With billions of dollars of prospective markets for renewable energy and energy efficiency in the federal government sector, I am astonished at how uncoordinated companies are in this area. As one who guides federal facility managers, as well as companies aspiring to enter the market, I have some first hand perspective.
There are some distinct differentiations and decision makers in this emerging and evolving market. Some agencies have established approaches for pre-financed projects, meaning power purchase agreements or energy service performance contracts. In these cases, the government doesn’t procure (buy) products/systems, it just establishes the guidelines and format to share savings or buy electricity or thermal energy. The Department of Interior has designated sites on federal lands, the military services have net zero energy/waste/water bases and buildings. And for instance, the US Army has an EITF initiative for larger projects as well as a contractor preapproval (MATOC) of companies for these larger projects.
The General Services Administration (GSA) manages all the federal buildings, and have established goals conforming to Presidential Executive Orders, and previous Energy Legislation (EPACT’05, EISA’07, and ARRA’09). And they also have a procurement portal for themselves and other federal agencies (known as the GSA Schedule) , and the Department of Defense (DOD) has its own portal managed by the Defense Logistics Agency (DLA,), which has their own schedule of products and services.
Most companies anecdotally follow ROI’s (Requests for Interest), RFP’s (Request for Proposals), participate in MATOC and ESPC selections, visit Washington offices, visit regional contracting authorities, and visit actual facilities/military bases. Some companies focus on a subset of all of these and build a sub-specialty. And some try everything, and by sheer volume, get some percentage of success. Are there better approaches?
But first, here is a cursory overview. On 20 June 2013, deputy secretary of defense Ashton Carter issued guidance for a comprehensive defense energy policy. Specifically, he highlighted how changes in the department’s use of energy are needed in order to:
- Enhance military capability,
- Improve energy security (i.e., assured access to reliable supplies of energy and the ability to protect and deliver sufficient energy to meet mission essential requirements), and
- Mitigate costs.
With this guidance, Carter initiated a process for institutionalizing these priorities across the full range of defense energy activities, including operational and facilities energy, as well as energy-related elements of mission assurance. The resulting DOD issuance will adapt core business processes — including requirements, acquisition, planning, programming, budgeting, mission assurance, operations, and training — to improve the department’s use and management of energy. Carter’s memorandum provides interim guidance to OSD, the Joint Staff, Combatant Commands, Military Departments, and Defense Agencies. For example, the department will improve energy efficiency, invest in cost-effective energy sources (including renewable energy and energy efficiency), promote non-materiel and behavior-based solutions, address mission risks associated with energy-related infrastructure, and collaborate with other Federal departments and agencies to promote innovation that meets DOD energy needs.
In December 2007, Congress authorized the Office of Federal High-Performance Green Buildings under the Energy Independence and Security Act to enable and enhance federal leadership in the field of sustainable real property portfolio management and operations. The U.S. General Services Administration (GSA) coordinates and stimulates green building across the entire federal government, which includes over 400,000 owned or leased buildings containing over 3 billion square feet of space. In 2010, to examine whether green buildings deliver their promised performance, the GSA conducted a study of 22 representative buildings from the administration’s portfolio. Each building was evaluated on its environmental performance, financial metrics, and occupant satisfaction.
- The buildings in the study have aggregate operating costs that are 19 percent lower than national averages, at $1.60 per square foot, rather than $1.98 per square foot.
- The buildings in the study have a 27 percent higher occupant satisfaction rate.
- The buildings in the study have 36 percent fewer CO2 emissions than the national average
On October 25, 2013, the U.S. General Services Administration (GSA) announced that it has issued its recommendation on the federal government’s use of third party green building certification systems. GSA is required by law to issue a recommendation to the Department of Energy (DOE) on how the federal government can best use certification systems to measure the design and performance of the federal government’s construction and major renovation projects.
Where Does a Company Go from Here?
First, do you know your company’s strength?
While many companies pitch themselves, in many cases they try to “cover the field” rather than promote the top one-to-three assets they have to offer … technology, excellent integration, novel components.
Second, do you know how your company is different or unique?
This is usually what makes government officials take notice — why is what you do or offer or finance or install different from the “set” of companies in your field. Do you have a unique recipe or approach?
Third, can your company handle federal legal and budget requirements including proposal preparation, federal contract (procurement and acquisition) rules and requirements?
The federal contracting and procurement process is not easy, requires training and expertise, and has certain penalties if not followed. This means either building and internal capability, outsourcing pieces to those that have the proven experience, or teaming with another who does — as the principle and where you may be a prime subcontractor.
Fourth, are there strategic partners that make sense for your company?
Many companies have had ongoing contractual or project experience with the federal government. Some just are “mark up” houses which float “theme of the month” companies to play into agency priorities and initiatives. Usually, they are not the best partners. Other companies that are in analogous fields IT, critical infrastructure, back-up power, building construction, etc. and who have an ongoing government business may also want a strategic partner in the clean energy field. Many of these companies are regional or specific kinds of facilities so it requires some research.
Fifth, can this effort be leveraged to state and local government markets, or even corporate or institutional campuses or initiatives?
The same skills and capabilities that apply to the federal government sector, relate equally to state and local governments, where in many cases copy federal government procurement and contracting practices. In the last decade institutions like hospitals and universities, and even campuses of Fortune 500 companies, have similar requirements. It makes sense to create a portfolio approach either by region or by end-use characteristics.
With an increasing federal and state government market, there needs to be some fundamental planning and soul searching on the best strategy for market development. For many companies already in the field, I stress some reassessment to reorder and reprioritize approaches in an ever-changing and competitive world. The future looks bright with good strategies, focus, segmentation, and partnerships.
Lead image: Yes and no sign via Shutterstock