[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


      PUBLIC-PRIVATE PARTNERSHIPS FOR FEDERAL EMERGENCY MANAGEMENT

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON ENERGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           DECEMBER 12, 2018

                               __________

                           Serial No. 115-176
                           
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                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman

JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas            ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
STEVE SCALISE, Louisiana             DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio                MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington   JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi            G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            PAUL TONKO, New York
BILL JOHNSON, Ohio                   YVETTE D. CLARKE, New York
BILLY LONG, Missouri                 DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana               KURT SCHRADER, Oregon
BILL FLORES, Texas                   JOSEPH P. KENNEDY, III, 
SUSAN W. BROOKS, Indiana             Massachusetts
MARKWAYNE MULLIN, Oklahoma           TONY CARDENAS, California
RICHARD HUDSON, North Carolina       RAUL RUIZ, California
KEVIN CRAMER, North Dakota           SCOTT H. PETERS, California
TIM WALBERG, Michigan                DEBBIE DINGELL, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina

                                 ______

                         Subcommittee on Energy

                          FRED UPTON, Michigan
                                 Chairman
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    JERRY McNERNEY, California
JOHN SHIMKUS, Illinois               SCOTT H. PETERS, California
ROBERT E. LATTA, Ohio                GENE GREEN, Texas
GREGG HARPER, Mississippi            MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia     KATHY CASTOR, Florida
ADAM KINZINGER, Illinois             JOHN P. SARBANES, Maryland
H. MORGAN GRIFFITH, Virginia         PETER WELCH, Vermont
BILL JOHNSON, Ohio                   PAUL TONKO, New York
BILLY LONG, Missouri                 DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana               KURT SCHRADER, Oregon
BILL FLORES, Texas                   JOSEPH P. KENNEDY, III, 
MARKWAYNE MULLIN, Oklahoma               Massachusetts
RICHARD HUDSON, North Carolina       G.K. BUTTERFIELD, North Carolina
KEVIN CRAMER, North Dakota           FRANK PALLONE, Jr., New Jersey (ex 
TIM WALBERG, Michigan                    officio)
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)

                                  (ii)
                             
                             
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     1
    Prepared statement...........................................     3
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     3
    Prepared statement...........................................     4
Hon. Peter Welch, a Representative in Congress from the State of 
  Vermont, opening statement.....................................     5
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, prepared statement.....................................    58

                               Witnesses

Leslie Nicholls, Strategic Director, Federal Emergency Management 
  Program, Department of Energy..................................     7
    Prepared statement...........................................     9
    Additional information submitted for the record..............    50
John E. ``Jack'' Surash, Acting Deputy Assistant Secretary of the 
  Army for Energy and Sustainability.............................    15
    Prepared statement...........................................    16
Kevin Kampschroer, Chief Sustainability Officer and Director, 
  Office of Federal High-Performance Buildings, General Services.    22
    Prepared statement...........................................    24
    Additional information submitted for the record..............    46
Edward L. Bradley III, Executive Director, Office of Asset 
  Enterprise Management, Department of Veterans Affairs..........    29
    Prepared statement...........................................    31

 
      PUBLIC-PRIVATE PARTNERSHIPS FOR FEDERAL EMERGENCY MANAGEMENT

                              ----------                              


                      WEDNESDAY, DECEMBER 12, 2018

                  House of Representatives,
                            Subcommittee on Energy,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:19 a.m., in 
room 2322, Rayburn House Office Building, Hon. Fred Upton 
(chairman of the subcommittee) presiding.
    Members present: Representatives Upton, Olson, Shimkus, 
Latta, McKinley, Kinzinger, Johnson, Long, Bucshon, Flores, 
Mullin, Hudson, Walberg, Duncan, Rush, McNerney, Peters, Green, 
Doyle, Welch, Loebsack, Kennedy, and Butterfield.
    Also present: Representative Guthrie.
    Staff present: Wyatt Ellertson, Professional Staff Member, 
Energy/Environment; Margaret Tucker Fogarty, Staff Assistant; 
Mary Martin, Chief Counsel, Energy/Environment; Sarah Matthews, 
Press Secretary; Brandon Mooney, Deputy Chief Counsel, Energy; 
Mark Ratner, Policy Coordinator; Annelise Rickert, Counsel, 
Energy; Evan Viau, Legislative Clerk, Communications and 
Technology; Rick Kessler, Minority Senior Advisor and Staff 
Director, Energy and Environment; John Marshall, Minority 
Policy Coordinator; Alexander Ratner, Minority Policy Analyst; 
Tuley Wright, Minority Policy Advisor, Energy and Environment; 
and Teresa Williams, AAAS Fellow.
    Mr. Upton. Good morning, everybody. The Subcommittee on 
Energy will now come to order, and the Chair would recognize 
himself for 5 minutes for an opening statement.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Today's hearing, entitled ``Public-Private Partnerships for 
Federal Energy Management,'' will examine a number of recent 
examples, challenges, and opportunities for improving energy 
efficiency in Federal facilities.
    We are primarily focused on two examples of public-private 
partnerships that are managed by the DOE: energy savings 
performance contracts, ESPCs, and utility energy service 
contracts, UESCs.
    I would like to begin by welcoming our four witnesses. We 
are going to have one panel of senior reps from the Department 
of Energy, the Department of Army, the GSA, and the Department 
of Veterans Affairs. Each of our witnesses will share relevant 
examples and lessons learned implementing ESPCs and UESCs at 
their respective agencies.
    The Department of Energy, through the Federal Energy 
Management Program, is the lead agency responsible for 
implementing rules and policies for ESPCs and UESCs. DOE 
collects a wide range of data and information on ESPC and UESC 
use across the Government that is going to help us weigh the 
cost and benefits of these performance contracts. DOE's data is 
also useful to identify trends and measure outcomes related to 
energy and water use.
    I am looking forward to the testimony from GSA, Veterans, 
and the Army. Each of these agencies has well-defined programs 
for ESPCs and UESCs. And if you were to list the agencies that 
award the most contracts, these agencies would be all in the 
top 10.
    However, they each face unique challenges and 
opportunities, depending on the facilities they are 
retrofitting and their specific needs.
    It has been over a decade since Congress amended the 
statute governing ESPCs and UESCs, and I think that most folks 
would agree that it is time to consider improvements in these 
programs. In recent years agencies have used ESPCs and UESCs to 
gather the low-hanging fruit of energy-efficiency upgrades, 
focusing especially on lighting, insulation, and HVAC.
    In the years ahead, we are going to be looking for ESPCs 
and UESCs to continue delivering energy savings. Concepts such 
as deep energy retrofitting are being proposed as a 
facilitywide approach to energy conservation that includes new 
energy management systems, smart sensors, innovative 
technologies, and onsite power generation.
    We have also seen more of a focus on energy resilience with 
agencies utilizing ESPCs and UESCs to harden their grid and 
install backup power generation. For example, with the help of 
performance contracts, Fort Knox recently became the first 
military installation with the capability to unplug entirely 
from the grid utilizing demand management, onsite natural gas, 
geothermal, and renewable energy resources. Good work.
    In order to stay on the cutting edge, Congress may need to 
consider changes to the statute to enable agencies to capture 
the cost savings offered through the most innovative energy 
conservation tools. And given the time that has passed since 
its original drafting, we ought to start by looking at the 
definition of a Federal building and the definition of energy 
savings.
    We ought to also consider how energy-efficiency upgrades 
affect the lifecycle costs of operations and maintenance at the 
facility and ways to harmonize the program with other 
successful programs and goals.
    These issues and several other changes to performance 
contracting authorities are addressed in legislation that has 
already been reported by the committee, H.R. 723, the Energy 
Savings Through Public-Private Partnerships Act of 2017.
    I look forward to working with the bill sponsor, Mr. 
Kinzinger, on his legislation. And as we run out of time in 
this Congress, as we know the clock is ticking, I hope that we 
can continue to work on this bipartisan bill early next year.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    Today's hearing entitled ``Public-Private Partnerships for 
Federal Energy Management'' will examine recent examples, 
challenges, and opportunities for improving energy efficiency 
in Federal facilities. We are primarily focused on two examples 
of public-private partnerships that are managed by the 
Department of Energy: Energy Savings Performance Contracts 
(ESPCs) and Utility Energy Service Contracts (UESCs).
    I would like to begin by welcoming our witnesses. We will 
have one panel of senior representatives from the Department of 
Energy, the Department of the Army, the General Services 
Administration, and the Department of Veterans Affairs. Each of 
our witnesses will share relevant examples and lessons-learned 
implementing ESPCs and UESCs at their respective agencies.
    The Department of Energy, through the Federal Energy 
Management Program, is the lead agency responsible for 
implementing rules and policies for ESPCs and UESCs. DOE 
collects a wide range of data and information on ESPC and UESC 
use across the Government that will help us weigh the costs and 
benefits of these performance contracts. DOE's data is also 
useful to identify trends and measure outcomes relating to 
energy and water use.
    I am also looking forward to testimony from GSA, Veteran's 
Affairs, and the Army. Each of these agencies have well-defined 
programs for ESPCs and UESCs, and if you were to list the 
agencies that award the most contracts, these agencies would 
all be in the top ten. However, they each face unique 
challenges and opportunities, depending on the facilities they 
are retrofitting and their specific needs.
    It has been over a decade since Congress amended the 
statute governing ESPCs and UESCs, and I think many people 
would agree that it's time to consider improvements to these 
programs. In recent years, agencies have used ESPCs and UESCs 
to gather the ``low hanging fruit'' of energy efficiency 
upgrades, focusing especially on lighting, insulation, and 
HVAC.
    In the years ahead, we will be looking to ESPCs and UESCs 
to continue delivering energy savings. Concepts such as ``deep 
energy retrofitting'' are being proposed as a facilitywide 
approach to energy conservation that includes new energy 
management systems, smart sensors, innovative technologies, and 
on-site power generation. We've also seen more of a focus on 
``energy resilience'' with agencies utilizing ESPCs and UESCs 
to harden their grid and install backup power generation. For 
example, with the help of performance contracts, Fort Knox 
recently became the first military installation with the 
capability to un-plug entirely from the grid, utilizing demand 
management, on-site natural gas, geothermal, and renewable 
energy resources.
    In order to stay on the cutting edge, Congress may need to 
consider changes to the statute to enable agencies to capture 
the cost savings offered through the most innovative energy 
conservation tools. Given the time that's passed since its 
original drafting, we should start by looking at the definition 
of a ``Federal building'' and the definition of ``energy 
savings.'' We should also consider how energy efficiency 
upgrades affect the life-cycle cost of operations and 
maintenance at the facility, and ways to harmonize the program 
with other successful Federal programs and goals.
    These issues, and several other changes to performance 
contracting authorities, are addressed in legislation that has 
already been reported by the committee, H.R. 723, the Energy 
Savings Through Public Private Partnerships Act of 2017. I look 
forward to working with the bill sponsor, Mr. Kinzinger, on his 
legislation. If we run out of time this Congress, I hope we can 
get to work on this bipartisan bill early next year.
    With that, I'd like to thank the witnesses for appearing 
before us today, and I look forward to their testimony.
    I yield back the balance of my time.

