Energy Performance Contracting Process

Objective: To provide a concise, easy to understand process, that labels each parties basic
responsibilities for an Energy Performance Contract. All process steps must adhere to
Florida Statues 489.145, 287.055, 255.05 and 287.057

A. Agency Procurement of Investment Grade Audit (IGA)

1. Agency identifies need to reduce energy costs in its buildings by investing in

energy conservation measures (ECM’s). Agency intends to enter into a
guaranteed energy performance savings contract with a licensed energy
performance contractor (EPC) in compliance with F.S. 489.145.
2. Agency will develop a short analysis of the project that they intend to include
into an energy performance contract. This should include but not limited to
the scope of the project; age, use, and occupancy of the buildings, and
current building equipment.
3. Agency will seek out the most highly qualified EPC on the State Term
Contract to recommend and implement ECM’s that will provide the needed
energy savings to the agency.
4. Agency will competitively select a guaranteed energy performance savings
contractor in compliance with F.S. 287.055 and F.S. 489.145.
a. Agency shall evaluate current statements of qualifications and
performance data of EPCs that are on the State Term Contract. Agency
can reference this information online at the DMS website. Each EPC will
provide a summary of their qualifications or a link to their website to be
viewed by all interested agencies.
b. Agency shall rank the three providers deemed most highly qualified based
on but not limited too; Professional Personnel, Minority Business
Enterprise, Past Performances (References, On time, Budget, etc.), Current
Workloads, Agency Business History.
c. Agency shall conduct discussions with no fewer than three firms.
d. Agency may require public presentations regarding their qualifications,
approach to the project, and ability to furnish required services.
e. Agency will provide published notice of the meeting in which it proposes
to award contract, the names of the parties to the proposed contract, and
the contract’s purpose.
f. Agency selects most qualified EPC.
g. Agency informs DMS and DFS of intent to enter into ESCO contract.

Roy Jeter, CPA Dan Hedrick

Financial Administrator Operations and Maintenance
Division of Accounting & Auditing Real Estate Development
Florida Department of Financial Services Department of Management Services
(850) 413-5363 (850) 413-9515

12/4/2009 Page 1
5. Agency authorizes Investment Grade Audit (IGA)
a. EPC will give a detailed analysis on each energy conservation measure
they are proposing, including energy and energy related operating savings.
At a minimum, an audit should include current and future energy
consumption, projected savings, maintenance costs, simple payback, life
cycle costs, building description, analysis methods, and calculations.
Assumptions, baselines, and baseline adjustment criteria must be
predetermined and agreed upon in the audit. Audit may include all
commodity or unit prices.
b. To provide consistency for review of a future guaranteed energy
performance savings contract, the EPC will provide contract schedules A,
B, E, and F in the IGA.
c. A model Audit agreement can be found on the DMS website.
d. Agency may enter into a separate agreement to pay for the audit, or the
cost of the audit may be part of the final contract.
e. It is suggested Agencies negotiate a mechanism that allows them to
perform identified ECM’s with out further obligation under the audit in
cases of emergencies (immediate or imminent equipment failure).
6. EPC submits IGA to the Agency
a. Agencies’ internal staff reviews audit for completeness, guaranteed
savings, and value of ECM’s (This process is contingent on the Agencies’
internal staffs or contracted staffs ability to review engineering
documents).
b. Agency can approve or not approve the audit.
1. If Agency does not approve the audit, they may ask EPC to resubmit
with specific changes.
2. If the audit is unacceptable to the Agency, the Agency may move to
work with the second ranked most qualified EPC.
7. Agency submits approved IGA to Department of Management Services for
review
a. DMS will assign a reference number to the IGA.
b. DMS staff reviews audit. Staff will provide a comprehensive review of
guaranteed savings, sound engineering practices, baseline assumptions and
adjustment criteria, appropriate ECM’s, and unit costs to verify fiscal
stewardship.
c. DMS can approve or not approve the Audit. If DMS does not approve the
audit, the Agency and EPC must make the necessary changes, and then
resubmit to DMS for approval of revised audit.
d. DMS will then send the approved audit back to the Agency so that they
and the EPC can develop a guaranteed energy performance savings
contract.
e. A model contract agreement can be found on the DMS website.

