UESC Project Identification
The Utility
Audit
Establish Terms
& Conditions
Preliminary issues
Key sections
Arranging the audit
Interest rate
Kickoff meeting
Issue and evaluate
The audit
Negotiate
The audit results
CO signs
Go/ No go
Decision
The Feasibility
Study
 CO issues TO for
Study
 The feasibility
study
 Agency review
contractual
documents
Go/ No go
Decision
Stop and $/
Go to Engineering &
Design
The Utility Audit
Preliminary issues
Arranging the audit
Kickoff meeting
The audit
The audit results
Go/ No go
Decision
Working the
Preliminary Issues
 Contact your utility to find out audit
offers and any associated fees
 Meet with your acquisition team and
decision makers to establish
concurrence
Arranging for
the Audit
 Contact your utility and request the
audit
– Provide some form of written
documentation that says whether or
not the service is for free or fee
– Designate your agencies COTR
 Schedule a kick-off meeting with the
utility and key acquisition team
players
Hosting Your
Audit Kick-off Meeting
 Establish your project expectations
 Hand over your collected facility data
 Share the outcomes of the acquisition
strategy development
– Make site specific needs & constraints
clear
– Answer all questions completely
 Arrange a tour of the facility (notify your
tenants)
The Partnership
Begins Here
 Remember: This is not traditional
contracting! Success depends on
open communication.
 By minimizing utility’s costs you
maximize government’s value.
 Consider a formal partnering
session
The Audit
 Utility collects and reviews utility bills,
purchased fuels data and metered data
– Evaluation of utility rate schedule options
 Utility performs a site visit to look at:
– the operation and use of buildings, building
envelope and systems
• O&M procedures, insulation of pipes and tanks
– all energy consuming equipment
• Lighting, heating and cooling, motors, hot water
– the utility systems
The Audit Results
 Utility provides report that:
– documents existing equipment
– describes recommended ECMs
– offers a preliminary estimate of savings
– establishes baseline conditions
– offers technical recommendations
– estimates payback periods
Note: the Audit
is an Estimate!
 Don’t expect “a bulls eye”, it’s the
first approximation of the project
 Use this as an opportunity to
evaluate the utility’s technical
ability and compatibility
 It’s all negotiable (technical and
price) until the contract is signed
Evaluating the Audit
 Place more weight on technical factors
and approach over price
 Distinguish between significant issues
that could affect project
economics/feasibility and lesser details
that can be fixed in negotiation
Focus the Evaluation
 Is the ECM package reasonable and does it
provide solutions to site problems?
 Are estimates of energy and O&M savings
reasonable?
 Are assumptions, analyses and calculations
clear and credible?
– ECM costs, simple payback, energy and cost
savings
Keep The Evaluation Focus
 Were requested items included?
 Are you comfortable with what you see?
 Do you think this is a good fit for your
continued partnership?
Make the Go/ No Go Decision
 You make the call
– Will you say thank you and go separate
ways?
– Will you ask for revisions?
– Will you approve the audit and move
forward?
Exercise:
Examining Audit Results
Establish
Contract Terms
and Conditions
 Incorporating terms
and conditions
 Interest rate
 Issue and evaluate
 Negotiate
 CO signs
contractual
documents
UESC Vehicles
 Areawide Contract (AWC)
– Task order placed underneath to establish
terms and conditions for energy
management services
 Site Specific Contract
 Basic Ordering Agreement (BOA)/
Agency Master Agreement
GSA Areawide
Users Manual
Construction and
Service Contracts
 Most UESCs are a combination construction/
service contract. Utilization of FAR clauses is
dependent on type of work
– Determined by project specs and CO (Navy
considers contracts to be pure construction)
– For project’s design activities and performance
phase activities (O&M, M&V), use FAR clauses for
services
– For project’s installation activities, use FAR
clauses for construction.
