Kurmit Rockwell:
This FEMP's Just in Time ESPC webinars training series, session one, "Managing Your Investment-Grade Audit".  My name is Kurmit Rockwell, and I am the FEMP ESPC outreach and project development lead. The Just in Time training series is designed to give you timely information from program experts to help you award high quality, on time easily ESPC tasks. This is the first of three session and our goal is to take you through the first three phases of the ESPC process, which includes the request for proposal and the investment grade audit which is the basis for the proposal. For this training, we assume that you have already finished phase one and two of the ESPC process. Which includes ESCO selection through the notice of intent to award, session two and three in the series will focus on the review of the proposal and negotiations, and finally, crossing the finish line to pass the award.

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Slide 3. Before we begin, I would like to share with you FEMP mission, and resources available to help you with all aspects of your project. One of FEMP's main functions is to help federal agencies to achieve their energy and sustainability related goals. A significant way that we accomplish this is by supporting a suite of tools for energy projects. This includes, energy savings performance contracts, ESPC, ENABLE, utility energy service contracts, on-site power purchase agreements, and other incentive programs. All of these are described in detail at FEMP's website. In addition, all of the templates and tools that will be mentioned during today's training, along with key contacts for your ESPC projects will be available on FEMP's website.

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Our ESPC team is a great resource for your acquisition team. Whenever you have questions or need technical support, we have people that can help you with direct answers or help you obtain further assistance. A great way to officially coordinate your support is to contact your federal financial specialist. They are experienced in all aspects of project funding and ESPC. They will help you obtain your project facilitator and coordinate other technical and contractual resources to help you. An example of technical support is a preliminary screening of a renewable energy or combined and heat and energy project.           

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Your instructors today are very experienced in ESPC. Tom Hattery has been involved in ESPC as an FFS for about ten years and he's been involved in more than 50 ESPC projects. He is also one of our instructors for our comprehensive ESPC course.  Prior to FEMP he was an assistant director of the Maryland State Energy Office and he ran the state ESPC program.

Sam Espinosa was involved in contracting for 38 years and was contracting officer for ESPC projects when he worked for DOE.  Sam is also one of our instructors for our comprehensive ESPC training.

Tom Harris provides technical and training support for ESPCs through the National Renewable Energy Laboratory, where he works in the project development and finance group. He has a degree in electrical engineering, an MBA, and he is a licensed lawyer in Colorado.

So I encourage you to take advantage of your instructors and ask all the questions you have, no matter how small.  We may not be able to get to all of them today, but we will be following up on all your questions and evaluating if we can provide additional support services from FEMP's program. So I hope you find your training useful today and I encourage you to complete an evaluation form as soon as it's over. And I'm now going to turn it over to Tom so he can get us kicked off with the agenda.

Tom Hattery:
Thanks a lot, Kurmit. Folks, my name's Tom Hattery. As Kurmit said, I'm a federal financing specialist. I would hope that I have met and - so I don't know who all is signed in, but I would hope that I've met and talked to a lot of you, especially if you're doing projects in the Mid-Atlantic Northeast. Just at the outset I want to say, first, you know, one of the reasons that we're doing this, as Kurmit said, is that we, among all our trainings this one was kind of designed especially with the presidential initiative in mind about, hey, let's have something when people are trying to get their projects wrapped up, available to folks to make sure that they are either reminded of or have an opportunity to ask us questions about the process so that they can get these things done in time and for us to be there to help you do that. 

In that light, the way we work things here, a lot of times a federal financing specialist is there at the beginning and then a project facilitator sort of takes over. But don't forget we're there, whether you're from my region or one of my colleagues' regions - Doug Culbreth in the South and Midwest, and Scott Wolf in the West. If you do encounter a problem don't hesitate to call us, do keep us on speed dial. You know, our job is to make sure that you have whatever resources you need to get the job done.

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So let me turn back to the slides and tell you that today's webinar - first we're going to - even though the assumption is most of you folks are in the process of doing a project, we just want to do a quick overview of the beginning to end of the process, so you've got sort of that in a nutshell in your mind. We're going to talk about the team work being a key to success. That's true, you know, more with ESPC than probably any other procurement you will ever do.  The teamwork here is working with not only with DOE and our experts, but also with the contractor; there's more of a collaborative process working with a contractor than in any other procurement that I'm aware of.

We're going to talk specifically about the task order RFP, which is it is a true RFP, but it's a little unusual in the sense that it is only going to one contractor. So we're going to be talking about why we have that and how we need to use it to make sure that you get the deal you need in your project. We're also going to be talking about the investment-grade audit and the kick-off meeting in today's meeting, which is really the heart of develop - the IGA, investment grade audit, is really the heart of putting together what will become the fixed-price proposal. Then we're also going to talk about best practices and lessons learned, you know, just some tips that we feel we can give you from our experience, and not only from our experience, but also in talking to folks from the questions they've asked us.

