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UESC Project IdentificationUESC Project Identification
The Utility Audit
Preliminary issuesPreliminary issues
Arranging the audit Arranging the audit
Kickoff meetingKickoff meeting
The auditThe audit
The audit resultsThe audit results
Establish Terms & Conditions
Key sectionsKey sections
Interest rateInterest rate
Issue and evaluate Issue and evaluate
Negotiate Negotiate
CO signs CO signs contractual contractual documentsdocuments
The Feasibility Study
CO issues TO for CO issues TO for StudyStudy
The feasibility The feasibility studystudy
Agency reviewAgency review
Stop and $/Stop and $/Go to Engineering & Go to Engineering &
Design Design
Go/ No go Decision
Go/ No go Decision
The Utility AuditThe Utility Audit Preliminary issuesPreliminary issues
Arranging the audit Arranging the audit
Kickoff meetingKickoff meeting
The auditThe audit
The audit resultsThe audit resultsGo/ No go Decision
Working the Working the Preliminary IssuesPreliminary Issues
Contact your utility to find out audit Contact your utility to find out audit offers and any associated feesoffers and any associated fees
Meet with your acquisition team and Meet with your acquisition team and decision makers to establish decision makers to establish concurrenceconcurrence
Arranging for Arranging for the Audit the Audit
Contact your utility and request the Contact your utility and request the auditaudit– Provide some form of written Provide some form of written
documentation that says whether or not documentation that says whether or not the service is for free or feethe service is for free or fee
– Designate your agencies COTRDesignate your agencies COTRSchedule a kick-off meeting with the Schedule a kick-off meeting with the
utility and key acquisition team utility and key acquisition team players players App. 4
Hosting Your Hosting Your Audit Kick-off MeetingAudit Kick-off Meeting
Establish your project expectationsEstablish your project expectationsHand over your collected facility dataHand over your collected facility dataShare the outcomes of the acquisition Share the outcomes of the acquisition
strategy developmentstrategy development– Make site specific needs & constraints Make site specific needs & constraints
clearclear– Answer all questions completelyAnswer all questions completely
Arrange a tour of the facility (notify your Arrange a tour of the facility (notify your tenants)tenants)
The Partnership The Partnership Begins HereBegins Here
Remember: This is not traditional Remember: This is not traditional contracting! Success depends on contracting! Success depends on open communication.open communication.
By minimizing utility’s costs you By minimizing utility’s costs you maximize government’s value.maximize government’s value.
Consider a formal partnering Consider a formal partnering sessionsession
The AuditThe Audit
Utility collects and reviews utility bills, Utility collects and reviews utility bills, purchased fuels data and metered datapurchased fuels data and metered data– Evaluation of utility rate schedule optionsEvaluation of utility rate schedule options
Utility performs a site visit to look at:Utility performs a site visit to look at:– the operation and use of buildings, building the operation and use of buildings, building
envelope and systemsenvelope and systems• O&M procedures, insulation of pipes and tanksO&M procedures, insulation of pipes and tanks
– all energy consuming equipmentall energy consuming equipment• Lighting, heating and cooling, motors, hot water Lighting, heating and cooling, motors, hot water
– the utility systemsthe utility systems
The Audit ResultsThe Audit Results
Utility provides report that:Utility provides report that:– documents existing equipmentdocuments existing equipment– describes recommended ECMsdescribes recommended ECMs– offers a preliminary estimate of savingsoffers a preliminary estimate of savings– establishes baseline conditionsestablishes baseline conditions– offers technical recommendationsoffers technical recommendations– estimates payback periodsestimates payback periods
Note: the Audit Note: the Audit is an Estimate!is an Estimate!
Don’t expect “a bulls eye”, it’s the Don’t expect “a bulls eye”, it’s the first approximation of the projectfirst approximation of the project
Use this as an opportunity to Use this as an opportunity to evaluate the utility’s technical evaluate the utility’s technical ability and compatibilityability and compatibility
It’s all negotiable (technical and It’s all negotiable (technical and price) until the contract is signedprice) until the contract is signed
Evaluating the AuditEvaluating the Audit
Place more weight on technical factors Place more weight on technical factors and approach over priceand approach over price
Distinguish between significant issues Distinguish between significant issues that could affect project that could affect project economics/feasibility and lesser details economics/feasibility and lesser details that can be fixed in negotiation that can be fixed in negotiation
Focus the EvaluationFocus the Evaluation
Is the ECM package reasonable and does it Is the ECM package reasonable and does it provide solutions to site problems?provide solutions to site problems?
Are estimates of energy and O&M savings Are estimates of energy and O&M savings reasonable?reasonable?