Construction and
Service Contracts
 Wages and rates
– Davis Bacon rates for construction, Services
Contract Act rates for services
 Warranty
– FAR 52.246-20 for construction, FAR 52.246-21
for services
 Payment and performance bonds
– Requirements determined by CO, utility letter of
credit is low cost option
– FAR 28.102 or 52.228-15 for construction, FAR
28.103 or 52.228-16 for services
Incorporate Your
Terms and Conditions
 More detail can be incorporated
through the Uniform Contract
Format
 Specific detail for each additional
project phase is incorporated in task
orders associated with the phase
– TO for Feasibility Study, TO for
Engineering & Design Package, TO for
Construction & Installation
Uniform Contract Format
 Part I: The Schedule
 Part II: Contract Clauses
 Part III: List of Documents, Exhibits, and
Other Attachments
 Part IV: Representations and
Instructions
Section B: Supplies or
Services and Prices/Cost
 Required supplies and services
 Total price (minimum/maximum)
 Ordering
 Utility margins
Section C: Descriptions/
Specs/Work Statement
Use performance specifications. Prescriptive
specifications should be used only when necessary.
 General Requirements/ Project Scope
 ECMs- types and restrictions
 Facility Performance Requirements
 M&V of ECM Performance
 Installation Requirements
 O&M, Repair, Response Time, Training
 Subcontractors
Section E: Inspection and
Acceptance
 Inspection requirements
 Acceptance requirements
 Warranty of service
Section F: Deliveries or
Performance
 Period of performance
 Principal place of performance
 Deliverables
Section G: Contract
Administration Data
 Invoicing Instructions
 Invoice submittals for TO projects
Section H: Special Contract
Requirements
 Wage determination
 Title and ownership of equipment:
– Government decides who retains title during the
contract term (taxes, subsidies and interest are
impacted)
 Payment and performance bond
requirements
– Performance bonds on typical construction
contract carry a penal sum of 100% of the price of
implementation phase.
– Payment bonds carry a penal sum of 40% if the
project is 1-5 million dollars
Section H: Special Contract
Requirements
 Financier protection
– Assignment of claims (direct finance
payment to financier)
– Notification to government of problems
 Buy-down provisions
– Index formula vs. fixed schedule
– decide to either decrease the payment or
reduce the term
Loan Amortization Schedule
 Termination for convenience (FAR 52.249-2)
 Required by financiers
 Mutually agreed upon by agency, utility and
financier
 Buy-out options:
– Add lender fees to capital portion of termination
schedule
– Increase the interest rate to accommodate risk
– Leave it open to be agreed upon at time of buy-out
– Indexed formula (recommended)
Termination contracts- FAR 49, FAR 52.217-2
Section I: Contract Clauses
Section J: List of Attachments
 I: Clauses incorporated by reference
 J: Definition of terms applicable to
contract, Required schedules
Section L: Instructions,
Conditions & Notice to Offerors
 For each ECM in technical proposal, specify
– Description and purpose
– Current status
– Implementation costs, rebates,
– Annual energy and O&M costs (may not offer
O&M)
– Life-cycle cost analysis
– Commissioning plan (Commission guide on FEMP
web site)
– M&V (if requested)
– Guaranteed savings, if requested (Not offered by
all utilities)
Section L: Instructions,
Conditions & Notice to Offerors
 Requirements for price proposal
– Specify cost reasonableness verification
method
• Explanation of equipment choices
• Number of vendor quotes for generic
equipment
• Competition for subcontractors
Section M: Proposal
Evaluation Factors
 Demonstrated knowledge of site
requirements and constraints
 Complete and accurate description of
technologies
 Evaluation of all directed ECMs
 Management Plan
 Construction schedule
 Quality control plan
 Price reasonableness demonstration
Optional Elements that Impact
Interest Rate
 Cost savings guarantee
– is more risky to financier, could add up to
2-3%
 Performance guarantee:
– provides energy savings incentive to utility
 Level of M&V
 Responsibility for O&M
10 Ways to Lower
Financing Costs
 Time is money– don’t delay
 Learn about financing
 Use standard terms and conditions
 Negotiate prepayment formula
 Include assignment of claims
 Ask for appropriate M&V
 Don’t buy a rate lock
 Bundle ECMs
 Annual instead of monthly payments
 Compare rates
Contractual Documents
 Your contracting documents are
determined by agency procedure
 Reach agreement with utility
 Utility signs, agency CO signs and
project proceeds
The
Feasibility Study
 Issue Task
Order for Study
 The feasibility
study
 Agency review
Go/
No go Decision
Stop and $
Feasibility Study
 Definition: an investment-grade review
of the site’s condition & potential
efficiency improvements, and a
detailed assessment of both the
technical and economic viability of the
proposed ECMs.
