DoD's $11M Siemens ESPC contract for energy savings shows mixed value and limited competition

Contract Overview

Contract Amount: $11,069,292 ($11.1M)

Contractor: Siemens Building Technologies

Awarding Agency: Department of Defense

Start Date: 2006-10-13

End Date: 2019-09-16

Contract Duration: 4,721 days

Daily Burn Rate: $2.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Construction

Official Description: ENERGY SAVINGS PROGRAM CONTRACT (ESPC)

Plain-Language Summary

Department of Defense obligated $11.1 million to SIEMENS BUILDING TECHNOLOGIES for work described as: ENERGY SAVINGS PROGRAM CONTRACT (ESPC) Key points: 1. The contract's value proposition is unclear due to a lack of detailed performance metrics and benchmarking. 2. Siemens Building Technologies, the sole awardee, suggests potential limitations in competitive dynamics. 3. The contract duration of nearly 12 years raises questions about long-term cost-effectiveness and adaptability. 4. Performance context is limited, making it difficult to assess the actual energy savings achieved against the investment. 5. This contract falls within the 'Other Heavy and Civil Engineering Construction' category, but its focus is energy efficiency. 6. The absence of small business set-asides indicates a lack of specific focus on small business participation.

Value Assessment

Rating: fair

Assessing the value for money on this $11 million contract is challenging without clear performance data and comparison points. While ESPCs are designed to generate savings that offset costs, the provided data does not detail the achieved savings or compare them to the contract's price. The long duration suggests a significant project, but without specific metrics, it's difficult to benchmark its cost-effectiveness against similar energy efficiency projects or market rates for such services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, the data only shows one awardee, Siemens Building Technologies, for this specific delivery order. The number of bids received during the initial competition is not specified, making it difficult to fully assess the breadth of competition. A single awardee for a significant project might suggest that only a few firms possessed the necessary specialized capabilities or that the bidding process favored a particular solution.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it aims to drive down prices through market forces. However, if the actual number of competitive bids was low, the potential for cost savings may have been limited.

Public Impact

The primary beneficiaries are the Department of the Air Force facilities that are expected to realize energy savings. The contract aims to deliver energy efficiency improvements and potentially modernize building systems. The geographic impact is localized to the Air Force facilities covered by the contract, which are not specified. Workforce implications could include specialized roles in energy auditing, project management, and construction/installation services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it hard to verify actual energy savings and return on investment.
The long contract duration (nearly 12 years) may not be optimal for rapidly evolving energy technologies.
Limited visibility into the competitive landscape beyond the single awardee for this delivery order.
The contract type (firm fixed price) might not fully account for unforeseen complexities in large-scale energy projects.

Positive Signals

Awarded under full and open competition, suggesting an initial opportunity for broad market participation.
The contract is an Energy Savings Performance Contract (ESPC), a mechanism designed to fund improvements through achieved savings.
Siemens Building Technologies is a recognized provider of building automation and energy efficiency solutions.

Sector Analysis

This contract falls under the broad category of construction and facilities management, specifically focusing on energy efficiency. The market for Energy Savings Performance Contracts (ESPCs) is significant, with government agencies increasingly seeking to reduce energy consumption and operational costs. Comparable spending benchmarks would typically involve analyzing the cost per square foot for energy retrofits or the projected savings as a percentage of baseline energy costs for similar facilities.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it specify any subcontracting requirements for small businesses. This suggests that the primary awardee, Siemens Building Technologies, likely managed the contract with its own resources or through larger subcontractors. Consequently, the direct impact on the small business ecosystem appears minimal based on the provided information.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force contracting and program management offices. As an ESPC, there are usually specific reporting requirements related to energy savings verification and project milestones. Transparency is generally facilitated through contract databases like FPDS, but detailed performance reports and Inspector General involvement would depend on specific audit triggers or performance issues.

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Department of Defense Facilities Management
Air Force Construction and Modernization Projects
Building Automation Systems Contracts

Risk Flags

Long contract duration may exceed optimal technology lifecycle.
Lack of detailed performance metrics hinders value assessment.
Sole awardee for delivery order raises questions about competition breadth.
Potential for inaccurate long-term energy price forecasts impacting savings.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.1 million to SIEMENS BUILDING TECHNOLOGIES. ENERGY SAVINGS PROGRAM CONTRACT (ESPC)

Who is the contractor on this award?

