EPA awards $23.2M ESPC task order to NORESCO, LLC for energy upgrades in Ann Arbor, MI

Contract Overview

Contract Amount: $23,245,048 ($23.2M)

Contractor: Noresco, LLC

Awarding Agency: Environmental Protection Agency

Start Date: 2023-02-01

End Date: 2046-10-31

Contract Duration: 8,673 days

Daily Burn Rate: $2.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) TASK ORDER FOR ANN ARBOR, MI

Place of Performance

Location: ANN ARBOR, WASHTENAW County, MICHIGAN, 48105

State: Michigan Government Spending

Plain-Language Summary

Environmental Protection Agency obligated $23.2 million to NORESCO, LLC for work described as: ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) TASK ORDER FOR ANN ARBOR, MI Key points: 1. Task order awarded under a broad agency announcement for engineering services. 2. Contract duration extends over 23 years, indicating a long-term investment in facility modernization. 3. Firm Fixed Price contract type suggests predictable costs for the government. 4. The contract is not set aside for small businesses, potentially limiting opportunities for smaller firms. 5. The project aims to achieve energy savings, aligning with federal sustainability goals. 6. The large dollar value and long duration warrant close monitoring for performance and cost control.

Value Assessment

Rating: good

The total award amount of $23.2 million for an Energy Savings Performance Contract (ESPC) task order appears reasonable given the long duration of over 23 years. ESPCs are designed to be cost-neutral or cost-saving, with the contractor's payment tied to verified energy savings. Benchmarking this specific award without knowing the scope of energy conservation measures (ECMs) is challenging, but the overall value aligns with typical ESPC projects for large federal facilities. The firm fixed price structure provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit offers. This approach generally fosters a competitive environment, which can lead to better pricing and innovative solutions. The data indicates 5 bids were received, suggesting a healthy level of competition for this task order.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down costs through market forces and encouraging multiple contractors to vie for the work, ensuring the government receives competitive pricing.

Public Impact

The primary beneficiaries are the Environmental Protection Agency (EPA) facilities in Ann Arbor, Michigan, which will receive energy efficiency upgrades. The project is expected to deliver significant energy savings and reduce the environmental footprint of the facilities. The geographic impact is localized to Ann Arbor, Michigan. The contract supports the federal government's broader goals of sustainability and reduced energy consumption across its real property portfolio.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 23 years) increases the risk of performance degradation or obsolescence of technologies if not managed proactively.
Reliance on future energy savings to fund the project requires robust measurement and verification (M&V) protocols to ensure savings are realized.
Firm Fixed Price can be a risk if unforeseen site conditions or scope changes occur, potentially leading to change orders if not carefully managed.
The large dollar value necessitates diligent oversight to ensure the project stays on track and delivers the promised savings.

Positive Signals

Awarded under a full and open competition with 5 bids, indicating a competitive process.
Firm Fixed Price contract provides cost certainty for the government.
ESPC model aligns project costs with achieved energy savings, creating a performance-based incentive.
Long-term nature of the contract allows for comprehensive facility modernization and sustained energy reduction.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), specifically related to energy efficiency and sustainability projects. ESPCs are a common contracting vehicle used by federal agencies to finance energy conservation measures without upfront capital investment. The market for energy services is substantial, with numerous firms specializing in identifying, implementing, and verifying energy savings. This award to NORESCO, LLC, a known player in the ESPC market, fits within the broader landscape of federal efforts to modernize infrastructure and reduce energy consumption.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). This means the competition was open to all eligible firms, including large businesses. While this ensures a broad pool of potential contractors, it may limit direct opportunities for small businesses unless they are part of a subcontracting plan. The impact on the small business ecosystem depends on whether NORESCO, LLC intends to subcontract portions of this work to smaller enterprises.

Oversight & Accountability

Oversight for this ESPC task order will likely be managed by the Environmental Protection Agency (EPA) contracting officers and program managers. Robust oversight will involve diligent monitoring of project milestones, adherence to the scope of work, and rigorous verification of energy savings achieved throughout the contract's long duration. Transparency is facilitated through the ESPC model itself, where payments are directly linked to verified performance. The specific Inspector General jurisdiction would typically be that of the awarding agency, the EPA.

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Federal Energy Management Program (FEMP)
Environmental Protection Agency (EPA) Facility Management
Engineering Services Contracts
Task Orders under Broad Agency Announcements

Risk Flags

Long-term contract duration requires sustained oversight.
Performance-based payments necessitate robust Measurement & Verification (M&V).
Firm Fixed Price may require careful change order management.
Potential for technological obsolescence over 23 years.

