OIG:JSC Mismanaged $42.7M Energy Contract
>NASA OIG: NASA’s Management of Energy Savings Contracts
“We found that Johnson mismanaged its $42.7 million energy contract. Specifically, Johnson officials did not require Honeywell to submit annual savings verification reports and accepted a flawed report for the first year, did not consider the effect of renovations to or demolition of facilities on the guaranteed savings rate, and added work to the contract without ensuring that energy savings would cover the additional costs. Based on our interviews and document review, it was apparent that Johnson contracting officials did not effectively administer the energy contract. Moreover, neither Johnson nor NASA had developed sufficient guidance or an effective training program regarding administration of energy contracts. As a result, Johnson may have overpaid Honeywell because it could not verify that the conservation measures installed under the contract resulted in the guaranteed $2 million in annual energy savings.”
Looks to me like one of those contracts where the contractor is required to create “savings” by manipulating the figures. Of course the only way you can win a contract is with an unrealistic bid, then requiring everything to be added as “new work’.
I haven’t read the specific contract, but I would have thought that for this task to have any basis for evaluation before contract award the measures to be employed, and both the expected costs and expected savings, would be given in the contract text, at least as qualified estimates. Management of the project would then basically be verification audits (unless for some reason the whole thing isn’t working out).
If this is actually the case, then it’s once again a matter of NASA letting contracts with no clear terms and expectations, which by now is something that should be caught before sign-off. If this is what happened and it wasn’t caught, then are we looking at negligence, no training, no procedures manual(s), collusion, …? What is the root case and why has it still not been addressed?
I would say the the OIG themselves hold a share of the blame in this, continually catching the problem only after the fact. Does NASA contracting have nothing in the way of Quality Control and Quality Assurance?
Does NASA contracting have nothing in the way of Quality Control and Quality Assurance?No, there are QA and QC guidelines
Do they follow them In practice?
No
Two million dollars is a LOT of savings per year but based on a cost of $42.7 million dollars the pay back is over 21 years, more than double the payback time for solar or wind energy projects.
So it even could have been more than $2 million in savings…? 🙂
JSC good ole boy network in action. Horrible contracting for the taxpayer as usual $42.7 million….
Anybody else tired of this?
In its report, the OIG recommended that NASA: (1) ensure that guaranteed energy savings are being achieved at Johnson and if not, determine whether the contract needs to be modified;
NASA disagreed with our first recommendation, stating that Johnson’s accounting practices are consistent with the Department of Energy’s standards and that implementing any changes to the contract would be almost impossible and certainly impractical.
Basically, they think it’s fine to just blow money down the drain.
Terminate those responsible!
If it is next to impossible to modify the existing contract or measure the guaranteed energy savings through the contractor, it is a pretty easy task to bring in a third party to do so.
My company has the capability to do these energy audits and it could be done for well under $100k.
🙂