savings Contract with Johnson Controls Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $48,842,741 ($48.8M)

Contractor: Johnson Controls Government Systems, LLC

Awarding Agency: Department of Defense

Start Date: 2017-09-30

End Date: 2040-03-31

Contract Duration: 8,218 days

Daily Burn Rate: $5.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: ENERGY SAVINGS PERFORMANCE CONTRACT IN SUPPORT OF USAG-KA. IGF::OT::IGF

Place of Performance

Location: MARSHALL ISLANDS

Plain-Language Summary

Department of Defense obligated $48.8 million to JOHNSON CONTROLS GOVERNMENT SYSTEMS, LLC for work described as: ENERGY SAVINGS PERFORMANCE CONTRACT IN SUPPORT OF USAG-KA. IGF::OT::IGF Key points: 1. The contract's value proposition is unclear without detailed performance metrics and energy savings verification. 2. Limited public information on the competition dynamics makes it difficult to assess if full and open competition yielded optimal pricing. 3. The long duration of the contract (over 16 years) raises concerns about adaptability to future technological advancements and market changes. 4. Performance context is lacking, making it hard to benchmark the effectiveness of the energy efficiency measures implemented. 5. The contract falls within the Engineering Services sector, a broad category that requires more specific performance indicators for evaluation. 6. The absence of small business participation is noted, suggesting potential missed opportunities for economic inclusion.

Value Assessment

Rating: fair

Benchmarking the value of this $48.8 million Energy Savings Performance Contract (ESPC) is challenging without specific, verifiable energy savings data. ESPCs are typically designed to be cost-neutral or cost-saving, with savings funding the project. However, the raw contract value alone does not confirm this. Comparing it to similar ESPCs requires access to detailed project scopes, baseline energy usage, and achieved savings, which are not publicly available. The fixed-price nature suggests a defined scope, but the long duration could lead to inefficiencies if not managed proactively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition,' indicating that all responsible sources were permitted to submit offers. However, the number of bids received is not specified, which is crucial for understanding the true level of competition. A robust competition typically involves multiple bidders vying for the contract, driving down prices and fostering innovation. Without knowing the number of bidders, it's difficult to definitively assess if the competition effectively led to price discovery and secured the best value for the government.

Taxpayer Impact: While full and open competition is the preferred method, the lack of detail on the number of bidders means taxpayers cannot be assured that the most competitive pricing was achieved. This could potentially lead to overpayment if competition was weak.

Public Impact

The primary beneficiary is the Department of the Army, specifically USAG-KA (US Army Garrison - Kwajalein Atoll), which is expected to see improved energy efficiency and reduced operational costs. The contract aims to deliver energy conservation measures, potentially including upgrades to lighting, HVAC systems, and building controls. The geographic impact is localized to the USAG-KA facility in the Marshall Islands. Workforce implications are likely to involve specialized technicians for installation and maintenance of energy-efficient systems, potentially benefiting the engineering and construction sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency regarding specific energy savings achieved and how they are verified.
Long contract duration (over 16 years) may not align with rapidly evolving energy technologies.
Limited information on the number of bidders in the 'full and open' competition raises questions about price competitiveness.
Absence of small business participation or subcontracting goals.

Positive Signals

Awarded under 'Full and Open Competition,' theoretically allowing for broad market participation.
Fixed-price contract type provides cost certainty for the government.
Focus on energy savings aligns with federal sustainability goals and potential long-term cost reductions.

Sector Analysis

This contract falls under Engineering Services (NAICS 541330), a broad category encompassing various design and consulting services. Energy Savings Performance Contracts (ESPCs) are a specialized subset within this sector, often involving complex energy audits, system design, installation, and performance monitoring. The market for ESPCs is driven by government mandates for energy efficiency and cost reduction. Comparable spending benchmarks would typically involve analyzing other ESPCs awarded to federal agencies, considering factors like facility size, type of energy conservation measures, and geographic location.

Small Business Impact

The contract indicates no small business set-aside (ss: false) and no indication of small business participation (sb: false). This suggests that the prime contract was not specifically targeted towards small businesses. There is no information provided on subcontracting plans, which makes it difficult to assess the potential impact on the small business ecosystem. Federal policy encourages small business participation, and the absence of this here may represent a missed opportunity for smaller firms to engage in energy efficiency projects.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As an Energy Savings Performance Contract, there may be specific performance metrics and reporting requirements tied to energy savings verification, potentially involving third-party auditors or internal energy managers. Transparency is limited by the public availability of performance data. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Department of Defense Energy Initiatives
US Army Garrison Operations
Federal Building Efficiency Programs
Sustainability and Climate Resilience Initiatives

Risk Flags

Long contract duration increases risk of technological obsolescence.
Lack of detailed performance data hinders value assessment.
Unclear level of competition despite 'Full and Open' award.
No specified small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.8 million to JOHNSON CONTROLS GOVERNMENT SYSTEMS, LLC. ENERGY SAVINGS PERFORMANCE CONTRACT IN SUPPORT OF USAG-KA. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is JOHNSON CONTROLS GOVERNMENT SYSTEMS, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $48.8 million.

