Under the U.S. Department of Energy's (DOE) energy savings performance contract (ESPC) program, agencies are encouraged to adopt an "enterprise approach" to implementing ESPCs.
An enterprise approach—which is integrated and aligned across organizations' various administrative and operational units—allows agencies to award more and larger projects, with shorter development times, than agencies that follow a standard project-by-project approach.
This enterprise approach centers around ESPC ENABLE, a standardized and streamlined procurement process for small federal projects that typically range from $200,000 to $5 million (although there is no fixed minimum or maximum project size) to install targeted energy conservation measures (ECMs) in six months or less.
ESPC ENABLE is limited to five types of ECMs that can accommodate the streamlined procurement and measurement and verification processes:
- Controls for heating, ventilation and air conditioning (HVAC)
- Replacement of HVAC equipment
- Solar photovoltaics.
Key Elements of an Enterprise Approach
The enterprise approach encompasses these three key elements.
1. Senior Management Support
Critical to establishing an enterprise approach is ensuring that key members of senior management and the contracting and legal offices have a full understanding of the ESPC ENABLE vehicle, the proposed agency enterprise approach, and the authorization to use it.
The standard ESPC ENABLE contract should be vetted through agency management, contracting and legal to develop consensus that the contract would be valid for use across the organization. Senior management should convey support for the ENABLE vehicle and authorization of the defined agency process to potential ENABLE project sites or buildings. Senior management support of an agencywide ESPC ENABLE program is best conveyed to the organization by a letter from senior management to agency energy-management personnel at the agency headquarter, regional, and facility levels, as applicable, to convey:
- Senior management endorsement in the use of ESPC ENABLE to address energy, water, and renewable energy goals
- A description of the agency's ESPC ENABLE enterprise process
- The identification of personnel to contact within agency's core ESPC ENABLE team to engage in the ENABLE process
- Authorization to use the program and project procedures, templates, and model contracts
- An organizational goal (e.g. address 10% of all agency small sites each year, so that in 10 years all sites have been reviewed by ESPC ENABLE ESCOs for project potential and execution).
2. The Development of Center of Expertise
Assembling staff members that are well versed in the ESPC ENABLE process in a center of expertise is a key driver in successfully centralizing ENABLE ESPCs. This group of knowledgeable staff enables the agency's central ESPC ENABLE program to do the heavy lifting on project development in an atmosphere where these types of projects are seen as commonplace, rather than foreign. In addition, this centralization allows the agency's ENABLE program to have vision that spans across the entire agency. This way, potential projects can be identified and move forward at sites with no previous experience with ESPC ENABLE. The program office can expedite the projects by providing the necessary support for an installation to know that its project will be successful.
An agency may have a centralized program set guidance and have an approval role for projects. Particular projects might be initiated by a site to accomplish one or more goals. However, the program office is able to see across these various activities and determine the best approach for the entire portfolio. The center of expertise has the ability to see gaps within the portfolio for a particular project aimed at energy usage and intensity and can manage any conflicts that arise throughout the process. Additionally, the center of expertise coordinates lessons learned that are shared across the agency.
Core Team Members
Key personnel should be identified as part of a comprehensive core team to support multiproject ENABLE program efforts. Core team members include:
- Contracting officer (CO)
- Project manager
- Legal and potentially centralized staff representing the areas of energy management, engineering and/or sustainability.
The core team would be responsible for helping facilitate the project through the various phases of development and eventual award.
ESPC best practices also show the importance of having a CO who is familiar with ESPCs assigned to the project from the very beginning. The caliber of the CO, and not simply the existence of a CO, is critical to project's success.
While a program office can provide abundant CO support, it is very important that the CO assigned to ESPC ENABLE projects understands ESPCs. At times, ESPCs can be seen as conflicting with some federal acquisition rules, and a CO well versed in these issues is important to the success of a project.
3. The Development of a Documented Procedure
As part of an agency's enterprise approach to implementing a program office, a documented procedure that outlines the agency's approach to implementing multiple ENABLE projects within the organization should be developed. Elements to be considered as part of the procedure may include, but are not limited to:
- An approach to regionwide or multiregion identification and project site identification and opportunity assessment
- A management approach with roles and responsibilities
- A work flow with target project cycle times for key milestone completion (ideally set to a six-month project identification to award cycle).
- A project approval path and escalation path for resolving issues.
The procedure should reflect the potential for:
- Resource availability and support toward the rapid execution of key project development milestones including issuance of notice of opportunity, ESCO selection, final proposal review and approval for project award (using ENABLE templates and model documents as guidelines).
- Determination of all approvals needed at the lowest possible levels (e.g., regional or site-specific) within the agency.
Other considerations include:
- Budget structure and payment flow: The agency should examine the current structure and process for utility payments across the agency or within a region or agency substructure. The agency will need to determine how payment streams can be structured within the agency to support payment of a bundled multisite ESPC project and the steps needed to implement it.
- Procurement plan: The agency should outline and document the steps required within their agency to develop a plan for the procurement selection of an ENABLE energy service company (ESCO) under a structure in which that ESCO would provide services across a multiyear window in a staged approached to addressing multiple facilities and sites within the organization (i.e., a phased approach through the use of multiple task order awards).
Benefits of an Enterprise Approach
An enterprise approach can benefit agencies, their regions, and their sites by adding clarity in an ambiguous decision-making setting. That clarity can take multiple forms. From a top-down perspective, it can set and enforce policies and goals agencywide or, through a centralized office, provide a go-to resource for navigating through the world of ESPCs.
A centralized program office can also promote consistency across the agency—perhaps reducing inter-region differences in interpretation of the same rules and guidance. From a site-specific perspective, where ESPCs typically are just one component of multiple job responsibilities, an enterprise approach can help to ease the frustration and reduce the "extra" work that can ensue when key players are unfamiliar with or have inconsistent (or conflicting) approaches to ESPCs, or when it is not clear who needs to be on board with ESPCs.
The Federal Energy Management Program can help agencies put together an enterprise approach. For more information, contact Ira Birnbaum, 202-287-1869.