Kurmit Rockwell:
Welcome to FEMP's Just-in-Time ESPC Webinar. I'm Kurmit Rockwell from the Department of Energy, Federal Energy Management Program. Next slide. In this webinar, we're focusing on the ESPC implementation/construction period, which is Phase 4 of FEMP's standardized ESPC process. This seminar is intended for ESPC acquisition teams and their ESCO partners who are assigned responsibilities for the project implementation construction period. If you haven't participated in our previous Just-in-Time webinars, you can do so on demand 24/7. Previously, we have focused on pre-award from the investment grade audit to negotiating proposals to awarding the task order. Please note we are always planning new Just-in-Time webinars and encourage you to check the ESPC training website regularly.
Attendees will have the option of obtaining continuing education unit credits for attending this webinar. To obtain the educational credits or CEUs, you'll have to successfully complete a short quiz. Next, I'd like to introduce your speakers.
I'm Kurmit Rockwell, ESPC Program Manager at the Department of Energy, Federal Energy Management Program or FEMP. I have over 20 years of experience with energy savings performance contracting, I'm responsible for FEMP's ESPC resources, including direct project support, training, online tools and guidance documents to help support acquisition teams implement high quality, financially smart ESPC projects. I'm also the contracting officer's representative for DOE's ESPC IDIQ contract. Sam Espinosa is a subject matter expert providing contract advisory services to federal agencies. Mr. Espinosa has over 40 years of experience in all types of contracting in dollars ranging from small purchases to multi-billions. Sam served as a manager and senior contracting officer for the Department of Energy, National Nuclear Security Administration as the principal contracting advisor for ESPC contracts.
Terry Sharp is a building scientist at Oak Ridge National Laboratory's Building Technologies Research and Integration Center. He has over 20 years experience with alternatively financed projects focusing on project technical development, project facilitation, performance assurance, and risk mitigation for acquisition teams. He's also a Professional Engineer and a Certified Measurement and Verification Professional. Scott Wolf is a Federal Project Executive at Oak Ridge National Laboratory. He assists federal acquisition teams in the western part of the country with launching successful third-party projects including ESPC and UESC projects, and he has worked with most federal agencies in the field. Overall, Scott has over 30 years of experience in technology and engineering. Next slide, please.
This webinar covers the implementation/construction phase with the ten modules listed. This webinar is presented with some focus on the requirements of the DOE ESPC IDIQ contract, however much of the presentation is applicable to any ESPC project. We'll cover what differs about ESPC from a conventional design build project, and take you from the post award through project acceptance and into the beginning of the post-acceptance performance period with the contract management plan and discuss FEMP's life of contract services that help agencies achieve persistent documented savings. Next slide, please.
There are some important differences between ESPC projects and other conventional projects, such as design-bid-build or design-build projects. Performance guarantees are at the top of this list. This ensures that cost savings and performance standards are achieved. Performance standards can include comfort conditions and the reliability of equipment just to name a few. To verify that performance guarantees have been achieved, a key activity is to document the potential to achieve cost savings with the post-installation measurement and verification report.
Thereafter, annual measurement and verification reports determine if the performance guarantee has been met. Commissioning also plays an important role to verify the equipment in the systems installed meet the design intent and have the potential to achieve the performance guarantees. This combination of ESPC features helps incentivize ESCO partners to perform, and as a result, we find there are fewer claims for equitable adjustments of price needed than conventional projects. Next slide. This webinar presents a deep dive into the post awards stage of an ESPC project, specifically the implementation/construction period, which is phase four of FEMP's standardized ESPC process. As you can see from this list of best practices we'll cover today, there are many factors that need to be considered during this phase.
Careful attention to these best practices can help reduce the risks associated with cost overrun, schedule slippage, scope changes, with the end result being a better outcome for both the customer and the ESCO partner. The best practices drew information from federal personnel highly experienced in ESPCs. You can be assured that the best practices we present today have been used in the field with positive results. The best practices covered are intermingled in this entire session of this training and a blue star designates them. So, this concludes our welcome and introduction. The next speaker is Sam Espinosa, who will present the next two modules showing how to successfully manage transitions from pre-award to post-award, and the post-award conference.
Sam Espinosa:
Thank you, Kurmit. Next slide, please. Ok, as we get to the post-award, the members of the acquisition team obviously consist of your contacting officer and your acquisition staff, which could be your legal folks, folks that review the contracts and et cetera. Also, what you're going to have is the responsibilities. The contacting officer typically appoints a contacting officer rep to support in the requirement. CORs typically are the technical arm of the CO that provides assistance. They also lead the post-award conference. The also written acceptance of the ESCO design and submittals. The CO is responsible for signature. They also issue the notice to proceed to construction. You also find that the commissioning report and the post installation reports, once written, will be reviewed and signed off by the CO. Also, the CO has the authority to make any changes to the task order, and is the only one that has the authority to make any changes to the task order, and that's cost, schedule, and scope. Typically, the CORs, delegated their authority from the CO, are providing textbook direction to the ESCOs.
Again, they authorize project acceptance, that's the CO's responsibility, and a key ingredient here is to ensure you do have a CO that is appointed. The COs have their warrants, and in their warrant, it tells the folks what the level of responsibility that CO has. Next slide, please. Other members of the acquisition team consist of engineers, obviously, that are going to be reviewing the planning, design, and construction. There'll also be facility engineers. They'll also have safety, site security, and O&M folks, and this also would be considered members. Also, what you'll find is that the technical representative for the CO/KO is typically the COR. The folks will provide--technical members of the team will provide ESCO with obviously maps, building drawings, essential information like reports of the technical information for particular facilities or the site. They also will review design submittals from the ESCO and make recommendations.
Again, they'll also provide some oversight during construction. You will also find that they'll be witnessing the M&V. Typically, the COR will take the lead on these, but other activities such as, in the event that the COR can't make it, you'll have other technical members to ensure that there is witnessing being done. And we'll get more details on the M&V during this presentation. The M&V reports will be reviewed, and then once the review has been completed, they will be signed off by the contracting officer. Okay, next one please. Following that, the CO again appoints the contracting officer rep through delegation. That written delegation obviously has the authority that the COR has and been delegated from the contracting officer.
The ESCO will be provided a copy of that COR delegation so they also understand what the authority of the contracting officer has for that particular project. Also, the CO provides technical direction to the ESCO and that means within the cost, schedule, and scope of the awarded task order. It will also monitor the compliance with technical requirements. They will witness, again, the commissioning of post-installation M&V, which is very important. Also, they'll provide recommendations to the CO, typically, on the technical aspects of a particular review that the COR has been looking at at the site. Next slide, please.
Again, the key ingredient for anything is transition. Obviously from the project development to the implementation and construction, there should be some continuity and consistency of individuals going from, again, project development to the implementation or the construction. And again, the reason for that is proactively manage hand-off of the project. Obviously, they have the project knowledge, they have responsibility, and also carry the authority with them as they go through the construction phase. Again, this will maintain the continuity. Obviously, that also avoids common failures like not understanding what the development phase was versus the construction phase. At least you won't have those particular problems. Also have agency teams, especially, obviously, the COR assigned. Also, and ready to go into the design phase with the technical folks. Again, the key ingredient is to clearly identify the new team roles and responsibilities, and also provides for an education to new team members. As you well know, the time it takes to get to this stage, that you may gain some new members to the team, and it's good to keep them informed, not only of where you are, but also keep them informed of what an energy savings performance contract is to include the specifics for this particular awarded requirement.
Also, again, for the turnover, the key ingredient is to maintain the schedule, and the ESCO at times also has transitioned with new people. And they are responsible to ensure that those folks are also trained and have been given information specifically on this particular awarded ESPC. Next slide, please. Stakeholders. Very important. Such as individuals that are, for example, M&O contractors, this is management and operating contractors. These are the ESCO, also not necessarily is the CO sitting in the same facility. So, you will also bring the stakeholders on board and which we consider the field office folks. And also any contracting folks that are near, such as maybe contract specialists and others, or legal folks, so they understand the particular requirement. Also, the field office should have an understanding and support of the project with the tenant.
