US Army Corps of Engineers
U.S. Army Engineering and Support Center

Third-party acquisition tools allow agencies to do more with reduced budgets

U.S. Army Engineering and Support Center, Huntsville
Published July 31, 2015

Using a Utility Energy Services Contract to leverage third-party financing for energy conservation infrastructure upgrades is paying big dividends for the Intelligence Community Campus in Bethesda, Maryland. The ICC-B is a 29-acre site in the Washington National Capital area that dates back to World War II. The Defense Intelligence Agency is the executive agent for the Campus renovation project.

The U.S. Army Corps of Engineers, Engineering and Support Center, Huntsville’s UESC program is working with DIA and the USACE Baltimore District to integrate a UESC project with a recapitalization project to centralize the heating and air conditioning systems in four buildings into a central utility plant; upgrade heating, ventilation and air conditioning systems; chillers; boilers; water heaters; and other equipment using a four-phase execution award time line. The combined capital investment for the design, labor and hardware systems awarded in the first three phases is approximately $51 million.UESC acronym image

“By incorporating the UESC, DIA is able to accomplish more with less upfront capital than they could have with just the construction budget,” said Michael Norton, chief of the Energy Implementation Branch at Huntsville Center. “This says a lot about the integration and synchronization of third-party financed acquisition tools with conventional construction acquisitions being managed by another USACE district.”

Luis Ayala, the senior technical expert (facilities/construction) of the project for the DIA, attributes the project’s success to two Huntsville Engineering and Support Center employees.

“Without Lisa Harris (UESC program manager) and Barbara Osterkamp (contracting officer), this project could not have been a success,” Ayala said. “We have been working this a long time, Equipment installation is nearly complete, and commissioning is well underway. It’s been a long, slow fight, but victory is in sight.

“Nearly 20 percent of the construction cost of the Intelligence Community Campus is being provided by the UESC contract that the Huntsville Engineer Center awarded,” Ayala said. “This is the future of federal construction and MILCON projects in particular. Once completed, Huntsville can be very proud of the fact that you folks completely changed the formula – and the expectations of the Intelligence Community in dealing with the new budget reality.

“Without the UESC, we could not have delivered the scope desired by the Office of the Director of National Intelligence (ODNI) and certainly not at the budget authorized,” Ayala said. “This entire recapitalization is still under $250 per square foot – and all buildings at the ICC-B are being constructed so they are either Zero Net Energy or Zero Net Energy-capable!  This formula will be repeated again and again in the future. Public Private Partnerships is the new normal.”

Phase 1 of the UESC project kicked off January 2014; work is expected to be complete in October 2015.

“We recently awarded Phase III of the project, but we are already working on the award for Phase IV,” Harris said.  The same contractor, Washington Gas Light Company in Washington, District of Columbia, will perform work under all four phases.

UESC is one of the third-party financing tools Huntsville Center uses to meet customers’ needs. UESC negotiates with local utility companies to provide various energy conservation measures, such as system upgrades and commissioning, deep retrofit projects, renewable energy, cogeneration plants and microgrids, at no up-front costs to the customer.

Under the contract, a selected local electric, gas or water utility company assesses the energy savings opportunities, fronts the capital costs, and designs and installs the equipment in the project.  The utility company is paid from the resulting savings from the energy conservation measures.

Project development and implementation costs can be fully or partially financed or be completely paid for upon project acceptance.  UESC also has a fast-track process to expedite awards for those energy projects with a short list of specific ECMs.

The UESC program provides several benefits to the federal customer:

  • Measurement and Verification (M&V) is optional for projects
  • Annual performance assurance inspections are mandatory for all projects
  • Older equipment can be replaced with newer more energy-efficient systems
  • Operations and Maintenance effort is optional for projects

“No one expected this to be easy,” Ayala said. “The Huntsville Engineer Center helped make this project a success, and for this you folks have a lot to be proud of.”