    Mr. Upton. With that, I want to again thank the witnesses 
for appearing today. And I yield to the ranking member of the 
subcommittee, my friend, Mr. Rush.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. Thank you, Mr. Chairman, for holding this hearing 
today examining public-private partnerships for Federal energy 
management.
    Mr. Chairman, like Members on most sides of the aisle, I 
fully support the objectives of both the energy savings 
performance contracts, or ESPCs, and the utility energy savings 
contracts, UESCs.
    However, we must also take heed to the warning by both the 
GAO and the CRS that a lack of consistency in reporting across 
agencies for projects makes it challenging to document the 
actual savings achieved solely from ESPCs or UESCs.
    Mr. Chairman, ESPCs and UESCs allow the Federal Government, 
the Nation's largest energy consumer, to leverage public-
private partnerships in order to improve energy efficiency and 
save taxpayer dollars, while also increasing the use of 
renewable energy in the nearly half a million facilities that 
the Federal Government maintains and supports.
    ESPCs and UESCs consist of contracts between a Federal 
agency and another third party, either an energy service 
company or a utility, to finance options that employ private 
sector resources and capabilities in order to facilitate 
investment in energy efficiency and renewable energy at Federal 
facilities.
    Through ESPCs, private contractors finance the upfront 
costs of efficiency updates, which may include modifications 
such as transformer upgrades, the installation of high-
efficiency lighting, rainwater harvesting equipment, or 
heating, ventilation, and air conditioning improvements.
    The contractor assumes the risk of the energy improvements 
and certifies that the upgrades will generate savings that 
cover the initial costs, and the agency pays a yearly amount 
for a fixed period of time.
    Under the ESPC program, the Department of Energy has 
awarded 400 projects, invested $6 billion in energy 
improvements, and saved an estimated $14 billion in cumulative 
energy costs since the year 1998.
    Mr. Chairman, in regards to UESCs, more than 1,800 projects 
have been reported with $3.3 billion leveraged through utility 
partnerships since the year 2000.
    ESPCs are headed by the Department of Energy's Federal 
Energy Management Program, which also provides training, 
guidance, and technical assistance to help Federal agencies 
achieve their energy and water conservation objectives.
    Based on FEMP's data, ESPCs funded $5.7 billion and UESCs 
funded $1.5 billion in energy efficiency improvements between 
the years 2005 and 2017.
    Mr. Chairman, the data suggests that there has been an 
overall trend of declining energy and water use and an increase 
in renewable energy consumption as a share of the overall 
energy usage due to these programs.
    Mr. Chairman, I look forward to our witnesses today, and I 
want to thank you. And I yield back the balance of my time.
    [The prepared statement of Mr. Rush follows:]

                Prepared statement of Hon. Bobby L. Rush

    Thank you, Mr. Chairman, for holding this markup today 
examining Public Private Partnerships for Federal Energy 
Management.
    Mr. Chairman, like Members on both sides of the aisle, I 
fully support the objectives of both the Energy Savings 
Performance Contracts, or ESPCs, and the Utility Energy Service 
Contracts, or UESCs.
    However, we must also take heed to the warning by both the 
Government Accounting Office and the Congressional Research 
Service, that a lack of consistency in reporting across 
agencies for projects makes it challenging to document the 
actual savings achieved solely from ESPCs or UESCs.
    Mr. Chairman, ESPCs and UESCs allow the Federal Government, 
the Nation's largest energy consumer, to leverage public/
private partnerships in order to improve energy efficiency and 
save taxpayer money, while also increasing the use of renewable 
energy in the nearly half a million facilities it maintains and 
supports.
    ESPCs and UESCs consist of contracts between a Federal 
agency and another third party, either an energy service 
company or a utility, to finance options that employ private 
sector resources and capabilities in order to facilitate 
investment in energy efficiency and renewable energy at Federal 
facilities.
    Through ESPCs, private contractors finance the upfront 
costs of efficiency updates, which may include modifications 
such as transformer upgrades, the installation of high-
efficiency lighting, rainwater harvesting equipment, or 
heating, ventilation, and air conditioning improvements.
    The contractor assumes the risks of the energy improvements 
and certifies that the upgrades will generate savings that 
cover the initial costs, and the agency pays a yearly amount 
for a fixed period of time.
    Under the ESPC program, the Department of Energy (DOE) has 
awarded 400 projects, invested $6 billion in energy 
improvements, and saved an estimated $14 billion in cumulative 
energy costs since 1998.
    In regards to UESCs, more than 1,800 projects have been 
reported with $3.3 billion leveraged through utility 
partnerships, since 2000.
    Mr. Chairman, EPSCs are headed by the Department of 
Energy's Federal Energy Management Program, or FEMP, which also 
provides training, guidance, and technical assistance to help 
Federal agencies achieve their energy and water conservation 
objectives.
    Based on FEMP data, ESPCs funded $5.7 billion, and UESCs 
funded $1.5 billion in energy efficiency improvements, between 
FY2005 and FY2017 alone.
    Mr. Chairman, the data suggests that there has been an 
overall trend of declining energy and water use, and an 
increase in renewable energy consumption as a share of overall 
energy usage due to these programs.
    However, I look forward to further engaging each of our 
witnesses on the implementation of the ESPCs and UESCs, as well 
as their recommendations on how best to address the lack of 
consistency in reporting across agencies for these types of 
projects in order to get a more accurate sense of the direct 
savings enjoyed from these programs.
    Thank you, Mr. Chairman, and with that I yield back the 
balance of my time.

    Mr. Upton. The gentleman yields back.
    It is my understanding that Chairman Walden is not going to 
be able to make it for an opening statement. Would anyone want 
his time on our side?
    Seeing none, the Chair would recognize Mr. Welch, who is 
going to take Mr. Pallone's time, for 5 minutes.

  OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF VERMONT

    Mr. Welch. Thank you very much.
    You know, there are two ways that we can deal with the $150 
billion backlog in repairs and energy efficiency improvements 
that need to be made.
    One is we can appropriate taxpayer dollars and make that 
investment. And the other is we can enter into these energy 
savings performance contracts and utility performance contracts 
and not have to put upfront taxpayer dollars. There is a good 
argument to invest taxpayer dollars, but there are not the 
votes to accomplish that.
    On the other hand, if we enter into these contracts with 
the private sector, where they provide the financing, they do 
the work, and then they get repaid from the energy savings, 
then everybody is a winner.
    And this energy efficiency is really a big deal. In 
addition to cutting down on the cost of energy, every single 
improvement is made by a local laborer. This is real work that 
goes into the communities that has to create jobs. I have been 
working with Mr. McKinley on this for some time. So you get 
taxpayer savings, you get local employment, and, oh, by the 
way, you reduce carbon emissions.
    So it is tremendous that we are working together on this 
with such bipartisan support, Mr. Chairman, Mr. Ranking Member, 
and we will be doing that next year as well. So this is a big 
deal. Mr. Rush cited what the amount of money was that we 
saved, and we want to keep that up.
    There are some questions that are coming up about the 
audits. GSA, by and large, has been very positive about what is 
there. But you know what, we should audit and let's keep 
auditing, because that information can help us make 
improvements, make it more efficient, and maintain support 
within Congress for what has been a very solid program. So 
bring the audits on, we will make the improvements, we will 
make the adjustments.
    It has been great to work with Representatives Kinzinger 
and Moulton and Blackburn, who are the cochairs with me of the 
House Performance Contracting Caucus.
    This is an area where, instead of arguing about the science 
of climate change, we can talk about the benefits of saving 
taxpayer dollars and creating local jobs and employment. And I 
think there are a huge number of our committee members who want 
to find a way to make this better, stronger for all involved.
    And I want to thank the chairman and the ranking member for 
this hearing, and I yield back the balance of my time.
    Mr. Upton. The gentleman yields back.
    At this point, we are prepared to hear from our witnesses, 
your statements. Thanks for submitting them in advance. They 
will be made part of the record in their entirety, and we will 
ask each of you to summarize those in no more than 5 minutes, 
at which point we will obviously go to questions for all of 
you.
    Our first witness is Leslie Nicholls, the Strategic 
Director of the Federal Energy Management Program at the 
Department of Energy.
    Welcome again.

  STATEMENTS OF LESLIE NICHOLLS, STRATEGIC DIRECTOR, FEDERAL 
  EMERGENCY MANAGEMENT PROGRAM, DEPARTMENT OF ENERGY; JOHN E. 
``JACK'' SURASH, ACTING DEPUTY ASSISTANT SECRETARY OF THE ARMY 
    FOR ENERGY AND SUSTAINABILITY; KEVIN KAMPSCHROER, CHIEF 
  SUSTAINABILITY OFFICER AND DIRECTOR, OFFICE OF FEDERAL HIGH-
  PERFORMANCE BUILDINGS, GENERAL SERVICES ADMINISTRATION; AND 
  EDWARD L. BRADLEY III, EXECUTIVE DIRECTOR, OFFICE OF ASSET 
     ENTERPRISE MANAGEMENT, DEPARTMENT OF VETERANS AFFAIRS

                  STATEMENT OF LESLIE NICHOLLS

    Ms. Nicholls. Good morning, Chairman Upton and Ranking 
Member Rush and members of the Energy Subcommittee. Thank you 
for the opportunity to provide testimony on performance 
contracting. My name is Leslie Nicholls, and I am the strategic 
director of the Department of Energy's Federal Energy 
Management Program, known throughout the Federal Government as 
FEMP.
    In my capacity as Strategic Director, I am responsible for 
analyzing, evaluating, and making recommendations to EERE 
leadership on the effectiveness of FEMP programs. Today I will 
provide a brief summary of FEMP's mission and activities, the 
impact of performance contracting, and FEMP's perspective 
regarding current performance contracting opportunities and 
challenges.
    FEMP's mission is to provide strategic energy management 
tools and resources to enable Federal agency mission assurance. 
In a nutshell, FEMP assists agencies' agility and ability to 
become resilient, efficient, and secure. FEMP supports 
Executive Order 13834 by providing guidance, resources focused 
on optimizing energy and environmental performance, reducing 
waste, and cutting costs.
    FEMP enables Federal agencies to reduce their $16.1 billion 
energy bill and meet energy and water management goals by 
providing support and accountability for Federal agencies.
    We continue to increase the skills of a multidisciplinary 
Federal workforce by providing training and best practices. 
FEMP provides technical assistance and guidance for completing 
energy savings projects by leveraging private sector financing 
through the use of performance contracting.
    Performance contracting has had a significant impact on the 
improved energy performance of the Federal Government over the 
last 20 years. FEMP estimates that Governmentwide, over 600 
ESPC projects and over 2,000 UESC projects have been 
implemented, resulting in energy infrastructure improvements of 
$12.5 billion, with a value of cumulative energy cost savings 
over the life of these projects of $27.5 billion.
    Since 1998, FEMP has offered its own contracting vehicle, 
the DOE Indefinite Delivery Indefinite Quantity contract, known 
as the IDIQ. The current IDIQ has 21 energy service company 
awardees. Thirty-six agencies have utilized the IDIQ contract 
in 50 States, Puerto Rico, and the U.S. Virgin Islands, and 
have invested about $63 billion in Federal energy efficiency 
and renewable energy improvements from 1998 to 2018.
    Fiscal year 2018 has been a record year for the IDIQ 
awards. Federal agencies using the IDIQ contract provide $809 
million of facility infrastructure investment, which will 
result in 2 trillion BTU of energy savings annually, which is 
the equivalent of the energy use of 25,000 average U.S. 
households.
    Going forward, we know there is an opportunity, a 
potential, for continued use of performance contracting, 
including improving infrastructure by addressing the estimated 
$150 billion of deferred maintenance and repairs related to 
agency facilities and equipment.
    Another area is supporting facilitywide resilience, as 
efficiency underpins resilience. FEMP is developing a 
systematic prioritized approach to resilience portfolio 
planning that helps agencies identify mission risk, prioritize 
projects, and identify financing options.
    FEMP is continuing to work with the performance contracting 
community to identify barriers and gaps associated with the use 
of performance contracting for facilitywide resilience. Through 
training and outreach, we are working to address inconsistent 
interpretations of legislation and guidance, which inhibits 
accounting for operation and maintenance savings within 
performance contracts and leveraging appropriations and 
incentives with project financing.
    We are also encouraging agencies to consider all ECMs in 
performance contracting, including advanced building controls, 
microgrids, and distributed energy resources. Bundling some 
less cost-effective ECMs with more cost-effective ECMs is a key 
to this approach.
    To summarize, we believe performance contract tools, when 
applied wisely, will continue to be a useful tool in the future 
to assist agencies in their efforts to become resilient, 
efficient, and secure.
    FEMP will continue to identify ways to improve its program 
tools and guidance for performance contracting, and as part of 
this process, FEMP will continue to analyze the data received 
from performance contracting reporting, life-of-contract 
support, and quality assurance functions.
    I appreciate the opportunity to address you this morning. I 
would be happy to answer any questions that you may have. Thank 
you.
    [The prepared statement of Ms. Nicholls follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Upton. Thank you.
    The next witness is Jack Surash, Acting Deputy Assistant 
Secretary for Energy and Sustainability at the Department of 
the Army.
    Welcome, sir.

              STATEMENT OF JOHN E. ``JACK'' SURASH

    Mr. Surash. Good morning, sir. Chairman Upton, Ranking 
Member Rush, distinguished members of the committee, thank you 
very much for the opportunity to testify about Army energy 
resilience and our utilization of energy savings performance 
contracts and utility energy service contracts.
    The Army appreciates your interest in this area and the 
authorities which support Army readiness, modernization, and 
reform. Secure uninterrupted access to energy is essential to 
sustaining our critical Army missions and how our installations 
support operational warfighters and enable Army readiness.
    The Army's 156 installations, located around the world, 
must be ready, secure, and capable of deploying and sustaining 
forces.
    As potential vulnerabilities emerge in the Nation's utility 
distribution infrastructure, ensuring reliable sources of 
energy for our installations has become increasingly 
challenging. To meet these challenges, the Army is pivoting 
energy planning and assessment approaches to increase the focus 
on resilience.
    The Army leverages private sector expertise through energy 
savings performance contracts, or ESPCs, and utility energy 
service contracts, or UESCs. These projects enhance resilience, 
improve efficiency, and help address maintenance backlogs and 
repair or replace aging and failing equipment.
    The Army has the largest ESPC program in the Federal 
Government. Contract costs are paid from commodity and 
operations cost savings and are, therefore, budget neutral.
    We have awarded over $2.2 billion of ESPCs since 1996 and 
over $674 million of UESCs since 1992. ESPCs and UESCs are an 
important tool at Army installations as we work to achieve 
energy resilience across our installations.
    Thank you very much for the opportunity to present this 
testimony and for your continued support of our soldiers, 
civilians, and families.
    [The prepared statement of Mr. Surash follows:]
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    Mr. Upton. Thank you.
    Our third witness is Kevin Kampschroer, Chief 
Sustainability Officer and Director of the Office of Federal 
High-Performance Buildings at GSA.
    Welcome.

                 STATEMENT OF KEVIN KAMPSCHROER

    Mr. Kampschroer. Thank you.
    Good morning, Chairman Upton, Ranking Member Rush, and 
members of the subcommittee. My name is Kevin Kampschroer, and 
I am the U.S. General Services Administration's Director for 
the Office of Federal High-Performance Buildings, as well as 
GSA's Chief Sustainability Officer.
    I appreciate being invited here today to testify on GSA's 
policy and experience in using public-private partnerships to 
achieve energy savings for our Federal buildings. I will also 
discuss our National Deep Energy Retrofit Program and share 
with you several lessons learned.
    GSA's mission is to deliver value and savings in real 
estate, acquisition, technology, and other mission support 
services across the Government. GSA manages over 371 million 
square feet of space, housing 1.1 million Federal employees 
from 65 different Federal agencies.
    Executive Order 13834 reinforces the Trump administration's 
commitment to meeting energy and environmental statutory 
requirements in a manner that increases efficiency, optimizes 
performance, and eliminates unnecessary use of resources.
    Reducing Federal buildings' energy consumption and 
increasing their efficiency saves the Government money and 
makes our buildings more resilient in the long-term.
    GSA has been using these types of partnerships since 1989. 
GSA has invested over $1 billion in both ESPCs and UESCs, 
resulting in an annual energy savings of 4 trillion BTUs in GSA 
facilities and $2.3 billion in guaranteed savings.
    A key benefit of the ESPC is the guaranteed performance and 
savings with no upfront capital costs. ESPCs have been proven 
to work. In fact, the Oak Ridge National Laboratory showed that 
the actual savings to the Federal Government were 1.96 times 
the guaranteed savings.
    Given that the repair and alteration funding is often in 
short supply and Federal agencies have repair backlogs 
estimated Governmentwide to be over $150 billion, the ESPC is 
an important tool for maintaining a deteriorating 
infrastructure.
    In addition, a power purchase agreement can be used to 
purchase electricity from specific generation sources. For 
civilian agencies, these agreements are limited by statute to a 
term of 10 years. GSA has executed power purchase agreements 
for ourselves and for other agencies, such as an aggregated set 
of solar systems in Washington, DC, with a total capacity of 
2.7 megawatts and cost savings of $281,000 annually.
    An integral part to achieving these efficiencies for GSA is 
the Deep Energy Retrofit Program. A deep energy retrofit is a 
whole building analysis and construction process that uses 
integrated design to achieve larger energy savings than 
conventional retrofits.
    GSA has awarded 32 contracts in this way, at 73 locations, 
totaling $570 million in investment, with $33 million in annual 
savings. These contracts have provided overall energy savings 
of 34 percent on average, which is nearly double the historic 
average for the Government.
    For smaller projects, GSA partnered with the Department of 
Energy, the Federal Energy Management Program, to create the 
ESPC ENABLE program, which uses an existing GSA schedule 
contract and couples it with preplanned, streamlined ways to 
accomplish simple improvements. This program has been used by 
12 agencies in addition to GSA for projects saving $83 million, 
with an investment of $55 million.
    I would like to share with the subcommittee three lessons 
we have learned among the many.
    We have found it important to aggregate short- and long-
term measures to maximize synergy and build long-term value. 
For example, an investment in window replacement does not 
typically pay back in under 25 years. However, when you couple 
the window replacement with chiller and heating plan 
improvements, the windows may reduce the overall load in the 
building, reducing the size of the chiller and saving money in 
a way not possible without the window replacement.
    Secondly, centralizing ESPC contracting reduces the time 
for project execution and increases savings. During our first 
round of the Deep Energy Retrofit Program, we reduced the time 
to award from 2 years to 1 year, significantly reducing 
contract overhead costs, and then applying those savings to 
building improvements.
    Lastly, not every project is suitable for an ESPC, and it 
is important to carefully select buildings using well-developed 
analytical tools and criteria.
    Thank you for the opportunity to testify today. Public-
private partnerships are valuable tools agencies can leverage 
to increase building efficiencies and save money while not 
relying on annual appropriations. GSA has seen significant cost 
savings, and we are continuously pushing for greater savings in 
our future contracts.
    I am pleased to be here today, and I am happy to answer any 
questions you may have.
    [The prepared statement of Mr. Kampschroer follows:]
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    Mr. Upton. Thank you.
    Our last witness is Ed Bradley, Executive Director of the 
Office of Asset Enterprise Management at Veterans Affairs.
    Thanks for your service.