Are assumptions, analyses and calculations Are assumptions, analyses and calculations clear and credible?clear and credible?– ECM costs, simple payback, energy and cost ECM costs, simple payback, energy and cost
savingssavings
Keep The Evaluation FocusKeep The Evaluation Focus
Were requested items included?Were requested items included?Are you comfortable with what you see?Are you comfortable with what you see?Do you think this is a good fit for your Do you think this is a good fit for your
continued partnership?continued partnership?
Make the Go/ No Go DecisionMake the Go/ No Go Decision
You make the callYou make the call– Will you say thank you and go separate Will you say thank you and go separate
ways?ways?– Will you ask for revisions?Will you ask for revisions?– Will you approve the audit and move Will you approve the audit and move
forward?forward?
Exercise: Exercise: Examining Audit ResultsExamining Audit Results
Establish Establish Contract Terms Contract Terms and Conditionsand Conditions
Incorporating terms Incorporating terms and conditionsand conditions
Interest rateInterest rate
Issue and evaluate Issue and evaluate
Negotiate Negotiate
CO signs CO signs contractual contractual documentsdocuments
UESC VehiclesUESC Vehicles
Areawide Contract (AWC) Areawide Contract (AWC) – Task order placed underneath to establish Task order placed underneath to establish
terms and conditions for energy terms and conditions for energy management servicesmanagement services
Site Specific Contract Site Specific Contract Basic Ordering Agreement (BOA)/ Basic Ordering Agreement (BOA)/
Agency Master AgreementAgency Master Agreement
GSA Areawide GSA Areawide Users ManualUsers Manual
App. 3
Construction and Construction and Service ContractsService Contracts
Most UESCs are a combination construction/ Most UESCs are a combination construction/ service contract. Utilization of FAR clauses is service contract. Utilization of FAR clauses is dependent on type of work dependent on type of work– Determined by project specs and CO (Navy Determined by project specs and CO (Navy
considers contracts to be pure construction)considers contracts to be pure construction)– For project’s design activities and performance For project’s design activities and performance
phase activities (O&M, M&V), use FAR clauses for phase activities (O&M, M&V), use FAR clauses for servicesservices
– For project’s installation activities, use FAR For project’s installation activities, use FAR clauses for construction.clauses for construction.
Construction and Construction and Service ContractsService Contracts
Wages and ratesWages and rates– Davis Bacon rates for construction, Services Davis Bacon rates for construction, Services
Contract Act rates for servicesContract Act rates for services WarrantyWarranty
– FAR 52.246-20 for construction, FAR 52.246-21 for FAR 52.246-20 for construction, FAR 52.246-21 for servicesservices
Payment and performance bondsPayment and performance bonds– Requirements determined by CO, utility letter of Requirements determined by CO, utility letter of
credit is low cost optioncredit is low cost option– FAR 28.102 or 52.228-15 for construction, FAR FAR 28.102 or 52.228-15 for construction, FAR
28.103 or 52.228-16 for services28.103 or 52.228-16 for services
Incorporate Your Incorporate Your Terms and ConditionsTerms and Conditions
More detail can be incorporated More detail can be incorporated through the Uniform Contract through the Uniform Contract FormatFormat
Specific detail for each additional Specific detail for each additional project phase is incorporated in task project phase is incorporated in task orders associated with the phaseorders associated with the phase– TO for Feasibility Study, TO for TO for Feasibility Study, TO for
Engineering & Design Package, TO for Engineering & Design Package, TO for Construction & InstallationConstruction & Installation
Uniform Contract FormatUniform Contract Format
Part I: The SchedulePart I: The SchedulePart II: Contract ClausesPart II: Contract ClausesPart III: List of Documents, Exhibits, and Part III: List of Documents, Exhibits, and
Other AttachmentsOther AttachmentsPart IV: Representations and Part IV: Representations and
InstructionsInstructions
Section B: Supplies or Section B: Supplies or Services and Prices/CostServices and Prices/Cost
Required supplies and servicesRequired supplies and servicesTotal price (minimum/maximum)Total price (minimum/maximum)Ordering Ordering Utility marginsUtility margins
Section C: Descriptions/ Section C: Descriptions/ Specs/Work StatementSpecs/Work Statement
General Requirements/ Project ScopeGeneral Requirements/ Project ScopeECMs- types and restrictionsECMs- types and restrictionsFacility Performance RequirementsFacility Performance RequirementsM&V of ECM PerformanceM&V of ECM Performance Installation RequirementsInstallation RequirementsO&M, Repair, Response Time, TrainingO&M, Repair, Response Time, TrainingSubcontractorsSubcontractors
Use performance specifications. Prescriptive Use performance specifications. Prescriptive specifications should be used only when necessary.specifications should be used only when necessary.