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Okay, two slides up we come to slide 9, which is one of two slides of the streamlined process. As I say, most of you have been through the first few steps, but I'll go through it anyway.  Acquisition planning is very important; with ESPC it's required, just like most other procurements. It helps you put in place, you know - it helps you think through really what are the nuts and bolts that we're going to need and who's going to be responsible for what and so on and what is our goal and how are we going to do this procurement. Why are we doing it; why is the ESPC preferable to some other type of procurement that we could do.

Once that's underway or done you put out a notice of opportunity and do a contractor selection. There are a couple of ways to do that, and we work with agencies a lot in getting that done; we want to make it as streamlined as possible. So, you know, if there are any questions about that feel free at any time to contact any of the FFSs to help you through the process.

Once a contractor is selected, or it can also be part of the selection process, although it's a little bit more streamlined to deal with qualifications base and have one contractor do a preliminary assessment, you can have multiple preliminary assessments and have them used to do the final selection, down selection to a single contractor. At any rate, the preliminary assessment is done; we're going to go into that. Well, no, we won't, but that is basically to give you a scope of what your project is going to look like should you tell the contractor to go ahead and prepare an IGA for you. A lot of times people look at that as a proposal because it looks like a proposal, and they start really digging into it, and it is not a proposal; it is just the promise that, hey, this is the core of what we can get you if you let us go and develop a proposal for you.

Then you get into the IGA process. If you like the preliminary assessment you issue a Notice of Intent to Award, and that is the green light for the contractor to do the IGA. In a perfect world you'd have the task order RFP done at that time, and in the real world we try to get as much of the important information done, but it probably won' be done for some time yet during the process.  That's okay. That's something I want to emphasize, is not to worry yourself to death if it hasn't been completely finished, you know, sort of right after the IGA begins. The TORFP is going to be a document that is going to change as your project changes through the IGA development process, through what the ESCO finds out, through its further investigation, and from what your own staff decides as things are being found out, "Yeah, we want one of these. No, we want six of these. No, we don't want any of these."  You know, all those decisions along the way are going to change the elements of the TORFP.

The one thing I will say about it is that the things that you do need in there early the ESCO will definitely ask you about, because they're going to be the cost drivers. You know if you tell them that there are these certain security measures or building codes that they have to comply with that are really going to drive costs, they want to know that early so that they don't have to go redo their numbers later on. Okay.

So once they do an IGA that really turns into a proposal, final submittal for a proposal, you review that proposal, you do revisions to that, and also final negotiations. After final negotiations are done then of course you will find a task order award. Now of course you're not done.

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We're going to slide 10, where after you've made the award you're going to have a post-award conference where you're going to talk about - so when you have an award you have - there are different amounts depending on your project, but somewhere, 30 to, you know, maybe 70-percent, but mostly in the probably less than 50-percent designed documentation. So there needs to be final design done after award, and you're going to be having the ESCOs sit down with your technical folks and working that stuff out. The ESCO, based on that, will give you submittals and then the agency will approve those submittals finally when they are approved and you give the contract to the notice to proceed with construction.

And then construction commences, which is fairly typical, but at the end of construction it's not typical, you're back into the ESPC world, where a couple of things happen. One is training, which is extremely important. You want to make sure that you've got adequate training written into your contract and then make sure that the ESCO follows through with it so that especially if your staff is required to operate some of the gizmos that the ESCO is installing and that savings are predicated on that proper operation, that they have the proper training so that they can succeed at that.

And then also after installation typically we say 30 days, depending on the technology, can be different, but typically a 30-day run time, and then you do a post-installation M&V to prove that the stuff is working like the contractor says it's going to work and that the savings are predicated on it working. So if it's a boiler that's supposed to be a 95-percent efficient boiler and it's only 94-percent efficient, something's wrong and you don't accept it. So it has to show that stuff is as efficient as it says it is, and after that's been shown only then would you issue an acceptance of the completed project. It's only then that the ESCO can issue their first invoice for payment. 

That takes us into the last phase, which is phase five, which is the post-acceptance performance period, and that's the period that you think of that's, you know, we are allowed up to 25 years. Now the clock starts ticking when you sign the task order, but a performance period is the, you know, if you have two years for construction and the performance period can be up to 23 years. It's during that time that we have to make sure that everything continues to deliver the savings. So we have invoices and payments during that time, we have operations and maintenance per task order, and what that means is either side can perform the operations and maintenance, but regardless of who's performing it, it's the ESCO's responsibility to make sure the O&M gets done properly.

Modifications to the contract will typically take place from time to time; most of them are minor, some of them can be major mods to a contract, and we'll talk about that later, 'cause that's an important topic. M&V activities are really the heart of the program, its how we prove year after year to the budget folks, auditors, to anybody looking in at our projects that when we make a payment to a contractor that it is - that there is a commensurate avoided cost from which that payment can be made. Then after the performance period and the contract is finished, all terms and conditions and payments and the debt service is over, then the project is closed out and the ESCO has no further responsibility to you. 

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Okay, and so now I'm going to ask Sam Espinosa to pick up.

Sam Espinosa:
Okay. Thank you, Tom. Let me ask this first of everybody, can everybody hear me?

