VA's $34M Energy Service Contract for Buffalo VA Medical Center awarded to National Grid USA

Contract Overview

Contract Amount: $34,280,376 ($34.3M)

Contractor: National Grid USA Service Company, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2019-09-20

End Date: 2026-09-30

Contract Duration: 2,567 days

Daily Burn Rate: $13.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: OTHER FUNCTIONS - VISN 2 BUFFALO VA MEDICAL CENTER UTILITY ENERGY SERVICE CONTRACT (UESC)

Place of Performance

Location: BUFFALO, ERIE County, NEW YORK, 14215

State: New York Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $34.3 million to NATIONAL GRID USA SERVICE COMPANY, INC. for work described as: OTHER FUNCTIONS - VISN 2 BUFFALO VA MEDICAL CENTER UTILITY ENERGY SERVICE CONTRACT (UESC) Key points: 1. Contract focuses on utility energy services, aiming for efficiency improvements. 2. Sole-source award raises questions about potential cost savings and competition. 3. Long contract duration (nearly 7 years) requires careful performance monitoring. 4. Fossil fuel electric power generation is the primary sector, with potential environmental implications. 5. Contract value is substantial, necessitating robust oversight for value for money. 6. No small business set-aside noted, impacting opportunities for smaller enterprises.

Value Assessment

Rating: fair

The contract value of $34.3 million over approximately seven years for utility energy services at the Buffalo VA Medical Center appears significant. Benchmarking this against similar energy service contracts for large federal facilities is crucial. Without specific details on the scope of work and expected energy savings, it's difficult to definitively assess value for money. The sole-source nature of the award also limits direct price comparison to competitive bids, suggesting potential for higher costs than if multiple vendors had competed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific vendor possesses unique capabilities or when circumstances necessitate a direct award. The lack of competition means that the government did not benefit from a bidding process that could drive down prices or encourage innovative solutions from a wider pool of contractors.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive bidding. The government's negotiating position is weakened without alternative offers to consider.

Public Impact

The primary beneficiary is the Department of Veterans Affairs, specifically the Buffalo VA Medical Center, which will receive improved utility and energy services. Services delivered include energy efficiency upgrades and potentially renewable energy integration, contributing to operational cost savings and environmental sustainability. The geographic impact is localized to Buffalo, New York, where the medical center is located. Workforce implications are likely related to the installation and maintenance of energy infrastructure, potentially involving skilled trades and technical personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Long-term contract duration requires diligent performance management to ensure ongoing value.
Focus on fossil fuel generation may not align with long-term sustainability goals.
Lack of small business participation could limit economic opportunities for smaller firms.

Positive Signals

Addresses critical utility and energy needs for a major VA facility.
Potential for significant energy efficiency improvements and cost reductions over the contract term.
National Grid's established presence and expertise in utility services may ensure reliable delivery.

Sector Analysis

This contract falls within the broader energy services sector, specifically focusing on utility energy services contracts (UESCs) for federal facilities. UESCs are designed to help federal agencies reduce energy costs and improve energy efficiency. The market for such services is competitive, but specific utility infrastructure and service needs can sometimes lead to sole-source or limited competition awards, particularly when dealing with established utility providers like National Grid. Comparable spending benchmarks would typically involve analyzing other UESCs awarded to utility companies for large institutional facilities.

Small Business Impact

The contract details indicate that this was not a small business set-aside, and the prime contractor, National Grid USA Service Company, Inc., is a large utility provider. This means that opportunities for small businesses to directly participate as prime contractors were absent. Subcontracting opportunities may exist, but the extent to which small businesses will be involved is not specified. The overall impact on the small business ecosystem for this specific contract appears limited unless significant subcontracting plans are in place.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures would be tied to the performance work statement and delivery schedules. Transparency is facilitated through federal contract databases, but the specifics of performance metrics and savings achieved would require further reporting. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Federal Energy Management Program (FEMP)
Utility Energy Service Contracts (UESCs)
Department of Veterans Affairs Medical Facility Operations
Energy Efficiency and Conservation Block Grant Program

Risk Flags

Sole-source award may limit cost-effectiveness.
Lack of competition could reduce innovation incentives.
Long contract duration requires sustained oversight.
Potential misalignment with long-term renewable energy goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $34.3 million to NATIONAL GRID USA SERVICE COMPANY, INC.. OTHER FUNCTIONS - VISN 2 BUFFALO VA MEDICAL CENTER UTILITY ENERGY SERVICE CONTRACT (UESC)

Who is the contractor on this award?

