VA Awards $44.6M Chiller Plant Upgrade to Energy Services Group Inc. via Enhanced Use Lease

Contract Overview

Contract Amount: $44,647,380 ($44.6M)

Contractor: Energy Services Group Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-08-05

End Date: 2026-10-23

Contract Duration: 809 days

Daily Burn Rate: $55.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: UPGRADE CHILLER PLANT, PROJECT 537-24-500 AWARD TO ENHANCED USE LEASE HOLDER

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60612

State: Illinois Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $44.6 million to ENERGY SERVICES GROUP INC for work described as: UPGRADE CHILLER PLANT, PROJECT 537-24-500 AWARD TO ENHANCED USE LEASE HOLDER Key points: 1. The contract focuses on upgrading a chiller plant, a critical infrastructure component. 2. Awarded to a single vendor, raising questions about competition and potential price discovery. 3. The project's success hinges on the vendor's ability to deliver complex energy services. 4. Spending is concentrated within the facilities maintenance and energy services sector.

Value Assessment

Rating: fair

The contract value of $44.6M for a chiller plant upgrade appears substantial. Benchmarking against similar large-scale facility upgrades would be necessary to determine if the pricing is competitive, especially given the limited competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award, likely tied to an Enhanced Use Lease agreement. This limits price discovery and competitive pressure, potentially leading to higher costs for taxpayers.

Taxpayer Impact: The lack of competition may result in a higher overall cost to taxpayers compared to a fully competed contract.

Public Impact

Veterans in Illinois will benefit from improved facility infrastructure and potentially more stable environmental controls. The project represents significant investment in aging federal infrastructure, impacting operational efficiency. Taxpayers are funding a large-scale upgrade with limited transparency on cost-effectiveness due to the award method.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for cost overruns
Reliance on a single vendor for critical infrastructure

Positive Signals

Addresses critical infrastructure needs
Potential for long-term energy savings
Supports facility modernization

Sector Analysis

This contract falls within the facilities management and energy services sector, specifically focusing on critical infrastructure like chiller plants. Benchmarks for similar large-scale HVAC and energy system upgrades are essential for evaluating cost-effectiveness.

Small Business Impact

The contract was awarded to Energy Services Group Inc. and does not indicate any specific provisions or set-asides for small businesses. The nature of the project and award method may limit small business participation.

Oversight & Accountability

The Enhanced Use Lease structure suggests a specific framework for oversight. However, the lack of competition warrants close monitoring by the Department of Veterans Affairs to ensure performance and cost control.

Related Government Programs

Power and Communication Line and Related Structures Construction
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Sole-source award limits competitive pricing.
Potential for cost overruns in complex infrastructure projects.
Dependence on a single vendor for critical facility operations.
Enhanced Use Lease terms require careful scrutiny for taxpayer value.
Long-term contract duration may not align with future technological advancements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $44.6 million to ENERGY SERVICES GROUP INC. UPGRADE CHILLER PLANT, PROJECT 537-24-500 AWARD TO ENHANCED USE LEASE HOLDER

Who is the contractor on this award?

The obligated recipient is ENERGY SERVICES GROUP INC.

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 $44.6 million.

What is the period of performance?

Start: 2024-08-05. End: 2026-10-23.

What is the specific justification for the sole-source award under the Enhanced Use Lease, and how does it ensure fair pricing?

The justification for a sole-source award under an Enhanced Use Lease typically stems from the unique nature of the agreement where the lessee is responsible for significant upfront investment and development. While this can offer benefits like infrastructure modernization without direct appropriation, it necessitates rigorous negotiation and oversight by the agency to ensure the pricing reflects fair market value and avoids undue burden on taxpayers. The specific terms of this lease agreement would detail the pricing mechanisms and justification.

What are the key performance indicators (KPIs) for this chiller plant upgrade, and how will their achievement be measured?

Key performance indicators for a chiller plant upgrade would likely include energy efficiency improvements (e.g., reduction in kWh per ton-hour), system reliability (e.g., uptime percentage, reduction in unscheduled maintenance), water usage reduction, and compliance with environmental regulations. Measurement would involve regular data collection from the new system's monitoring controls, comparison against baseline data, and independent verification audits to ensure the vendor meets contractual obligations and delivers the projected savings and performance.

What is the long-term financial impact and risk associated with this Enhanced Use Lease for the VA?

The long-term financial impact involves the VA potentially paying for services or infrastructure over an extended period, which could be higher than upfront purchase if not negotiated well. Risks include vendor default, unexpected maintenance costs beyond the lease scope, or technological obsolescence. However, the lease can also mitigate upfront capital expenditure risks for the VA and transfer some operational risks to the lessor, provided the contract terms are robust and clearly define responsibilities and exit strategies.

Industry Classification

NAICS: Construction › Utility System Construction › Power and Communication Line and Related Structures Construction

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 36C25224R0056

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1533 BELLEMEADE DR, MAYFIELD, KY, 42066

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $44,647,380

Exercised Options: $44,647,380

Current Obligation: $44,647,380

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline