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DEPARTMENT OF THE AIR FORCE HEADQUARTERS AIR FORCE CIVIL ENGINEER SUPPORT AGENCY APPROVED FOR PUBLIC RELEASE: DISTRIBUTION UNLIMITED FROM: HQ AFCESA/CEO 139 Barnes Drive Suite 1 Tyndall AFB FL 32403-5319 SUBJECT: HQ USAF/A7C Policy on Energy Savings Perf ormance and Utility Energy Service Contracts (ESPC/UESC), AFPD 32-10, Installations and Facilities http://www.e-publishing.af.mil/ DFARS 241.201, Acquiring Utility Services - Policy http://farsite.hill.af.mil/VFDFARA.htm HQ USAF/A7C A4&Tab=0&FolderID=OO-EN-CE-A4-16 Executive Order (E.O.): E.O. 13423, Transportation Management E.O. 13514, Performance http://www.archives.gov/federal-register/executive-orders/2009- P.L. 109-58, Energy Policy ction.action?collectionCode=PLAW P.L. 110-140, Energy Independence and Se ction.action?collectionCode=PLAW 10 U.S.C. 2911, Performance Goals 10 U.S.C. 2912, Availability and Use of Energy Cost Savings 10 U.S.C. 2913, Energy Savi ngs Contracts and Activities 31 U.S.C. 1301, Purpose Act 42 U.S.C. 8287, National Energy 42 U.S.C. 8253, Energy Policy Act of 1992 ctionUScode.action?collectionCode=US 10 CFR 436, Federal Acquisition Regulation (FAR): FAR 6.302-5, Circumstances permitting other FAR 31.205-7, https://www.acquisition.gov/far/ NIST Handbook 135, National Institute of Standards and Technology Interagency Report (NISTIR) Energy Price Indices and Discount Factors for Life-Cycle Cost Analysis ( lement to NIST Handbook 135, Guide to Government Witnessing and Re /financing/espcs_resources.html https://afkm.wpafb.af.mil/Links/Admin/EditGroup.aspx?GroupID=24882&Filter=OO- International Performance Measurem http://www.nrel.gov/docs/fy02osti/31505.pdf 5. Acronyms and Terms: base civil engineer CE Code of Federal Regulations CoP – Community of Practice COR – contracting officer representative Executive Order ESCO HQ AFCESA Air Force Civil Engineer Support Agency HQ AFCESA/CENE Air Force Civil Engineer Support Conservation Branch HQ USAF/A7C – Office of the Air Force Civil Engineer IDIQ – indefinite deliver investment grade audit for DOE contracts military family housing NAF NIST National Institute of Standards and Technology National Institute of Standards and Technology PA – preliminary assessment for DOE contracts PF AF Regional ESPC - Initial energy audit of selected facilities ings, excluding leased buildings (unless leased from another f utility bill. ESPCs are typica lly considered for increasing energy efficiency through improvements to base infrastructure, buildings, and building systems. However, ed to, data center computer equipment; proc ess equipment; or research, development, test and preliminary assessments (PA) and invest acquire energy-conserving infrastructure improvements under the condition that he base do not increase as a result of the contract and contractor. The savings generat he contractor’s (ESCO’s) sufficient savings to cover all costs associated with an energy conservation Generally recurring reductions in ex related to energy-consuming equipment, generally affecting operations, maintenance, renewal or repair expenses of equipment; One-time energy-related cost sa vings can result from avoided ions and maintenance, repair and replacement, The ESCO is responsible for the design, acquisition, installation, M&V, and maintenance of the energy conservati on project’s (ECP) equipment or systems not a design-build contract—it is a s the ESCO to guarantee the savings generated by, and the operation of, t he installed ECP equipment. This and materials that affect this guarantee upon the ESCO. This guarantee must be satisfied and verified at the acceptanc e of the ECP equipmen Certain risks are always associated ESPC for both assumes the risk of any stipulations, including utility rates, hours of operation, and mission changes, during the life of the TO. These risks require a thorough unde unnecessary risks. The ESCO assumes the risk for the performance of the implemented ECM through its maintenance responsibility and guarantee of ct. Again, careful consideration is essential to ensure that the Air Force is not assuming any of ide a guarantee of cost savings to the Air Force and establish payment schedules reflecting such guarantee, taking into account any capital costs under the cont ract. The annual guaranteed savings are entage of the calculated ener gy savings. These awarded cash flows) are major factors in perform the maintenance as l Consequently, the language in the TO must clearly state that the ESCO is not transferring this ctor is responsible for maintenance and systems) and there is no funds can be applied to an ESPC. 42 U.S.C. 8287 does not explicitly state where the sa vings may be derived, but it logically follows that utility energy sa vings and avoided maintenance costs can be included. Minor maintenance savings should be justified, normally using historical mentioned. Use caution if applying anticipated cost avoidance to the ESPC due to major repair/replacement that may not be needed because of the ESPC. These items may not data to back up expenditures but should still be justified as a future expense; for expenditures are included as captured savings, the base must be aware that they will become a must-pay bill from O&M funds . Before these funds are included in an tion and agreement. See Paragraph (a)(1) and so the base doesn’t run the risk of a eliminate actual costs or produce actual savings versus avoided costs shall not savings reconciliation must be accomplished for each awarded TO. This requirement includes an approved rnational Performanc 11.1). During the annual reconciliation th must validate that the ESCO’s annual reconciliation requirement is perfo ent schedule to the ESCO upon acceptance of the ECM and commencement of the performance period, which allows for a lower wn a portion of the TO, several steps are necessary: the use of these funds must