               STATEMENT OF EDWARD L. BRADLEY III

    Mr. Bradley. Yes. Thank you, Chairman Upton and Ranking 
Member Rush, and members of the committee, for the opportunity 
to appear today to discuss the Department of Veterans Affairs--
VA--Energy Management Program and allowing us to highlight the 
success VA has had upgrading our facilities through energy 
savings performance contracts, or ESPCs, and utility energy 
service contracts, or UESCs.
    VA operates the Nation's largest integrated healthcare 
system, as well as administering benefits and services to 
veterans and operating 135 national cemeteries. The average age 
of a VA-owned building is approaching 60 years, and since VA 
owns 86 percent of the 180 million square foot real property 
portfolio, ensuring VA infrastructure continues to support VA's 
mission is a constant challenge.
    As identified through VA's Strategic Capital Investment 
Planning process, better known as SCIP, VA has more than $50 
billion in capital needs over the next 10 years to modernize 
and maintain its infrastructure.
    Along with the appropriated projects, VA has been using 
ESPCs and UESCs to address its infrastructure needs. Since its 
first award in 2011, VA's centralized program has awarded over 
$630 million of ESPCs and UESCs.
    These projects are supporting infrastructure upgrades at 60 
VA facilities using private sector financing to implement 
energy and water conservation measures. Once installed, these 
improvements are expected to generate over $40 million annually 
of avoided energy and water cost, which translates into more 
than $1 billion of avoided costs over the life of this 
portfolio of contracts through 2040.
    By leveraging the benefit of private sector financing, VA 
facilities are able to efficiently address critical system 
repairs, infrastructure improvements, and deferred maintenance. 
These projects are also allowing VA to enhance the resiliency 
and reliability of our facilities, enabling better care for 
veterans.
    In addition to the awarded portfolio, VA is actively 
developing another $550 million of potential upgrades for 35 
other VA facilities, and an additional 15 facilities are being 
looked at in initiating projects to support their needs, and as 
well as others in the future will be looked at.
    VA's centralized energy performance program has had many 
successes since its launch, and several VA projects have 
received national recognition for innovation and value. For 
example, VA's UESC in Northport, New York, addressed a critical 
infrastructure repair when the facility's rooftop cooling 
towers failed. VA coordinated with the Department of Defense 
Innovative Readiness Training program for helicopter services 
to support replacing the cooling towers as part of the UESC. A 
video of that cooling tower replacement has been predominantly 
featured on DOE's website.
    VA's program continues to evolve. In June 2017, VA issued 
the Federal Government's first ESPC vehicle to solicit as a 
set-aside for eligible veteran-owned small businesses. VA is 
actively developing several of these set-aside ESPCs and is in 
the process of establishing its own IDIQ contract to allow 
veteran-owned small businesses to more efficiently compete for 
these projects.
    Energy performance contracts have proven to be a very 
effective tool for VA, and we hope to continue to expand and 
improve upon their uses in support of our mission of care for 
veterans.
    Mr. Chairman and members of the committee, this concludes 
my statement. Thank you for the opportunity to testify before 
this committee today, and I will be happy to respond to any 
questions you may have.
    [The prepared statement of Mr. Bradley follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Upton. Thank you all for your testimony. At this point, 
we will go into questions and answers from all of us here.
    Ms. Nicholls, as you know, the performance contracts have 
been around since the 1990s. We amended it in 2007, and we have 
got Mr. Kinzinger's bill before us, but it is likely to be 
pushed off into next year.
    What do you think the greatest challenges are? What do we 
need to do as we look to make further improvements down the 
road?
    Ms. Nicholls. In terms of challenges, clear and consistent 
understanding of legislative interpretations is something that 
FEMP has been working on to clarify with agencies. There is 
inconsistency across Federal agencies of the legislative 
authorities with the use of ESPCs and UESCs and consistent 
application of FEMP guidance.
    Two examples would be the use and the ability to leverage 
appropriations with project financing for resilient projects, 
and also to be able to take advantage of incentives with 
performance contracting.
    Mr. Upton. So as I mentioned privately to you as I walked 
in the door, I learned just this morning that Assistant 
Secretary Winberg is actually at Fort Custer today, which is 
adjacent to my district. It is a National Guard base. It is one 
of the finalists. President Obama agreed that we needed another 
missile defense site for North America, for the east side of 
the country, and this is one of the finalists in that.
    I have been to the site a good number of times. One of the 
things that have really been pretty exciting is that Consumers 
Energy Company has actually installed a pretty major solar grid 
there, and that is one of the performance reviews, in terms of 
the decisionmaking by the Pentagon, to decide which potential 
site is going to get this award that was approved under 
President Obama.
    As I said, Secretary Winberg is there today, as I represent 
that area, and this would be a $3 billion project if it ends up 
there. But this is one of the real strengths, I think, that 
Fort Custer has.
    I know you don't know much about it, at least I don't think 
so this morning, but I just would like to work with you as we 
move forward, as it appears as though it is a major incentive, 
which is why they are unveiling this today.
    And I don't know, Mr. Surash, if you know much about it as 
well.
    But, again, if we could work with you and if you have ideas 
on how we can make this better, I would certainly appreciate 
it.
    Ms. Nicholls. The Federal Energy Management Program would 
be pleased to work with you on this project, and we look 
forward to following up with you at a later date.
    Mr. Surash. Sir, I don't have details at my fingertips, but 
Army will be happy to follow up with you and provide you 
information that we have available.
    Mr. Upton. Great.
    I yield to Mr. Rush for 5 minutes.
    Mr. Rush. I want to, again, thank you, Mr. Chairman.
    Ms. Nicholls, is there a centralized list of contractors 
that DOE maintains? And how does a contractor get on a list--if 
there is one--how does a contractor get on it?
    Also, I understand that there is a set-aside for veteran 
contractors at the VA. Does DOE or any other agency also 
maintain a list of minority contractors? And do we know the 
percentage of these Federal contracts that were awarded to 
minorities?
    Ms. Nicholls. In terms of the maintaining a list of 
qualified energy service companies, yes, the Federal Energy 
Management Program maintains the Qualified List of ESCOs. There 
is a process that is outlined in our resource materials as we 
vet energy service companies, not only those that are part of 
the IDIQ, but also those that are part of our ENABLE program. 
So, yes, we have that list.
    In terms of a set-aside for veteran-owned minority 
companies, there are owners of small business, and the current 
ENABLE includes two disabled veteran ESCOs. I will have to get 
back to you on the percentage of minority-owned businesses, 
ESCOs, that are currently on our qualified list.
    Mr. Rush. Under an ESPC, how does the private contractor 
finance the upfront costs for energy upgrades? Does the money 
come from financial institutions, banks, or are the companies 
themselves responsible for doing the work and also fronting the 
cost of doing the work?
    Ms. Nicholls. Typically, an ESCO will work with a financing 
company to obtain finance for the project. The project goes 
through rigorous price-reasonableness evaluation as well as 
viability to obtain that financing from a third party.
    Mr. Rush. And, Mr. Bradley, do you maintain any data on 
minority veterans and the number of minority veterans that have 
contracts under this program, under FEMP?
    Mr. Bradley. What we are doing is identifying the veteran-
owned small businesses that have supposedly energy-type 
capabilities. We are working with DOE to get those businesses 
qualified and certified.
    Even with those small businesses, they sometimes have a 
lacking in overall financing capabilities. And through SBA and 
the small business set-asides and so forth, they are able to 
joint venture with some of the bigger businesses that can 
handle with financing as well. So the two are working together 
on joint ventures, bringing in the VOSBs as well.
    Mr. Rush. I just want to make a note, Mr. Chairman, that we 
are moving into an area where diversity in Government 
contracting really means something. This is not just some kind 
of a political comment or slogan. It really means something.
    And so I would like to meet with you, Director Nicholls, to 
really kind of flesh this out more and see what exists and how 
it can be enhanced. Maybe you are doing a great job, I don't 
know, but you don't know either, and that is my problem.
    Thank you, and I yield back.
    Ms. Nicholls. I would be happy to follow up with you, sir. 
As an additional note, FEMP does provide a robust training, 
both for ESCOs and agencies, including small business and small 
disadvantaged businesses.
    Mr. Rush. Thank you.
    Mr. Upton. Great.
    Mr. Olson, vice chair of the subcommittee, from Texas.
    Mr. Olson. I thank the Chair.
    And welcome and happy holidays to our five experts.
    As you all may know, I grew up about a mile and a half from 
the Johnson Space Center, the home of American human space 
flight. This is in my heart. It is very important to me that 
the work being done there continues, even when a hurricane 
hits, like Hurricane Harvey.
    Hurricane Harvey hit Texas hard on August 25 of 2017. The 
Johnson Space Center has a mission that has to keep going 
throughout a hurricane. The International Space Station has 
been in orbit now for 20 straight years, with a human being on 
board every single day of that period. They can't go down when 
a hurricane hits like Harvey, and they didn't go down.
    They shut down the center on the 25th, when the hurricane 
hit, opened the center on the 4th of September, when it was 
clear. But guess what stayed open the entire time: Mission 
Control at JSC, controlling our space station.
    Now, Ms. Nicholls, you guys had a big role in that at DOE. 
It is called the AFFECT grant. Gave one to JSC in 2014. They 
have leveraged that. Let's see, it was a $1 million AFFECT 
grant that supported a $47 million investment in new combined 
heat and power projects.
    So please take a victory lap and tell us about the project 
at JSC, what it accomplished, what it can accomplish. Can it be 
a model for other NASA centers and also any other Federal 
Government agencies? It is a great project.
    Ms. Nicholls. Thank you, sir.
    The NASA Johnson Space Center project can certainly be a 
model for other Federal agencies as a case study and as a way 
to accomplish a great deal.
    Some of these accomplishments include the fact that, as you 
mentioned, Johnson Space Center, with the help of FEMP 
technical assistance and through the use of our AFFECT, which 
is Assisting Federal Facilities with Energy Conservation 
Technologies program, through the use of our Federal Energy 
Efficiency Fund authority, was able to provide $47 million of 
investment. The AFFECT program provided the $1 million 
investment. So there was a good leverage there.
    The project had a new combined heat and power capable of 
providing the site with 70 percent of its base power 
consumption, allowing the site to operate off the grid during 
outages, as you mentioned. It has a 12-megawatt CHP plant. It 
allowed Johnson Space Center to operate in island mode.
    It also helped NASA meet energy intensity reduction goals 
through 2020. Interagency collaboration was a piece of this as 
well, to create replicable resilience projects.
    Other ECMs include boiler and chiller improvements. It was 
a $47 million project with a 22-year term, and it, as you 
mentioned, is located in Houston, Texas.
    Mr. Olson. And just to reiterate for our Members here, she 
mentioned $1 million of Federal money became $47 million in 
private investment, 1 to 47 million. And, yep, put your Texas 
hat on, ma'am, and brag, like Texans brag, that is amazing, 
amazing, amazing. Thank you.
    Final question for all the panelists, just basic big, high-
level question, just to understand the range of issues you have 
to deal with. It is real simple. What has been the lowest-
hanging fruit to deal with that has been achievable, and what 
is the highest? What is something that you have to do, want to 
do, but it is going to cost a lot of money or some technology 
changes?
    How about start with the VA there, Mr. Bradley?
    Mr. Bradley. The lowest-hanging fruit would be lighting, 
things like that. The highest would be chiller, boiler 
replacements, HVAC replacements. Using the two together to 
combine is where you get the cost effectiveness that you can do 
both.
    Mr. Olson. Thank you.
    Mr. Kampschroer.
    Mr. Kampschroer. I would say in addition to lighting, 
control systems are the very good, very fast payback. The most 
difficult thing we have had to deal with is roof replacement, 
with increased insulation. Doesn't pay back. But, again, 
coupling it in a deep energy retrofit, we have been able to do 
that. And there is nothing like having a nonleaky roof over 
your head. Keeps your investment dry.
    Mr. Olson. And hurricanes make for leaky, leaky roofs.
    Mr. Surash.
    Mr. Surash. Sir, with respect to low-hanging fruit, I would 
agree, lighting and a range of basic efficiency improvements.
    These days, with the Army, with our pivot to focus on 
resilience we are looking for projects that help us withstand 
interruptions in electricity and water and services such as 
that. So we are finding those projects as very challenging to 
pursue, but we are making progress there.
    Mr. Olson. Thank you.
    And, Ms. Nicholls, one more chance to brag.
    Ms. Nicholls. I agree with my esteemed colleagues that the 
low-hanging fruit is lighting and basic HVAC upgrades.
    I believe that the opportunities for big projects are the 
fence-to-fence projects that enhance resilience, include 
microgrids and advanced building technologies, and present the 
opportunity to leverage your appropriations with performance 
contracting, because not all resilience measures do pay for 
themselves in a performance contracting situation.
    Mr. Olson. Thank you very much. Time is over.
    Mr. Surash, remember: Go Navy, beat Army.
    Mr. Surash. Thank you, sir.
    Mr. Upton. Next year.
    Mr. McNerney.
    Mr. McNerney. Well, thank you, Mr. Chairman.
    And it is too late for Navy to beat Army this year, I am 
afraid.
    So it sounds like all of you think that these are 
favorable, the ESPCs and the UESCs. Could each of you verify 
that with a simple yes or no, you think these are good ideas, 
and you would like to see this continue, starting with Ms. 
Nicholls?
    Ms. Nicholls. Yes.
    Mr. Surash. Yes, sir.
    Mr. Kampschroer. Yes, sir.
    Mr. Bradley. Yes, sir.
    Mr. McNerney. Well, good.
    How about this question with the same format. ESPCs and 
UESCs need significant or could use significant improvement by 
legislation?
    Ms. Nicholls. Yes, sir.
    Mr. Surash. Yes, sir.
    Mr. Kampschroer. Yes, sir.
    Mr. Bradley. Yes, sir.
    Mr. McNerney. Well, thank you.
    Ms. Nicholls, are the incentives appropriate to identify 
and use ESPCs and UESCs as quickly as possible?
    Ms. Nicholls. I believe that there are good incentives out 
there. There is always room for improvement.
    Mr. McNerney. OK.
    Mr. Bradley, where did the VA end up with regards to the 
2014 goal of $2 billion in ESPCs that were part of the Climate 
