From: Federal Times
By ANDY MEDICI
For more than a decade, agencies have used innovative financing deals, known as Energy Savings Performance Contracts (ESPCs), to pay for extensive energy-saving retrofits to their facilities.
But a recent effort by the Energy Department to use an ESPC to finance a data center consolidation is running into headwinds. And a number of agencies are watching the project closely with hopes they too can use ESPCs to consolidate data centers and refresh aging IT infrastructures.
Under an ESPC, a vendor pays the upfront costs of energy-saving retrofits in exchange for payments from energy cost savings over time. The contractor guarantees the energy savings for the life of the contract or pays the balance.
In an unusual application of an ESPC, the Energy Department in July 2011 selected Lockheed Martin to help the agency consolidate its data centers and reduce operating costs — all without spending any appropriated funding.
More than two years later, the contract has languished. The Energy Department said in a statement it is still reviewing the contract. But it appears to be the Office of Management and Budget that is holding up the project.
Several House and Senate lawmakers are pressing the Obama administration to let the project proceed.
“The action of OMB regarding a single project is creating an impasse across the federal government and sending a chilling effect across federal agencies pursuing data center ESPCs,” said Sens. Ron Wyden, D-Ore., and Al Franken, D-Minn.; and Reps. Peter Welch, D-Vt.; Anna Eshoo, D-Calif.; and Gerald Connolly, D-Va., in a July 10 letter to Energy Secretary Ernest Moniz and Office of Management and Budget Director Sylvia Burwell.
According to one industry executive who asked not to be named, OMB is holding up the project because too much of the projected savings — about 70 percent — comes from operations and maintenance, as opposed to energy savings. As a result, policy makers are having “internal discussions” about the role of operational savings in ESPCs, the source said.
Other agencies are anxious to see the matter resolved and move on with their own projects because agencies are under pressure from OMB to close 40 percent of their “non-core” data centers by 2015, an effort OMB estimates would save $3 billion.
On June 23, the Air Force issued a notice of opportunity for an ESPC to reduce the size and energy use of two of its data centers at Edwards Air Force Base, Calif.
And in May, officials at the Air Force Civil Engineering Center told vendors at an industry briefing that computers, servers and data centers are “prime targets” for ESPCs. Les Martin, the ESPC program manager at the AFCEC, said the Air Force is committed to improving the energy efficiency of its data centers.
“ESPCs could be one of the avenues used to make this happen,” Martin said.
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