With DOE Contract, SAIC Can Seek $5B in Energy Conservation Work

SAIC’s acquisition of an Oklahoma engineering company in 2007 could yield a substantial new revenue source for the San Diego-based government contractor. The company also known as Science Applications International Corp. (NYSE: [[ticker:SAI]]) said earlier this week its Benham Companies subsidiary was recently awarded an Energy Savings Performance Contract by the U.S. Department of Energy.

The DOE contract qualifies Benham for work to be awarded under a 2007 law that requires federal agencies to reduce their energy “intensity” by 30 percent from 2003 levels and water consumption by 16 percent from 2007 usage levels. SAIC did not disclose financial terms when it acquired Benham in mid-2007.

The federal government is the largest single user of energy in the United States. The DOE award enables the Oklahoma City-based firm to get project orders that could total as much as $5 billion over seven years if all options are exercised. Benham designs and builds industrial facilities, including oil refineries and public buildings, and specializes in designing and installing energy management technologies.

SAIC says its Benham subsidiary also won a second Energy Savings Performance Contract from the U.S. Army Corps of Engineers, although the total contract ceiling for that work is only $50 million over six years if all options are exercised.

Under the Energy Savings Performance contract, SAIC spokeswoman Melissa Koskovich says Benham is basically pre-qualified to bid for energy-saving projects, but a big difference is the company must arrange its own financing. Once a federal agency issues a contract to Benham for a particular project, Benham must obtain the necessary financing, and design and build the project. The government agency pays the company for its work over a specified period from the savings it gains from the reduced costs of its energy or water utility bills.

The DOE says the contractor must guarantee that its energy or water improvements will generate savings for the agency. After the contract ends, any continuing cost savings accrue to the agency.

SAIC’s Benham subsidiary was among 16 companies to get identical Energy Savings and Performance Contracts in December under the DOE’s Federal Energy Management Program. All 16 companies are listed here

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.