Action Plan?
    Mr. Bradley. We achieved that goal. It was successful. It 
took some time to get there, but we did achieve that goal.
    Mr. McNerney. OK. Thank you.
    Mr. Surash, are any projects of your agency working on to 
implement, are they hindered, and is there something Congress 
can do about it?
    Mr. Surash. Sir, off the top of my head, I can't think of 
any projects that are hindered. There is certainly some room to 
bring forward some enhancements to the legislation, as the 
chairman noted during his opening comments.
    Mr. McNerney. OK. Very good.
    Again, Ms. Nicholls, I understand that many agencies use 
the DOE's umbrella, IDIQ, which is the Indefinite Delivery 
Indefinite Quantity contracting vehicle. What more can be done 
to modernize our Federal buildings, besides that tool?
    Ms. Nicholls. Besides the IDIQ?
    Mr. McNerney. Right.
    Ms. Nicholls. There is the use also of UESCs and working 
with utilities in taking advantage of incentives. There is the 
use of power purchase agreements, again partnering with your 
utility to have on-site renewable generation. And there is also 
really looking at resilience portfolio planning to look at your 
infrastructure against your risk and prioritize those projects 
so you are prioritizing those with the highest-level 
infrastructure needs.
    Mr. McNerney. Thank you. That is a good list. I appreciate 
that.
    Are the FEMP's guidelines designed to ensure the UESCs 
provide energy savings adequate? Are they designed to be 
adequate?
    Ms. Nicholls. Yes.
    Mr. McNerney. Very good.
    Mr. Surash, what benefits have ESPCs and UESCs provided the 
DOD in its efforts to enhance reliability and resiliency?
    Mr. Surash. We are very happy with what we are seeing, sir.
    So first of all, we get the best ideas from the energy 
industry brought into Army installations, really great ideas 
and great projects.
    And also, as you are aware, the ESPCs and UESCs allow these 
projects to be completed with no upfront capital. We, of 
course, pay back that investment through a saving stream. So 
that really helps us leverage the amount of work that we are 
able to perform.
    Mr. McNerney. Thank you.
    Now something closer to my district.
    Mr. Bradley, I have been working with the VA to build a 
clinic in my district. And you spoke about how the average age 
of buildings is 60 years old in the agency's portfolio. What is 
the VA doing about new construction regarding resilience and 
efficiency?
    Mr. Bradley. The answer to that is that VA, regarding 
resiliency, that is a common practice that we incorporate into 
all of our projects, being the fact that we are essentially 
first responders in emergency situations with medical care and 
so forth. So everything we do has resiliency and reliability 
built into it today.
    Mr. McNerney. Do the ESPCs and UESCs have any relevance in 
new building construction?
    Mr. Bradley. In new building construction, no. It is more 
into the renovation of existing structures, things like that, 
that we have incorporated ESPCs. We have not dwelled into 
trying to incorporate them into a new facility construction 
project.
    Mr. McNerney. All right. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Latta.
    Mr. Latta. Thank you very much, Mr. Chairman.
    And thanks for our panel for joining us this morning.
    Mr. Surash, if I could ask a few questions from your 
testimony. How long do you have to do an analysis before they 
implement these projects at the installations?
    Mr. Surash. Sir, it depends on the complexity of the energy 
and water conservation measures. I would say a round number 
would be maybe 6 to 12 months. But we find end to end that we 
are typically able to get these projects in place quicker, 
quite frankly, than if we had direct funding. So we are very 
pleased with being able to do that.
    Mr. Latta. OK. I am looking at your testimony, on page 5, 
when you were talking about the Tobyhanna Army Depot in 
Pennsylvania, with the award there of $29.5 million for the 
ESPC, and then saved the Army about 3.7 annually.
    Again, on a base like that, or a depot like that, what is 
the average payback time then for you all?
    Mr. Surash. Sir, that really depends on the complexity of 
the project. For relatively straightforward, simple projects, 
payback could be in 3, 4, 5 years.
    This is a more complex project. I don't have the number. I 
can follow up and give you the exact number on the payback. 
This is a more complex project, so I would expect it to be 
maybe in the higher teens, or maybe up towards 20 years 
possibly.
    Mr. Latta. And when you are looking at these ESPCs, do you 
also do that with overseas bases?
    Mr. Surash. Yes, sir, we do, at certain locations where we 
are able to do them. There is country-to-country agreements and 
things like that, that we have to pay attention to. But there 
are some that we do, some third-party ESPC efforts at Army 
overseas installations.
    Mr. Latta. And if you can answer it, do you find that, when 
you are doing them overseas, it might be quicker or that you 
might get a faster payback on some of these?
    Mr. Surash. I think it is similar to what we are finding 
within the continental United States. The ESPC contracting 
approach, I think we find it is a fairly rapid thing. You have 
to negotiate. You could end up eating up a lot of time if 
negotiations don't speed along. But I think typically end to 
end we are seeing these done fairly rapidly. We are happy with 
what we are seeing.
    Mr. Latta. Good.
    Mr. Kampschroer, if I could ask for your testimony, could 
you give me a little more information on, when you talk about 
the deep energy retrofits? Because you are talking about that 
you are doing, instead of the retrofit of a whole building 
analysis construction project, it uses integrated to achieve a 
much larger energy savings than a conventional energy retrofit 
and how that works then.
    Mr. Kampschroer. Yes, sir. I think an example that is 
probably the best way to do it, right here in suburban 
Washington, New Carrollton, we did a retrofit that is a 1.2 
million square foot building. The building was built in 1994.
    At the time we started the retrofit, the energy consumption 
was 26 percent above the office average for the United States, 
and afterwards it is 61 percent below. We achieved 62 percent 
overall energy savings. It has been in operation for 4 years, 
and we have measured the savings every year, and they have 
achieved them.
    We replaced the central chilled water plant with a smaller 
plant, because we improved the insulation of the building and 
the roofs. We have integrated controls and sensors. We have 
11,000 individually addressable LED light fixtures within the 
building that can respond to different levels of energy use. We 
have one megawatt of onsite renewable energy. And we also 
improved it by adding a geothermal field to use the heat 
recovery of the earth there.
    We created 550 local jobs during the course of that 
construction, and also improved the operation of the IRS data 
center there as well, reducing their internal costs.
    [Additional information submitted by Mr. Kampschroer 
follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Mr. Latta. OK. Thank you very much, Mr. Chairman. I am 
going to yield back the balance of my time.
    Mr. Upton. Mr. Peters.
    Mr. Peters. Thank you, Mr. Chairman.
    And thanks to the witnesses for coming today.
    I appreciate the advancements that have been made on energy 
efficiency in Government infrastructure. Before serving on this 
committee, I spent two terms on the House Armed Services 
Committee, where we had similar discussions with respect to the 
military. The military is often ahead of other parts of the 
Federal Government in testing and using new efficiency 
technologies.
    In San Diego, which is my home, we launched the Great Green 
Fleet, with ships burning cleaner fuels. We tested and 
implemented smart grids with solar power investments at Marine 
Corps Air Station Miramar. We have, just north of me at 
Pendleton, taken advantage of microgrid technology. And we have 
implemented new energy savings in local Federal buildings. And 
I would like to see this progress continue, not just with the 
military, but with all our Federal agencies.
    And it occurred to me--and I will address this to Mr. 
Surash and Mr. Kampschroer--that I would be curious about how 
we coordinate across agencies.
    So in the military, for instance, Mr. Surash, is there a 
way for all the military bases in a region to join together for 
one long-term power agreement with a local utility? Or on a 
broader scale, if all Federal infrastructure in a region banded 
together in a power purchase agreement? Do you think that there 
are ways to do that? Are there barriers to you doing that? 
First within the military, Mr. Surash, and then, I guess, Mr. 
Kampschroer, across the Federal Government.
    Mr. Surash. Sir, with respect to purchasing our utilities, 
we are dealing with, first of all, regulated and deregulated 
regions. But it appears, from my knowledge, that each service 
is buying utilities at the base level, although there have been 
some efforts with the Defense Logistics Agency energy to bundle 
purchases together.
    I believe that Army, Navy, and possibly Air Force for 
deregulated places that are served by--that have deregulated 
service, we have that. But for the most part, in places where 
it is a regulated utility, I believe we are purchasing--each 
base is purchasing by themselves.
    Now, certainly I think this is a great idea and it is 
something that we should explore, to use our buying power as 
the Federal Government, not just the Department of Defense but 
other agencies also.
    Mr. Peters. Mr. Kampschroer.
    Mr. Kampschroer. Yes, sir, I think there are no real 
impediments for us to do that. GSA has the Government's energy 
purchasing authority for all agencies. We have purchased energy 
on behalf of virtually every other agency in the Federal 
Government upon occasion.
    As my colleague from the Army has stated, in the case of 
the deregulated utilities there is much more opportunity for 
looking at bundling requirements, for sort of structuring the 
procurement so that all your eggs are not in one basket, you 
have different sources. And I think the potential is certainly 
there.
    Mr. Peters. Maybe, Ms. Nicholls, I could ask you, too. 
There is no one here from the Army Corps, but maybe you are the 
one most knowledgeable about the dams that the Federal 
Government works on. It strikes me that those could be powered 
up for hydropower through power purchase agreements, would make 
a lot of sense.
    Are you familiar with how far the Government has come on 
doing that sort of work with dams and hydropower?
    Ms. Nicholls. There certainly is an opportunity with regard 
to hydropower and performance contracting. However, currently, 
there is a lack of clarity with regard to the use of 
performance contracting and the ability to use performance 
contracting on hydro facilities.
    There are some agencies, such as the Army with Mr. Surash, 
that have been able to use performance contracting, with hydro 
facilities, but it is not a consistent wide practice across the 
Federal Government.
    Mr. Peters. OK. Is that something that needs legislative 
attention?
    Ms. Nicholls. It definitely would need clarity. There is 
not clarity whether a ``thou shalt'' or a ``thou shalt not.''
    So, again, that goes back to my opening statement that this 
is one of the areas where there is inconsistent interpretation 
of the legislation.
    Mr. Peters. I hope we can work on that in the next 
Congress. I think it should be ``thou should.'' Those are 
opportunities to provide some really clean energy that is 
baseload power, and I think we could take advantage of that. So 
I will look forward to that in the next Congress.
    And I yield back.
    Mr. Upton. Mr. McKinley.
    Mr. McKinley. Thank you, Mr. Chairman.
    This is something that when I had my engineering 
architectural practice, this was one of our specialties, was 
the energy efficiency and performance contracts. So I have 
quite a familiarity with this.
    But I am curious now, Cato has come out recently and said 
that there are some 360,000 Federal buildings across the 
country, or maybe around the world, especially because of the 
military.
    And if this hue and cry coming from some of the new Members 
about making our buildings all energy efficient, state of the 
art within 10 years, I am just curious about the fiscal 
challenges that that is going to pose to all of us.
    So if we could start, Mr. Surash, you with the Army. The 
Army has the majority of the buildings, Federal buildings. Do 
you have a projection at all of what that cost might be to 
bring all your buildings up to state-of-the-art highest 
efficiency within 10 years? Do you have an idea what that might 
cost?
    Mr. Surash. Sir, I don't, but I can attempt to provide that 
in followup. I mean, the Army has many facilities. Due to other 
priorities, we are not always able to devote, frankly, the 
resources that----
    Mr. McKinley. Well, that is the second part is where I was 
going to go with the Army is that if we are going to put all 
this into energy efficiency--and listen, I am a very strong 
supporter of that--but what effect does that have on our 
national security and our preparedness? So I would like to see 
the--how that contrast could be with that.
    Do you have within the Army a cost-benefit ratio that you 
try to consider before you do a project?
    Mr. Surash. We are very focused on lowest life cycle cost, 
sir. So we would be willing to spend an extra dollar upfront 
when we are doing something to save $1,000 over its life cycle.
    Mr. McKinley. Sure.
    Mr. Surash. I can assure you that any of our new projects 
or major upgrades or modernizations we are providing are very 
efficient. We are meeting statute requirements and regulations, 
so that is all being done.
    Mr. McKinley. OK. Let me go to Kampschroer with the GSA. 
How about the same thing? Do you have an idea, projection, an 
estimate of what it might cost to bring our buildings to energy 
efficiency within the--state of the art within the next 10 
years? Do you have an idea of what that might cost?
    Mr. Kampschroer. I do not have that idea today, and I would 
be happy to do a little research and get back to you on that.
    Mr. McKinley. If you could. Let me just say, while I have 
got your attention, is that a reasonable goal that we should 
set aside? We have got modernization, upgrades, other things we 
have to do to our buildings. Is this the right thing to do to 
make our buildings energy efficient within 10 years?
    Mr. Kampschroer. I think that is a goal that the Congress 
could set, and we would do our damndest to achieve it.
    Mr. McKinley. Yes. I hear you say that, and that is a good 
political answer, but I am curious about what the cost would 
that be and how we do that.
    Same thing with the VA, how much do you think it is going 
to cost to--if you had a timetable of 10 years to make every VA 
facility across this country state of the art, highly 
efficient, what do you think that might cost?
    Mr. Bradley. We have no metrics on the cost, but we do know 
that within our portfolio, over the next 10 years, we have 
roughly $50 billion worth of upgrades and improvements that 
need to be done to VA's infrastructure and facilities. A 
portion of that cost would be energy efficiency, water 
conservation, and so forth.
    Mr. McKinley. OK. That is----
    Mr. Bradley. What percentage, no idea.
    Mr. McKinley. Can you get back to--I would like to start 
building a file on this of what the cost could be for VA, for 
GSA, and for military. Maybe we just focus on the Army and 
then, of course, the Department of Energy.
    So just closing is, you have--you are following the same 
thing I am about what--some of the proponents of this Green New 
Deal. For each of the four of you, is it reasonable to expect 
that we can achieve these things within 10 years? Yes or no?
    Ms. Nicholls. Yes.
    [Additional information submitted by Ms. Nicholls follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]    