Because a particular site may have several tenants on the site. That needs to be done upfront, and hopefully by now, the tenant understands where this particular requirement is. So, in the event you have new individuals as tenants, you may want to provide them formal training, and also provide them what the focus is between an ESPC and design-build construction project. Next slide, please. Tri-party agreements, typically in management and operating contracts like the M&Os for security sites, are between the field office, which is the contracting folks typically are at the field offices, the site M&O contractor. Also, the ESCO. What you do there is you clarify responsibilities, meaning for the maintenance and operation of equipment, specifically that of the ECMs that are being worked on and being put into that particular site. Also, in the event that security or escorts are required, and the management and operating contractor is responsible for that, let them know that they will either (a) have to provide escorts, or the ESCOs come into the site so they can do their requirements under the contract, which are the ECMs.
Teaming between the ESCO, the government, and site M&O, even beyond the tri-party agreement, obviously is very important, because the schedule is very essential, and as long as everybody understands the schedule and responsibilities when you put these tri-party agreements, every phase of the construction will go smoother. Next slide, please. Once you've gotten through the transition period, understanding the new individuals or individuals that need to be - provide them some training, we go to a post-award conference. The post-award conference are typically FAR Part 42.503, important to ensure that everybody is on the same page. Next slide, please.
Again, the objectives of this is to ensure that everyone understands the terms and conditions of the contract, and there is clear understanding of the requirements. Also, in the event of ambiguities at this point in time, those are the times you bring them up to ensure that you clear them up. Again, the way that works out is typically, ECMs, contractors will put them into WBS, work breakdown structure or milestones because it understands those particular terminologies, especially when you're at the site. Savings guarantees, also the contract clauses. The IDIQ has flow-down clauses that are used by prescription of a firm fixed price, performance-based contract. You also have specific clauses, which ... special provision clauses. Those particular clauses are unique to a particular requirement, site, or agency.
Also, to ensure the continuity and effective transition from pre-award to post-award. These pre-award conferences are essential to ensure that you document any areas of concerns. As you document those areas of concerns, you also understand who is responsible for the resolution, if there's any long-term actions that are necessary, and to ensure that due dates are met to ensure that you maintain the continuity of the schedule. Next slide, please.
Establishing roles and responsibilities. Some agencies have PCOs, who are procuring contracting officers, and administrative contracting officers, ACOs. Those particular individuals - PCOs will delegate the authority to the ACOs, and the authority and responsibility will be as a part of the modification to the existing contract, and the responsibilities are listed on FAR Part 42.302. Some of those administrative responsibilities are there. And again, procuring contracting officers will make the award - the administrative contracting officer will administer the contract that the PCO as awarded. And again, the delegation will come from the PCO with definitive responsibilities that the ACO has. Also, the CO will provide delegation and authority to the COR. That particular delegation will also be passed on to the ESCO so they understand what the responsibilities of the CO are. Also, understanding who is the primary point of contact for the ESCO is essential.
As you go through to this particular phase, in the event that there is a particular direction being given by the PCO or the COR or contracting officer, you'll know at this time who has that responsibility from the ESCO to take that direction and move out. Other key personnel in the agency is also - are important. You understand what the responsibilities are, such as facility managers, area managers. They also have responsibilities for the site. The key ingredient now is to ensure who they are, what their responsibilities are, to ensure that when you have this information, at least you'll be able to know in the event of an area of concern who to go to ensure that you continue to meet that schedule.
Subcontractor personnel obviously is a responsibility of the prime contractor, who is the ESCO. Also review tri-party agreements or M&O type agreements, ensure you're not overlapping a particular maintenance agreement that maybe the ESCO is working on. At this particular time, it's to bring it to the table so that you can ensure you don't have overlap in those particular responsibilities. Next slide.
Communication, very important. The protocol for communication, obviously, who at the ESCO is going to receive the information. Typically, what happens in the communication side is that all correspondence must go through, hopefully, what I'd consider a gatekeeper. The gatekeeper typically has the responsibility to ensure that information. And who the gatekeeper is typically are CORs, and what happens is they'll receive information from the ESCO. The ESCO has a primary contact also. They'll receive information going back from the agency to the ESCO. The reason for this is to ensure that the information being received, you have the latest documented information that (a) the COR will pass to the design team so that they understand this revision 4, revision 5, at least they have the latest information for review.
Because if you don't, then obviously you may impact the schedule because you may be out of sync in reviewing the latest document that has come across from the ESCO to the COR or the gatekeeper. The methodology of providing the documents, if you will, or providing the communication, e-mails are pretty acceptable when you lay out who gets e-mails and when. The approvals, who is responsible for the approvals. I think we went over a little bit about that, who has the authority to make that - those approvals. Also, in the event at the site if there's an emergency, at least you'll know what the process is from the ESCO and from the site, what the process is for that notification. Next slide, please.
Progress meetings. Hold regularly scheduled meetings in order to, again, everyone will be on the same page. Require the attendance of the site superintendents. They may be a couple, depending on the house the size of the site you're working on. You may want to invite the subcontractors. Again, the subcontractors are there to learn and understand basically what the requirements are for that particular requirement or the ECM they're working on. And again, the prime is also responsible for the subs to ensure that the prime flows down these particular requirements to the subs. So, in the event you're going to have a sub at the site, it's always good to have them listen to the information to ensure they understand that what is required of them also.
Another really important piece is a 36/60/90-day look-ahead. These snapshots will provide (a) what the progress is ongoing, and will be going for the next 30/60/90 days to ensure that in the event that you may need permits or et cetera for a particular site or facility that you're working at, those will be handled in an expedient manner, and they will be handled prior to them being on site. The other important piece of this is that if that is part of getting onto the site, you may need a permit or et cetera, the agency should at this time ensure that they provide that information to the ESCO so they'll also be able to work that early so that they are prepared at the time to go work at the site. They have all that completed. All right, next slide please.
Safety and security, very important. There are site access information that is required by different agencies, and again, some have clearances, badging responsibilities, procedures they must go through. Sometimes they go through briefings for the site for safety and security, and this is important early to ensure that again, you meet the schedule and that there are no surprises at the time that the ESCO and their personnel show up at your site. And the key here too in the post award is to provide any information that is necessary for the badging of those individuals coming to the site.
Again, site escorts. Again, make sure that the site is prepared to provide escorts as needed, and specifically these are M&O contractors that typically are required to provide site escorts. Again, safety and security requirements. Every particular agency has their own, Bureau of Prisons has their own. National Nuclear Security Administration has their own. Always be aware of what the requirements are, and past - during the post-award briefing, one of the important elements is provide that requirement during the post-award briefing so that the ESCO will understand what is required as they prepare to go onto the site. Next slide, please. Deliverables. In your IDIQ, you'll find a list of deliverables that are on the contract. These are just a few here.
I won't go over all of them. You have the deliverables are listed on the FEMP ESPC Resources page. You can see that sample list. So, whatever the agency may require. You also have site agency-specific requirements. That's why we have requirement A and B. Again, agencies and even sites have specific deliverables that they would like to see. The key ingredient here is ensure that you understand - excuse me, that you pass on the deliverables to the ESCO, that they understand not only what the deliverable is, but when is it due. Next slide, please.
Site preparation, again, is important. Again, the government has to confirm that the site is prepared, and then anything that needs to be done either is done or in the progress of getting done with established dates, and to ensure again the key ingredient here is to continue to meet the schedule. Also, site characterizations and/or the mitigation is being completed so that you don't impact or impede the ESCO coming in and meeting their requirements. Again, the key ingredient here, too, is the site preparation. You've got to account for the project complexity and the size.