Kurmit Rockwell:
I can hear you loud and clear.

Sam Espinosa:
Cool. I'll take that as a move forward to the next slide.

Teamwork throughout the ESPC phases is very essential, and the reason that is important is because team members will change as you go through these phases. So what we do here in this teamwork exercise or this particular section is kind of go over the continuing, if you will, efforts that all the team members have and responsibilities as you're going through all five of the ESPC phases. 

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Okay, obviously when you put this particular requirement together the agency puts together an acquisition team. Typically - obviously the team does require a contracting officer and the site technical representative. That also could be the contracting officer representative for that particular site or the requirement, but you'll also find as you go through these phases is that - yes?

Kurmit Rockwell:
Can someone - what slide are you on? I can't get into the web page. Sorry, I've got to follow along with the slides.

Sam Espinosa:
Okay. I'm on slide number 12.

Kurmit Rockwell:
Okay. Thank you. 

Sam Espinosa:
You bet.  And again, what makes up that acquisition team are the folks at the agency, which are your facility managers, the maintenance staff, you also have your energy and design construction engineers, obviously your procurement and legal staff, and again, the budget and the comptrollers who are responsible for the payment for the particular contract. Also you'll find that different sites, that there are different unions that represent different trades, which may provide some information as you get through phase one through phase five. Also you may be a tenant at a particular site or agency customers, also important, they'll provide you some guidance as you get to that facility. 

The other thing to keep in mind is not all the government facilities are brand new; obviously this is why we're doing the ESPCs, but again, we've got to take into consideration environment and the health and the safety standards that are required for each site. Also for particular sites there is also an ESCO representative necessary, either to escort a particular ESCO onto the site or there is a security responsibility to get individuals at different sites.

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Moving on to slide 13, again, the plan, the acquisition plan has already been developed. As Tom said earlier, what that is is the strategy that the agency has established to move forward going through the phases. That particular strategy obviously has been evaluated by the agency, but again, as you're going through these phases, which obviously at the time they're changing, they take anywhere from 12 to 16 months, you'll find that individuals change that have reviewed the strategy and the continuing efforts for the team is to keep everyone informed of the strategy which is developed in writing in your acquisition plan.

Again, one of the elements of that is to achieve the objectives obviously you have defined team roles and responsibilities as a part of that acquisition plan. You've also looked at whether the site needs to support for the project. As part of that you are going to educate the staff members and the tenants about the project, the process, and the benefits. We strongly encourage as you go through these phases that you continuously educate staff members that happen to join in different phases, because that will absolutely help you as you get through the phases. 

The other important piece of this is that there's always a champion in your organization that will assist the CO and through the agency for purposes of award the individual who is a champion obviously should be identified early, and hopefully the individual champion of that particular agency hangs on all the way through award of the contract. Again, those members change, so the key ingredient is to continuously provide education to the new members as they come into those phases. Again, the other one is very important as to keep everyone on track. There is a schedule that's put together from, if you will, the time that you set to give the acquisition plan to award and following the construction and those particular phases, and it's up to the folks within the team to encourage each other to meet both particular, you know, milestones to ensure that the contracts or the award is on time.

Also as you go through this particular any phase that you have, here we - FEMP specifically has experts that will help you in any one of the phases. There are a lot of times when teams do tend to get a little bogged down on a particular phase or a particular problem. FEMP does have the experts where they can reach out and provide you answers.

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Moving on to slide number 14, again, the efforts are essentially will be carried by the contracting officer, the energy and facility manager, along with - which could be the contacting officer rep.  You also have other acquisition or team members and they will get engaged as you move through the phases. Again, some of the elements that may or may not cause some particular concerns because individuals may not have the experience and the acquisition team, again, reach out to them and they'll be more happy to provide either a site-specific type of review or any particular questions you may have of a particular phase, they'll be more than happy to answer that particular question.  Also it may cause some type of questions with obviously the complexity of the project and the size.

The other thing to keep in mind is as the COs go through this process is the approval process. The approval process is by agencies are already written, so the key now is as part of the team is as you know who do you - the approval proc - who do you go to for the approval process in advance it would be best to educate them about the actual ESPC, where the process is in the event they are in that approval cycle. Again, the key ingredient is to ensure that you communicate and in the - because in the event, as you come up to a particular phase and it continues to educate, the project moves forward, because once you do a little backtracking obviously the schedule becomes - it's hard to catch up. So the key ingredient is to keep everybody educated as you go through the phases. Specifically individuals that have that approval chain or in that chain and request what particular document here would you like to look at and is there any particular education that they would like to have, whether it be it by the agency or FEMP, we'd be more than happy to provide that to them.

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Okay, moving on to slide number 15, the acquisition team members. Obviously, you, as I said earlier, you've got the CO staff and the acquisition staff that deals with their review staff, whether it is legal, policy, and those types of folks. Responsibilities always see they must ensure that to be appropriate regulations are adhered to within the confines of the contract. They will develop the contract documents, and as some said, if you go to the FEMP website there are some templates there that will assist the CO getting to the next step of the phases, particularly for those contracting documents.