What the Feasibility Study
Should Include
Verifies the audit assumptions
 Technical
– Building physical conditions
– Hours of use or occupancy
– Areas and use of conditioned space
– Inventory of energy consuming
equipment or systems
– Inventory of energy consuming
equipment operating conditions & loads
– Baseline weather
What the Feasibility Study
Should Include
 For price
– Estimated annual operating cost
– Project cost by ECM
– Estimated annual cost savings by ECM
– Unit cost by major components and
systems
– LCC analysis
– Breakdown of implementation cost and
estimate of annual energy savings
What the Feasibility Study
Should Include
 Other
– O&M plan
– M&V plan
– Guaranteed performance/savings
Ensure that individual ECM schedules
don’t interfere with mission activities
What to Look for When
Evaluating the Study
 Inclusion of all required ECMs
 Reasonable savings for each ECM
 Reasonable baseline
 Reasonable assumptions and
interaction of multiple ECMs
 Inclusion of ECMs for water and
renewables
More Things to Look For When
Evaluating the Study
 Fuel neutrality
 Price reasonableness
 Reasonable financing rate
 Savings that exceed payments
 Reasonable term
 Recognition of site-specific issues
 Consideration of environmental benefits
The Economic Review of the
Feasibility Study
 Check to see if the utility looked at the rate
schedule when calculating savings
 Analyze the project implementation costs
– Use cost estimating handbooks and past
experience to compare
– Consider level of competition among
subcontractors
 Examine adders: project management, hourly
rate, OH and profit (both % and basis), taxes
 Consider early ECM payoffs and financial
impacts
Take a Look at the Estimate of
Energy and Cost Savings
 ECM baseline consistent with requirements
 Acceptable ECM assumptions
– Operating hours
– Weather data
 Acceptable variance between audit and final
figure in feasibility study
 Compare with an independent estimate and
check the savings calculations
Evaluating Optional Items
 Does what you see comply with the levels
you asked for?
 Will O&M be conducted by in-house staff or
through the utility’s subcontractor
– O&M handled by someone other than the utility
will require a performance guarantee
– do you still want it?
 M&V cost benefit analysis
– the FEMP M&V Guidelines provide information on
available options
Why M&V
 The Guidelines are grouped into four
categories or options (A, B, C, & D).
– Each option is a generic approach to
measurement and verification of energy
and water projects
– The options address accuracy and risk
allocation
Option A – Engineering
Calculations
 A stipulated approach which may
include measured values at the retrofit
 Example: Lighting retrofits
– Based on calculated energy savings and
time of use schedules or light loggers
Option B – Metering and
Monitoring
 A measurement approach which may
include spot, short term or continuous
measurement at the retrofit
 Example: Variable Speed Drives
– Based on actual, measured motor speed
and corresponding monitored run time
Option C – Utility Meter Billing
Analysis
 An approach which studies the overall energy
use through utility billing data analysis
– Derived from long term, whole-building, facility or
sub-metered data analysis
 Example: Building Envelope
– Used when the conserving measures cannot be
measured directly.
– Used when the anticipated energy savings is at
least 20% of the total metered energy use.
Option D – Computer
Simulation
 A computer simulation modeling at the
retrofit or the building level
 Example: New Construction
– Based on a comparison of the building
energy use without energy and water
measures less the energy use with
conserving measures installed
M&V Plan
Key Elements
 Clarify the objectives
 Determine the baseline approach
– Consider the building characteristics, intended
measures and interaction between measures
 Specify the option to be used for each measure
– Identify methods and procedures of data gathering and
analysis for each measure
 Indicate the reporting format and schedule
 Identify budget impacts and resource
requirements
M&V Results
ECMs
installed here
Baseline
Baseline or adjusted baseline
Avoided use or savings
Measured or calculated performance
Time
Make the Go/No Go Decision
 You make the call
– Will you say thank you and go separate
ways?
– Will you approve or modify the feasibility
study and issue a TO for the next step?
 If you opt out here, you pay the fee
established in the task order