Agencies turn to service-level agreements and other forms of performance contracting to achieve new energy efficiency and electronics stewardship goals
- By Mary Mosquera
- Nov 19, 2007
The largest solar power plant in the United States belongs to the Defense Department. Nellis Air Force Base, which is northeast of Las Vegas, uses an innovative leasing program to provide solar arrays that will produce 15 megawatts of power when the plant is completed in December.
The plant’s 70,000 solar panels, installed on 140 acres of unused land at the base, are expected to save Nellis $1 million a year on its electricity bill.
The Air Force and other federal agencies are on their way to becoming stewards of the environment by adding provisions for energy savings and electronics stewardship to federal contracts. The Environmental Protection Agency helps agencies devise contract language to acquire environmentally friendly computer hardware that has been registered under the Electronic Product Environmental Assessment Tool (EPEAT) standard.
The Executive Office of the President has also made contracts a focus of its leadership on energy savings and electronics stewardship.
And the Office of Management and Budget is involved in an effort to include the EPEAT standard in the Federal Acquisition Regulation (FAR).
Agencies say they expect to use service-level agreements as the primary contractual means of tracking energy savings and electronics stewardship. With those contracts, payments hinge on the contractor meeting specific performance metrics.
But as government and industry officials try to figure out how to measure energy efficiency in a data center, for example, agencies have other performance contracting options available to them.
In August, the Council on Environmental Quality directed agencies to expand their use of energy savings performance contracts (ESPCs) and utility energy service contracts (UESCs), which are available through the Energy Department’s Federal Energy Management Program.
Agencies must spend about 20 percent of their annual energy budgets on energy efficiency to meet the goals set by President Bush’s Jan. 24 environmental executive order and other statutes, said James Connaughton, chairman of the Council on Environmental Quality. Connaughton issued a memo in August advising agencies to direct 10 percent of their annual energy expenditures into those energy savings contracting programs.
The president’s environmental executive order and the instructions that support it reflect a sense of urgency about safeguarding the environment, said David Rodgers, DOE’s deputy assistant secretary for energy efficiency.
“It’s a momentum that we need to nurture, strengthen and focus,” Rodgers said.
The contracting programs available through DOE are simple and flexible and don’t require agencies to spend money to achieve energy savings, Rodgers said. Under an ESPC, an energy services company or a utility company provides the upfront investment for improving energy efficiency.
The company could invest in more efficient heating and cooling or lighting systems, for example. The agency would reimburse the energy company for its investment with the agency’s savings on electricity costs.
“Because of the way the contract is structured, the agency is guaranteed to never pay more than the savings that are accrued,” Rodgers said.
Those contracts can have 25-year terms, but most are for less.
Typically, after 10 or 15 years, the agency has reimbursed the energy company and gets to keep all future savings from the contract.
Regardless of the type of energy savings technology an agency chooses to implement, it can pay for it with an ESPC if that technology will dramatically lower an agency’s utility bill, Rodgers said.
Utility companies are interested in those contracts because they struggle to meet a growing demand for electricity to operate data centers. For example, DOE’s Lawrence Berkeley Laboratory wants to build a data center to house new supercomputer. The local utility company said it cannot provide the electricity the data center needs, no matter what the lab is willing to pay. The company doesn’t have the transmission lines or the power-generation capacity to meet the lab’s needs. The only way the lab can operate its supercomputer is by switching to highly efficient technologies that draw less power.
Such dilemmas influenced DOE’s decision in September to join the Green Grid, a consortium of more than 100 information technology companies interested in developing more energy-efficient data-center technologies and practices. Both are areas in which data-center officials face a steep learning curve, Rodgers said.
“A data-center manager is not necessarily an energy manager,” Rodgers said. Data-center managers typically worry about avoiding downtime and achieving faster processing times. “We have to show them how [energy inefficiency] affects their bottom line.”
More than 50 percent of energy use in data centers is for heating and cooling — and a potential source of savings. “It’s likely that you’re keeping the computers too cold and your people are suffering because of it,” Rodgers said.
Utilities and energy companies affiliated with DOE’s performance contracts can help agencies discover where they might be wasting energy and identify new technologies or practices that could help them use energy more efficiently. In 2006, DOE helped agencies governmentwide write ESPCs and UESCs worth $300 million. DOE is using those types of contracts at 60 of its sites.
In addition to helping agencies write ESPCs, DOE also encourages agencies to use its super ESPC, which lists energy companies and utilities nationwide that DOE competitively selected.
Agencies that use DOE’s interagency contract can get an energy savings program in place in 90 to 120 days, Rodgers said. DOE recently issued a solicitation to recompete its super ESPC.
Contracts and their provisions play a huge role in ensuring that federal agencies can meet the requirements of the president’s executive order, said Holly Elwood, EPA’s headquarters lead for the EPEAT program. The executive order includes provisions that require agencies to use electronic products that meet EPEAT standards.
EPEAT-compliant products include desktop computers, laptop PCs and computer monitors. In the next two years, Elwood said, additional products that will meet the EPEAT standard will include imaging equipment, TVs, servers, personal digital assistants and cell phones.
Agencies are starting to write requests for proposals and contracts that specify EPEAT-registered products. For example, NASA recently revised its IT specifications to ensure that any desktop computer, laptop PC or computer monitor purchased through its Outsourcing Desktop Initiative contract is EPEAT-registered.
ODIN is a multiple-award contract with a ceiling of $100 million and a term that ends in 2010.
“That immediately impacted ODIN and everything bought through ODIN,” Elwood said.
Any agency can buy EPEAT-registered products through various governmentwide agency contracts, such as the General Services Administration’s Alliant, NASA’s Solutions for Enterprisewide Procurement IV and the National Institutes of Health’s Electronic Commodity Store III. However, agencies must specify in their orders that they want EPEAT-registered products, Elwood said. NASA and GSA required their GWAC vendors to demonstrate that they could provide such products. But because vendors are not required to provide only EPEAT-registered products, buyers must still specify in their orders that they want such products.
Despite the contracting help that is available to agencies, green computing is still a high hurdle, Elwood said. The biggest hurdle is getting procurement officials to change their thinkin aid.
Many contracting officers assume that green computing means spending more money, settling for lower performance or choosing from a narrow selection of options. Those assumptions are no longer true, she said.
Once EPEAT standards become part of the FAR, it will be difficult for agencies to avoid such purchases, Elwood said. Some federal buyers still have the attitude, “‘If it’s not in the FAR, I’m not interested. When it gets in the FAR, call me,’” she said.