The obligated recipient is SIEMENS BUILDING TECHNOLOGIES.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $11.1 million.

What is the period of performance?

Start: 2006-10-13. End: 2019-09-16.

What was the specific scope of work and the types of energy conservation measures implemented under this contract?

The provided data identifies this as an Energy Savings Program Contract (ESPC) awarded to Siemens Building Technologies by the Department of the Air Force. ESPCs typically involve a comprehensive energy audit followed by the implementation of various energy conservation measures (ECMs). These can include upgrades to lighting systems, HVAC (heating, ventilation, and air conditioning), building envelope improvements (insulation, windows), water conservation measures, and the installation of building automation systems for optimized energy management. The specific scope for this $11 million contract would detail which of these ECMs were prioritized and implemented at the Air Force facilities in question, aiming to reduce energy consumption and operational costs over the contract's duration.

How were the energy savings calculated and verified to ensure the contract's financial viability?

Energy Savings Performance Contracts (ESPCs) are structured so that the contractor is paid from the cost savings achieved. The calculation and verification process is critical. Typically, a baseline energy consumption is established before the improvements are made. Post-implementation, actual energy usage is measured and compared to this baseline, accounting for variables like weather and facility occupancy. A Measurement and Verification (M&V) plan, often following established protocols like the International Performance Measurement and Verification Protocol (IPMVP), is used. The savings are then calculated based on the difference in energy costs. Verification involves regular reporting by the contractor and oversight by the government agency (in this case, the Department of the Air Force) to ensure the savings are real and attributable to the implemented measures.

What is the track record of Siemens Building Technologies in delivering similar ESPC projects for the federal government?

Siemens Building Technologies is a major global player in building automation, energy management, and efficiency solutions, with a significant history of working with government agencies, including the U.S. federal government. They have executed numerous ESPC projects across various departments and military branches. While specific project performance data for this particular Air Force contract is not detailed here, Siemens generally has a substantial portfolio of such projects. Federal agencies often evaluate a contractor's past performance, including their success in meeting savings guarantees and project timelines, as part of the procurement process. A review of past performance evaluations and contract awards would provide a more granular understanding of their track record.

How does the $11 million contract value compare to other similar ESPC projects undertaken by the Department of Defense or other federal agencies?

The $11 million value for this ESPC contract with the Department of the Air Force is a moderate-sized investment for energy efficiency projects. ESPCs can range from hundreds of thousands to tens or even hundreds of millions of dollars, depending on the scale of the facilities, the scope of improvements, and the projected energy savings. For context, large federal ESPCs often involve comprehensive overhauls of multiple buildings or entire installations. This $11 million contract likely targeted a specific set of facilities or a significant upgrade package within a larger base. Benchmarking would require comparing it to ESPCs of similar scope (e.g., lighting retrofits, HVAC upgrades) at comparable facility types and sizes across the federal government.

What are the potential risks associated with a nearly 12-year contract duration for an energy efficiency project?

A contract duration of nearly 12 years (4721 days) for an ESPC presents several potential risks. Firstly, energy technologies evolve rapidly; measures implemented early in the contract might become outdated or less efficient compared to newer options available later. Secondly, the accuracy of long-term energy price forecasts, which underpin the savings calculations, can be uncertain, potentially impacting the actual financial return. Thirdly, changes in facility usage, mission requirements, or building conditions over such a long period could affect the performance of the installed measures. Finally, maintaining the equipment and ensuring ongoing performance over more than a decade requires sustained oversight and potential for contractor performance degradation or shifts in company focus.

Industry Classification

NAICS: Construction › Other Heavy and Civil Engineering Construction › Other Heavy and Civil Engineering Construction

Product/Service Code: MAINT, REPAIR, ALTER REAL PROPERTY › MAINT, ALTER, REPAIR BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: FRITZ WUNDERLICH STR 51, KUSEL

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $11,069,292

Exercised Options: $11,069,292

Current Obligation: $11,069,292

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F6152101DR008

IDV Type: IDC

Timeline