Section E: Inspection and Section E: Inspection and AcceptanceAcceptance
Inspection requirementsInspection requirementsAcceptance requirementsAcceptance requirementsWarranty of serviceWarranty of service
Section F: Deliveries or Section F: Deliveries or PerformancePerformance
Period of performancePeriod of performancePrincipal place of performancePrincipal place of performanceDeliverablesDeliverables
Section G: Contract Section G: Contract Administration DataAdministration Data
Invoicing InstructionsInvoicing InstructionsInvoice submittals for TO projectsInvoice submittals for TO projects
Section H: Special Contract Section H: Special Contract RequirementsRequirements
Wage determination Wage determination Title and ownership of equipment:Title and ownership of equipment:
– Government decides who retains title during the Government decides who retains title during the contract term (taxes, subsidies and interest are contract term (taxes, subsidies and interest are impacted)impacted)
Payment and performance bond requirementsPayment and performance bond requirements– Performance bonds on typical construction contract Performance bonds on typical construction contract
carry a penal sum of 100% of the price of carry a penal sum of 100% of the price of implementation phase. implementation phase.
– Payment bonds carry a penal sum of 40% if the Payment bonds carry a penal sum of 40% if the project is 1-5 million dollarsproject is 1-5 million dollars
Section H: Special Contract Section H: Special Contract RequirementsRequirements
Financier protectionFinancier protection– Assignment of claims (direct finance Assignment of claims (direct finance
payment to financier)payment to financier)– Notification to government of problemsNotification to government of problems
Buy-down provisionsBuy-down provisions– Index formula vs. fixed scheduleIndex formula vs. fixed schedule– decide to either decrease the payment or decide to either decrease the payment or
reduce the termreduce the term
Loan Amortization ScheduleLoan Amortization Schedule
Termination for convenience (Termination for convenience (FAR 52.249-2) Required by financiersRequired by financiers Mutually agreed upon by agency, utility and Mutually agreed upon by agency, utility and
financierfinancier Buy-out optionsBuy-out options::
– Add lender fees to capital portion of termination Add lender fees to capital portion of termination scheduleschedule
– Increase the interest rate to accommodate riskIncrease the interest rate to accommodate risk– Leave it open to be agreed upon at time of buy-out Leave it open to be agreed upon at time of buy-out – Indexed formula (recommended)Indexed formula (recommended)
Termination contracts- FAR 49, FAR 52.217-2
Section I: Contract ClausesSection I: Contract Clauses Section J: List of Attachments Section J: List of Attachments
I: Clauses incorporated by referenceI: Clauses incorporated by referenceJ: Definition of terms applicable to J: Definition of terms applicable to
contract, Required schedulescontract, Required schedules
Section L: Instructions, Section L: Instructions, Conditions & Notice to Offerors Conditions & Notice to Offerors
For each ECM in technical proposal, specify For each ECM in technical proposal, specify – Description and purposeDescription and purpose– Current statusCurrent status– Implementation costs, rebates, Implementation costs, rebates, – Annual energy and O&M costs (may not offer O&M)Annual energy and O&M costs (may not offer O&M)– Life-cycle cost analysisLife-cycle cost analysis– Commissioning plan (Commission guide on FEMP Commissioning plan (Commission guide on FEMP
web site)web site)– M&V (if requested)M&V (if requested)– Guaranteed savings, if requested (Not offered by all Guaranteed savings, if requested (Not offered by all
utilities)utilities)
Section L: Instructions, Section L: Instructions, Conditions & Notice to Offerors Conditions & Notice to Offerors
Requirements for price proposalRequirements for price proposal– Specify cost reasonableness verification Specify cost reasonableness verification
methodmethod• Explanation of equipment choicesExplanation of equipment choices• Number of vendor quotes for generic Number of vendor quotes for generic
equipmentequipment• Competition for subcontractorsCompetition for subcontractors
Section M: Proposal Evaluation Section M: Proposal Evaluation FactorsFactors
Demonstrated knowledge of site Demonstrated knowledge of site requirements and constraintsrequirements and constraints
Complete and accurate description of Complete and accurate description of technologiestechnologies
Evaluation of all directed ECMsEvaluation of all directed ECMs Management PlanManagement Plan Construction scheduleConstruction schedule Quality control planQuality control plan Price reasonableness demonstration Price reasonableness demonstration
Optional Elements that Impact Optional Elements that Impact Interest RateInterest Rate
Cost savings guarantee Cost savings guarantee – is more risky to financier, could add up to is more risky to financier, could add up to
2-3%2-3%
Performance guarantee: Performance guarantee: – provides energy savings incentive to utilityprovides energy savings incentive to utility
Level of M&VLevel of M&VResponsibility for O&MResponsibility for O&M
10 Ways to Lower 10 Ways to Lower Financing CostsFinancing Costs