We also have scope and pricing individuals that would be more than happy to assist you to ensure that you get that particular contract in the best interest of the agency, followed by award to your task order. So again, the acquisition sees the responsibility to ensure that the invoice was received and paid to the term. Again, that's administrative responsibility. Once the contract is awarded FEMP also has provided that service to all federal agencies once these contracts are awarded, that they will be more happy to assist you in that particular endeavor.

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Moving on to number 16, what makes up the technical folks? Again, as we go through these slides the technical acquisition folks sometimes change. Again, the key is to keep everybody educated on the ESPC so that this particular process moves forward within those milestones. Again, your members will include your energy facility manager; you've got your engineering folks at the site.  What's the deal with the energy, the planning, design, the construction phase of these particular ESPCs, you have O&M, and again, you may include an O&M contractor; it could be a management and operating contractor or just a particular contractor if you have a particular site that has that responsibility, will be a member to that. Obviously those folks do know that particular case sometimes a little better than obviously the ESCO, so it's good to have them onboard. 

Again, any requirements for the environmental safety and health come from your specialists at that particular site. And again, their roles and responsibilities are pretty clear; they act as technical representatives of the COR, our member of the COR, contacting officer rep is delegated the responsibility by the CO, and that particular contacting officer rep has the authority to write technical direction. That's that responsibility. Again, part of that responsibility, they identify the project goals, as Tom was alluding to, the energy goals by presidential letters, they support development of the contract documents, because as you well - as I know the contacting officer, the technical pieces of the contact I leave it pretty much in the hands of technical folks who assist me, just need to get that into the contract. Again, they support the ESCO project development at the site. They will also review deliverables because they are the technical experts at the site to understand what the deliverable is, provide oversight during construction, and in the event there was an issue they obviously get back to - the COR will get back to the CO, and again, in the event that there was any particular issue at that time and continue to meeting the milestone, FEMP does have experts to assist you in that particular endeavor. And again, the review and approval of the interview report we do have within FEMP. Again, team members that will assist you and get you those reports also.

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Number 17 slide, other members that make up, that would be your tenants, like we said earlier, union representatives, labor, safety, site security, and real estate. And again, it's good to keep these folks involved because in the event that the ESCO does go to the site these individuals do understand not only that they are there for a particular purpose, but secondly, they will know that they're there at that particular time. So it's good to share that milestone schedule with those folks at the site so everybody understands who's coming at the site and plan so that there are no, if you will, slowage, if you will, from the milestone. And again, they will consult and support the project development design installation.

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All right. Now the other thing we have for best practices for achieving, again, the timeliness of the award, which is very important, is to ensure that your project champion identified early, as I said earlier, and educate that project champion to ensure that the individual knows during the phases where this particular ESPC is going and who the review folks are. Your management change is very important because they are the ones that will be rejoining.  Again, the key ingredient here is to ensure that you provide them the milestones; secondly, what documents will be provided to them to look at; thirdly, I think another good piece is to ensure that you know what documents management would like to see for this particular requirement and provide them early so that obviously you're on schedule and on time.

Also management has - everyone knows they do have their own priorities, so it's good to bring the thing early and provide that to them so that they can hopefully make this a priority within the organization. To ensure that a couple of things also is they have to make this commitment to ensure that they also meet and provide support to the team so that they can move on to the next phase.

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Okay, moving on to best practices, slide 19. Again, you prepare - you establish product objectives, you expedite the acquisition, obviously the CO ensures that you've met the foreign agency requirements. Agency-specific requirements obviously are those that the CO will probably put into your statement of work, and work statement in Section C of the contract. Again, put your team together early. As you do that, at that stage you will also know who - what the roles are, who's responsible for what, management expectations, which is very important, and also to gain commitment from your staff and stakeholders. As this particular ESPC or this type of contract moves through the phases different agencies have different areas where they would like to have those reviews, and again, it's good to provide that information early to those folks within those phases to ensure you meet the milestones.

And again, as you're going through the project keep the individuals informed of the activities and where this particular project is at all times, that way you keep it on the front burner and you keep it moving to ensure that the ultimate goal and objective is to ensure that you receive savings early. And again, prepare for team member turnover. As we said earlier, you've documented your process, your acquisition plan, and as you go through the phases it's documented. In the event that you lose a team member it's good to provide that information to them and educate them so that the ESPC continues to move through the milestones, schedules.

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Okay, now the task-order RFP on the next slide. Again, the RFP, essentially we have a shell. What happens now is the agency will use that shell and put in it within Section C site-specific requirements coupled with Section H of the contract special provisions, which is site-specific clauses or special provisions that are necessary in order for them to ensure that they have a complete requirement for that particular agency at the particular site.  Investment grade audit, as I said earlier, is obviously is used to develop that particular performance work statement and is used for purposes of the ESCO to provide a final proposal for review for the agency.

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I'm on now slide 21 and now we are in phase three, which is we went out and requested a proposal and getting into the investment grade kickoff.