    Mr. Surash. Sir, we would try. I could not commit it. I 
would have to do a little bit more work on this.
    Mr. Kampschroer. I think it is a reasonable goal, sir.
    Mr. McKinley. It is a reasonable----
    Mr. Bradley. I think it is a goal. Reasonable, I am not 
sure, based upon the other needs of VA and so forth. We are 
building energy efficiency and energy conservation into all of 
our projects, so we are getting a lot of that through that. But 
the overall goal, it would--I would like to be reasonable, but 
I am not sure.
    Mr. McKinley. Thank you. I yield back.
    Mr. Upton. Mr. Green.
    Mr. Green. Thank you, Mr. Chairman and Ranking Member Rush, 
for holding this hearing today. And following my--I am glad to 
follow my colleague from West Virginia.
    Federal energy management is an issue that we have been 
trying to address for years. Having programs that permit--
promote energy efficiency, conserve water, and reduce emissions 
should be part of Federal building management. Energy 
efficiency improves--improvements are often difficult to obtain 
due to budget constraints and competing agency missions. I am 
glad that we are taking the time today to look at what we are 
doing right or see where improvements can be made.
    Under current law, often referred to as section 433, bans 
the use of all fossil fuel generated energy in Federal 
buildings by the year 2030. It has been 11 years since this law 
passed, and not only are we not on schedule to meet the 2030 
target, but we are not on schedule to meet the 80 percent 
reduction in 2020, just 2 years away.
    Neither the Obama administration nor the Trump 
administration have created regulations to implement the law. I 
don't believe these goals are achievable as such, and I 
introduce legislation along with my colleague on our committee, 
Congressman Buddy Carter, to replace these provisions with a 
series of energy efficiency measures that can be implemented 
today.
    My questions are, does the administration believe that 
section 433 is implementable? I will just go down the list, if 
you know what the administration's stance is on this.
    Ms. Nicholls. I do not know where the administration stands 
on particularly 433. Executive Order 13834 does promote the use 
of cost cutting and waste reduction through energy efficient 
upgrades to promote resilience and looks at an all-of-the-above 
strategy for energy.
    Mr. Green. OK.
    Mr. Surash. Sir, I am not familiar with exactly where we 
stand, but the direction the Army is going in is we are laser 
focused on resilience. There are a lot of threats out there 
that we are very worried about. And at the same time, we are 
interested in efficiency and the lowest life-cycle cost as we 
move forward.
    Mr. Green. But is it true though that we are not going to 
meet the 80 percent in 2 years, much less 100 percent in----
    Mr. Surash. Sir, I don't have those details at my 
fingertips. I will provide that as a followup.
    Mr. Green. OK. Thank you.
    Any other responses?
    I am just concerned because Fort Hood in central Texas--it 
is not my area, I am in Houston--it is probably the biggest 
Army base, I think. And just trying to put investment in that 
would take a significant amount.
    Do any of you believe a focus on energy efficiency would be 
a better target to aim for--than a complete fossil fuel ban? 
Just to have steps to take over a period of years instead of 
saying we are going to do this.
    Mr. Surash. Sir, if I can just quickly address Fort Hood. 
The Army has a project down there where half of the electricity 
is being provided by a wind farm. It is actually--it is a 
couple hundred miles away. And the other half we are buying 
from the local utility, and we have got a real good deal there. 
We are very happy with that.
    Mr. Green. Yes. Any other to that question?
    Well, I have admit, coming from Texas, and this Energy 
Subcommittee has done a lot of hearings on what is happening 
with--and oftentimes 40 percent of our baseload is from 
windmills, whether it be from west Texas or south Texas. And 
other--and since natural gas is so cheap, it is easy to turn on 
a burner and turn on a--can you elaborate on how energy savings 
performance contracts, or ESPCs, are a valuable tool toward 
meeting the efficiency goals? Yes.
    Mr. Kampschroer. Mr. Green, thank you for the question.
    Given the amount of repair and alteration request, which 
all mentioned, and the lack of ability to fund all of that, 
ESPCs and UESCs and energy conservation are a key component to 
being able to achieve energy conservation but also to improve 
the deteriorating infrastructure of the Federal Government.
    And I think, as Mr. Bradley pointed out, not every item on 
our list of deferred maintenance is an energy item. So there is 
never going to be, under the current statutes, the ability to 
do all of the repair and alteration backlog with energy savings 
performance contract. However, they can be a key component and 
should be.
    Mr. Green. OK. I know I am out of time, Mr. Chairman, but 
maybe the committee could look at that and say, you know, 
instead of this hard 100 percent use, we could actually see 
progress over the next few years and--because the electricity 
market and energy market are changing literally every day, so--
and thank you for your time.
    Mr. Upton. Thank you, Mr. Green.
    Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman.
    And before I start my questions, I would just like to say 
to Mr. Green, I know you are not going to be coming back next 
session. Best of luck to you. It has been a pleasure serving 
with you on our----
    Mr. Green. Thank you.
    Mr. Johnson [continuing]. On our committees. Appreciate 
that.
    Mr. Green. Thank you. I wish my wife was here. She would 
never believe it.
    Mr. Johnson. Mr. Bradley, for you, you know, I am a veteran 
of nearly 27 years myself, and I know that the work that the 
Veterans Affairs Department does is extremely important. I 
would think that the health and comfort of our Nation's heroes 
is, first and foremost, in the minds of executives when they 
are making management decisions, including changes in your 
energy management plan.
    Can you tell us a bit more how our veterans are considered, 
their health and welfare, when making energy management 
decisions?
    Mr. Bradley. They are considered in the way that we put 
together our various projects and so forth, the impact on the 
care and the services that we provide to veterans. That is one 
reason that every energy conservation measure that we see, we 
look at the impact on the operations; we look at the impact on 
the veterans, being able to serve the veterans, decide 
strategically what is the priority as far as what needs to go 
now, what needs to go later, the impact on care. We look at all 
that before we decide which ones we go to, and then we set up a 
site development plan that we work with the various ESCOs 
achieve.
    Mr. Johnson. And you have got multiple sets of eyes that 
are looking at all that?
    Mr. Bradley. Yes, sir, from up and down the VA.
    Mr. Johnson. OK. How does addressing resiliency and 
reliability of our energy delivery systems impact how the VA 
cares for our veterans, and how can the VA further improve 
those efforts?
    Mr. Bradley. From the resiliency standpoint, VA is a 24/7 
operation. We have within all of our designs, our 
implementation of projects, our implementations of retrofits, 
resiliency built in, resiliency and reliability.
    With being a 24/7 operation, we are there to serve the 
veteran at that time, so we have got to make sure everything is 
up and running, the equipment is running, the operating rooms 
are conditioned properly, the sanitary is there, things such as 
that. This is something that we constantly build in.
    Mr. Johnson. OK.
    Ms. Nicholls, in your testimony, you discuss how the 
Federal Energy Management Program will continue to refine 
practices relating to measurement and verification. Can you 
discuss some of the challenges in that current work, and do you 
believe there is a role that Congress will need to play?
    Ms. Nicholls. In terms of what we are doing, we continually 
work with agencies and ESCOs to ensure that M&V is happening, 
and then we analyze the M&V reports to ensure that the savings 
are being retained. We constantly want to improve the 
accountability and transparency around M&V.
    There are challenges that M&V is not necessarily 
consistently applied and utilized throughout the Federal 
Government, so training and providing training of full 
contracting teams, both those technical energy managers and 
contracting officers, would be something we would like to see 
continue, as well as clarity, again, for the need to use 
Federal Energy Management Program guidelines around performance 
contracting.
    Mr. Johnson. OK. Are there other issues that the Federal 
Energy Management Program is looking at or plans to more 
closely examine after it gets done with its measurement and 
verification work?
    Ms. Nicholls. We continue to do our life of contract 
support and quality assurance where we are looking to make sure 
through the use of data collection and eProject Builder that we 
have sound, viable projects and case studies throughout the 
Federal Government, and also looking, again, at clear and 
consistent understanding of legislation interpretations for 
these bigger complex projects such as resilience, leveraging 
appropriations with performance contracting.
    Mr. Johnson. OK. Right on time. Mr. Chair, I yield back.
    Mr. Upton. Mr. Doyle.
    Mr. Doyle. Thank you, Mr. Chairman.
    Mr. Surash, battery storage paired with renewables or any 
other type of energy production can lead to energy efficiency 
and resiliency for microgrids and isolated military bases. Is 
the Army taking steps to utilize this technology, and how does 
the Army determine which technologies are preferable for a 
given project?
    Mr. Surash. Thank you, sir. Yes, we are interested in all 
the above. First of all, our view is we are currently 
technology agnostic, so we are looking for what the market 
could bring. Now, our focus is resilience, but that is very 
complementary to the legacy focus on efficiency and 
conservation and, of course, lower cost.
    I can just give you a quick example. It happens to be out 
in California. We are using an enhanced-use lease, so this is a 
deal where a third party is going to come in and generate power 
and actually sell it to the market. And we are only going to 
want it during a contingency or when the grid goes down.
    That is an active procurement right now, and it appears 
that the proposer is going to bring in--in the case out there, 
it is going to be a PV with a very large battery storage and a 
microgrid and a little bit of an either natural gas or diesel 
generator to ensure that we have a 24/7 availability of power.
    Mr. Doyle. Thank you.
    Mr. Kampschroer, you speak about opportunities that deep 
energy retrofits present. Are there challenges to deployment, 
and how are you trying to address those challenges?
    Mr. Kampschroer. In any large and complex construction 
contract, of course, there are challenges, and we do look at 
that. One of the principal ways we are doing that is by having 
very consistent contracting support centralized so that we can 
get not only the best experienced contracting officers but also 
consistent legal interpretations that we use nationwide.
    Secondly, as with the Army, we are looking for a--somewhat 
an agnostic approach to what is proposed. But what we have 
found is that working in partnership with the companies, we get 
a much better result than just keeping everything hands off. So 
we use our engineers, we use their engineers, and we work 
together with the building manager to see all the things that 
can be done in the building and push for the deep energy 
retrofit.
    And I mentioned things like leaking roofs. We have been 
