Overview
This section establishes the federal policy for utilizing Energy Savings Performance Contracts (ESPCs) to improve energy efficiency and reduce operational costs in agency facilities. It encourages the use of private-sector financing to achieve energy goals when projects are life-cycle cost-effective.
Key Rules
- Contract Duration: ESPCs may be awarded for a period not to exceed 25 years.
- Funding Mechanism: The Energy Service Company (ESCO) finances all capital costs for energy conservation measures; the agency repays the ESCO using a contractually determined share of the resulting cost savings.
- Capital Investment: Projects must be structured so there is no direct capital cost to the United States Treasury.
- Mandatory Procedures: Contracting officers must follow the specific procedures, selection methods, and terms found in 10 CFR part 436, subpart B.
- Vendor Selection: Agencies are permitted to use the "Qualified List" of energy service companies maintained by the Department of Energy.
- Multi-year Applicability: ESPCs are generally subject to FAR subpart 17.1 (Multi-year Contracting) requirements, unless specified otherwise by 10 CFR 436.34.
Practical Implications
- This policy allows agencies to modernize aging infrastructure and meet sustainability mandates without seeking specific congressional appropriations for the upfront capital costs.
- Contracting Officers and technical teams must ensure baseline energy consumption is accurately calculated, as the contractor's payment and the project's viability depend entirely on verified savings over the life of the contract.