What is the period of performance?

Start: 2017-09-30. End: 2040-03-31.

What specific energy conservation measures are included in this contract, and what are the projected energy savings?

The provided data does not specify the exact energy conservation measures (ECMs) to be implemented under this $48.8 million contract. Typically, ESPCs involve a range of upgrades such as high-efficiency lighting, HVAC system modernization, building envelope improvements, water conservation measures, and renewable energy integration. Projected energy savings are fundamental to the ESPC model, as these savings are intended to finance the project's costs over its lifespan. Without detailed project documentation or performance reports, it is impossible to quantify the expected reduction in energy consumption or the associated cost savings for USAG-KA. The success of such contracts hinges on accurate baseline energy usage data and robust measurement and verification (M&V) protocols to ensure savings are realized and properly attributed.

How does the $48.8 million contract value compare to similar Energy Savings Performance Contracts awarded by the Department of Defense or other federal agencies?

Direct comparison of the $48.8 million contract value for this ESPC is difficult without knowing the scope, scale, and specific energy conservation measures involved. ESPCs can vary significantly based on the size and complexity of the facilities being retrofitted, the types of technologies implemented, and the duration of the contract. For instance, a contract focused solely on lighting upgrades would likely be smaller than one encompassing comprehensive HVAC, building automation, and renewable energy installations across multiple buildings. To benchmark effectively, one would need to compare this contract against other ESPCs awarded for similar types of installations (e.g., military bases, research facilities) and similar geographic regions, considering the total square footage retrofitted and the baseline energy consumption of the facilities. Publicly available data on ESPC awards often lacks the granular detail needed for precise comparisons.

What are the key performance indicators (KPIs) used to measure the success of this contract, and what has been the historical performance?

The provided data does not include specific Key Performance Indicators (KPIs) for this contract, nor does it offer historical performance data. For an Energy Savings Performance Contract (ESPC), critical KPIs typically revolve around the actual energy savings achieved (measured in kilowatt-hours, therms, or gallons of water saved), cost savings realized, and the successful implementation of the agreed-upon energy conservation measures (ECMs) within the specified timeframe. Measurement and Verification (M&V) plans are crucial for tracking these KPIs. Without access to performance reports, annual reviews, or post-occupancy evaluations, it is impossible to assess whether Johnson Controls Government Systems, LLC has met its contractual obligations regarding energy efficiency and cost reduction for USAG-KA. The long duration (ending 2040) implies a need for ongoing performance monitoring.

What is the track record of Johnson Controls Government Systems, LLC in delivering similar energy performance contracts for the federal government?

Johnson Controls Government Systems, LLC is a known entity in the federal contracting space, often involved in large-scale building systems and energy efficiency projects. They have a history of performing work across various government agencies, including the Department of Defense. Evaluating their track record specifically for ESPCs would require examining past contract performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), any documented issues or successes with previous ESPCs, and their demonstrated ability to meet energy savings guarantees. While their general presence suggests capability, the specific success rate and client satisfaction levels for similar ESPCs would need to be researched through performance databases and agency records to provide a comprehensive assessment.

Given the contract's duration until 2040, what are the potential risks associated with technological obsolescence or changes in energy markets?

The extended duration of this contract, running until March 31, 2040, presents several risks. Technological obsolescence is a significant concern; energy efficiency technologies are rapidly evolving. Measures installed today might be less efficient or superseded by newer, more cost-effective solutions within the contract's lifespan. This could lead to the government paying for suboptimal technology over many years. Changes in energy markets, such as fluctuating utility prices or the emergence of new energy sources (e.g., distributed generation, advanced battery storage), could also impact the economic assumptions underpinning the contract's savings calculations. Furthermore, shifts in federal energy policy or sustainability mandates could necessitate contract modifications or render certain aspects of the original agreement less relevant, potentially requiring renegotiation or leading to inefficiencies.

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

Solicitation ID: W912DY12R0046

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 507 E MICHIGAN ST, MILWAUKEE, WI, 53202

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $88,842,279

Exercised Options: $88,842,279

Current Obligation: $48,842,741

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W912DY15D0046

IDV Type: IDC

Timeline