Time is money– don’t delayTime is money– don’t delay Learn about financingLearn about financing Use standard terms and conditionsUse standard terms and conditions Negotiate prepayment formulaNegotiate prepayment formula Include assignment of claims Include assignment of claims Ask for appropriate M&VAsk for appropriate M&V Don’t buy a rate lockDon’t buy a rate lock Bundle ECMsBundle ECMs Annual instead of monthly paymentsAnnual instead of monthly payments Compare ratesCompare rates
App. 5
Contractual DocumentsContractual Documents
Your contracting documents are Your contracting documents are determined by agency proceduredetermined by agency procedure
Reach agreement with utilityReach agreement with utilityUtility signs, agency CO signs and Utility signs, agency CO signs and
project proceedsproject proceeds
The The Feasibility StudyFeasibility Study
Issue Task Issue Task Order for StudyOrder for Study
The feasibility The feasibility studystudy
Agency reviewAgency review
Go/No go Decision
Stop and $
Feasibility StudyFeasibility Study
Definition: an investment-grade review Definition: an investment-grade review of the site’s condition & potential of the site’s condition & potential efficiency improvements, and a efficiency improvements, and a detailed assessment of both the detailed assessment of both the technical and economic viability of the technical and economic viability of the proposed ECMs.proposed ECMs.
What the Feasibility Study What the Feasibility Study Should IncludeShould Include
Technical Technical – Building physical conditionsBuilding physical conditions– Hours of use or occupancyHours of use or occupancy– Areas and use of conditioned spaceAreas and use of conditioned space– Inventory of energy consuming Inventory of energy consuming
equipment or systems equipment or systems – Inventory of energy consuming Inventory of energy consuming
equipment operating conditions & loadsequipment operating conditions & loads– Baseline weatherBaseline weather
Verifies the audit assumptionsVerifies the audit assumptionsVerifies the audit assumptionsVerifies the audit assumptions
App. 4
What the Feasibility Study What the Feasibility Study Should IncludeShould Include
For priceFor price– Estimated annual operating costEstimated annual operating cost– Project cost by ECMProject cost by ECM– Estimated annual cost savings by ECMEstimated annual cost savings by ECM– Unit cost by major components and Unit cost by major components and
systemssystems– LCC analysisLCC analysis– Breakdown of implementation cost and Breakdown of implementation cost and
estimate of annual energy savingsestimate of annual energy savings
What the Feasibility Study What the Feasibility Study Should IncludeShould Include
OtherOther– O&M planO&M plan– M&V planM&V plan– Guaranteed performance/savingsGuaranteed performance/savings
Ensure that individual ECM schedules Ensure that individual ECM schedules don’t interfere with mission activitiesdon’t interfere with mission activities
Ensure that individual ECM schedules Ensure that individual ECM schedules don’t interfere with mission activitiesdon’t interfere with mission activities
What to Look for When What to Look for When Evaluating the StudyEvaluating the Study
Inclusion of all required ECMsInclusion of all required ECMsReasonable savings for each ECMReasonable savings for each ECMReasonable baselineReasonable baselineReasonable assumptions and Reasonable assumptions and
interaction of multiple ECMsinteraction of multiple ECMsInclusion of ECMs for water and Inclusion of ECMs for water and
renewablesrenewables
More Things to Look For When More Things to Look For When Evaluating the StudyEvaluating the Study
Fuel neutralityFuel neutralityPrice reasonablenessPrice reasonablenessReasonable financing rateReasonable financing rateSavings that exceed paymentsSavings that exceed paymentsReasonable termReasonable termRecognition of site-specific issuesRecognition of site-specific issuesConsideration of environmental benefitsConsideration of environmental benefits
The Economic Review of the The Economic Review of the Feasibility StudyFeasibility Study
Check to see if the utility looked at the rate Check to see if the utility looked at the rate schedule when calculating savingsschedule when calculating savings
Analyze the project implementation costsAnalyze the project implementation costs– Use cost estimating handbooks and past Use cost estimating handbooks and past
experience to compareexperience to compare– Consider level of competition among subcontractorsConsider level of competition among subcontractors
Examine adders: project management, hourly Examine adders: project management, hourly rate, OH and profit (both % and basis), taxesrate, OH and profit (both % and basis), taxes
Consider early ECM payoffs and financial Consider early ECM payoffs and financial impactsimpacts
Take a Look at the Estimate of Take a Look at the Estimate of Energy and Cost SavingsEnergy and Cost Savings
ECM baseline consistent with requirementsECM baseline consistent with requirements Acceptable ECM assumptionsAcceptable ECM assumptions
– Operating hoursOperating hours– Weather dataWeather data
Acceptable variance between audit and final Acceptable variance between audit and final figure in feasibility studyfigure in feasibility study
Compare with an independent estimate and Compare with an independent estimate and check the savings calculationscheck the savings calculations
Evaluating Optional ItemsEvaluating Optional Items
Does what you see comply with the levels Does what you see comply with the levels you asked for? you asked for?
