# Presentation: 408849

## Contracting Officer’s PerceptionUESC/ESPC OptionsEdward ThibodoNaval Facilities Engineering Command

- FUPWG Downey, CA
- October 14, 2004

## Topic

**Background**
**UESC & ESPC Authority**
**Challenges**
**Options to Move Forward**
**Suggestions for Success**
**Questions,  Answers & Discussion**

## Slide 3

## UESC Authority

**Energy Policy Act of 1992 (P.L. 102-486)**
- 42 USC 8256
- Establish 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 2865**
- Implement Energy Cost Savings Measures at Military Installations with net present value of 10 years or less.
**10 USC 2866**
- Water Conservation at Military Installations.

## UESC Authority (Cont.)

**Federal Acquisition Regulations, Part 41**
- Acquisition of Utility Services.
**Multiple Public Laws**

## ESPC Authority

**National Energy Conservation Policy Act of 1978 (NECPA)** (As Amended)
- 42 USC 8287
- Authority to Contract
- Sets Contract Period not to Exceed 25 Years
- Identified Guidelines for Contracting
- Invoked a Sunset Requirement (October 1, 2003)

## ESPC Authority (Cont.)

**ESPC Regulation**
- 10 CFR 436
- Purpose, Scope and Definitions
- Qualified Contractors List
- Procedures to Implement
- Terms and Conditions
- Conditions of Payments

## ESPC Authority (Cont.)

**FAR 23.2 Water & Energy Efficiency and Renewable Energy**
**Multiple Public Laws**

## Slide 10

## Challenges - CICA

**Competition 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 Subcontracting**
- As 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 - Utility

**Buy 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 8287**
- Each such contract may, notwithstanding any other provision of law, be for a period not to exceed 25 years.

## Challenges - Costs

**Tiered 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 & Maintenance**
- These costs usually associated with a ESPC project could drive the cost over the UESC 10 year limitation.

## Challenges - Financing

**Utility**
- 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.
**ESCO**
- ESCO has developed a long term relationship with its financier.  Financial service is familiar with the conditions of an ESPC project.

## Challenges - Territory

**Utility 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 States**
- Utilities have no authority to perform work outside of their territory.  Consequently, the UESC can not be used for Government Facilities located in foreign countries.

## Slide 18

## Options to Move Forward

**ESPC Sunset Provision Extended**
**BPA**
**Utility Energy Service Contract**

## ESPC Options

**ESPC 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 Options

**BPA**
- 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.

## Slide 22

## UESC Options

- GSA Area-Wide
**Basic Ordering Agreement**
- Stand Alone Contract

## Partnership

**Must 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 Agreement

**Directed Source BOA**
- Government would justify and direct Utility to utilize specific ESCO.
**Competitive BOA**
- ESCO 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 BOA

**Justification & 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 BOA

**Government, 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 Offer

**Utility & ESCO enter into a partnership**
**Utility 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.**

## Slide 30

## 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/](http://www.eere.energy.gov/femp/)_
**GSA – Energy Center of Expertise**
- _[http://www.gsa.gov/Portal/content/offerings_content.jsp?contentOID=113321&contentType=1004](http://www.gsa.gov/Portal/content/offerings_content.jsp?contentOID=113321&contentType=1004)_
**Edward Thibodo – NAVFAC SWDIV**
- _[edward,thibodo@navy.mil](mailto:ThibodoED@efdsw.navfac.navy.mil)_
**Work  619-532-4243**
**Cell  619-279-9231**

## Questions & Answers

**Questions ....... Free**
**Answers..........Minor Fee**
**Discussion.......Might even pay you**