[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
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
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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
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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
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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:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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.
[all]