able to put that in there. We have been able to incorporate, 
for example, in San Diego battery storage that enables us to 
take advantage of the demand response systems there which saves 
money--and it is not just energy but money that we are also 
focused on savings--and then consistent management over time of 
the contract.
    Mr. Doyle. I meant to ask you too: I know you noted that 
there is a backlog, a repair backlog of $150 billion. It is not 
all energy. But I am just curious, how does GSA assess and 
prioritize projects to address the backlog? Is there a 
methodology to that, what you do first?
    Mr. Kampschroer. Yes, there is. We have an organization 
that consists of portfolio and asset managers that looks every 
year at a 5-year-forward look at all of the repair 
requirements, sets priorities based on a series of criteria 
that we develop and modify every year; looks at, you know, how 
long do we intend to be in the building, what is the condition 
of the building, what is the urgency of the mission, what are 
the needs of the agencies.
    It is important for GSA also to look at it not just from 
the pure real estate point of view but also the point of view 
that we only exist to serve the mission needs of the other 
agencies. So we are looking very closely with the agencies that 
we serve as to what their needs are, and we prioritize them 
accordingly. And we go through that set of priorities using 
some fairly modern systems for analyzing them in order to come 
up with our budget request every year.
    Mr. Doyle. Thank you.
    Mr. Chairman, I will yield back.
    Mr. Upton. Mr. Long.
    Mr. Long. Thank you, Mr. Chairman.
    And I will yield my time to my good friend from the 
Bluegrass State, Mr. Guthrie.
    Mr. Guthrie. Thanks. You didn't tell me ahead of time you 
were going to do that. So I appreciate that very much. I know I 
am----
    Mr. Long. You have been asking me all day to do it, and you 
didn't know I was going to do it?
    Mr. Guthrie. I appreciate it very much. And I am on the 
full committee but not on the subcommittee. I wanted to come 
because, Mr. Surash, you and I participated in an exercise at 
Fort Knox, which is in my district. Fort Knox is obviously a 
key component of the Army's function with Human Resources 
Command, 1st Theater Sustainment trains most of our officers.
    And we experienced in Kentucky the 2009 ice storm, so we 
are talking about resilience and being down. Things were down 
all the way across Kentucky and affected Fort Knox. And, of 
course, Kentucky is blessed in many ways, one is that we have a 
lot of natural gas. So we are able to--so Fort Knox is able to 
go off the grid and be resilient. We were there to experience 
that exercise when they showed they could go off the grid.
    And while Fort Knox is unique because of Kentucky's 
abundance of natural gas, can you speak in general how the Army 
is taking full advantage of natural resource production on 
bases across the country to support energy resilience and Army 
readiness?
    Mr. Surash. Yes, sir. Congressman, it was great to be down 
at Fort Knox with you in late October to witness that very 
successful exercise. And thank you for your assistance with 
section 320 of the National Defense Authorization Act to remedy 
things down there with respect to the Army's drilling for 
natural gas.
    So this is something we are very interested in, and it is 
because of resilience. That is our focus. So we are interested 
in working with the Congress and the Department of Interior and 
the Department of Defense to see where it would make sense to 
do something similar to what we have at Fort Knox where we 
essentially are able to produce our own natural gas and 
provide, you know, power and heating and cooling in a very--it 
is very efficient. It is very low cost, but it is very, very 
secure.
    And probably at the top of our list would be the McAlester 
Army Ammunition Plant out in Oklahoma. There are a couple other 
installations also that we are very interested in, but we are 
actively working this issue right now.
    Mr. Guthrie. OK. Thank you.
    And I know, as you have talked resilience several times, 
when the Army looks at installations, they specifically 
emphasize the ability to continue operations off the grid. And 
I know Fort Knox has done that. So that is a big plus for Fort 
Knox that they are able to be off the grid. I know not every 
base has that ability to do so.
    Mr. Surash. Congressman, that is right. And actually the 
current Army policy is focused on facilities that support 
critical missions and what--we would like them to have a 
minimum of 14 days ability to continue to operate. So, in my 
lane, that is energy and water sorts of considerations. And 
Fort Knox, you know, absolutely has that with respect to energy 
and water.
    Mr. Guthrie. Well, thank you very much. And I appreciate 
that. And those are the questions I had.
    But before I yield back to Mr. Long, just to answer Mr. 
Olson earlier, so, Mr. Surash, you were a career Navy officer, 
but you now work for the Army. So ``Go Army, beat Navy,'' 
right?
    Mr. Surash. Congressman, sometimes I seem to say, ``Go 
Army, go Navy,'' and I seem to get away with it.
    Mr. Guthrie. OK. That sounds good. I notice your boss was 
on the field----
    Mr. Olson. Cop out. Cop out.
    Mr. Guthrie. I will yield back to Mr. Long.
    Mr. Long. Well, thank you. I didn't know you were going to 
yield back to me.
    Mr. Bradley, in your testimony, you highlight the success 
that the VA has seen in reducing its energy cost through energy 
savings performance contracts and utility energy service 
contracts with a savings of over $230 million since 2008.
    How have centralizing the management of the ESPCs and UESCs 
through the VA Energy Management Program helped the VA maximize 
energy savings, and is this something that could be replicated 
across other agencies?
    Mr. Bradley. The way we have done that is that we have 
centralized the procurement of the ESPCs and UESCs with a 
central contracting arm in Ohio, Cleveland, Ohio. By doing 
that, we have the expertise together of doing ESPCs and so 
forth in conjunction with our field energy managers that are 
identifying the ECMs and things like that.
    And with the centralization, everyone understands how the 
contracts are set up, how they are put together, how they are 
negotiated, how you are going through the investment grade 
audits, things like that. When you decentralize it to 
individual contracting people in the field, they may be doing 
one UESC or ESPC in their lifetime. These guys are working it 
every day, and that is how we get the efficiency of what we are 
doing.
    Mr. Long. And is that something you think could be 
replicated throughout other agencies?
    Mr. Bradley. It certainly could be, yes. I am not sure what 
the other agencies' contracting arms, how they are set up, but 
it could be replicated, and we have promoted that quite a bit.
    Mr. Long. OK. Thank you.
    Mr. Chairman, I yield back.
    Mr. Upton. Mr. Welch.
    Mr. Welch. Thank you very much.
    And I thank all the panel for the good work you are doing. 
I really appreciate it.
    President Trump's 2018 Executive Order 13834, it said some 
of the really good things about needing to improve Federal 
energy and water efficiency. It didn't provide details or 
metrics. In my view, no details, no metrics, no progress.
    And the question I have for really all of you is whether 
energy efficiency has been less of a priority since the new 
executive order was released. Has there been a dropoff in new 
performance contract project starts?
    Maybe I will start with you, Mr. Kampschroer.
    Mr. Kampschroer. For GSA, energy efficiency and improving 
building operations has remained a high priority. It has not 
diminished. We awarded a large number of contracts, and there 
is kind of a cyclical process for identifying and bringing 
forward new contracts.
    But we have continued the program, continued the 
centralized program for energy efficiency, and we continue to 
work on improving the operations of buildings even without 
energy performance contracts through better use of the existing 
funding streams that we have and prioritizing the operations of 
buildings.
    Mr. Welch. Mr. Bradley.
    Mr. Bradley. We essentially have not slowed down. 
Basically, we are doing 25 percent at our facilities a year, 
looking at energy conservation measures through audits. And, 
with that, we are putting together ESPCs, UESCs because we see 
this as a way to use nonappropriated dollars that essentially 
we can use in other places to get the energy efficiency, to get 
the water efficiency, and, in concert with that, get some 
upgrades as we go through.
    Mr. Welch. Let me ask you--thanks. I will ask you a 
different question, Mr. Surash.
    Thank you, gentlemen.
    You know, the longer--the deeper retrofits have a longer 
payback, and that is tougher sometimes to make the numbers work 
as quickly as you want. How much does your agency rely on 
performance contract to deal with these deferred maintenance 
issues where you are trying to get a longer payback but 
actually longer term savings as well?
    Mr. Surash. Sir, we are doing a lot. As my statement 
mentions, we are the largest user of these third-party----
    Mr. Welch. Right.
    Mr. Surash [continuing]. Public-private venture agreements 
in the Federal Government. Now, we happen to also have the 
largest amount of infrastructure.
    So we find it very complementary to the direct funding we 
are able to receive. You know, it really helps us with 
efficiency, but we hope to use these deals to help us 
strengthen resilience at our installations as we go forward.
    Mr. Welch. So you are moving ahead?
    Mr. Surash. Absolutely.
    Mr. Welch. All right.
    Ms. Nicholls, you know, at the Federal level, we have heard 
from all of you, but there is a big opportunity to get the same 
benefit in municipal buildings, State buildings, State 
facilities, schools, hospitals. And as you know, the States 
often lack the resources, including kind of the infrastructure 
of people like you who have got some experience on how you make 
it work.
    And the question I have is, do you have some practical 
suggestions in how we can encourage more of this work at the 
State level, and do you see any opportunity for Congress to 
partner with States in a way that we could help provide 
technical assistance in training where it is warranted?
    Ms. Nicholls. Yes. I do see opportunities to facilitate 
performance contracting at the State and at the local 
government level. FEMP has partnered with the WIP program 
within EERE to help facilitate to training of best practices 
for performance contracting. Last year, in last August, we had 
our large training event that also included State and local 
governments, where we went through best practices for 
performance contracting.
    In addition, our training is open, and our tools are agency 
agnostic. We try to defederalize our tools and resources. Many 
agencies are members of communities, so there is synergy that 
we can learn from each other, and so any help to help us 
bolster our ability to provide training and provide our 
resources both to the Federal and State level would probably be 
helpful.
    Mr. Welch. OK. Thank you very much.
    And I yield back the balance of my time.
    Mr. Upton. The gentleman yields back.
    I would just note that we had a very good attendance today, 
but we have other subcommittees that are meeting. We may have 
some questions that may pop up by other Members that were not 
able to come, but we really appreciate your testimony, your 
thoughts, your answers.
    And I look forward to working with my new chairman, Mr. 
Rush, next year to continue to make sure that this is a 
priority, and appreciate all the work that you do.
    And, with that, the subcommittee stands adjourned.
    [Whereupon, at 11:49 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Greg Walden

