Bill Dean of MC Dean: “The only thing to prevent [fixed-price contracting] will be political intervention.”
GovCon Executive: Can you tell me about MC Dean’s Leadership in Energy and Environmental Design (LEED) green building initiatives?
Bill Dean: We’re an expert engineering firm. Very few firms have the level of engineering expertise and technical expertise that we possess in the electrical arena. I would say in what I would call the field of micro-electrical generation which includes solar and wind energy in the micro sense (not in the banks and arrays of energy generation systems you see off the Atlantic Coast and along the mountains) there are a lot of new turbine technologies that are designed for urban applications and suburban applications. Distributed storage is also going to be a big deal as you start doing smart grid deployment beyond just the smart meter, but really when you are doing large scale switch tower you are going to have to have distributed storage so you can localize energy consumption. For example, a lot of the wind energy that is generated today, a lot of these kilowatts go straight into the ground – it can’t be deployed into the grid because the grid is not intelligent enough to shift energy sources. We are a member of the Freedm Alliance which is a partnership between the National Science Foundation, Nationalized Foundation and a few other federal entities and a lot of the local universities and a handful of other major companies. That is predominantly studying smart energy technology, smart grid and smart distribution. We are world class engineers in the deployment of this stuff and this is really complex engineering if you do it right. That is kind of our bread and butter.
“There’s a very aggressive push inside the federal government for fixed price performance based contracts and that’s really our area of expertise. When you read about all of these government cost overruns about some gigantic company that had massive cost overruns – I’m always scratching my head going ‘why is that the government’s problem?'” – Bill Dean
GovCon Executive: Is the money there for green and LEED contracting?
Bill Dean: LEED has been going on so long that it’s starting to be a non-expense. LEED Silver is a routine certification and LEED Gold is starting to become routine. We do a lot of energy modeling. We do a lot of design to energy budget to sell and that’s tricky stuff but it’s great. Like anything once you do enough of it you start to become very efficient and proficient. We are doing a project right now where the government is trying to get to carbon neutral by 2030 which is pretty impressive. LEED Silver, from my perspective, has become minimum spec which is a great thing. It wasn’t long ago when that was a special building that had a LEED Silver designation. I would argue that it’s not even a budget item any longer, spec gold will cost a little bit more but most of the systems we are seeing right now have really grown their energy budgets and have aggressive LEED targets. Companies are learning to deliver this stuff at pretty close to the cost as if it weren’t required.
GovCon Executive: Who are some of your biggest clients?
Bill Dean: The Department of Defense and that’s everybody; the Navy, the Army, the Air Force, DOD Headquarters – we’re the engineer of record for the renovation of the Pentagon for example. We are the electrical engineering firm of record and the implementer of that system. Our real expertise comes in the performance contracts.
There’s a very aggressive push inside the federal government for fixed price performance based contracts and that’s really our area of expertise. When you read about all of these government cost overruns about some gigantic company that had massive cost overruns – I’m always scratching my head going ‘why is that the government’s problem?’ That should be the shareholders of that company’s problem. We did the Pentagon renovation for example, commonly thought to be impossible to get under an aggregated agreement or fixed price agreement or performance based agreement. We did that whole project under what we call a guaranteed maximum price which meant the whole team was at risk for cost overruns. There was a shared percentage but most of the cost overruns would be borne by the contractor. We do most of our work under a fixed price agreement or something like it. We have what we call performance contract where we have to meet, for example, a certain energy consumption. We have to meet so many watts a square foot for this, so many watts a square foot for that and if we don’t meet that then it’s our obligation to correct it and it’s our cost. They are risky but they also make you able to work in the commercial environment too because that’s the way most large scale commercial contracts are run. It keeps us from becoming purely a government contractor.
ExecutiveBiz: Do you think there is going to be a major shift towards fixed price contracting?
Bill Dean: I think the only thing to prevent it will be political intervention. It is absolutely the smartest path for the government to take, unquestionably. Most of the complaints about fixed price contracting come from folks who are very used to having an open checkbook and I believe that a lot of that could be avoided. These government cost overruns should be predominantly borne by the contractors, you are in the contracting business.
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