And ensuring that you have planned, meaning the ESCO has also planned to ensure that they're going to meet that size and complexity of the site. And again, agency, if there's any required resources that are needed to support, agency should be prepared at the time to get this completed. A lot of this information again should be coming forth right at your 30, 60, or 90 days look-aheads. In the event that you do have some concerns or if you will you need some subject matter experts, you can reach out to FEMP and they should be able to provide you some assistance and provide you some answers. They also have, again, they can reach out to the national labs. Okay, next slide, please.
Logistics, again, logistics important to know that up early to ensure that they are prepared to prevent delays, constructional logistics, things like material, there may be special circumstances like I said earlier, areas that you may or may not be able to enter. For example, Federal Bureau of Prisons. Everything has to be accounted in your toolbox to include your pens and pencils. So, understand those things are there. Also, occupancy agreements may be needed.
And again, you'll have dedicated security entrances that the ESCOs may have to go through, and also, they need to understand that early so they can ensure they do not impede the tenants that are on the site because they, too, obviously have work to do. Okay, construction and crew sizes. That's - the ESCO should be able to provide to the agency what the crew sizes are, and ensuring that the government is - be able to meet those particular crew sizes to allow them to come into the site. Next slide, please. Okay, best practices. Again, reinforce the timely responses from all parties to maintain the schedule, which is very important.
Again, facilitate coordination with all the stakeholders, specifically the project managers and construction managers to review and know the requirement that's in front of them. Agency should also consider travel funds, if necessary, for the sites to ensure the oversight and training will be on time and on schedule. So, in the event that they need to go through that, they need to prepare for the funds. Design engineers have to work closely with the construction management staff. Typically, those design engineers and the construction management staff look at the site and should be on the same page because these facilities sometimes typically change. Also establish that government contracts affected by the ESPC have been modified accordingly. Again, I talked about that early, about the overlapping.
The government does not want to pay twice for maintenance of particular equipment, or do you want to impede the ESCO going to do their particular implementation of an ECM at that particular site. Okay, next one.
Kurmit Rockwell:
Great, thank you Sam. Next up is Scott Wolf. He'll present the next two modules, four and five, project design and review through the construction kickoff meeting.
Scott Wolf:
Thanks, Kurmit. As you can see here, you see the flow going on in the chart just to let you know where we're on on the project design and review. I'll talk over this section four and then section five. Next slide. Okay, so final designs and ESCO submittals. It's great we got to this point. It's really important that at this point you understand that the task order award, you're not - the designs are not 100 percent complete. There's going to be a process going on to where there is - the ESCO is going to design, you're going to review and approve. After the task order award, the ESCO completes the design, they'll provide design submittals, there is going to be a lot of back and forth going on with you and the ESCO on that topic. Submittals must be reviewed and they must be approved before the construction may begin.
Agency must verify the compliance with the task order requirements, and then the design must clearly address the ECM interfaces with the existing equipment. Very common for equipment that the ESCO puts in to interact and affect and influence other types of measures and equipment in the building, so it's very important that there's this clear distinction on what's going on there. The process for submittal and review of the ESCO's designs and installation plans, it's defined in the IDIQ section C.5. It's supplemented by the task order. The design construction submittals may include things like the design, the drawings, the installation plans and schedules, quality control permits, there's permits that you have to draw at the situation, including material submittals, things like this. But hopefully your site has a construction type of skilled manager that you can access and you also have the expertise of the agency-provided project facilitator, or, in some cases, DOE will provide your agency a facilitator. Next slide.
All right, 26, ESCO activities during design phase. Real simple here, great approach. We're going to submit the design - the ESCO will submit the design and construction drawings and specifications. You, the agency, will review this and you will approve it. Now, these are the items that's going to be included in your review and in the submittals: The manufacturer's data for all installed equipment will be provided. Identification and reference to all applicable design and construction specifications. The construction drawings. And again, previously, you, the agency, decided what kind of format you want these drawings to be in, and quantity. Planned service interruptions. Again, this could be for electricity, it could be for natural gas. The plan for required permits. Again, this could be digging permits, it could be work in electrical boxes, it could be all kinds of different things. And lastly, installation schedules. Really important that the schedules are in sync with the expectations up to this point.
Now, it's important to have the submittals certified by a professional engineer. This is a requirement in the IDIQ contract. I also want to emphasize that acceptance of the design submittals does not relieve the ESCO from the responsibility for meeting facility standards of service and guaranteed cost savings.
It also does not relieve the ESCO of engineering or other calculation errors. And sometimes these are found a bit late in the game, but it is important that they are found. Humans do make errors. Also, if you are hiring the experts to design and install, which is the ESCO, the burden does fall with the ESCO on all these points above I just mentioned. Next slide. Okay, managing agency reviews. Absolutely allow adequate time here for the government to review. Hold on-site design meetings with reviewers and individuals responsible for securing approval.
Use these meetings to do these following items: Facilitate dealing with the comments, do it systematically and efficiently rather than ad hoc and piecemeal. Ensure that the impacts of design and other issues are shared with and by the government team. And also discuss the desired design changes. I mean design changes do happen, but make sure these are discussed with everybody on the government team, everybody on the ESCO team. There are designs and changes that do happen at the last minute, and they're necessary, so make sure there's good communication there.
Make sure the communication - that the agency construction manager and design teams from the government side are familiar with the buildings and can discuss these things on a technical level. What does this really mean here? Often times when there's an ESPC project, the contracting officer who is in charge of making sure they have the right resources, they sometimes have to pull people within the organization, and they might pull a construction management type person who is familiar with a whole other set of facilities, but not the one that is being worked on. So, it's really important that this new person on the government side becomes familiar with what's going on and understands the building and situation and able to ask questions. That's really important. Next slide. Okay, so again, best practice here noted by the blue star. Preparing reviewers.
Very important you have some competent and good reviewers on your agency end. In preparation for these reviews, present information to the reviewers on the project and how ESPC works. It's really important that there is this comfort level. You just don't pull in a reviewer who has construction experience and blueprint reading design and is an expert in HVAC, but they don't know anything about ESPC and the financed programs. It's really important that you get to explain this to these new folks. So basically, bring people in, your contracting officer, your COR, perhaps your champion, who took a lot of this training already, and have them explain what this task order is under the guise of the IDIQ in the ESPC and let them review the contract and share key areas of this, and even some online training you could show to your team members.
Experience definitely shows that providing information and fielding questions from reviewers before this review could yield higher quality comments and also shorten review time as well. Certainly, take the time and go through the ABCs of ESPC with all people who do review and touch the project. Next slide. All right. Well this slide talks about the notice to proceed, or NTP as we call it, with construction or installation. Again, all best practices. Make sure that all requirements for issuance of the notice to proceed are adhered to prior to the issuance of this. Be firm about this. The ESCO provides the performance and payment bonds, the certificates of insurance, things like that. Check requirements in your TO RFP on this topic. Some things you just also refer to the attachment, J-4. These are recommended deliverables in the task order.
Some of these items, it'll indicate performance bond. It's a one-time thing that needs to be done 30 days after the award, or a payment bond. Work schedules. This must be done monthly, so there's a frequency on these things. Design and construction package, that's a one-time deal, and even the ECM quality control implementation program. Please refer to the IDIQ, refer to the attachment, again, like I said, J-4, to get more information on that. Now, really important, you don't allow construction to begin until the complete contractually defined design has been reviewed and approved. Don't take shortcuts, don't try to, in the name of saving time and schedule, we're going to like, you know, take shortcuts here.
