Section 210

 

LEAs may enter into Energy Performance Savings Contracts under the provisions as described in West Virginia Code §5A-3B for the purpose of redirecting operations utility expenditures to funding facility improvement projects.  In addition to the statutory provisions, when SBA funds are to be utilized to fund or partially fund portions of the total energy savings project, the following Energy Savings Performance Contract procurement criteria shall be applied:

210.01.  LEAs shall make initial determinations on the facility or facilities to be included, the approximate scope of the proposed work, and the method of financing the project.  

    210.011.  As a part of determining the method of financing the project, the LEA shall choose whether this service is to be performed by an independent financing consultant that has a direct fiduciary responsibility to the LEA or if these services shall be a part of the energy services company (ESCO) scope of services as a packaged project.  In either option, the SBA believes it is in the best interest of the LEA to competitively source the financing aspect of the project.

    210.012.  This decision regarding the financing arrangement shall be reported to the SBA staff.

    210.013.  If an independent financing consultant option is chosen, these services shall be procured using rules described in WVBE Policy 8200 – Purchasing Procedures for Local Education Agencies.  The fees charged for the independent financing consultant’s services shall be provided to the LEA and evaluated prior to execution of any contract.

210.02.  LEAs shall use the SBA’s Standard Request for Proposals (SBA Form 210) for the selection of the ESCO to implement the proposed project(s) using a fully transparent “open book” pricing model.  The successful ESCO shall be determined solely from the Proposals, and, if desired by the LEA, an interview of any number of the candidates.

    210.021.  As a part of using the SBA Form 210 template, the LEA shall make the appropriate changes to the form to adhere to the finance arrangement (independent or a part of the ESCO scope).

    210.022.  In coordination with the independent financing consultant when applicable, determine the following cash flow variables in order to have an equitable comparison of submitted proposals:
        a.  Maximum Term – this can be no longer than 15 years per W.Va. Code §5A-3B, however, the LEA may choose to limit this term to a shorter period of time.
        b.  Interest Rate on Lease Purchase – this shall be a conservative estimate of the actual interest rate secured for the financing of the materials. 
        c.  Escalation Rates – includes Utility costs, Operations & Maintenance costs, capital avoidance, measurement and verification.  A conservative estimate of 3% per year is appropriate, but the LEA may choose differently.

210.03.  The LEA shall form a project review team to review all submitted proposals.  The team shall include, but is not limited to, the following members and consultants:
    a.  an Attorney – to examine the performance contract
    b.  an Independent Financing Representative (Third Party) – to evaluate the feasibility of the ESCO proposals.  If the financial arrangement of the project includes an independent financing consultant, this consultant shall serve in this role.
    c.  the SBA staff Representative – as a technical advisor only
    d.  the County Superintendent or LEA Director
    e.  an LEA Project Administrator – to serve as the team lead and the Point of Contact from the LEA
    f.  the Finance Director or Purchasing Director of the LEA

210.04.  Energy savings and guarantees provided by the selected ESCO shall offset the majority of the project costs for the LEA.  The ESCO shall provide arrangements for acquisition and installation and will work to maximize the net economic benefit and reduce the risk to the LEA.

    210.041.  An investment-quality Comprehensive Energy Performance Audit shall not be undertaken until after the procurement of the ESCO is complete, and the costs associated with the Audit shall be shown on the proposal form.

    210.041.  The scope of services that will be self-performed by the ESCO shall be clearly defined in the proposal.  ESCOs that intend to self-perform installation services must also obtain pricing from a minimum of three companies for the supply and installation of the proposed equipment.  Cost estimates from third-party companies will not be considered an adequate substitute for the above described process.

    210.041.  All construction and installation services not proposed and approved for self-performance by the ESCO shall be competitively bid.  All bidding and construction documents shall be reviewed and approved by the SBA for conformance to SBA policies and standards prior to releasing the project to bid.  Bids shall be advertised and received following all provisions of applicable West Virginia law.  Bids shall be received and reviewed by the LEA with advisement from the ESCO.  The LEA shall determine the lowest qualified responsible bidder(s). 

    210.041.  For the purpose of calculating the construction mark-up percentages, the unburdened construction costs shall be disclosed as a part of the ESCO proposal.  The unburdened construction costs shall be defined as the value of the final construction cost paid for facility improvements without any additional mark-up by the ESCO.  Neither the LEA nor the SBA will pay for additional costs above the unburdened construction costs, construction mark-up costs, project management costs or other ESCO related costs that are not identified in the proposal, without the proper execution of a Change Order.

210.05.  Prior to the execution of the contract between the LEA and the ESCO, approval must be obtained by the LEA Attorney.  

210.06.  Considerations should also be given to limit the term of the loan to 3-5 years – rather than the maximum timeframe of 15 years as defined in West Virginia Code – to lessen the project costs while empowering LEA maintenance employees to be trained on the operation and maintenance of new equipment.

210.07.  Strict adherence to the required Environmental Conditions as described in WVBE Policy 6200 – Handbook on Planning School Facilities and the SBA Quality & Performance Standards Handbook shall be incorporated into the design of the ESCO project. Depending on the project size and scope, the SBA may require an independent measurement and verification calculator to ensure guarantees are met and measurement and verification costs are accurate.  

210.08.  At the LEA’s discretion, the RFP template (SBA Form 210) may be used for projects that do not include SBA funding as a part of the project financing.  If no SBA funding is provided, the School Building Authority headline, form numbers, and references shall be removed from the document.