II 

108TH CONGRESS 

2D SESSION S. 2318 

To expand upon the Department of Defense Energy Efficiency Program 

required by section 317 of the National Defense Authorization Act of 

2002 by authorizing the Secretary of Defense to enter into energy savings 

performance contracts, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 8, 2004 

Ms. COLLINS (for herself, Mr. BAYH, Mr. ROBERTS, and Mr. REED) introduced the following bill; which was read twice and referred to the Committee on Armed Services 

A BILL 

To expand upon the Department of Defense Energy Efficiency Program required by section 317 of the National 

Defense Authorization Act of 2002 by authorizing the 

Secretary of Defense to enter into energy savings performance contracts, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘National Defense En5 ergy Savings Act of 2004’’. 
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1 SEC. 2. ENERGY SAVINGS PERFORMANCE CONTRACTS. 

2 (a) CONTRACTS AUTHORIZED.—The Secretary of De3 fense may enter into an energy savings performance con4 tract under this section for the sole purpose of achieving 

5 energy savings and benefits ancillary to that purpose. The 

6 Secretary may incur obligations under the contract to fi7 nance energy conservation measures so long as guaranteed 

8 savings exceed the debt service requirements. 

9 (b) TERMS AND CONDITIONS.— 

10 (1) CONTRACT PERIOD.—Notwithstanding any 

11 other provision of law, an energy savings perform12 ance contract may be for a period of up to 25 years 

13 beginning on the date on which the first payment is 

14 made by the Secretary pursuant to the contract. The 

15 contract need not include funding of cancellation 

16 charges (if any) before cancellation, if— 

17 (A) the contract was awarded in a com18 petitive manner, using procedures and methods 

19 established under this section; 

20 (B) the Secretary determines that funds 

21 are available and adequate for payment of the 

22 costs of the contract for the first fiscal year; 

23 (C) the contract is governed by part 17.1 

24 of the Federal Acquisition Regulation; and 

25 (D) if the contract contains a clause set26 ting forth a cancellation ceiling in excess 
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1 $10,000,000, the Secretary provides notice to 

2 Congress of the proposed contract and the pro3 posed cancellation ceiling at least 30 days be4 fore the award of the contract. 

5 (2) COSTS AND SAVINGS.—An energy savings 

6 performance contract shall require the contractor to 

7 incur the costs of implementing energy savings 

8 measures, including at least the cost (if any) in9 curred in making energy audits, acquiring and in10 stalling equipment, and training personnel, in ex11 change for a share of any energy savings directly re12 sulting from implementation of such measures dur13 ing the term of the contract. 

14 (3) OTHER TERMS AND CONDITIONS.—An en15 ergy savings performance contract shall require an 

16 annual energy audit and specify the terms and con17 ditions of any Government payments and perform18 ance guarantees. Any such performance guarantee 

19 shall provide that either the Government or the con20 tractor is responsible for maintenance and repair 

21 services for any energy related equipment, including 

22 computer software systems. 

23 (c) LIMITATION ON ANNUAL CONTRACT PAY24 MENTS.—Aggregate annual payments by the Secretary to 

25 a contractor for energy, operations, and maintenance 
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1 under an energy savings performance contract may not 

2 exceed the amount that the Department of Defense would 

3 have paid for energy, operations, and maintenance in the 

4 absence of the contract (as estimated through the proce5 dures developed pursuant to this section) during term of 

6 the contract. The contract shall provide for a guarantee 

7 of savings to the Department, and shall establish payment 

8 schedules reflecting such guarantee, taking into account 

9 any capital costs under the contract. 

10 (d) RULEMAKING.—Not later than 90 days after the 

11 date of the enactment of this Act, the Secretary, with the 

12 concurrence of the Federal Acquisition Regulatory Coun13 cil, shall issue final rules to establish the procedures and 

14 methods for use by the Department of Defense to select, 

15 monitor, and terminate energy savings performance con16 tracts in accordance with laws governing Federal procure17 ment that will achieve the intent of this section in a cost18 effective manner. In developing such procedures and meth19 ods, the Secretary, with the concurrence of the Federal 

20 Acquisition Regulatory Council, shall determine which ex21 isting regulations are inconsistent with the intent of this 

22 section and shall formulate substitute regulations con23 sistent with laws governing Federal procurement. 
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1 (e) IMPLEMENTATION PROCEDURES AND METH2 ODS.—The procedures and methods established by rule 

3 under subsection (d) shall— 

4 (1) provide for the calculation of energy savings 

5 based on sound engineering and financial practices; 

6 (2) allow the Secretary to request statements of 

7 qualifications, which shall, at a minimum, include 

8 prior experience and capabilities of contractors to 

9 perform the proposed types of energy savings serv10 ices and financial and performance information from 

11 firms engaged in providing energy savings services; 

12 (3) allow the Secretary to presume that a con13 tractor meets the requirements of paragraph (2) if 

14 the contractor either— 

15 (A) has carried out contracts with a value 

16 of at least $1,000,000,000 with the Federal 

17 Government over the previous 10 years; or 

18 (B) is listed by a Federal agency pursuant 

19 to section 801(b)(2) of the National Energy 

20 Policy Act (42 U.S.C. 8287(b)(2)); 

21 (4) allow the Secretary to, from the statements 

22 received, designate and prepare a list, with an up23 date at least annually, of those firms that are quali24 fied to provide energy savings services; 
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1 (5) allow the Secretary to select firms from 

