DoD's $20.1M Kadena AB ESPC with NORESCO, LLC awarded for 20-year energy savings

Contract Overview

Contract Amount: $20,148,960 ($20.1M)

Contractor: Noresco, LLC

Awarding Agency: Department of Defense

Start Date: 2019-11-13

End Date: 2042-11-13

Contract Duration: 8,401 days

Daily Burn Rate: $2.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) FOR KADENA AB, JAPAN

Plain-Language Summary

Department of Defense obligated $20.1 million to NORESCO, LLC for work described as: ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) FOR KADENA AB, JAPAN Key points: 1. Contract aims to improve energy efficiency and reduce utility costs at Kadena Air Base. 2. Long-term duration suggests a significant, sustained investment in infrastructure upgrades. 3. Fixed-price contract type shifts performance risk to the contractor. 4. Competition level indicates potential for competitive pricing, though specific benchmarks are needed. 5. Focus on energy savings aligns with federal sustainability goals. 6. Contractor NORESCO, LLC has experience in energy performance contracting.

Value Assessment

Rating: good

The contract value of $20.1 million over approximately 20 years suggests a substantial investment in energy infrastructure. Benchmarking this against similar Energy Savings Performance Contracts (ESPCs) for large military installations is crucial to assess value for money. The fixed-firm price structure provides cost certainty, but the actual savings realized will determine the ultimate value. Without detailed breakdowns of proposed energy conservation measures and their projected savings, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified contractors had the opportunity to bid. With 4 bids received, there was a reasonable level of competition. This suggests that the Department of Defense likely received competitive pricing, as contractors would aim to offer attractive terms to win the award. The presence of multiple bidders generally supports price discovery and can lead to better value.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and encourage innovation, leading to more efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense and the U.S. Air Force personnel stationed at Kadena Air Base, Japan, through improved facility operations and potentially enhanced comfort. The contract will deliver energy efficiency upgrades and services, leading to reduced energy consumption and utility costs. The geographic impact is localized to Kadena Air Base, Japan, a significant U.S. military installation. The project may involve local labor for installation and maintenance of energy conservation measures, though the primary contractor is NORESCO, LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 20 years) could introduce risks related to technology obsolescence or unforeseen changes in energy markets.
Reliance on projected energy savings for contract performance requires robust monitoring and verification to ensure taxpayer value.
Geographic location in Japan may present unique logistical or regulatory challenges not present in domestic contracts.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
Contractor NORESCO, LLC has a track record in ESPCs, indicating relevant expertise.
Fixed-firm price contract provides cost certainty for the government.
Focus on energy savings aligns with federal sustainability mandates and potential long-term cost reductions.

Sector Analysis

Energy Savings Performance Contracts (ESPCs) are a key mechanism for federal agencies to improve energy efficiency and reduce utility costs without upfront capital investment. The market for ESPCs is significant, driven by government mandates for sustainability and cost savings. This contract fits within the broader energy services sector, specifically targeting large federal facilities. Comparable spending benchmarks would involve analyzing other ESPCs awarded to military bases or large federal installations, considering factors like facility size, scope of work, and contract duration.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the nature and scale of ESPCs, prime contractors like NORESCO, LLC often utilize a mix of their own specialized teams and potentially subcontracting opportunities. Analysis of subcontracting plans would be necessary to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would likely fall under the Department of Defense's contracting and facility management authorities, potentially involving the Defense Logistics Agency. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency is generally facilitated through contract award databases, but detailed performance reports and savings verification data may be less publicly accessible.

Related Government Programs

Energy Savings Performance Contracts (ESPCs)
Department of Defense Energy Initiatives
Federal Facility Energy Efficiency Programs
Kadena Air Base Operations and Maintenance

Risk Flags

Long-term contract duration may expose government to technology obsolescence.
Accuracy of projected energy savings requires rigorous verification.
Geographic location presents unique logistical considerations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.1 million to NORESCO, LLC. ENERGY SAVINGS PERFORMANCE CONTRACT (ESPC) FOR KADENA AB, JAPAN

Who is the contractor on this award?