Frequently Asked Questions

What is this federal contract paying for?

Environmental Protection Agency awarded $23.2 million to NORESCO, LLC. ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) TASK ORDER FOR ANN ARBOR, MI

Who is the contractor on this award?

The obligated recipient is NORESCO, LLC.

Which agency awarded this contract?

Awarding agency: Environmental Protection Agency (Environmental Protection Agency).

What is the total obligated amount?

The obligated amount is $23.2 million.

What is the period of performance?

Start: 2023-02-01. End: 2046-10-31.

What is NORESCO, LLC's track record with similar ESPC contracts for federal agencies?

NORESCO, LLC is a well-established energy services company with a significant history of performing ESPC projects for various federal agencies, including the Department of Defense, Department of Energy, and others. Their track record typically involves implementing a wide range of energy conservation measures, such as HVAC upgrades, lighting retrofits, building envelope improvements, and renewable energy installations. Performance reviews and past performance evaluations from previous federal contracts would provide a more detailed assessment of their reliability, project execution capabilities, and success in achieving guaranteed energy savings. Agencies often consider a contractor's demonstrated success in delivering similar projects on time and within budget, as well as their ability to manage complex M&V processes, when awarding new ESPC task orders.

How does the $23.2 million award compare to other ESPC task orders for similar facility sizes or types?

Comparing the $23.2 million award requires understanding the specific scope of work and the baseline energy consumption of the facilities being upgraded. ESPC task orders can vary significantly in cost based on the number and type of energy conservation measures (ECMs) implemented, the size and age of the facilities, and the potential for energy savings. For large federal complexes or multiple facilities, a $23.2 million investment over 23 years is within the typical range for comprehensive energy efficiency retrofits. Benchmarking against similar ESPC projects awarded by the EPA or other agencies for comparable facility portfolios would provide a clearer picture of whether this award represents a competitive price point relative to the expected energy savings and project scope.

What are the primary risks associated with a 23-year contract duration for an ESPC?

The primary risks associated with a 23-year contract duration for an ESPC include technological obsolescence, potential changes in energy prices and usage patterns, and the long-term performance of installed equipment. Technologies implemented today might become outdated or less efficient compared to newer innovations over two decades. Fluctuations in energy markets could impact the projected savings, potentially affecting the contractor's ability to meet guaranteed savings targets or the government's return on investment. Furthermore, ensuring the long-term reliability and maintenance of installed systems over such an extended period requires robust performance guarantees and diligent oversight. The contract must include mechanisms to adapt to unforeseen circumstances and ensure sustained energy savings throughout its life.

How effective are ESPCs generally in achieving their stated energy savings goals for the federal government?

ESPCs have generally been effective in helping the federal government achieve its energy savings goals. The model's core strength lies in its performance-based nature: contractors are paid based on verified energy savings, creating a strong incentive for them to deliver measurable results. Numerous studies and reports from agencies like the Department of Energy have indicated that ESPCs have successfully reduced energy consumption and operating costs across federal facilities. However, effectiveness can vary depending on the quality of the initial project scoping, the thoroughness of the measurement and verification (M&V) process, and the ongoing management and oversight by the agency. When properly executed and monitored, ESPCs are a valuable tool for federal agencies to modernize infrastructure and meet sustainability mandates.

What is the historical spending trend for ESPC task orders awarded by the EPA?

The Environmental Protection Agency (EPA), like other federal agencies, utilizes ESPCs as a key strategy for improving energy efficiency and reducing operational costs in its facilities. Historical spending on ESPC task orders by the EPA has generally trended upwards, reflecting a growing emphasis on sustainability and federal energy mandates. While specific annual spending figures fluctuate based on available funding, agency priorities, and opportunities for large-scale retrofits, the EPA consistently invests in ESPC projects. These investments support upgrades to buildings, water treatment plants, and other infrastructure to reduce energy and water consumption. Analyzing EPA's historical ESPC spending data would reveal patterns in project types, average award values, and the geographic distribution of these investments.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 68HERC22Q0115

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 RESEARCH DR STE 400 C, WESTBOROUGH, MA, 01581

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

Financial Breakdown

Contract Ceiling: $129,749,359

Exercised Options: $129,749,359

Current Obligation: $23,245,048

Actual Outlays: $23,245,048

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DEEE0008038

IDV Type: IDC

Timeline