be identified as soon as possible to the ESCO; the economics must be considered; he equipment must be considered (i.e., in that has a life expectancy of 10 years). Al scheduled payments during the performance period. ons (e.g., removal or demolition of installed ESCO equipment, or mission chan l guaranteed savings falling below annual payments to the ES CO, and the TO term cannot be extended, ECP and/or ECM will be exercised. Ensure that the TO clearly identifies penalties for buyouts. Legislation requires that only O&M savings ment (paragraph 7.5). So, while l investment, there is no such limitation es) that an ESCO can make. This allows for a wider range when considering ESPC pr pment (wind tunnels), and maintenance processes/equipment. As long as the primary savings are energy/water related, thodology across multiple Air Force may require a buyout of such building (e.g., demolition, upgrades, construction, or privatizat ion) will impact the ESPC contractor’s materials/equipment inst or will otherwise alter the conditions of the contract, making ing should consider funds to buy ract. If possible, buyout funds should be Military construction (MILCON) funds be applied to an ESPC. tegory C ECPs must use savings only from other must be coordinated with the NAF funds Military family housing (MFH) funds are appropriated separately and used specifically for MFH purposes. MFH ECPs must use savings only from other MFH ECPs to avoid subsidizing or being s ubsidized by other t han MFH-funded sources. Use of MFH funds for a purpose outside their appropriated use would result in a e Act (31 U.S.C. 1301). Reimbursable customers require separate accounting procedures to ensure that 9. How to Access an ESPC. ough the following contracts, listed in evaluate in accordance wit ed selection criteria and data package, evaluation criteria, ss the ESCO’s commissioning and the annual M&V activities throughout the per Guide to Government Witnessing and Revi ew of Post-Installation and Annual 14 15 authority to the Air Force CO of the reques ting base. If this vehicle is used, the Develops ESPC procedures and guidance . Provides assistance in awarding eloping the ESPC Supports the Air Force RCOs by tracki ng contract ceilings, administering Reviews and provides comment as a clearinghouse for ESPC lessons learned. MAJCOM A7 (CE): technical review and approval per t ENE and DOE FFS for use of DOE Baseline Development. An energy baseline is a pr of energy that would have been used if no energy co st clearly document the ba each ECP. The performance test plan de process, including schedules, responsibil ities, documentati energy savings. The purpose is to test savings. coordination and verification of savings by the base energy manager. lay out, in clear terms, ESCO and base equipment operate, a clear line of demarcation must be identified. In the simplest cases, and only afte r approval by HQ AFCESA, the base base must carefully consider the ultimately responsible, the ESCO will ibuted to utility savings, such as contract-operated functions. Ancillary han energy savings. the government or by a cont ractor hired by the governm the tasks, or eliminates the tasks. Savings must be eement with the ESCO for the new utility system’s owner to buy out that system should privatization take place. 12. Point of Contact. Recommendations for improvement ANDREW A. LAMBERT, Colonel, USAF 6 Atchs t Div. 1. HQ USAF/A7C Policy Memorandum 2. ESPC Considerations for Base Energy Manager 3. Centralized Support Services Atch 1 (1 of 1) ESPC CONSIDERATIONS FOR BASE ENERGY MANAGER ESPC, the base energy TO that best satisfies the Air Force’s stated scope oadest swath of goals and mandates. Do not accept a preliminary report that addresses only technology that the ESCO elected to consider. If the base energy manager is inte rested in the viability of a specific technology and the ESPC contractor states that the proposed technology is not uate proposals. Be certain to consider the cost of maintenance and repairs after e as well as items cost basis, and energy-effi equipment should be used in the project where possible. Future energy commodity pricing is very difficult to predict. Where practicable, consider having building en goals. PC TO as straightforward and clear s of added O&M savings or escalators for cost of fuel and services. Look at each EC Ensure that all variables affecti defined. To the greatest extent practicable, include as many of these variables as eline model. In this way, the energy savings will eather variations, variable remaining variables or for variables that are not expected to change (e.g., non-routine variables such as building square footage, occupancy, size and type of equipment), doc ument these as “static” variables that affect facility energy consumption. If thes e static variables change during the ESPC period. Tour the building and make cannot be included as savings. CENTRALIZED SUPPORT SERVICES This attachment identifies the various support services provided by HQ AFCESA and Participate in periodic project teleco Atch 3 (3 of 3) Base Contracting Officer: Signature/Date EXAMPLE COORDINATION CHECKLIST DOE/Preliminary AF/Phase I (IGA) or AF/Phase II TO Award BCE Funds Manager Energy Manager Design Chief Ops Chief MFH (if required) BASE Comptroller Legal CEO/CEC Funds Manager Energy Manager AFCESA/CENE GUIDE TO GOVERNMENT WITNESSING AND REVIEW OF POST-INSTALLATION AND ANNUAL M&V ACTIVITIES or COR must witness the ESCO’s M&V activities. standing of the awarded M&V pl an to ensure the ESCO thods, procedures, calculations, and other FEMP has written guidance, Guide to Government Witnessing and Review of ESPC contract. It is also useful for other ESPC contract vehicl es (e.g., Air Force Atch 6 (1 of 1) DISTRIBUTION LIST SPECIAL INTEREST ORGANIZATIONS Information Handling Services (1) Construction Criteria Database (1) National Institute of Bldg. Sciences