Also, please don't piecemeal installation based on the progression of design reviews towards the 100 percent design approval. It's burdensome. So, get the whole package, you know, to your reviewers, get it approved, go through the Q&A, whatever you need to do, and approve things as a package and move forward systematically. And you'll be a lot happier doing it this way. Next slide. Okay, this talks about the construction kickoff meeting. You see, you know, congratulations. You're through the project design and review. You're going to start to approach this construction kickoff meeting, and I'm going to talk to you a little bit about this.
Next slide, please. Okay, let's talk about the construction kickoff meeting. Well, like all kickoff meetings, we have participants. We've got the ESCO, the contracting officer, the CORs that were appointed by the contracting officer, the government folks who are doing the inspections, the PF or project facilitator, which is either supplied by DOE or supplied by the agency, and other people. On the ESCO side, you have the project manager, who you've known the whole time throughout this process, the construction manager, the site superintendent, the other managers for design, commissioning, and measurement and verification, and also performance service individuals.
Now it's really important, the last point here is the key subcontractors. These are key folks, and you're going to get to meet them as well at this kickoff meeting. Now the purpose, like all kickoff meetings, are to review the roles, the responsibilities, setting expectations, and the timelines and, importantly, the communication protocols from here on out. Because they may change from what you've been used to.
During this time, you're also going to review the schedules for the construction. And it's very important to adhere to the proper schedules, so you don't get behind. I also want to emphasize, at these meetings, you're going to talk about and you are going to refer to the ECM installations quite a bit, the post-installation inspections you're going to discuss and talk about, as well as commissioning, which is built into the IDIQ contract.
Absolutely, you'll be going over the training requirements, as well as the processes for the government to accept the project. Other aspects of performance such as conditional acceptance, of testing equipment, will be discussed as well, and just to give you an example, what if the ESCO is installing a boiler, and the boiler project gets completed in the summertime. Well, if you want to accept the project under real working conditions, you need a full winter load to test that boiler.
So in this case, you may conditionally accept it, and then further accept the deal when you can see the boiler operating under a real winter load, perhaps five or six months later. This also works the other way, whereas if the ESCO installed a chiller. And the chiller is predominantly cooling in the summer months, but the chiller was completed in the winter months. You would then do a conditional acceptance and wait, and then you would see how the chiller operates under its real load in the summer months. Next slide. Okay, the construction kickoff meeting agenda. I'm just going to go over a few things that this agenda will cover. It'll cover of course the introductions, the organization and the various communication protocols, the reporting requirements, and the deliverables. Also on the agenda, you're going to talk about various contract clauses that are being used in the IDIQ, various clauses that might be written in the task order, definitions and so forth.
Certainly, site access and security requirements. I know Sam did talk about that, and he talked about the escorts and so forth. Design and construction, the environmental and safety planning of what's going on. Really important, there's a lot of commitment in the federal sector to strive for zero accidents, strive for zero spills or things like that. Electrical outages, permits, gas fuel interruptions, things like this are going to be on this agenda. And again, planning for scheduled progress meetings, super super important. Listen, some agencies will deviate from this agenda and these bulleted items, and that is okay.
We have a FEMP website. You can go to the FEMP website and see our template on this construction kickoff meeting agenda. But I do know some agencies do like to grab our agenda, add some things, delete some things, kind of make it their own. Also, the ESCOs oftentimes make recommendations on what they would like to have on the agenda. But certainly, start off with our FEMP supplied agenda. Also rely on the expertise of your project facilitator. They've done perhaps 20, 30, 40 projects prior, and so they have some excellent experiences and certainly have modified various agendas to move forward. Next slide.
Okay, topic for construction kickoff, managing contract changes during the implementation. Now the goal here is to handle changes so that no revisions of task order schedules or the financing structure are required. Always try to strive towards no-cost modifications. It gets a little bit messy when you do a modification and it's so big and complex that it alters the task order schedules and the financing structure. Like I said, this is only a goal, sometimes you can't avoid doing that, but at this point, let's shoot for a goal of don't revise the task order schedules. Now, keep in mind, only the contracting officer can approve modifications to the contract. I have seen in the field where CORs perhaps went a little bit beyond their purview, their authority, and they actually went a little bit further, and they directed the contractor. Don't do this. Only the contracting officer could approve modifications.
Also, be aware of variances between the design and the as-built installation. The ESCO and the agency should definitely both track changes of what's going on in the field. The changes and the energy impacts should be documented in the post-installation M&V report. And again, the post-installation M&V report is a contract requirement, and that'll simply show you if the ECM is going to perform as it was designed, and as it was installed in the field. Now, it's very important to have timely negotiations to preserve the project schedule. What happens if the project schedule gets pushed out? Well, that can impact your savings. It will impact when the project will be accepted. And it could also cause more interest to be paid throughout this whole ordeal, because the schedule is being pushed off. Next slide.
Kurmit Rockwell:
Thank you, Scott. Terry Sharp will now present modules six and seven, Inspections and Training through the Commissioning and Measurement and Verification.
Terry Sharp:
Thank you, Kurmit. Good afternoon, good morning, everyone. As Kurmit said, it's my privilege to speak with you today on two sections. We'll dig into some of the topics that Scott presented a little more deeply. And like the other speakers, I will share a lot of the best practices that have come in from federal agencies that have been down this road. And, of course, what is so great about best practices is that, if we can understand them and practice them, we can do better than and we can avoid the mistakes of other folks that have been down this road. So, they're pretty great to have at your disposal.
So, Scott has carried us through the construction kickoff meeting. What that means is that our construction plan is in place, our schedules are in place, roles and responsibilities have been defined, our lines of communication have been established, and so at this point, we're ready to make some noise, we're ready to get dirty, and we're ready to build the project. So next slide please. So, let's touch upon the responsibilities in terms of construction, both on the ESCO and the agency side. On the ESCO side of the fence, they have a lot of management responsibilities. One is to manage the schedule, and I can tell you that the ESCO will be very motivated to drive the schedule.
They're on a fixed price contract, and they're going to want to get it done. So, they'll be very motivated here. It's also their role to manage their subcontractors. On - from the agency side of the fence, you might want to think about this a little bit, and maybe even require the ESCO to have an on-site presence daily when subcontractors are doing work. You want the ESCO to manage the subcontractors, not the agency. They'll also have to manage delivery and storage, and you as an agency may have to help them a little bit here because they're going to need a staging area. Sometimes that's not so difficult. Sometimes it could be a challenge, particularly if the project is large or if the project is located in an urban setting where you don't necessarily have a lot of land area available for staging.
Quality control is also a responsibility. The government will have a role in this, as well. It's the primary role of the ESCO to install all of the energy conservation measures. Post-installation M&V is a big responsibility of theirs, but the government will have involvement in that, as we will talk about. Commissioning is a primary responsibility for them. Testing and balancing, if it applies. That doesn't always apply. It's ECM dependent. And then lastly, training on the ECMs. And training can occur at different times, so we'll talk about that a little bit.
Next slide, please. In terms of responsibilities on the agency side of the fence, a big one, of course, is to monitor the construction or do oversight on the construction. A second one is quality assurance, and this is where your inspections, your witnessing, and the various approvals that you do will come into play. Third is coordinating and providing site access to prevent delays. And remember, as I mentioned a moment ago, this is a fixed price contract, so from the government side of the fence, you don't want to be inducing delays of the contractor, because it puts the government at risk.
Fourth item is generating punch lists from your inspections, from the agency inspections, and this is very important, to make sure you get your ECMs right, you get what you're expecting, and resolution of the items on these punch lists is a requirement prior to acceptance of the project. So, this is pretty important stuff. The next one deals with monitoring the development and maintenance of as built drawings. You can bet, if you're going to do a project, that things are going to change. We see often in these projects that when a project may involve multiple buildings, that before the project gets built or maybe during it, that a building might get remodeled.