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What this particular chart shows is the draft and the issue with TRP comes to the CO, the CO will get that from the IDIQ contact in Golden. Again, you will have the shell followed by going with Section C, which is the requirement, which obviously is developed through the IGA process. In Section H, obviously special provisions are those site-specific requirements that are necessary to complete that CORP, followed by the IGA kickoff - we have an IGA kickoff meeting, which if you go to the FEMP website we have recommendations of what is - we would like to have at those kickoffs, and then also the ESCO at that point following the meeting. It connects the IGA and that is also discussed during the IGA kickoff meeting.

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Slide 23 now depicts that, again, the IDIQ contact from Golden has the general scopes and the terms and conditions for this type of contract. This is obviously an ESPC fixed price contract, and followed by the TORFP, which at that point you will be given a - the task order RFP will come from the IDIQ up in Golden, the CO will be assigned a TO number or task order number, if you will.  At that point in time the site agency-specific requirements that I put in, like I said, as you're going through the IGA followed by Section H, which is special requirements, special provisions, followed by within the IGA you will now formulate your proposal which you will now have the technical specs and followed by the proposal; you also have your financial schedules, which you will have five financial schedules. And that will also be provided to you in more detail as you go through the phases through this webinar.

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Okay, again, the purpose of the TORFP, you have all the IDIQ clauses that call specifically for this type of contract. It'll be in the - you also have added requirements that will be put in by the agency, which is obviously followed with the IGA, which at that point in time you start to gel what the energy conservation measurements are going to be listed in your Section C, which is the requirements part of your contract along with Section H.  And again, the language supersedes - your RFP that you put together supersedes the IDIQ language. For example, in the event that you would like to make changes to the IDIQ, see how that is provided to you as the agency, you still have - the COs have that opportunity to formulate that particular contract to the agency's requirements.

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Templates, like I said, we do have templates that are available to you in the FEMP website. You also can get assistance from the folks from Golden, and also FEMP has individuals that have already went through this a few times and we can assist you as you get to the point where you need to list either your site-specific - your project-specific requirements. Also what the template does is minimize your time and effort to put together that particular contract. And again, the template follows the numbering of the IDIQ, which makes it simple for the COs and the CSs to work to draft that RFP. Also your facilitator or your particular agency will be more than happy to help you get to that point where you feel comfortable as an agency with that RFP that you and the ESCO are working together as a team to put together. 

And the really - another important thing here is to - is you can provide at your IGA kickoff the expectations that the agency has for this final proposal that would help the process and the milestones as you get to award of the contract.

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Okay, slide number 26; before the TORFP is incorporated in the task obviously it must be incorporated to negotiate changes at the time that you have looked at in detail your IGA. Also the contractor will provide to you the final proposal for review. And any informal negotiations that happen as you're getting through the IGA and developing the final proposal is best to have documented to ensure that once your contract is awarded, in the event that a question does come up, at the time the question comes up you can go through the contract file and provide that intent of the contract once the contract is awarded.

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Now again, as you complete the TORFP and get the final proposal we do have, as I said earlier, the experts that will continually assist the agency as it goes through these phases. Please, by all means do not feel that you're out there by yourself, because FEMP does have a team of experts that will help you from cradle to grave through this negotiation and even through construction.

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Okay, moving on to slide 28, that will be the investment grade audit, and then we'll turn that over to Tom, who will go through the IGA. Tom.

Hello?  Hello?

Kurmit Rockwell:
Tom Harris, we need you.

Sam Espinosa:
*6, Tom.

Tom Harris:
Hello. Hello, this is Tom. I had music on my local. Can everyone hear me now?

Kurmit Rockwell:
We can hear you loud and clear, Tom.

Tom Harris:
Great. Thank you, Sam, for passing it over. For those following online, as Sam said, we're on slide 28. Let's talk now about preparation for and management of the IGA. Here we'll discuss four general topics. First, how the agency can create an environment that ensures success. Second, what should be done before the IGA kickoff in preparation for it? Third, the structure of the kickoff meeting itself. Finally, some best management practices for the IGA.  Let's move on to slide 29.

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On this slide you'll notice the, again, the red "you are here" arrow on the process map. We're still near the beginning of phase three, in which we develop the ESPC project and refine it. The next big goal is the IGA, and the intermediate milestone leading to the IGA is the IGA kickoff meeting. By the way, if you're referencing the DOA IDIQ master contract, section H5gives the IGA content requirements for past quarters. So let's move on to slide 30.

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So here's just a brief review of how we got here. In phase two - you'll remember phase two is the preliminary assessment ESCO selection phase. The preliminary assessment, which contains the initial ECM findings, was found to be acceptable and the agency issued a notice of intent to award. So development of the TORFP may have begun at that point, as Tom mentioned earlier, not absolute, but if, you know, things are really rolling that might've happened. At this point, on the basis of the notice of intent to award, the ESCO is ready to conduct the IGA to support preparation of the proposal. Of course the proposal provides a complete technical description of the project and states the price, and it forms a basis for negotiating the terms and conditions of the TO.

