Your Alternative Financing Questions Answered
August 1, 2002
Who determines the cost baseline, the agency or the ESCO?
Baseline costs are established as part of the measurement and verification (M&V) methodology that is agreed upon by the contractor (energy service company - ESCO) and the customer (agency) and is documented in the delivery order. For more information, please see FEMP's Practical Guide to Savings and Payments in Super ESPC Delivery Orders.
How much detail should be included in an initial project proposal and what happens if the agency does not accept the initial proposal?
The initial proposal is intended to give the agency enough information to make a confident decision on whether or not to proceed with the project. It is not expected to reflect a complete understanding of the agency and site-specific requirements, and is intended to be completed at a modest cost to the ESCO. The initial proposal must comply with the indefinite-delivery, indefinite-quantity contract requirements and include a narrative summary of the proposed project, descriptions of the energy conservation measures, estimates of proposed energy and cost savings, an overview of M&V methods, a responsibility matrix, and estimated price. Financial schedules are also required components of the initial proposal.
If the agency determines that the initial proposal does not meet its needs, it can issue a letter rejecting the ESCO's proposal. The agency can still accept proposals from other ESCOs as long as it does not disclose the original ESCO's proprietary information. If the agency decides to work with the ESCO to improve the initial proposal, it can provide feedback to the ESCO on deficiencies or desired changes in the initial proposal and allow for a revision to be submitted in the final proposal.
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