It could get repurposed. We've even seen it where buildings have been demolished. We try to plan for that up-front and try to keep those kinds of buildings out of our projects, but they do happen. Things will change. Changes will need to be managed, and as-built drawings will definitely need to be updated and managed. The next item deals with verifying activities. And you'll do these through reviews, such as review of the ECM installation per your TO requirements, review of design/installation plans, and approved submittals. You'll also do verification through actions, actions such as I mentioned a moment ago, the inspections and witnessing.
Those kinds of things. And then lastly, you'll see witnessing per the M&V plan, and this witnessing is also done at different times, too, and we'll talk about that a little bit. So, these are all agency responsibilities, and a lot of them are very, very important. Okay, next slide please. So, before digging, if you're familiar with construction or you've ever been involved in construction, I probably don't have to tell you how important this is. If you don't give it sufficient attention, it can be a show-stopper for you, so doing your homework prior to excavating is a big deal. And the first of these best practices that comes from agencies is dealing with permitting. And you want to make sure that these permits are very thorough, that they are filled out well. And you want to be sure that they identify the equipment that is going to be used for digging.
And a reason for this, of course, is that this equipment defines the access that you're going to need to get to the location, how much space you're going to need to get your equipment in there. The permits should tell you, is the contractor going to bring in a backhoe when they should be bringing in a shovel, or vice versa? The permit will tell you if a crane is coming in. Are you going to be driving that crane over utility services? Those kinds of things. So, it's very important to make sure that that permit is very detailed, such that the agency knows what to expect and can plan for it. Secondly, clearly identifying and marking the area where digging or excavating is going to occur.
I'm sure that many of you, if not all of you, definitely have an appreciation for this. And this kind of reminds me of the saying in the construction business of, "Measure twice and cut once." Although I think when you're digging, it kind of takes that to a whole different level. When you start digging, you can find - there can be gas underneath the digging site, there can be utilities, there can be communications lines, all kinds of things. So, it's really a big deal to get this right. And you'll find in terms of marking these areas that responsibilities may vary by agency or by site.
For example, at our site at Oak Ridge National Laboratory where I am, it's okay for the contractor to mark the site, and then the laboratory will come in, and in the area that's marked off by the contractor, will identify the utilities that are in that space. And then in fact an outside company comes in and marks where any communications lines might be in this space. So, it's kind of a team effort to get this right. Your agency may do something similar or may do something different. I've actually heard where contractors may come in and say, "Agency or customer, we want you to mark the site, you maintain your drawings. You know where everything is, so we want you to have that responsibility and to designate that entirely." So, it does differ.
Let's talk - next slide - let's talk about readiness of subcontractors, and we have a few best practices here. Both on the ESCO side of the fence and agency side of the fence. So, on the ESCO side of the fence, we want to ensure that our subcontractors are on board, we want to ensure that they're ready and they're on time. And the ESCO should really manage this very thoroughly. They should be very proactive in this area, because we don't want this subcontracting process - it shouldn't be allowed to eat up any float in the schedule or to delay anything. That's why they really have to be proactive on this and make sure that everything stays on schedule.
On the agency side of the fence, diligence in this contract file management. There'll be a lot of documentation that comes into the agency: certifications, training, reports, other types of things coming into the agency. So, managing that contract file and getting that documentation in there for the long term will be an important function, and you'll find that that typically is probably driven by the agency CO, to do that archiving and maintenance of that contract file. Next slide, please. On the - in terms of inspections best practices, we have a few that agencies have provided us. One is to identify and schedule construction inspections based on major milestones.
For example, given here is a chiller being installed or maybe some percentage of the lighting being complete, or maybe when a critical system goes in. For example, if you're familiar with construction, you know that when the electrical is put into a building, there's an electrical inspection before the contractor is ever allowed to cover the walls. Same thing on the plumbing side of the fence. Those are critical infrastructures that must be able to perform, and so those inspections are done before you can go forward.
So, inspection milestones are - they're very fixed, they happen at very fixed times, and the government definitely should plan to be part of those inspections. In terms of the second best practice, this good planning in terms of inspections is required to allow the site to support the construction schedule. Again, remember, the government doesn't want to be responsible for causing any delays. As I mentioned earlier, this puts the government at risk. Next slide, please. Training is also a part of this section. I wanted to touch upon that.
The ESCO provides the training for the operation and maintenance associated with ECMs. So, you'll get this training, the agency will get this training, and they'll either get it - maybe either at the start of the performance period, may get it during the performance period, or they may even get it at the end of the performance period. Maybe during the performance period, the ESCO happens to do all the O&M, and so the only time that the agency really needs training is at the hand off at the end of the performance period, that's possible. So, training can happen at multiple times.
Now, the training plan will be detailed in the proposal. And that training plan will be ECM specific. In other words, there should be training defined, associated with every ECM that is installed. And note that if this training plan - if the detail is not provided in the proposal, if there's missing details after the fact, after you're way down the road, those details could be kind of optional for the ESCO. So, you want to be sure that that training plan is very detailed and it does a good job at providing the agency the training that they're going to need to operate those ECMs for the long term. The training approach in the second sub-bullet here is very customized. It's very proportional to the ECMs that are installed, and it's proportional to the level of responsibility that's assumed by the agency.
Training may be repeated as needed. As you all know, at federal agencies in terms of maintenance personnel, there is turnover that occurs. These are long-term contracts, and so if there's personnel turnover, those people may need to be brought up to speed in terms of training. So, it can happen periodically. Training includes in-person training. It could include manuals. It could include travel to get training from an equipment supplier, those kind of things, so the training can be pretty diverse.
So, this - at this point, this concludes the section on construction inspection and training. So, we'll move to the next slide, Section 7. This section is on commissioning and measurement and verification. And in my mind, commissioning and measurement and verification activities that are done are really the foundation for long-term success of your project. Remember, these projects are running 15 or 20 years, so commissioning and M&V is something that you want to get right early on. Next slide, please.
One of the big best practices that - or one of the key best practices I think that agencies have identified in this area relates to commissioning, measurement and verification, and witnessing. And that is that the key to, I think, agencies and customers doing a good job in these areas is for the agency and the customer to value these activities. And the way for them to value that is to be able to - to understand very well the purposes of these three activities. On commissioning, the purpose of commissioning is to verify proper installation of the ECMs and their ability to perform. In other words, when you throw the switch, they come on, and they run, they operate, that kind of thing. So, if you're familiar with construction, you probably have heard all kinds of war stories about commissioning maybe not necessarily being effective or done properly. For example, some of the things I've heard about, I've actually heard about distribution fans either rotating backwards or being installed backwards. I've actually heard also about - or actually, I've seen this one where a unitary air conditioner, the compressor was actually running backwards. And this can happen easily in a lot of these larger systems because they're all run on three-phase power, and there's a lot of power leads that come to three-phase equipment, and it turns out that you - if you get a couple of those power leads reversed, the motor can run backwards. And so you - these three-phase systems are very prone to problems when you install them. And that's what commissioning is all - is designed to catch that. Another one I've actually seen is unconnected registers in a building.
And this particular building I'm thinking about actually went through testing and balancing where the flow out of these registers is checked to make sure that the right flow is coming to each register. Well obviously, the testing and balancing end didn't work, and probably in this case, the customer didn't do witnessing because this particular register that was disconnected was never discovered. It still exists in the building, and it wasn't an issue of not connecting the duct. It was that the duct was never extended to the register in the first place. So, this got through primarily because the testing and balancing wasn't done correctly, and it certainly wasn't witnessed and caught.
So, I'm sure each of you familiar with construction probably have a lot of commissioning war stories. So, this is what commissioning is all about, is to prevent these kind of problems and to set you up for long-term success. On the measurement and verification, it is different than commissioning because in measurement and verification, we use that to validate that the ECM provides savings. That's for the individual ECM. And that when these ECMs, when combined, we can validate that the guaranteed savings are achieved for the whole project. So, M&V does a totally different thing than commissioning because it really focuses on validating savings. So, for example, commissioning might verify that a fan comes on, it rotates in the right direction, and if it's driven by a VFD, that the speed may change. But measurement and verification would measure the power draw of the system because that may be the baseline, or could be the post-installation power draw that is used to quantify savings. So, these two things do very different things.
