DOE's Qualified List of Energy Service Companies

August 1, 2002

The Energy Policy Act of 1992 (EPAct) directed DOE to develop methods and procedures to bring energy savings performance contracts (ESPCs) into the mainstream of Federal procurement. An ESPC regulation detailing the methods and procedures was published in Title 10 Code of Federal Regulations, Part 436. The regulation established methods and procedures for competitive contractor selection and states that DOE shall maintain a list of qualified energy service companies (ESCOs) who may compete for advertised Federal ESPC solicitations.

The DOE Super ESPC regional and technology-specific contract competitions, as well as the DOD indefinite-delivery, indefinite-quantity (IDIQ) blanket contract competitions, requires competitors to be included on DOE's qualified list to be eligible for consideration for a contract award. As all other Federal agencies are bound by the regulation, any Federal agency competitions for ESPC work, whether solicited for award of long-term IDIQ contracts or for site-specific ESPC work, must also require that potential offerors establish themselves on this list. Inclusion on the qualified list only provides contractors with eligibility to compete for Federal agency ESPC opportunities and does not guarantee the award of Federal contracts.

ESCOs must undergo an application process to be considered for DOE's qualified list. FEMP facilitates and provides all administrative assistance for the process of evaluating the skills and experience of the ESCOs. All first-time applicants must submit a statement of qualifications and two client questionnaires with original signatures from project clients.

A Qualification Review Board (QRB), comprising of representatives of the Federal Interagency Energy Management Task Force and the Department of Energy, evaluates all applications. Only those companies which the QRB accepts as meeting the defined criteria are placed on DOE's qualified list.

Federal agencies may accept unsolicited ESPC proposals but only from firms on the qualified list. When an agency wishes to consider an unsolicited proposal, it must acknowledge receipt of the proposal in the Commerce Business Daily (CBD) and invite other firms on the qualified list to submit competing proposals.

To remain on the qualified list, ESCOs must annually resubmit updated statements of qualification or certify that information previously furnished has not changed. FEMP initiates this update each year with an announcement in the CBD and by sending applications to firms already on the qualified list.

What Is an ESCO?

An ESCO, or energy service company, is a business that develops, installs, and finances projects designed to improve energy efficiency and reduce operations and maintenance costs for its customers' facilities. ESCOs generally act as project developers for a wide range of tasks and assume the technical and performance risk associated with the project. What sets ESCOs apart from other firms that offer energy efficiency improvements is the concept of performance-based contracting. When an ESCO undertakes a project, the company's compensation is directly linked to the amount of energy that is actually saved.

The comprehensive energy efficiency retrofits inherent in ESCO projects typically require a large initial capital investment and may offer a relatively long payback period. The customer's debt payments are tied to the energy savings offered under the project so that the customer pays for the capital improvement with the money that comes out of the difference between pre-installation and post-installation energy use and other related costs.

Note: This definition is based on "What is an ESCO," by NAESCO (National Association of Energy Service Companies), used by permission.

DOE's Qualification Review Board - ESCO Evaluation Criteria

Through an energy savings performance contract (ESPC), an energy service company (ESCO) arranges financing to develop and install energy and water conservation and renewable energy projects. As part of the project, the ESCO conducts a comprehensive energy audit and identifies improvements that will save energy and reduce utility bills at the facility.

The ESCO guarantees that energy improvements will result in a specified level of annual cost savings to the Federal customer, and that these savings will be sufficient to pay the ESCO for its work over the term of the contract. Agencies use a portion of guaranteed energy cost savings to pay for building improvements over the life of the contract. After the contract ends, all additional cost savings accrue to the agency. Contract terms can be up to 25 years, depending on the scope of the project.

Federal agencies are required to announce ESPC solicitations in the Commerce Business Daily (CBD). The CBD announcements provide contact information and instructions for obtaining solicitations. Any firm may request an ESPC solicitation and respond with a proposal, but must become qualified before contract award. The period of eligibility of the firm's qualification runs from February 1 through January 31 of a given year.

The Qualification Review Board selects firms for inclusion on DOE's qualified list of ESCOs based on the following criteria:

  • The firm has provided ESPC services or services that saved energy or reduced utility costs for not less that two clients, and the firm possesses the appropriate project experience to successfully implement the technologies that it proposes to provide.
  • Previous project clients provide ratings of "fair" or better.
  • The firm or any principal of the firm has neither been insolvent nor declared bankruptcy within the last 5 years.
  • The firm or any principal of the firm has not been debarred from working with the Federal government.
  • There is no adverse information which warrants the conclusion that the firm is not qualified to perform energy savings performance contracting.

For more information about DOE's Super ESPC program and how to apply for the DOE's qualified list of ESCOs, please visit the Super ESPC web site or contact Tatiana Strajnic at 202-586-9230 or tatiana.strajnic@ee.doe.gov.