So the next milestone is the IGA, as we said, and the first step in this process is the agency hosting of the IGA kickoff meeting. 

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Moving on to slide 31, here we though if we could just choose one overarching theme that would sort of infuse every aspect of the relationship and the process of facilitating the IGA with the ESCO it might be communication or it might be the stress of the importance of planning and structuring for a true partnership between the agency and the ESCO. So if the theme is clear and timely communication through open channels covering critical elements then the elements of that would be frequent communication, coverage of mission and constraints, the sharing of expectations, especially from the agency to the ESCO, and then a clear shared definition of success. How can this be achieved?  Well, a communications plan is a key element in that, and we'll talk more on this later, but the communications plan should at least include regularly scheduled communications, which for example might be telecoms with update, action items, discussions and decisions, and then clear definitions of roles and responsibilities.

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Moving on to slide 32, in preparation for the IGA kickoff you'll want to assemble the staff affected by each ECM in the preliminary assessment and review the ECM with them, or the ECM set of factors. Discuss with them and agree on the ECMs to pursue and then document those decisions. Decide on the ECMs not to pursue and document those with the rationale; for example, if there's been a recent investment in energy using systems in the facility so that you don't need ones, that might be an example rationale, or maybe there's a pending mission change for the facility or a plan to demolition or renovation within the next 15 years.

And check the proposed cost savings. Do they support the energy water greenhouse goals? Do they make sense? Are they reasonable? Examine the operations and maintenance and repair and replacement responsibilities. Is the agency responsible? Is the ESCO responsible? Or is the responsibility shared? And are these allocations of responsibility reasonable? Moving on to slide 33.

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In further preparation for the kickoff meeting, before the meeting the CO should share the outcome of that agency review of the ECMs with the ESCO, and in this way the ESCO has agency feedback and has a better view on the possible project scope and can better facilitate further refinement of the ECM choices. A telecom report kickoff may be a good idea in support of a stronger common understanding between the agency and the ESCO. If there's a draft RFP at this point it can be shared for ESCO review.  Leave ample time for the ESCO to review it before the meeting.  If you're reviewing the draft RFP we recommend going over a copy at the meeting and agreeing on the turnaround timeline for comments; this keeps things moving. Let's move on to slide 34.

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Instructing the kickoff meeting you may find the sample agenda on the FEMP website useful. Be sure and set a date and time that works for the whole acquisition team if possible, as well as for the ESCO. Slide 35, please.

[Next slide]
The project facilitator is a great resource for facilitation of the kickoff meeting.  Utilize the project facilitator for this; he'll help to establish roles, responsibilities, timelines, and communication protocols and he'll help with a plan for reviewing the proposal.  Here we stress again the importance of a working partnership with the ESCO and emphasize sharing all relevant information with the ESCO, including agency desires and expectations. The more details that's shared the better the outcomes for the agency.  Moving to slide 36.

[Next slide]
Again, utilize the sample agenda for the IGA kickoff meeting on the FEMP ESPC resources webpage; this will save you some time.  Let's look at possible agenda items in detail, and we're going to have four slides of these, so let's fasten our seatbelts. There should be introductions with roles of all attendees, standard practice for a meeting. Also documenting these things and sharing them is good.  The goal of the meeting, of course, is to initiate the IGA process, and then the agency should review its goals and objectives, priorities, mission, and its man support, and the ESCO can share its interest in the project.

Then sort of a working session can ensue. Dive into the outcomes of the agency's review of the preliminary assessment. Go through all the comments, allow the ESCO to respond to the ECM selections. Let's go to slide 37.

[Next slide]
Continuing the agenda items, the ECM selection is a good segue into discussion of project scope, of course. This includes a discussion of buildings and land area and the ECM candidates remaining for the IGA. Discuss the building performance requirements, discuss long-term site plans, are there term limitations for the contract that apply, where will the responsibilities fall for each ECM. If there are codes and regulations for compliance, discuss those. Other hazards or other considerations discuss the M&V options and go over financial parameters and incentives.

[Next slide]
Slide 38. Here continuing the agenda items, if there was an advanced review of a draft TORFP you should discuss that. Discuss the IGA process, including plans for the IGA by the ESCO. You'll want to plan logistics, site access, points of contact.  If there will be metering installed for the IGA or permanent metering installed you can discuss plans for that. Discuss escorts as needed and set those up. And last - not last, but first, of course, safety. Safety first, and then discuss communications. Here's where we continue discussion of the communication plan just briefly; who are the agency and ESCO communications leads?  Establish those. What will be the frequency and media for communications?  Establish those as well.

Let's move to slide 39.

[Next slide]
Tom Hattery:
Can I stop you there, Tom?

Tom Harris:
Please.

