the WHITE HOUSEPresident Barack Obama

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Energy Performance Upgrades Offer Savings, Jobs, and are Self-Funded

Summary: 
GSA Administrator Johnson describes how performance-based contracts are a "triple win" for Americans: creating jobs, offering guaranteed energy savings, and coming at zero cost to taxpayers.

Last week, GSA announced the Deep Retrofit Challenge, which challenges the private sector to bring innovative, energy saving retrofits to Federal buildings and to take performance-based contracts to the next level. These retrofit projects create jobs, and performance-based contracts provide government with decades of lower utility bills and long term cost savings without an up front investment from the taxpayers.

The Deep Retrofit Challenge is offering 30 buildings across the country, totaling nearly 17 million square feet, that will use Energy Service Performance Contracts (ESPCs) to make existing buildings more energy efficient. ESPCs retrofit buildings for guaranteed greater energy performance at no net cost to taxpayers. The retrofit projects are paid for through energy savings over time.

Last December, President Obama announced nearly $4 billion in commitments to perform energy efficiency upgrades to buildings over the next two years. Two billion dollars of this effort will come from the private sector through upgrading manufacturing facilities, retail stores, universities, and other buildings. Up to $2 billion more will come from Federal buildings through the use of ESPCs, which the President directed in a Presidential Memorandum to all government agencies. GSA’s Deep Retrofit Challenge will contribute to the President's performance contracting goals for the Federal government.

As the President said, performance-based contracts are a “triple win”-- they create jobs, offer guaranteed energy savings, and they come at no cost to taxpayers. Through an ESPC, building owners leverage private funds to perform energy efficiency upgrades. When the work is done, money will be saved on energy costs. Federal buildings are built to last, and these contracts span a maximum of 25 years; therefore, the Federal government stands to reap the benefits of energy and cost savings for decades without making an initial investment.

GSA already has extensive experience with performance contracting. Since 1998, GSA has contracted over $460 million in ESPCs through the Department of Energy’s Federal Energy Management Program. GSA owns roughly 182 million square feet of space in over 1,500 buildings nationwide, and we are eagerly reviewing our owned building portfolio to determine where we can best use ESPCs to increase energy efficiency. 

In addition to the Presidential Memorandum on Implementation of Energy Savings Projects and Performance-Based Contracting issued in December 2011, President Obama issued Executive Order 13514 on Leadership in Environmental, Energy, and Economic Performance in 2009, which requires agencies to meet a number of energy, water, and waste reduction targets in existing Federal buildings. Performance based contracts help Federal agencies to meet these benchmarks and to become more sustainable. 

Martha Johnson is Administrator of the U.S. General Services Administration