Opening utility energy service contracts to competing franchised utility companies ensures federal agencies get the best value for their projects.

Federal agencies are not legally required to compete for utility incentive services provided by the "established source" utility in the utility's franchised service territory. If services are available, the Energy Policy Act of 1992 states that there should be no restriction on federal facilities directly benefiting from the services the same as any other customer.

The exception is if there is more than one serving utility offering utility energy services (e.g., a gas company and an electric company). In this case, the Federal Acquisition Regulations and good fiscal management require federal agencies to evaluate each utility and select the best value. This evaluation can be as simple as a discussion or as rigorous as a formal competitive procurement. In either case, the federal agencies should pay close attention to the utility's:

  • Related experience and expertise
  • References and success stories
  • Project markup costs
  • Specific offers to limit administration costs.

Federal agencies must decide whether to compete and the level of the competition. However, the General Services Administration (GSA) in its model agreement requires utility companies to competitively select technical subcontractors that do the actual work. The model agreement also requires subcontractor plans to comply with federal utility contract requirements (either GSA areawide or other delegated authority contract).