2 such list to conduct discussions concerning a par3 ticular proposed energy savings project, including re4 questing a technical and price proposal from such se5 lected firms for such project; 

6 (6) allow the Secretary to select from such 

7 firms the most qualified firm to provide energy sav8 ings services based on technical and price proposals 

9 and any other relevant information; 

10 (7) allow the Secretary to permit receipt of un11 solicited proposals for energy savings performance 

12 contracting services from a firm that the Depart13 ment of Defense has determined is qualified to pro14 vide such services under the procedures established 

15 pursuant to subsection (d) and require facility man16 agers to place a notice in the Commerce Business 

17 Daily announcing they have received such a proposal 

18 and invite other similarly qualified firms to submit 

19 competing proposals; 

20 (8) allow the Secretary to enter into an energy 

21 savings performance contract with a firm qualified 

22 under paragraph (7), consistent with the procedures 

23 and methods established pursuant to subsection (d); 

24 and 
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1 (9) allow a firm not designated as qualified to 

2 provide energy savings services under paragraph (4) 

3 to request a review of such decision to be conducted 

4 in accordance with procedures, substantially equiva5 lent to procedures established under section 759(f) 

6 of title 40, United States Code, to be developed by 

7 the board of contract appeals of the General Services 

8 Administration. 

9 (f) TRANSITION RULE FOR CERTAIN ENERGY SAV10 INGS PERFORMANCE CONTRACTS.—In the case of any en11 ergy savings performance contract entered into by the Sec12 retary, or the Secretary of Energy, before October 1, 

13 2003, for services to be provided at Department of De14 fense facilities, the Secretary may issue additional task or15 ders pursuant to such contract and may make whatever 

16 contract modifications the parties to such contract agree 

17 are necessary to conform to the provisions of this section. 

18 (g) PILOT PROGRAM FOR NONBUILDING APPLICA19 TIONS.— 

20 (1) IN GENERAL.—The Secretary may carry out 

21 a pilot program to enter into up to 10 energy sav22 ings performance contracts for the purpose of 

23 achieving energy savings, secondary savings, and 

24 benefits incidental to those purposes, in nonbuilding 

25 applications. 
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1 (2) SELECTION.—The Secretary shall select the 

2 contract projects to demonstrate the applicability 

3 and benefits of energy savings performance con4 tracting to a range of non-building applications. 

5 (3) REPORT.—Not later than three years after 

6 the date of the enactment of this Act, the Secretary 

7 shall submit to Congress a report on the progress 

8 and results of the pilot program. The report shall in9 clude a description of projects undertaken; the en10 ergy and cost savings, secondary savings and other 

11 benefits that resulted from such projects; and rec12 ommendations on whether the pilot program should 

13 be extended, expanded, or authorized. 

14 (h) DEFINITIONS.—In this section: 

15 (1) ENERGY SAVINGS.—The term ‘‘energy sav16 ings’’ means a reduction in the cost of energy, from 

17 a base cost established through a methodology set 

18 forth in the energy savings performance contract, 

19 utilized in an existing federally owned building or 

20 buildings or other federally owned facilities as a re21 sult of— 

22 (A) the lease or purchase of operating 

23 equipment, improvements, altered operation and 

24 maintenance, increased capacity or payload, or 

25 technical services; or 
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1 (B) the increased efficient use of existing 

2 energy sources by cogeneration or heat recov3 ery, excluding any cogeneration process for 

4 other than a federally owned building or build5 ings or other federally owned facilities. 

6 (2) ENERGY SAVINGS PERFORMANCE CON7 TRACT.—The term ‘‘energy savings performance 

8 contract’’ means a contract that provides for the 

9 performance of services for the design, acquisition, 

10 installation, testing, operation, and, where appro11 priate, maintenance and repair of an identified en12 ergy conservation measure or series of measures at 

13 one or more locations. Such contracts— 

14 (A) may provide for appropriate software 

15 licensing agreements; and 

16 (B) shall, with respect to an agency facility 

17 that is a public building, as defined in section 

18 13(l) of the Public Buildings Act of 1959 (40 

19 U.S.C. 612(l)), be in compliance with the pro20 spectus requirements and procedures of section 

21 7 of the Public Buildings Accountability Act of 

22 1959 (40 U.S.C. 606). 

23 (3) NONBUILDING APPLICATION.—The term 

24 ‘‘nonbuilding application’’ means— 
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1 (A) any class of vehicles, devices, or equip2 ment that is transportable under its own power 

3 by land, sea, or air that consumes energy from 

4 any fuel source for the purpose of such trans5 portability, or to maintain a controlled environ6 ment within such vehicle, device, or equipment; 

7 or 

8 (B) any Federally owned equipment used 

9 to generate electricity or transport water. 

10 (4) SECONDARY SAVINGS.—The term ‘‘sec11 ondary savings’’ means additional energy or cost 

12 savings that are a direct consequence of the energy 

13 savings that result from the energy efficiency im14 provements that were financed and implemented 

15 pursuant to the energy savings performance con16 tract. Such secondary savings may include energy 

17 and cost savings that result from a reduction in the 

18 need for fuel delivery and logistical support, per19 sonnel cost savings and environmental benefits. In 

20 the case of electric generation equipment, secondary 

21 savings may include the benefits of increased effi22 ciency in the production of electricity, including rev23 enue received by the Federal Government from the 

24 sale of electricity so produced. 
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1 (5) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of Defense. 

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