[Back one slide]
Tom Hattery:
Hey, this is Tom Hattery, folks. Yeah, I just wanted to stay back on slide 38 for just a second, Tom. I just wanted to add to the comment, you know, similar to my comment about the TORFP, one of the most important things to keep in mind is cost drivers, and that's the same here, when you're thinking about these issues.  You want to make sure you don't over-promise, for example escorts, you know, you don't want to say, "Well we can give you five escorts to show you folks around" and then end up with three and then you've got delays because the government didn't come through with what they promised. So, you know, my recommendation is to think carefully about these things, under-promise, let them build the project around your very sensible estimate of what you can do. For example, in my little example, say three escorts, and then if you can have five and work it out later that's great, but at least you're not going to be slowing the project up. 

So just keep that in mind for each one of these things, that one of the most important things, especially early on, is letting the ESCO know so that they can build their project around the parameters of what your requirement - what your needs are going to be. 

Tom Harris:
Thank you, Tom. Just to confirm what you mean by cost drivers, are you saying things that could affect the cost of the ESPC?

Tom Hattery:
That's right. Sure. You know, they're going to be, you know, pricing this thing out, they're going to be developing their savings and, you know, very carefully balanced proposal to you that's going to say, you know, hey, it's going to - all the costs involved are going to create a periodic payment of $100.00 and we can come up with $100.00 in savings, and that's all in balance. Then you say, "Well, you know what, you're going to have your contractors come out here, you know, almost twice as much as you thought you were going to have to because we can't provide the escorts for you," or "We have safety requirements we didn't tell you about, that you're going to have to meet these requirements" or "We have security and you're going to have to get every one of your folks through a month-long or several month-long security approval procedure." You know, any one of these things can increase the cost of the project. That's fine, but they need to know upfront so that they can keep - you know, so that they can make sure that they're finding enough savings to pay for the construction and, you know, performance part of their - what they're offering you.

Tom Harris:
Good. Good. No surprises. Thank you, Tom, for those excellent examples. 

[Next slide]
Moving on again to slide 39, and just wrapping up our discussion of the agenda items, when we discuss the report and the proposal requirements with the ESCO, including the energy and the water base lines, protected performance and approach to the calculation of savings, the factors affecting the ECM performance, very importantly the M&V plan per ECM, and then the other possible ECMs that may not have been included for various reasons or there may be interagency interest in including them. 

And finally, agree on a schedule and milestones for the IGA and the proposal. Again, because the contracting timeline is so important and these things can drag out, so we want to keep them moving.

[Next slide]
Moving on to slide 40, and very briefly, this is sort of our quick start guide, you know, at a minimum to the kickoff meeting, at a minimum we want to establish agreement on schedule, scope, the ECMs to be included are the required ECMs, the O&M and the repair and replacement approaches, and the M&V approach, and the plan and commissioning.

[Next slide]
On to slide 41. Just sort of as best practices to best ensure the success of the IGA, keep in mind that the IGA is usually conducted by a team of ESCO engineers led by a senior project developer and can involve multiple site visits. So you should plan and have escorts available to facilitate site access and make site experts available to provide information and answers to the ESCO visitors.  Bi-weekly meetings will keep things moving and keep folks on the same page. Remember that an ESPC is somewhat different from other types of contracting, and especially in formulating the TORFP. Each party should gladly disclose any findings relevant to the TORFP and the project in general. This can prevent delays and can keep the project moving forward efficiently and save money for both parties.

Let me say thank you for participating in the webinar today and listening to my portion. Tom Hattery is going to wrap up and transition to the Q&A course. Tom.

Tom Hattery:
Thanks, Tom. Before I go on, and we don't need to go back, but a couple slides back, similar to my earlier comment, Tom mentioned, you know, in the kickoff meeting the O&M plans, and I just want to spend a minute on that, saying that there are legitimate reasons for either party in certain circumstances; it's sometimes for the ESCO to do the operations and maintenance on something they put in, sometimes for the agency to do the operations on maintenance on what the ESCO puts in. 

My admonition to you, advice to you is just like I said before in the other things, don't over-promise. Be sure that your agency has the resources to do what you're signing up to do. You don't want to get into, you know, a colloquy with the ESCO in a couple years from now about, "Oh, we didn't have the staff to change the filters" or whatever the maintenance thing was on the equipment put in. So if you feel you're going to be short-staffed, you know, just make sure that it's built into the project, paid for from savings for the ESCO to do the O&M. So I just wanted to - you know, even though in our contract we push as much responsibility onto the contractor, even though if it's performed - O&M is performed by the agency it's still the ESCO's responsibility, it's a tension that you don't want to get into down the line. 

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Okay, having said that, let's move on to best practices. In one of our project facilitators I note wrote in as we were - as this was commented on earlier, about a project champion. He wrote in that he can't emphasize it too much, and I think he's exactly right. You know, ESPCs are - they're long and complex deals to put together, and now that I've said that let me also say that one of my new mantras in life is "ESPC compared to what?" So it's not long and complex compared to some other form of procurement, but you're getting so much done in an ESPC, so you're getting an audit, you're getting a design, you're getting a proposal for construction, you're getting construction, you're getting O&M, you're getting M&V. All of these things are accomplished and they all are good things and, you know, I would even say that it's a more efficient way of getting them all done than doing them piecemeal.  However, it is putting a lot together in one contract, and as you all know, it's an unusual contract, unusual to people that have done, you know, 20 years, 30 years of federal contracting.