The obligated recipient is NATIONAL GRID USA SERVICE COMPANY, 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 $34.3 million.

What is the period of performance?

Start: 2019-09-20. End: 2026-09-30.

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

The provided data does not detail the specific energy efficiency measures or projected savings. Utility Energy Service Contracts (UESCs) typically involve a comprehensive energy audit followed by the implementation of measures such as lighting upgrades, HVAC improvements, building envelope enhancements, and water conservation projects. The projected savings are usually guaranteed by the Energy Service Company (ESCO) and form the basis for the contract's financial structure. For this contract with National Grid USA at the Buffalo VA Medical Center, a detailed breakdown of proposed measures and their associated savings would be found in the contract's Statement of Work and the ESCO's proposal. Without access to these documents, a precise answer is not possible.

How does the $34.3 million contract value compare to similar energy service contracts for federal medical centers of comparable size?

Comparing the $34.3 million contract value requires context regarding the size and specific energy needs of the Buffalo VA Medical Center, as well as the scope of services provided by National Grid USA. Energy Service Contracts (ESCs) can vary widely based on the age and condition of the facility, the types of energy-consuming equipment, and the extent of planned upgrades. Generally, large medical facilities have substantial energy demands. To benchmark effectively, one would need to analyze contracts for similar-sized VA or other federal medical centers, considering factors like square footage, patient capacity, and the specific technologies implemented. The sole-source nature of this award also complicates direct price-based comparisons with competitively bid contracts.

What are the risks associated with a sole-source award for a contract of this magnitude and duration?

A sole-source award for a contract of this magnitude ($34.3 million) and duration (nearly 7 years) carries several risks. Primarily, the absence of competition means the government may not have secured the most cost-effective solution, potentially leading to overpayment. There's also a reduced incentive for the sole-source provider to innovate or offer significant cost reductions beyond the initial agreement, as there is no competitive pressure. Furthermore, if the contractor underperforms or faces financial difficulties, the government has limited leverage compared to a situation with multiple potential providers. Ensuring robust contract management and performance monitoring becomes even more critical to mitigate these risks and ensure value delivery.

What is National Grid USA Service Company, Inc.'s track record with federal energy service contracts, particularly with the VA?

National Grid USA Service Company, Inc. is a subsidiary of National Grid, a major utility company operating in the Northeast. While National Grid is well-established in providing energy infrastructure and services to residential, commercial, and industrial customers, its specific track record with federal energy service contracts, particularly with the Department of Veterans Affairs (VA), is not detailed in the provided data. Federal contracts often require specific experience and certifications related to energy efficiency projects and performance contracting. A thorough assessment would involve reviewing past performance evaluations, contract history, and any relevant case studies or testimonials from previous federal clients to gauge their expertise and reliability in this specialized area.

What are the potential long-term implications of this contract on the VA's energy costs and sustainability goals?

The long-term implications depend heavily on the specific energy efficiency measures implemented and the guaranteed savings. If the contract successfully reduces energy consumption and optimizes utility usage, it could lead to significant cost savings for the Buffalo VA Medical Center over its operational life, extending beyond the contract period. However, the contract's focus on 'Fossil Fuel Electric Power Generation' as its primary NAICS code might raise questions about its alignment with broader federal sustainability goals, which increasingly emphasize renewable energy sources and greenhouse gas reduction. The contract's success in contributing to sustainability would hinge on whether it incorporates renewable energy components or focuses primarily on efficiency improvements within existing fossil fuel-based systems.

Industry Classification

NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Fossil Fuel Electric Power Generation

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 40 SYLVAN RD, WALTHAM, MA, 02451

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

Financial Breakdown

Contract Ceiling: $34,700,294

Exercised Options: $34,369,568

Current Obligation: $34,280,376

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00P12BSD0879

IDV Type: IDC

Timeline