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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: May 10, 2000

FROM: Barry McVay, CPCM

SUBJECT: Federal Acquisition Regulation (FAR); Energy Efficiency of Supplies and Services

SOURCE: Federal Register, May 10, 2000, Vol. 65, No. 91, page 30309

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that the FAR be amended to implement Executive Order 13123 of June 3, 1999, Greening the Government Through Efficient Energy Management, which directs federal agencies to improve energy management and reduce emissions. This proposed rule would address the procurement of "energy-efficient products" and the use of "energy-savings performance contracts" (ESPCs).

EDITOR'S NOTE: For more on the recent issuance of three other "greening" executive orders (EO 13148, Greening the Government Through Leadership in Environmental Management; EO 13149, Greening the Government Through Federal Fleet and Transportation Efficiency; and EO 13150, Federal Workforce Transportation), see the April 26, 2000, FEDERAL CONTRACTS DISPATCH "'Greening the Government' Executive Orders."

For more on the procurement of products with recovered materials, see the January 19, 2000, FEDERAL CONTRACTS DISPATCH "Comprehensive Guideline for Procurement of Products Containing Recovered Materials and Recovered Materials Advisory Notice III (RMAN III)."

DATES: Submit comments on or before July 10, 2000.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVRS), 1800 F Street, NW., Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, e-mail: farcase.1999-011@gsa.gov. Cite FAR case 1999-011 in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Paul Linfield, Procurement Analyst, 202-501-1757.

SUPPLEMENTAL INFORMATION: EO 13123 directs each government agency to "significantly improve its energy management in order to save taxpayer dollars and reduce emissions that contribute to air pollution and global climate change. With more than 500,000 buildings, the federal government can lead the nation in energy efficient building design, construction, and operation. As a major consumer that spends $200 billion annually on products and services, the federal government can promote energy efficiency, water conservation, and the use of renewable energy products, and help foster markets for emerging technologies." To achieve these aims, EO 13123 established federal goals for greenhouse gas reduction, energy efficiency improvement, energy consumption by industrial and laboratory facilities, expanded use of renewable energy, reduced use of petroleum, reduced total energy use, and water conservation.

To implement EO 13123, the following significant changes to the FAR are proposed:

• Definitions of the following terms would be added to FAR 2.101, Definitions:
  
  
  • "Energy-efficient product" (relocated from FAR 23.704, Policy, and revised to state that such products meet the Department of Energy and Environmental Protection Agency criteria for use of the Energy Star(R) trademark label, or are in the upper 25% of efficiency for all similar products as designated by the Department of Energy's Federal Energy Management Program (FEMP)).
    
    
  • "Energy-savings performance contract" (a contract that requires the contractor to "perform services for the design, acquisition, financing, installation, testing, operation, and where appropriate, maintenance and repair, of an identified energy conservation measure or series of measures at one or more locations; incur the costs of implementing the energy savings measures, including at least the cost (if any) incurred in making energy audits, acquiring and installing equipment, and training personnel in exchange for a predetermined share of the value of the energy savings directly resulting from implementation of such measures during the term of the contract; and guarantee future energy and cost savings to the government").
    
    
  • "Renewable energy" ("energy produced by solar, wind, geothermal, and biomass power").
    
    
  • "Renewable energy technology" ("technologies that use renewable energy to provide light, heat, cooling, or mechanical or electrical energy...including passive solar design").
  
  
  
• To FAR 15.603, General, would be added a paragraph (e) that would alert agencies to "evaluate unsolicited proposals for energy-savings performance contracts in accordance with the procedures in 10 CFR 436.33(b) (Procedures and Methods for Contractor Selection).
  
  
• FAR Subpart 23.2, Energy Conservation, would be revised to include guidance on energy-efficient products and services currently in FAR Subpart 23.7, Contracting for Environmentally Preferable and Energy-Efficient Products and Services, so the focus of Subpart 23.7 would be exclusively on environmentally preferable products and services. FAR Subpart 23.2 would be retitled "Energy and Water Efficiency and Renewable Energy" to reflect this new coverage, and be reorganized as follows:
  
       23.200   Scope.
       23.201   Authorities.
       23.202   Policy.
       23.203   Energy-Efficient Products.
       23.204   Energy-Savings Performance Contracts (ESPC).
  
  FAR 23.203 would require contracting officers to acquire energy-efficient products (that is, Energy Star(R) or FEMP products), or require the specifications for the design, construction, renovation, or maintenance of a public building to specify Energy Star(R) or "other energy efficient products." Also, it would provide the web sites for Energy Star(R) (http://www.energystar.gov/) and for FEMP (http://www.eren.doe.gov/femp/procurement).
  
  FAR 23.204 would state that EO 13123 requires agencies "to use an ESPC, when life-cycle cost-effective, to reduce energy use and cost in the agency's facilities and operations." Under an ESPC, "an agency can contract with an energy service company for a period not to exceed 25 years to improve energy efficiency in one or more agency facilities at no direct capital cost to the United States Treasury. The energy service company finances the capital costs of implementing energy conservation measures and receives, in return, a contractually determined share of the cost savings that result." Contracting officers would be required to follow the procedures in Title 10 of the Code of Federal Regulations (10 CFR), Part 436, Federal Energy Management and Planning Programs, Subpart B, Methods and Procedures for Energy Savings Performance Contracting, and would be permitted to use "the 'Qualified List' of energy service companies established by the Department of Energy and other agencies" (see 10 CFR 436.32, Qualified Contractors Lists).
  
  
• FAR Subpart 23.7 would be retitled "Contracting for Environmentally Preferable Products and Services" to reflect its more limited scope; FAR 23.703, Definitions, would be removed; and paragraph (b) of FAR 23.704, which pertains to energy-efficient products, would be moved to FAR 2.101 (see above).

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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