So there are a lot of folks in your agency who are going to need to be, you know, continually be encouraged to participate, to approve, and so on. So to keep a project like this moving it is critical to have a project champion.

Similarly, the second bullet there, it is very important to keep management apprised from the very beginning. This is something that I really don't think we do well enough, is that, you know, so we're all busy, and management's busy and folks get exciting about doing a project, maybe they mention it to somebody, some senior official that has an approval role, but maybe they don't tell them enough about it or keep them informed enough. It comes time for one of those approval milestones and now this person says, "What's ESPC and what are you asking me to approve?" So this is the one I would say can't be emphasized enough, is keep making sure that everybody in your chain of command that has to approve one of the steps in one of these projects is onboard.

You know, I'm just kind of skipping down to the last one, but it is true with this one too, which is about turnover, and it was mentioned earlier about keeping new people informed and so on.  And this is true with management as well, 'cause either sometimes you have management who should've been engaged but couldn't really pay enough attention, or you've got new management involved. Don't hesitate to contact your federal financing specialist to come in. Many of you probably have had one of us come in and do a, you know, an hour or two overview briefing on what is ESPC and how does it work and so on. Don't hesitate to have us come in again if need be to take new folks under our wing and kind of explain the process to them, even though you've got a process ongoing at the time.

Make sure you planned your project's objectives and expedited all of the acquisition steps. Like I said, there are a lot of steps in the process. Assemble your team early, that's important too. What I would say in terms of that is anybody who could say no to your project, include them. You know, people can decide for themselves how much they need to stay involved, but everybody from that senior official down to a, you know, a building manager or the head electrician of your agency or whatever, who can later take a look at a project and say, "No, no, that's not going to work in my building." You want those folks involved right up front.  Labor needs to be involved up front because, you know often there can be a misconception about these things. As we talk about O&M savings, "Oh, does that mean we're going to cut down on jobs here?" We never do that, but you can avoid any of those kinds of suspicions if you include people as part of the team.

The other thing about turnover is good documentation, which is very important, so that if you do have new folk - and this is going to be very, very important for contracting officers as well. This is important for lots of folks, but I would say mostly for contracting officers who are coming in, taking over a contract file; they really don't know what went on before them and they have to have good documentation so that they can administer these contracts over the long-term.

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Okay, slide 43. The investment grade audit expectations should be a collaborative discuss thing and everybody should be sort of onboard with what the goals are and frequently talking about it, because one of the actual - what I think is one of the beauties of ESPC is the IGA process is a discovery process, so you don't know at the beginning what's possible until you really have the expert ESCOs as well as the expertise of your own agency and the expertise of DOE weighing in and working on developing and exploring things. You don't know what all is going to be achievable, so you want to have frequent communication so you can say, "Hey, what you're finding out there is really not important to us or it won't work with our mission" or, you know, "This thing looks marginal to you guys as an ESCO, but it's really important to our mission, so let's sharpen your pencils and see if you can make that thing work." So that kind of communication you want to have constantly throughout the process.

The agency should facilitate site access to the ESCOs; that's fairly obvious. But I think you, again, you want to look at them as a collaborative partner and make sure that they're getting all of the information necessary. A lot of times I get questions from folks at agencies, "Well, can I show them this study we've had done before?" Yes, you can, you know, unless there's some procurement proprietary nature of it with some other contractor or whatever, which I just have not run across. In most cases studies that you've had done are very useful to show to contractors.

We generally set up, as you probably know by now, bi-weekly meetings throughout the IGA process. This is important, I think, to keep on a schedule, even if there's not a lot to talk about.  I don't know about everyone on this call, but I know I operate this way too often, where I have some homework to do, and at the time of a call coming up or something and it's like, oh my goodness, I didn't get that done, so I've got to get that done. So it really is something that actually keeps people on task as well as keeps track to making sure everything is getting done. And dealing with issues before they metastasize is another very important benefit of having these bi-weekly meetings, even if they only end up being a 15-minute meeting.

[Next slide]
Okay, I'm going to move on to slide 44. We're getting pretty close to the end, folks, and I would encourage you - this is - you know, this is difficult to have the kind of interaction you have in a live in-class situation, so please be thinking about questions that we haven't made clear or that we haven't touched on that you would like us to respond to when we do get wrapped up here. 

So anyhow, I was going to tell you just a little bit about tomorrow's session. It's going to be going on to the next phase of the process, next pieces of the process. Phase three, we've talked some about the investment grade audit; we're going to go into it more, we're going into drafting and issuing the task order RFP.  That's the document where you set forth your site requirements.  Like I mentioned before, if you've got certain building codes or if there are sort of set points in humidity levels or whatever is, you know, required, they can only work at night or, you know, they need these security clearances, all these kinds of things are embodied in the TORFP.

Talking more about the kickoff meeting and then the ESCO conducting the actual investment grade audit.

[End of Audio]