Audit: DOE-OIG-24-23

July 8, 2024

The National Nuclear Security Administration’s Energy Savings Performance Contract with NORESCO, LLC at the Pantex Plant

Energy Savings Performance Contracts (ESPCs) are contracts between a Federal agency and an energy service company which allow a Federal agency to improve energy efficiency at no direct cost to the U.S. Treasury.  ESPCs incorporate energy conservation measures, which are upgrades to equipment and controls intended to save energy and associated costs.

Due to these concerns and the importance of ensuring energy savings are being achieved, we conducted this audit to determine whether the National Nuclear Security Administration’s (NNSA) Pantex Plant realized the guaranteed savings in NORESCO, LLC’s (NORESCO) contract DE-AD52-06NA27281.

The guaranteed savings identified in the NORESCO ESPC did not reflect the site conditions at the Pantex Plant.  One example is that the NORESCO reports improperly included energy savings for buildings that had been demolished or sold.  Although NORESCO identified noncompliant site conditions in its annual reports, NNSA’s Contracting Office did not take action to update the contract to address the site changes.

This situation occurred because of inadequate oversight of the contract and included a period in which there was no onsite ESPC Federal oversight.  Repeated changes to NNSA Contracting Office personnel responsible for oversight of the Pantex Plant ESPC resulted in oversight personnel being unaware of site conditions.  As a result of our audit findings, the current NNSA Contracting Officer took immediate action to begin addressing our concerns during the audit.  These actions will save American taxpayers approximately $2.5 million.

This report contains two recommendations that, if fully implemented, should help ensure that NNSA is spending taxpayers’ funds effectively on ESPCs.  Management agreed with our findings and recommendations, and its proposed corrective actions are consistent with our recommendations.