These two activities do very different things, and both of them are very critical to setting you up for success. And remember, at this point when we're talking commissioning and M&V, we're about to turn this equipment loose for the next 15 to 20 years. So, it's critical that we catch these kinds of things now, and we make sure that problems don't occur, because if we don't catch them now, there's a good chance we may never catch them during the long-term performance period.
Lastly, witnessing. What is witnessing? This is a government activity, of course, and its purpose is to independently verify the success of the commissioning and the M&V results. Okay? And this witnessing, it is a requirement of the contract. So, it is a requirement that agencies do this. Lastly, my comment on these is that I think these are very complimentary to one another. They are somewhat dependent on one another, but I also think that if you don't commission properly, hopefully you'll catch it with M&V, but there's no assurance of this, so they're both critical to the process, and I think really set the stage for long-term success.
All right, let's - next slide, please. Let's talk a little bit about the scope of commissioning and witnessing. Best practices associated with these, number one is to clarify that commissioning is fully scoped, i.e., it's required for all ECMs, and there's a plan for commissioning of all ECMs. Also, commissioning reports must include test results. We want - these commissioning reports should tell us more than just, hey, everything looks good. There should be measurements in there to demonstrate that things function.
So, remember that also that the - in the task order award, the commissioning approach is defined, but the detailed commissioning plan comes in after the task order award. So, you must check the scope and make sure that it's thorough, and your project facilitator will review this commissioning plan for you. So, you've got help in that area. The second best practice is about ensuring that the ESCO and the agency understand witnessing, and we talked about how witnessing is for independent verification of the ESCO's work, and also that both of these entities understand that witnessing does not constitute approval or acceptance of an ECM or the project.
There's a pretty extensive formal process for this approval and acceptance, and Sam will talk to that a little bit more. Okay, next slide please. So, here are some best practices from agencies about facilitating M&V, commissioning, and witnessing. The first of these involves coordinating and tracking of scheduling, and I think this boils down to that if you plan well, you can execute well. And in these three areas, you want to do both of those. The second bullet is about ensuring that you have your people, you have the right people, and you have the correct expertise available, because remember, some of these technologies are going in, some of them can be sophisticated, there's a lot of mechanical, a lot of electrical to it.
And so a lot of measurements being made, electrical measurements, maybe mechanical measurements, and so your people need to have an understanding and a background in those areas. The third item deals with when you go through these activities, issues are going to arise, and when they do, you want to keep everyone in the loop and make sure that everyone is on top of these and aware of them and is working to figure out solutions. And the last bullet deals with if there's any issues discovered during these activities that create shortfalls, you want to make sure that those are identified, and if they cannot be corrected during the commissioning period, you want to require and have the ESCO establish a plan for remedying these kind of problems. Hopefully they won't happen, but if they do, get everyone engaged and figure out and plan for a solution.
Next slide, please. Lastly, on facilitating these activities, and I've touched on this before, but this first best practice really involves planning well. And one way of facilitating that is to get the ESCO to provide a look-ahead schedule for M&V, commissioning, and witnessing activities. They'll give you that look-ahead schedule, you have a chance to be proactive in terms of lining up your team to support those activities. So, this'll allow the agency to be ready and avoid things that you don't want to happen, such as not having the staff available, miscommunications, wasted trips, or maybe unproductive trips.
Next slide, please. So, on the commissioning reporting side of the fence, there are responsibilities here on both the ESCO and the agency sides. In the commissioning report, the ESCO - or in the commissioning area, the ESCO will have responsibility for three deliverables that'll be coming to you. It's shown at the very bottom of this slide. The first of those is the commissioning approach, and that comes to you in the task order proposal prior to award, and again, that is kind of a general document. After award, they deliver the commissioning plan, and that's that commissioning plan that has all the details. It gives you all the details for each ECM, how that's going to be done.
So, that's a very important baselining document. And then the last document that comes to you is the commissioning report, and that, of course, occurs after installation. So, in that commissioning report, the ESCO performs a commissioning, and then they document in that report the results of the commissioning efforts. On the agency side of the fence, associated with this commissioning report, the agency reviews that report and verifies the two things shown: that the commissioning was done in compliance with the approved plan, and then secondly, that the ECMs are installed for the design and they're meeting the performance requirements that were specified. Next slide, please.
Let's talk agency witnessing a little bit, and here are some best practices that I'd like to share. The first of those deals with assigning oversight responsibilities early on the government side of the fence, and I had alluded to this early. And ideally, you'll want to start thinking about those at the IGA. Think about them early, what kind of expertise that you can get such that you can be proactive. You want to ensure that if it's the COR that is going to do this witnessing or someone that they appoint that you have got the people and expertise and you're ready to go. Secondly, you want to identify and designate this qualified witness.
And you may use multiple witnesses, depending upon, maybe there's a mix of technologies that are being installed. You might need someone good on the electrical side of the fence, someone good on the mechanical side of the fence or some other expertise. So, it is possible that you use more than one individual person. And the last thing you want to do is have to scramble at the last minute to find this. So, that exposes you to risk and anxieties that you don't want to be happening. So, definitely want to avoid that. You'll see at the bottom that there is a reference to a document on the ESPC website that gives you some great guidance in this area.
That resources page is your best friend, if you're looking for a knowledge base in terms of executing this project. Okay, next slide. Let's talk a little bit about post-installation measurement and verification. Very important stuff, because this is where you're establishing, say, the baseline for establishing the savings of individual ECMs in your whole project. So, the ESCO performs this post-installation M&V and makes all these measurements in accordance with the M&V plan. And then, of course, the agency witnesses. Inside this post-installation report, you'll find several things. One is the measured data and calculation that demonstrates that the ECM performs as planned.
Very important baseline data. This report should have a format consistent with the latest version of the DOE M&V guidelines. You'll find those on the resource page, I think the latest version is Version 4, very informative. And then lastly, the results of this electronic based - electronic web-based tool that we have called eProject Builder. The results of the eProject Builder output. And one of the primary things that comes from that is the task order schedules, the financial schedules, if you will, that define all the cash flows associated with a project. So that is important stuff. And then also out of eProject Builder, there is measurement and verification summary data that's inside that.
So, that information should be pulled out of eProject Builder and included in this report. And lastly, associated with post-installation, the contracting officer or the COR will accept the M&V report. They'll confirm that the results in the M&V report match the results in eProject Builder, and also approve and accept the data in eProject Builder. And why is that so important that we get this information in the report and we get it inside eProject Builder? Well, remember, these projects are 15- to 20-year projects. They're going to be here for the long term, and there's - each year, there's an annual M&V exercise that's done, and guess what? They're going to go back and they're going to use this M&V data in ePB, and these reports may even have to fall back to the TO schedules to do their - the activity that they do associated with annual M&V. So, this information needs to be accurate.
It's going to be relied on for the long term, and in the event that there's adjustments that have to be made somewhere during the performance period, this information is going to be critical. So, this is very important stuff, things that you want to get right. Next slide, please.
Also, in terms of review of the post-installation report, the agency does this review and they verify several things. Compliance with the M&V plan. They also verify baseline data. We don't want changes here in this baseline data, but if it happens, the most important thing is to make sure that you document it well. Also, the agency verifies that these individual ECMs have the potential to meet or exceed guaranteed cost savings, and also verify that there is a match between data and ePB and the post-installation M&V report. And of course, this relates to the long-term performance, so it's very important. In terms of the last slide, next slide please, for this section.
