Honeywell to pay $4 million to settle energy efficiency contract dispute

As part of the agreement, Honeywell and the city of Quincy will terminate a multi-year maintenance contract.

Honeywell Building Solutions SES Corp. agreed to pay $4 million to settle allegations that a Honeywell contract with the city of Quincy, Massachusetts failed to comply with the statue governing energy savings contracts by including revenues derived from water meters, and failed to comply with other statutory and contractual obligations, according to the office of Massachusetts Attorney General Martha Coakley.

As part of the agreement, Honeywell and the city of Quincy will terminate a multi-year maintenance contract.

The "Guaranteed Energy Savings Contract" was procured under Chapter 25A of the Massachusetts General Laws, an exception to the public bidding laws for programs intended to reduce government energy consumption. Honeywell entered into an energy efficiency contract with the city of Quincy in March 2007 and completed work in 2008.

"Strict compliance with this statute is important not only to conserve energy and protect the environment, but also to ensure that taxpayer money is well spent," said AG Coakley. "This settlement brings millions of dollars back to the city of Quincy."

"Our work from the outset of this investigation was guided by a single principle: protect the interests of our taxpayers," said Quincy Mayor Thomas Koch.

The city of Quincy and Mayor Koch took appropriate action in referring the matter to the AG's office and the inspector general. An investigation by the AG's Office examined whether the water meter replacement project included in the Guaranteed Energy Savings Contract was a proper "energy conservation measure" under Chapter 25A, and whether the contract's projected energy savings were sufficiently guaranteed by Honeywell.

Under Chapter 25A, it is a requirement that the primary purpose of the contract is energy conservation, and that contractors guarantee that the government will achieve a certain amount of "energy savings" or else the contractor will pay the amount of any shortfall.

According to a release from Honeywell, the company cooperated with the attorney general's investigation.

"We believe that the Massachusetts statute does not prohibit the use of water meters in an energy program, although we had a disagreement with the attorney general's office on this point, resulting in this settlement," said Tom Hamilton, general manager of Honeywell Building Solutions. "We feel strongly that the energy efficiency improvements and new water meters are delivering energy and operational savings to the city, as well as a significant boost in revenue. The guaranteed savings would have been met if the city had proceeded with the maintenance portion of the contract, but we agreed to settle with the attorney general to avoid spending more time and legal expenses on the matter."

The settlement agreement resolves all outstanding issues between Honeywell, the attorney general's office and Quincy. Honeywell will pay $4 million to the commonwealth and agrees to notify the state of any future water meter replacement projects that fall under the statute.

Quincy has likewise agreed that Honeywell will have no ongoing performance and maintenance requirements. The city will be responsible for all related equipment and expenses going forward.

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