Green energy awards top $23b in May
By Simon Brody
Friday, June 7th, 2013
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Five energy companies, including a division of the German engineering conglomerate Siemens AG, competed for the U.S. Defense Department's biggest contract last month, and won what may become a possible $7 billion deal for alternative energy.

According to the announcement on May 7th, the Army plans to buy renewable energy from privately developed power plants. The power plants are to be built, operated, and maintained by the five companies, under an agreement that is being hailed by some service officials, as the first of its kind.

"This effort will lead to enhanced energy security and sustainability for our installations," Col. Robert Ruch said in statement. Col. Ruch is the commander of the U.S. Army Corps of Engineers center in Huntsville, Ala., which is overseeing the work.

According to an analysis of the Pentagon's daily contract announcements, this award was among more than 250 contracts with a combined value of over $23 billion seen this May. This is a 22 percent leap from the values of contracts in the previous month, not reflecting what was actually spent, or obligated, as many deals are not fully funded at first. The Army chose the five awarded companies out of a total of 16 companies bidding on part of a contract to buy energy generated by geothermal technology. The five chosen firms were Constellation NewEnergy Inc., based in Baltimore; ECC Renewables LLC, based in Burlingame, Calif.; Enel Green Power North America Inc., based in Andover, Mass.; LTC Federal LLC, based in Detroit; and Siemens Government Technologies, based in Arlington, Va.

According to the Army release, the contract includes a three-year base period and seven one-year options. The service said that it is the first of several expected this year that, when combined, may total to a potential value of $7 billion.

"In our current fiscal environment, attracting third-party money to build renewable energy production facilities that will allow military installations to purchase energy at a pre-determined rate without building, owning and maintaining the facility is the right thing to do," Ruch said.

The Defense Department's goal is to derive 3 gigawatts of power - enough power to support about 750,000 homes - from alternative energy sources such as solar, wind, biomass, and geothermal by the year 2025.

The military's venture into renewable energy is facing opposition by some lawmakers. Rep. Randy Forbes, R-Va., has criticized the Navy's "Great Green Fleet" initiative to power ships, aircraft, and combat vehicles with biodiesel and other alternative fuels under the claim that fuels from alternative sources are unnecessarily costly. Fuels derived from algae and other alternative sources are currently more expensive than petroleum-based products.

In a related, but separate effort, Siemens has also teamed with the Chicago-based Beoing Co. in the mission to upgrade the Defense Department's current energy grid to a more independent system.

"The challenge they face today is, at times they are dependent on the local utilities, which work, but at certain times today and in the future there might be the need to island or cut themselves off from the grid for security reasons," Judy Marks, chief executive officer of Siemens Government Technologies Inc., said in a video announcing the partnership. "We have an offer that will help them do that."

Out of the top five awards in May, four were so-called multiple-award contracts. Under these sorts of arrangements, companies win positions on the contract then compete against each for individual orders.

The second-largest contract, a Navy agreement worth as much as $1.9 billion over a five year span, supports habitat systems on vessels and small crafts. This contract was won by four companies, including three from Virginia.

A group of 15 companies, including units of the London-based BAE Systems Plc and Bethesda, Md.-based Lockheed Martin Corp., won the third-largest contract; another Navy agreement, this one potentially valued at $900 million over five years with the aim to provide information-technology services for combat systems and intelligence collection.

Another group of 30 companies, including McLean, Va.-based SAIC Inc. and Chantilly, Va.-based Engility Corp., won seats on the fourth-largest contract, a deal worth as much as $855 million deal over five years to provide the Marine Corps with logistics support.

A unit of Northrop Grumman Corp., based in Falls Church, Va., won the fifth-largest contract, an Air Force award potentially valued at $556 million to upgrade the biggest unmanned aircraft in their fleet, the Global Hawk drones. Work is expected to take place in San Diego and finish in 2015.

Northrop received individual contracts with a potential combined value of $872 million - the most of any company last month.



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