So, let's talk M&V records for a moment. M&V records are required to, number one, to establish and retain the baseline conditions of the project and the performance data, and also to show due diligence by both the ESCO and the government. In terms of these M&V records, there are several things you see here. Documentation of witnessing, post-installation report is an M&V record. Resolution of any issues, and then a memo from the COR to the CO documenting the review of this report and its acceptability, and then lastly, documentation of the acceptance of this report, because the contracting officer is the final authority in terms of this record-keeping.
Finally, I guess I'd like to say, from going through these last two sections, I hope that I've given you insight on construction best practices from experienced users and given you an appreciation for the importance of commissioning, M&V, and witnessing, and how they serve as the foundations for long-term success. Remember, you get a guarantee with these projects, and you want that guarantee to be good over the long-term. So, if you want that, this good commissioning, M&V, and witnessing, they're your insurance policies, so you need to get those right. So, at this point, we've got the project built, and we're ready for acceptance, and I'm going to turn it over to the next speaker. Thank you.
Kurmit Rockwell:
Thank you, Terry. We're now going back to Sam. He's going to present modules eight and nine, acceptance of the project, and contract management.
Sam Espinosa:
Thank you, Kurmit. Wow, we really went through the post-award, implementation of the construction, to the commissioning and the M&V. Now only things left, all they've got to do is accept the project and then just administer the contract. So, let's go to the next slide, please. Acceptance responsibilities. Again, the key ingredient here is that acceptance is a top priority, obviously. It also devotes adequate time, and you'll need adequate time and personnel to ensure the acceptance is adequately documented in the contract file. And I think Terry has led that responsibility based on the M&V, ensuring that those things are right.
Again, the acceptance occurs once commissioning and post installation M&V and punch list items are completed. Any additional punch list items identified after the acceptance of the punch list is treated as a post-acceptance warranty. One of the elements that I would pass on to my folks is, if you're going to do the review of the ECM and you have the punch list, please do a thorough review to ensure that we don't have a continuous punch list. So, once we have one, we've identified it, we've accepted it, any little odds and ends that - post that, obviously, the warranty will be used. Also, you're looking at to ensure that the ECMs are performing as specified. Again, as a CO, I think what you'll rely on your technical folks, your COR to ensure that that has happened. Also, the required submittals and deliverables that we talked earlier, that those have been received on time, they have been approved and reviewed by the technical folks if necessary.
And again, they have to be accepted in writing by the contracting officer. The acceptance checklist is complete, has been signed off by the COR. Obviously, forwarded to the CO, to ensure that the ESCO has complied with the terms and conditions and that the ECM is functioning properly. Next slide, please. Okay, a checklist. You're looking to see that the warranties and the registration paperwork has been submitted. Rebates obviously are - paperwork has been submitted. Again, I think Terry or Scott touched on training manuals and schedules. Obviously, training is very important to the agencies because the agency person will need to understand, in the event that they are responsible for the maintenance, that they do receive the training and they receive the manuals for each ECM. The other important element is to ensure that any discrepancies have been noted and have been corrected. The other element that you will see is that the deliverables, again, like ECM reports, ECM scheduling reports, as-built drawings, as noted in the contract have been provided and they have been accepted by the CO.
There is, in the web, guidelines to the checklist and contract clauses for the government acceptance. Please read that, it is very informative and will make your life a lot easier than having to just look at what you have in front of you. Next slide, please. Best practices. Here we go. Again, the agency is obligated to perform oversight and reviews within the timeframes. And the key ingredient here is to ensure that you do that on time because any schedule delays of the payments to the ESCO, may also be driven by the financiers that will provide a penalty and interest that can be associated with the delay and not meeting the schedule. To ensure that doesn't happen, it's always best practice from the government side of the house to ensure that you meet our requirements that are necessary and not to impede the ESCO. Again, be aware of inspection requirements and have ample resources able to inspect construction without delay. Terry touched on this a little bit. Again, the key ingredient here is to ensure that we are on time and on schedule, and ensuring that the government has the correct personnel at the right time, so that we can meet the schedule and move on to acceptance behind - having acceptance behind us. Next one, please.
Partial acceptance. Okay. Early acceptance of individual ECMs is allowed when ECMs are producing, obviously, savings well before the full project acceptance. Obviously, the reasons for this thing is the ECM construction times vary widely. One ECM will be completed, and the other one just may be on the tail end, and you can still use that partial acceptance. Also, you want to capture construction period savings for project benefits. And the ultimate one I think is real important is, again, you return the construction site to the customer. To the project site, but they can continue to move on with their requirements. Again, project acceptance, obviously, is situational. And be sure that, if you have a partial acceptance, that you clearly articulate in the letter of acceptance exactly what is being accepted, what is not being accepted, and what remains to be accomplished. And it's very important to have that in there because at least you have a definitive reason why this happens. You'll also find partial acceptance - I think Scott touched on this a little bit - for example, he gave two examples.
One was the boilers and chillers. I won't repeat that, but those are also reasons for partial acceptance. Next slide, please. Okay. Again, this is that partial/conditional acceptance that Scott was talking about. For ECMs, for which construction period savings are allowed, the contract should define what is a requirement for ECMs. Generally, you'll have a 30-day functional test and commissioning document. Post-installation M&V documentation is required before final acceptance, as Terry was laying out the process to get that done. You establish acceptance procedures for each ECM as individual systems or buildings, separate from the full project. That's again a documentation requirement that you'd need to have to move forward.
Take consideration, obviously, the project deliverables. ECM level versus project level. Again, that's part of your partial or conditional acceptance. Take into consideration who will perform the O&M from the ECM acceptance until final project acceptance. A lot of this information about who is being responsible for what O&M is in your risk, responsibility, and performance matrix. We haven't touched on that, but that document is also part of your contract file. And I let this out to the contracting folks and the technical folks: Please ensure that you read that risk and responsibility performance matrix. Next slide, please.
Okay, now everything is going well. We've accepted the project, I'm moving forward. The next part is contract management. What that means is, in your contract file, contracting officers, contract specialists, you need to understand that this contract is a 10- to 15- to 20-year contract, and personnel will change. And it comes with change in the contract. You need to ensure that it is being administered continuously, if you will, with the same continuity as it was awarded by the CO. Next slide, please. And again, critical attributes for successful contract management is early planning, meaning contract management file could be started as early as your IGA, and then you've got to successfully manage the change, and the key ingredient for managing the change is ensuring that you try not to change the contract, as they said earlier, but you try to manage that change to ensure that any changes that you make does not impact the TO schedules. And we'll get into a little bit about that here in a minute.
And again, following best practices. JIT4, we're going through now, has a lot of best practices. This information has been put together from a multitude of agencies, and we share with everyone and we put it out there. And in the event that there is something there that for whatever reason you need some clarification, by all means, reach out to FEMP. They'll be more than happy to provide you a response. Next slide, please. Contract management. Again, effective contract management during post-acceptance performance can be a challenge. And the key ingredient is it takes the continuing effort of the agency, CO, the CORs, the team, to continue to cooperate with the ESCO to maintain that continuity. Obviously essential because at this time in the game, you are now just looking at the ECMs and ensuring they are functioning properly. You will get your M&V report on a yearly basis for review to ensure that, given this is a firm fixed price performance-based, and the performance-based piece of this is the guaranteed savings.
Again, agency contract management plan is essential. You finalize the plan at task order reward, you keep it current, because things will change, administering these 15- to 20-year contracts. Keep it current, accurate, and complete, as - as the contracting officers know. And again, the follow the plan. FEMP on the website has put together a very comprehensive contract management plan for contracting officers to put in their contract to ensure that the administration is absolutely - you maintain that continuity as it was today, 15, 20 years ago, you're doing the same thing.
