Contracting Officer’s Perception

Edward ThibodoNaval Facilities Engineering Command

Washington, D.C.

July 1, 2004

TopicBackgroundUESC & ESPC AuthorityChallengesOptions to Move ForwardSuggestions for SuccessQuestions, Answers & Discussion

UESC AuthorityEnergy Policy Act of 1992 (P.L. 102-486)

42 USC 8256Establish a program for conserving energy.Authorized and encouraged to participate in energy

efficiency programs.Accept financial incentive, goods or services available

from a utility.

UESC Authority (Cont.)

10 USC 2865Implement Energy Cost Savings Measures at

Military Installations with net present value of 10 years or less.

10 USC 2866Water Conservation at Military Installations.

UESC Authority (Cont.)

Federal Acquisition Regulations, Part 41Acquisition of Utility Services.

Multiple Public Laws

ESPC AuthorityNational Energy Conservation Policy Act of

1978 (NECPA) (As Amended)

42 USC 8287Authority to ContractSets Contract Period not to Exceed 25 YearsIdentified Guidelines for ContractingInvoked a Sunset Requirement (October 1, 2003)

ESPC Authority (Cont.)

ESPC Regulation 10 CFR 436

Purpose, Scope and DefinitionsQualified Contractors ListProcedures to ImplementTerms and ConditionsConditions of Payments

ESPC Authority (Cont.)

FAR 23.2 Water & Energy Efficiency and Renewable Energy

Multiple Public Laws

Challenges - CICACompetition in Contracting Act of 1984

41 USC 253 requires equal and intelligent competition “at the Prime Contract Level”.

When Congress enacted CICA, it did not make it applicable to subcontracting. In doing so, Congress intended to provide prime contractors and subcontractors more flexibility in selecting their suppliers.

Don’t forget FAR 52.244-5 (Competition in Subcontracting).

Challenges - CICA (Cont.)

52.244-5 Competition in SubcontractingAs prescribed in 44.204(c), insert the following

clause:Competition in Subcontracting (Dec 1996)

(a) The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract.

Challenges - UtilityBuy In?

Benefit to Utility?

PUC?

Control?

Challenges - 10 yr. vs. 25 yr.10 USC 2865

For the purpose of implementing any energy performance plan, the Secretary shall provide that the selection of energy conservation measures, including energy efficient maintenance or water efficient maintenance, under such plan shall be limited to those with a positive net present value over a period of 10 years or less.

42 USC 8287Each such contract may, notwithstanding any other

provision of law, be for a period not to exceed 25 years.

Challenges - CostsTiered Costs

A five million dollar ESCO project could easily cost six million when you apply the utilities management, overhead and profit.

M&V, Guaranteed Savings & MaintenanceThese costs usually associated with a ESPC

project could drive the cost over the UESC 10 year limitation.

Challenges - FinancingUtility

Utility has developed a long term relationship with its financier. Financial arrangement may not include ESPC methods and requirements. Utility will be responsible for obtaining the third party financing.

ESCOESCO has developed a long term relationship with

its financier. Financial service is familiar with the conditions of an ESPC project.

Challenges - TerritoryUtility Footprints

Each Utility has an area of responsibility. There will be some ESCO projects that fall within that territory but Utility may decline.

Outside the United StatesUtilities have no authority to perform work

outside of their territory. Consequently, the UESC can not be used for Government Facilities located in foreign countries.

Options to Move ForwardESPC Sunset Provision Extended

BPA

Utility Energy Service Contract

ESPC OptionsESPC Sunset Provision Extended

Current legislation action has moved the ESPC extension language into the Defense Department Authorization Bill.

Provides for an extension from October 2003 to October 2005.

Will it happen? That is anyone's guess.

BPA OptionsBPA

BPA provides an option in all areas not covered by UESC Utility.

BPA can operate in a Utility footprint if permission is granted.

BPA can operate outside the boundaries of the United States.

Will require an Inter-Agency Agreement.

UESC OptionsGSA Area-Wide

Basic Ordering Agreement

Stand Alone Contract

PartnershipMust be mutually beneficial to all parties.

The Government can’t direct Utility to participate.

Government + Utility + ESCO can equal success.

Memorandum of Understanding may be necessary to assure all parties understand each others responsibilities.

Basic Ordering AgreementDirected Source BOA

Government would justify and direct Utility to utilize specific ESCO.

Competitive BOAESCO must compete to become provider of choice

on follow on Delivery Orders.Unsolicited BOA Offer

Utility & ESCO submit an unsolicited offer to Government to accomplished under BOA.

Directed Source BOAJustification & Authorization (J & A)

J&A provides justification for other then full and open competition (Seven Exceptions).Only one responsible source (FAR 6.302-1)Unusual and compelling urgency (FAR 6.302-2)Industrial mobilization (FAR 6.302-3)International agreement (FAR 6.302-4)Authorized by statute (FAR 6.302-5)National Security (FAR 6.302-6)Public Interest (FAR 6.302-7)

Directed Source BOA (Cont.)

Enter into a BOA with Utility Identifying ESCO as provider of Choice.

Assure MOU is Written and Understood by Both Parties.

Issue RFP for First Delivery Order. Receive Proposal, Review Cost Elements and

Negotiate. Execute Contract and Administer. Lessons Learned.

Competitive BOAGovernment, with permission of ESCO,

requests Utility to competitively select best valued contractor to enter into a BOA to accomplish energy measures.

Utility selects subcontractor based on best understanding, knowledge and value.

Government issues Delivery Orders to accomplish Energy Conservation Measures.

Unsolicited BOA OfferUtility & ESCO enter into a partnershipUtility approaches the Government with an

unsolicited proposal to accomplish the energy conservation measures.

Government evaluates the proposal, determines applicability, reasonableness and negotiates the terms and conditions of the BOA and first Delivery Order.

Suggestions for Success Written Legal Guidance to Facilitate Program. Team Building Between Utility, ESCO &

Government. Memorandum of Understanding Assure Roles and Responsibilities are Understood Learn From Your Mistakes. Promote Your Success. Communicate, Communicate, Communicate!

Resources Federal Energy Management Program

http://www.eere.energy.gov/femp/

GSA – Energy Center of Expertisehttp://www.gsa.gov/Portal/content/offerings_content.jsp?cont

entOID=113321&contentType=1004

Edward Thibodo – NAVFAC SWDIV edward,thibodo@navy.milWork 619-532-4243Cell 619-279-9231

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