12/4/2009 Page 2
B. Agency Negotiation of a Guaranteed Energy Performance Savings Contract

1. Agency negotiates a Guaranteed Energy Performance Savings Contract

with the EPC. The Guaranteed Energy Performance Savings Contract
(Contract) will become part of a long term facilities management plan. The
Contract should be carefully considered and should spell out exactly what the
EPC and the Agency are obligated to do. A model contract is available to use
as a starting point, however, many of the terms must be defined through
negotiation. The Agency is responsible for negotiating the best agreement for
the State and ensuring fiscal responsibility, accountability, and
documentation. The Contract should be carefully considered and reviewed by
the Agency’s management, legal, budget, purchasing, and facilities
management staff before it is approved for review by DFS.
2. Agency submits the Guaranteed Energy Performance Savings Contract
to the Department of Financial Services for review.
a. When DFS receives the Contract for review, a review number will be
assigned and a letter sent to the Agency contact noting this number and
the date the Contract was received by DFS
b. DFS will review the contract documentation for the following:
1. The Contract, Financing Agreement, and all schedules,
exhibits, and appendixes must follow the latest Model Contract
and Model Financing Agreement forms. DFS will review all
sections in the Contract for language inconsistent with the
Model Agreement. Any changes from the Model may require
further review by DFS legal staff.
2. All blanks must be completed with correct information.
3. DMS must have approved the IGA.
4. Financing must have already been arranged and Schedule L
completed. Results of at least three bids should be provided
evidencing the financing is the most cost effective.
5. Agency management must provide a letter stating the contract
was reviewed and approved by Agency legal, budget,
purchasing, and facilities management staff.
6. Additionally, the following schedules will be reviewed:
Schedule C – Energy Saving Guarantee
Schedule D – Deliverables and Compensation to Company
Schedule G – Construction and Installation Schedule
Schedule I – Company’s Maintenance Responsibilities (any
items being paid by the Agency)
Schedule J – Agency’s Maintenance Responsibilities (any cost
that may not be in the cost flow)
Schedule K – Company’s Training Responsibilities (measurable
deliverables)
Schedule L – Third Party Financing Agreement
7. Certain schedules contain primarily engineering information
and will be sent to DMS for review. The results of DMS’

12/4/2009 Page 3
 review will be incorporated into the DFS review. The
following Contract Schedules will be sent to DMS for review:
Schedule A – Equipment to Be Installed by Company
Schedule B – Description of Facilities; Pre-existing Equipment
Inventory
Schedule E – Baseline Energy Consumption
Schedule F – Savings Calculation Formulae; Methodology to
Adjust Baseline
c. The Contract will either be approved or denied in writing and a letter
will be sent to the Agency along with an attachment listing material
deficiencies and suggested changes. Material deficiencies must be
corrected in order for the Contract to be approved. Suggested changes
reflect minor errors or highlight items the Agency should consider.
The Agency may renegotiate the Contract with the EPC. DMS must
review any resulting changes made to the IGA and associated Contract
schedules. Otherwise, a new version of the contract may be re-
submitted to DFS.
3. Agency executes the contract and financing agreement approved by DFS
and begins work on ECMs.

C. Ongoing Measurement and Verification process begins (M and V).

1. M and V will be evaluated by the Agency or third party firm. This will be
determined in the contract based on the Agencies level of expertise in
measurement and verification of ECM’s. Assumptions, baselines, and
baseline adjustment criteria must be predetermined and agreed to in the Audit.
a. EPC will provide written reasons for changes to the assumptions or
baselines. EPC and Agency must both agree with these changes
before any future payments will be made. Mediation by a third party
may need to be defined in the contract in case of disputes.
b. Both parties must agree that the guaranteed savings have been
realized. If they have not, the EPC must pay the difference.
c. This process will continue for the life of the contract. All payments
must be made by the end of the term of the contract, and all equipment
and maintenance will be the full responsibility of the Agency at that
time.

12/4/2009 Page 4