EPA's experience: 3 keys to sharing savings

'Industry needs to bring us their ideas instead of the usual dog-and-pony shows.'

'EPA's Judy Davis

Rachael Golden

Share-in-savings is the most complex type of contract, according to Judy Davis, the Environmental Protection Agency's director of acquisition management, who has had some experience with them.

EPA used the approach for an Energy Savings Performance acquisition. Under the contract, EPA wanted to improve the energy efficiency of federal buildings. The agency asked contractors to put up the money for upgrades and recoup their investments based on savings from the new systems.

Before entering into a share-in-savings contract, Davis said, agencies must:
  • Understand the baseline costs of the activity. For the energy contract, Davis said the contracting office chose a specific date to start collecting information on utilities costs and related charges, and infrastructure expenses. These expenses let the contractor know the true starting point to measure savings against.

  • Develop a plan to measure savings. Davis said EPA'and all federal agencies'faced a federal mandate to reduce energy use by at least 30 percent. As part of its contractor evaluation criteria, the agency asked vendors to propose a savings percentage drawn from the baseline costs.

  • Obtain executive commitment. EPA officials held several executive-level briefings to ensure that management understood how the contract worked and would support it.

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