    Today's hearing exploring ``Public-Private Partnerships for 
Federal Energy Management'' continues our oversight of the 
Federal Government's efforts to improve energy efficiency and 
modernize its operations. Since the 1970's, Congress has 
encouraged Federal facility managers to establish conservation 
goals and reduce energy use. Through subsequent legislation, 
Congress authorized a number of tools to help Federal agencies 
improve energy efficiency.
    Today, we are examining two prime examples of public-
private partnerships for Federal energy management: Energy 
Savings Performance Contracts (or ESPCs) and Utility Energy 
Service Contracts (or UESCs). ESPCs allow a private party to 
pay for energy efficiency upgrades in a Federal facility. The 
private company brings new technology and expertise to the 
table, and it gets paid back, over time, on the basis of 
reduction in the agency's energy costs. In the case of an ESPC, 
the energy service company is qualified by the Department of 
Energy to enter into the contract with the Government. With 
UESCs, the services and equipment are provided by the local gas 
or electric utility.
    ESPCs and UESCs have been in use since the mid-1990's, and 
Congress most recently reauthorized the programs in 2007. Since 
then, Federal agencies have increasingly relied on performance 
contracts to manage their facilities, leading to declines in 
energy and water consumption, and increases in the share of 
renewable energy.
    Through performance contracts, a wide array of equipment 
and services have been financed by Federal agencies without 
having to rely on annual appropriations, including, for 
example, new windows, lighting upgrades, new HVAC, and building 
automation systems. Federal facility managers are increasingly 
looking beyond the building envelope to improve efficiency, and 
we have seen innovative uses of performance contracts to tackle 
more challenging demands, such as on-site power generation, 
peak shaving capability, and energy infrastructure hardening.
    Today's hearing will allow Members to hear from several 
Federal agencies with firsthand experience overseeing 
performance contracts. We'll hear testimony from the Department 
of Energy, the lead agency authorized by statute to establish 
procedures and methods for ESPCs and UESCs. DOE provides 
training, guidance, and technical assistance, and compiles data 
about energy costs and savings, which they collect from across 
Government.
    Members will also hear from some of the agencies that are 
most closely involved with energy performance contracts. The 
Department of Army, the Government Services Administration, and 
the Department of Veterans Affairs are three agencies that have 
made significant investments in facility efficiency 
improvements with ESPCs and UESCs. Though they face unique 
challenges and very different mission requirements, they all 
have significant energy demands and a large footprint of 
facilities to manage.
    Today's testimony will help build our record and guide us 
as we move forward with legislation to improve performance 
contracting authorities. The committee has been hard at work 
this Congress, but there is one piece of legislation, 
particularly relevant today, that hasn't gotten over the finish 
line.
    Earlier this year, the committee reported Mr. Kinzinger's 
bill, H.R. 723, the Energy Savings Through Public Private 
Partnerships Act of 2017. This is a commonsense bipartisan bill 
that would encourage the use of performance contacting in 
Federal facilities. I look forward to continuing our work to 
see this bill pass the House and get signed into law. While 
today's hearing is not a legislative hearing, I expect the 
testimony and real-world examples will make the case for the 
targeted improvements contained in the bill.
    With that, I'd like to thank our witnesses for appearing 
before us today, and I yield back the balance of my time.


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