And again, key ingredient, things will change, keep it current and accurate. Next slide, please. All right, contract management, what should it include? You've got a lot of items here. Again, you have a summary and background of the scope. You look at the period of performance, contract value, and the contract type. Firm fixed price, performance-based contracts. Who are the contract management team members? And, of course, including the authorities and responsibilities, and the key elements of that are your CO and COR. Everyone understands the CO has responsibilities to change the contract. COR gets the technical responsibilities, provides technical direction within cost, schedule, and scope. At the same time, you'll have key ESCO personnel to contact or who they are, contact for this particular requirement.
Protocols, communication protocols. Very important because those are the protocols - those are the individuals that and/or who you'll go through for particular areas of concern for this energy services performance contract. Deliverables. There are deliverables and that deliverable that you will see, obviously, in your administrative contract is the M&V report. Be familiar with that, you've got an M&V plan, like Terry had alluded to. Read the plan, because when you read that plan, they, the ESCO, need to submit the M&V report in accordance with the M&V plan. The method of monitoring performance and savings guarantees. That's also essential for the agency as they are reviewing the ECMs, whether at the M&V or for that ECM as it's working. The TO, obviously, should include the M&V plan, your commissioning plan, and again, risk, responsibility and performance matrix.
That is essential to the contracting folks because that typically lays out who is responsible for doing what for those ECMs. Invoicing procedures. And again, the key ingredient here is that every agency has their own process for invoicing, but the key ingredient is, I think, a lot of this invoicing should happen 30 days prior to payment, and the second part of this, ensuring that the agency is prepared to make these payments. The agency does not want to put itself in the position of compromising, having to pay a penalty and interest because the agency delays. Again, there's a website for contract management plan. Please take a look at it. It is a very comprehensive plan and very useful. Next slide, please.
Changes. Lord knows there's going to be changes. You've got a contract to go 15 to 20 years. Again, keep your contract files up to date, current, and accurate. They should reflect, obviously, the site conditions, operations, and performance, and disposition of the energy conservation measurements. I know Terry also alluded to that the items do change. I experienced some of those changes in some of the ESPCs that I've had, to include a building was removed, and it appeared, well, we're getting great savings. Well, of course you're getting great savings. The building is gone. But the key ingredient is to keep up with the site and the changes. Also, at the site, very important, your site managers should be aware of the ECMs that are installed in those facilities, so that in the event a change comes about, they need to notify the CO of the changes so that the CO can collaborate with the site manager and the ESCO to mitigate any impacts. And again, any impacts of the project, take appropriate contract action.
Again, depending on the nature of the change, potential contract actions may include: you can do an administrative modification, just documenting in the contract file. You may also do a modification of the contract. Now that's a little bit deeper, and what that means is you may need to change your task order schedule to reflect the currency of the savings to the contract. Again, the key ingredient is, we try not to do that, and we try to use other methodologies and not to change that particular dollar amount. So again, reach out to FEMP if you need any assistance in this because this is very important from the contracting officer side of the house, when you're going to make a change to the contract.
Next slide, please. Okay, assign responsibilities for leading contract management. Obviously, agencies should designate the primary contact, who is responsible for - FEMP will put out what they call a life of contract program. They will contact you on a yearly basis, and ask you - and they'll be looking at the M&V report with you. Trust me, they will assist you in that and it's very, very useful because again, you have a 15- to 20-year contract. You may not have the same COR or same CO. At least if you maintain that contact with FEMP, they will help you as you go through the life of this contract. And again, maintaining continuity of documentation and awareness of the ESPC throughout the performance period. Again, what I said is you document your contract file with this contract management plan because every contract management plan will be unique with the requirement.
So, use the plan as you - as they have and pick those pieces for the agency that's most important to you to ensure success in completing the energy savings performance contract period of performance. Next slide.
Kurmit Rockwell:
Thank you, Sam. So, we're now moving into the last section of the webinar, FEMP's life-of-contract services. We'll tell you a little bit what Sam mentioned just before. So, after acceptance of the ESPC project, you're now in the post-acceptance performance period, where you will use the contract management plan, as Sam mentioned, as a key tool to help you move through the ESPC contract term. So, what FEMP has learned over the last few decades is that change is inevitable during an ESPC project, and we have developed FEMP's life-of-contract services to help you through these changes. ESPCs, again, are long-term contracts, and during the performance period we have found that this list here covers most of the common areas that need to be considered. And I'll discuss just a few of them.
Changes in key personnel with an agency will occur over time, and not having agency personnel available to follow the contract management plan can lead to a lack of, of course, documentation that verifies the performance guarantees are being met. Very important. Other changes in operation or maintenance of the installed energy and water conservation measures can potentially impact the life of the equipment or the performance, and ultimately the guarantees the ESCO provides. So, all of these changes may not be bad, though. For instance, during your M&V visits, the ESCO may find ways to improve operation of your existing equipment, which could increase savings and potentially increase the life of the equipment.
Also, technology advancements could bring new opportunities for your performance contract to increase savings for your project, with the addition of potentially new ECMs or upgrading existing ECMs through modifications of your contract. Please talk to FEMP if you believe you have any of these opportunities. So, the contract plan from Module 9 will be key to inform the future personnel as changeover occurs about the overall project and the contractual responsibilities of your organization and ESCO. Extremely important.
So, to help with these changes, FEMP has developed life-of-contract services. Next slide, please. Quality assurance is important to maintain the integrity of ESPC projects, and to ensure guarantees are achieved. All sites having task orders under our DOE IDIQ ESPC contract that are in the performance period will receive FEMP's life-of-contract services, which is our quality assurance program for agencies. So, the quality assurance goal is to ensure that the site and the ESCO uphold their responsibilities, which includes items like: performance guarantees are delivered. Equipment is maintained and operated correctly. The ESCO is performing the M&V according to the plan and schedule. And the site performs the M&V witnessing and M&V report review. And throughout the post acceptance performance period, the site maintains a continuity of awareness that an ESPC exists and records the key documents per the contract management plan and makes sure they're developed and saved in the project file.
Our life-of-contract team at Oak Ridge National Laboratory contacts the site personnel before the annual M&V visit to verify that they're still there and they're still the main contact responsible for conducting the witnessing. We also contact them again after the M&V site visit to see if they need any assistance reviewing the M&V report. So, this is an important step that helps to identify if there are any gaps in personal assignment, which we then would communicate, of course, to the ESPC program management at that agency for resolution. We can also provide subject matter expertise to help if the M&V report indicates there are some technical issues, or if it looks like changes have occurred that might need a consideration, let's say, for potential contract modification. Our communications also include reminders of where resources are for both the online and our live training and guidance.
So, this concludes our last module. Just want to show this as a quick reminder that we have covered all of these ten modules in today's training, and now I want to leave you with some closing thoughts on the next slide. So, we've reached the end of our training, and here are the highlights from today. Many best practices have been presented, and in closing, keep in mind the following. Know that post-installation M&V is what differentiates ESPCs from other federal construction projects, and it's extremely important to make sure your project is heading in the right direction towards achieving savings guarantees. Be proactive in handing off project knowledge and responsibility and authority when transitioning to post-award.
Make sure all parties understand the contract terms and conditions and identify and resolve the potential problems. Extremely important at the post-award kickoff meeting. Maintain regular and scheduled communications between the ESCO and agency project teams. Verify the ECMs are working, and ensure witnessing of the M&V and of the commissioning. Establish and maintain continuity of ESPC administration throughout - through your contract management plan, as Sam had described earlier. This is one of the key items you're going to need to keep your project running very well, achieving savings, and guarantees throughout its performance term.
And always remember, communication is going to be key for your project, and any long-term relationship, and in the success of the implementation/construction period phase, especially. So, thank you for joining us today. As reminder, I want to show you this slide and encourage you to visit our FEMP website to look at our Just-in-Time ESPC Webinars, and please note that we're always planning and implementing new series of Just-in-Time webinars, and I encourage you to check our website regularly.