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Vendors balk at using new technologies at fed facilities

May. 24, 2012 - 03:18PM   |  
By ANDY MEDICI   |   Comments

The Defense Department officials say they are pressing vendors to use more cutting-edge technologies when renovating facilities to be more energy efficient. But many contractors are reluctant to do this because they fear less-proven technologies would put their revenues at risk.

Dorothy Robyn, deputy undersecretary of Defense for installations and environment, said technology such as solar-powered air conditioners; nanotechnology heating and cooling systems; and electrochromic windows — which darken automatically in response to light — are the kinds of technology she wants to see more of at DoD facilities.

But contractors are reluctant to take on the risk of using those technologies and instead opt for more conventional approaches like efficient lighting, heating and cooling systems, and windows.

“That may be OK for some federal agencies, but we have a somewhat higher tolerance for risk” and much experience dealing with advanced technology, Robyn said.

She said while there may be greater risk from using more cutting-edge technologies, they also hold the potential for bigger pay-offs.

Most federal energy-efficiency projects are financed by so-called Energy Savings Performance Contracts (ESPCs), in which a vendor pays the upfront investment for facility renovations and retrofits in exchange for payments from the government’s energy savings over time. The contractor guarantees the energy savings for the life of the contract, or has to pay the balance.

Federal agencies are working to make greater use of ESPCs in response to a">Dec. 2 presidential memo calling on them to enter into at least $2 billion in ESPCs by the end of fiscal 2013.

Richard Kidd, deputy assistant secretary of the Army for energy and sustainability, said the Army was pursuing advanced technology in ESPCs but that the companies that guarantee the savings prefer more conservative, proven energy saving measures.

“We don’t do that as much as we would like,” Kidd said. “If the technology is new then it has a greater element of risk and it’s harder to get companies to back that.”

He said one approach the Army is considering would be to use appropriated funding to purchase the technology and allow the private contractor to operate it for the duration of the contract.

Mark Wagner, vice president of government relations for Johnson Controls, which partners with agencies to create ESPCs, said private contractors are unwilling to deviate from “tried and true” technology.

He said companies have the tendency to propose and install technology that’s less risky because they know how it will perform over the lifetime of the contract.

“You could use bleeding-edge technology, but would any company feel comfortable guaranteeing those savings 15 years out or more?” Wagner said. “If the government wants more advanced technology they will have to share in some of that risk.”

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