Will O&M be conducted by in-house staff or Will O&M be conducted by in-house staff or through the utility’s subcontractorthrough the utility’s subcontractor– O&M handled by someone other than the utility O&M handled by someone other than the utility
will require a performance guarantee will require a performance guarantee – do you still want it?do you still want it?
M&V cost benefit analysisM&V cost benefit analysis– the the FEMP M&V GuidelinesFEMP M&V Guidelines provide information on provide information on
available options available options
Why M&VWhy M&VThe GuidelinesThe Guidelines are grouped into four are grouped into four
categories or options (A, B, C, & D). categories or options (A, B, C, & D). – Each option is a generic approach to Each option is a generic approach to
measurement and verification of energy measurement and verification of energy and water projectsand water projects
– The options address accuracy and risk The options address accuracy and risk allocation allocation
Option A – Engineering Option A – Engineering CalculationsCalculations
A stipulated approach which may A stipulated approach which may includeinclude measured values at the retrofit measured values at the retrofit
Example: Lighting retrofitsExample: Lighting retrofits– Based on calculated energy savings and Based on calculated energy savings and
time of use schedules or light loggerstime of use schedules or light loggers
Option B – Metering and Option B – Metering and MonitoringMonitoring
A measurement approach which may A measurement approach which may include sinclude spot, short term or continuous pot, short term or continuous measurement at the retrofitmeasurement at the retrofit
Example: Variable Speed DrivesExample: Variable Speed Drives– Based on actual, measured motor speed Based on actual, measured motor speed
and corresponding monitored run time and corresponding monitored run time
Option C – Utility Meter Billing Option C – Utility Meter Billing AnalysisAnalysis
An approach which studies the overall energy An approach which studies the overall energy use through use through utility billing data analysisutility billing data analysis– Derived from long term, whole-building, facility or Derived from long term, whole-building, facility or
sub-metered data analysissub-metered data analysis
Example: Building EnvelopeExample: Building Envelope– Used when the conserving measures cannot be Used when the conserving measures cannot be
measured directly.measured directly.– Used when the anticipated energy savings is at Used when the anticipated energy savings is at
least 20% of the total metered energy use.least 20% of the total metered energy use.
Option D – Computer Option D – Computer SimulationSimulation
A cA computer simulation modeling at the omputer simulation modeling at the retrofit or the building levelretrofit or the building level
Example: New ConstructionExample: New Construction– Based on a comparison of the building Based on a comparison of the building
energy use without energy and water energy use without energy and water measures less the energy use with measures less the energy use with conserving measures installedconserving measures installed
M&V PlanM&V PlanKey ElementsKey Elements
Clarify the objectivesClarify the objectives Determine the baseline approach Determine the baseline approach
– Consider the building characteristics, intended Consider the building characteristics, intended measures and interaction between measuresmeasures and interaction between measures
Specify the option to be used for each measureSpecify the option to be used for each measure– Identify methods and procedures of data gathering and Identify methods and procedures of data gathering and
analysis for each measureanalysis for each measure
Indicate the reporting format and scheduleIndicate the reporting format and schedule Identify budget impacts and resource Identify budget impacts and resource
requirementsrequirements
M&V ResultsM&V ResultsM&V ResultsM&V Results
BaselineBaseline
En
erg
y U
sag
eE
ner
gy
Usa
ge
ECMs installed here
ECMs installed here
BaselineBaseline or adjusted baselineor adjusted baseline
Measured or calculated performanceMeasured or calculated performance
TimeTime
Avoided use or savings
Make the Go/No Go DecisionMake the Go/No Go Decision
You make the callYou make the call– Will you say thank you and go separate Will you say thank you and go separate
ways?ways?– Will you approve or modify the feasibility Will you approve or modify the feasibility
study and issue a TO for the next step? study and issue a TO for the next step?
If you opt out here, you pay the fee If you opt out here, you pay the fee established in the task orderestablished in the task order