The obligated recipient is NORESCO, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $20.1 million.

What is the period of performance?

Start: 2019-11-13. End: 2042-11-13.

What is NORESCO, LLC's track record with similar ESPCs for large military installations?

NORESCO, LLC is a well-established energy services company with extensive experience in implementing ESPCs for federal agencies, including military bases. They have a history of delivering projects focused on a wide range of energy conservation measures, such as HVAC upgrades, lighting retrofits, building envelope improvements, and renewable energy installations. Their portfolio includes numerous projects with the Department of Defense and other branches of the military. Assessing their specific performance on contracts of similar size, duration, and complexity to the Kadena AB ESPC would involve reviewing past performance evaluations, any documented project successes or challenges, and their overall financial stability. Publicly available information and government contract databases can provide insights into their past awards and project completions, though detailed performance metrics are often internal.

How does the $20.1 million contract value compare to the projected energy savings over its 20-year term?

The contract value of $20.1 million represents the total investment over approximately 20 years. The core principle of an ESPC is that the cost savings generated by the energy conservation measures implemented must be sufficient to cover the contract costs and provide a net financial benefit to the government. To assess value, one would need to compare the $20.1 million investment against the projected total energy savings over the contract's life. For instance, if the projected savings are $30 million, the net benefit would be approximately $9.9 million. A critical aspect is the accuracy of these savings projections and the verification process throughout the contract term. Without the detailed savings projections and the baseline energy consumption data, it's impossible to definitively state if the value is good or questionable. However, ESPCs are designed to be self-financing through these savings.

What are the primary energy conservation measures (ECMs) included in this contract and their expected impact?

While the specific breakdown of Energy Conservation Measures (ECMs) is not detailed in the provided data, typical ESPCs for large military bases like Kadena AB often include upgrades to HVAC systems, building envelope improvements (insulation, windows), high-efficiency lighting retrofits, water conservation measures, and potentially renewable energy installations (e.g., solar panels). The expected impact of these ECMs is a significant reduction in energy and water consumption, leading to lower utility bills for the base. These upgrades also contribute to improved facility reliability, reduced maintenance costs, and enhanced operational resilience. The long duration of the contract suggests a comprehensive approach to modernizing the base's energy infrastructure, aiming for sustained performance improvements and cost savings over decades.

What are the potential risks associated with a 20-year contract duration for energy performance?

A 20-year duration for an ESPC presents several potential risks. Firstly, technology evolves rapidly; measures installed early in the contract might become outdated or less efficient compared to newer technologies available later. Secondly, energy markets can be volatile, with fluctuating prices for electricity, natural gas, and other fuels, which could impact the accuracy of projected savings. Thirdly, the physical infrastructure installed may require unforeseen maintenance or repairs beyond the scope initially anticipated. Lastly, changes in military operational requirements or base infrastructure could affect the performance of the installed ECMs. Robust contract management, performance monitoring, and potentially clauses for technology refresh or adaptation are crucial to mitigate these long-term risks.

How does the 'Delivery Order' award type impact the contract structure and execution?

The 'Delivery Order' award type, in the context of an ESPC, typically means that the overall contract (or Indefinite Delivery/Indefinite Quantity - IDIQ - contract) establishes the terms and conditions, and then specific projects or phases of work are ordered through individual delivery orders. For an ESPC like this, it suggests that the initial award might cover the design and implementation of a set of energy conservation measures, with potential for future orders to address additional needs or phases of upgrades over the contract's lifespan. This structure allows for flexibility in phasing the project and managing expenditures. The 'Delivery Order' itself would specify the scope, timeline, and cost for that particular order, all within the framework of the master ESPC agreement.

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: SP060017R0409

Offers Received: 4

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, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $152,390,604

Exercised Options: $152,390,604

Current Obligation: $20,148,960

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DEAM3609GO29039

IDV Type: IDC

Timeline