INVITATION FOR PROPOSALS (IFP) PROCESS

1. INVITATION FOR PROPOSALS (IFP) PROCESS Competitive Procurement

2. PROCUREMNT OVERVIEW • Request For Qualifications (RFQ) - Soliticitation Creation of DAGS-SPO Vendor List • Invitation For Proposals (IFP) Solicitation - Competition for a Project in accordance with DAGS-SPO Vendor List • ESCO Selection for a Project (one ESCO from DAGS-SPO Vendor List)

3. PROCUREMENT PROCESS OVERVIEW Phase I: RFQ Written Responses Phase II: Client References Phase III: IFP Written Responses Phase IV: Oral Interviews (as needed)

4. BENEFITS OF PREQUALIFYING ESCOs • Gives agencies confidence that companies have the requisite experience, technical capabilities and financial strength to implement projects • Expedites procurement cycles by allowing agencies to issue project-specific IFPs • Offer ESCOs a credible calling card to inform and educate agencies on energy performance contracting

5. BENEFITS OF PREQUALIFYING ESCOs • Offers an opportunity to limit the number of proposals received by agencies, thereby reducing workload on agency personnel • Eliminates ESCOs that do not have the capabilities of implementing high quality projects • Mitigates agency concerns about an ESCO’s ability to perform for the duration of a contract

6. THE VALUE OF QUALIFICATIONS • Project scope and price can be negotiated – qualifications can not • Better qualified ESCOs will generally present better technical/cost proposals • Energy performance contracts are long-term partnerships, so pick a reliable partner with a proven track record

7. INFORMATION REQUESTED FOR IFP PROCESS • Technical Qualifications of Personnel • Specific Experience with Guaranteed Energy Savings Projects • Detailed Project Histories and Client References for 10 Completed Projects in Repayment • Client Reference Contact Information • Sample Commissioning Plan

8. INFORMATION REQUESTED FOR IFP PROCESS • Sample Final Design Specification • Sample Measurement & Verification Plan • Sample O&M Manual • Sample Customer Savings Report • Sample Investment Grade Audit • Financial Statements and References

9. IFP PHASE OF THE PROJECT • Only pre-qualified ESCOs are invited to respond • Typically, a short list of three pre-qualified ESCOs is invited to respond to the IFP based on specific project qualifications to make competition manageable • However, on the DAGS-SPO Vendor List, all ESCOs can compete to ensure maximum competition

10. PURPOSE OF THE IFP PROCESS • Defines the technical scope of the project • Describes the procurement process • Establishes the project schedule • Defines the evaluation criteria • Experience, Management, Technical, Financial • Highlights special project terms and conditions • Technical & Contractual

11. PROJECT TECHNICAL SCOPE Customer Project Goals • To maximize facility capital renewal, and if allowable, include customer contributions to fund some costs, with the majority funded from energy project savings • To fully fund the project exclusively from achieved utility and operational savings Regardless, inform the ESCO up-front

12. SAMPLE STEPS FOR IFP AND IMPLEMENTATION OF ESPC PROCESS

13. SAMPLE PROJECT SCHEDULE ACTIVITYTIMEFRAME • Issue IFP Week 1 • Site Visit (to be arranged) Weeks 3-5 • Proposals due Week 6 • Written proposals reviewed & evaluated Weeks 6-10 • Oral interviews Week 12 • ESCO selection Week 14 • Approval of selected ESCO Week 14 • Investment grade audit, project analysis, ESPC negotiations Weeks 16-29 • ESPC presented & signed Week 32

14. IFP PROCESS – TYPCIAL INFORMATION REQUESTED • Qualifications & Experience of Project Team Members • Detailed information on project management • Technical experience of key staff • Detailed energy performance data on past projects • Client references • NAESCO Accreditation

15. IFP PROCESS – TYPICAL INFORMATION REQUESTED • Financial Information • Audited financial statements, financial ratings, bonding capacity • Subcontractor Information (if known) • Corporate Background • Technical Qualifications • Financial References

16. IFP PROCESS – TYPCIAL INFORMATION REQUESTED • Energy Baseline Calculation Methodology • Project Work Plan and Milestones • Technical and Cost Proposal • Proposed Project Financing

17. IFP PROCESS – TYPCIAL INFORMATION REQUESTED • Energy/Cost Savings Calculation Methodology • Savings M&V Plan • Commissioning Plan and Training Provisions • Maintenance Plan

18. AGENCY GUIDANCE ON SAVINGS CALCULATIONS • Provide reasonable escalation rates to value future savings for cash flow analysis • Require materials and maintenance savings be clearly calculated and documented • Require utility bill reconstruction be used to value savings -- not average costs

19. IFP EVALUATION PROCESS GOALS Transparency Objectivity Accuracy Well Defined Criteria Efficiency Technical Competence Consistency Fairness Effectiveness

20. IFP EVALUATORS MUST: • Be technically proficient • Be motivated and interested in the project • Participate in evaluation training prior to serving on evaluation committees • Exercise diligence and responsibly review and objectively compare qualifications

21. IFP EVALUATION GUIDELINES • Focus on the quality of evaluation, rather than the quantity of evaluators • Remember that selecting ESCOs with ALL the necessary capabilities is crucial • To overstate the obvious: Do not discuss the substance of the evaluation process with the competing ESCOs during the evaluation

22. IFP EVALUATION GUIDELINES • Assign evaluation criteria to team members according to their relevant expertise • Allow project staff to observe oral interviews and read proposals to facilitate their education about the project and promote ownership • Offer to debrief unsuccessful ESCOs on how they can improve future proposals

23. IFP EVALUATION GUIDELINES • Assume that evaluation team rankings may be disclosed in a future FOIA request • Unjustified extreme rankings will be a red flag for any ESCO pursuing a bid protest under FOIA

24. IFP EVALUATION TEAM MEMBERS • Energy manager • Designated project manager • Technical advisor/consultants • Project engineer • Facilities operating personnel • Administrative/financial managers

25. IFP MAJOR EVALUATIONCATAGORIES • Experience • Project Management • Technical • Financial • Other/Special Project Requirements (if applicable)

26. ASSIGN PROJECT MANAGEMENT EVALUATION CRITERIA OF IFP TO: • Facilities operating personnel • Energy manager • Administrative/financial managers • Designated project manager • Technical advisor/consultants

27. ASSIGN TECHNICAL EVALUATION CRITERIA OF IFP TO: • Project engineer • Facilities operating personnel • Energy manager • Designated project manager • Technical advisor/consultants

28. ASSIGN FINANCIAL EVALUATION CRITERIA OF IFP TO: • Administrative/financial managers • Designated project manager • Technical advisor/consultants

29. IFP EVALUATION CRITERIA NON-NEGOTIABLE Experience • Technical qualifications and experience of ESCO’s personnel • Experience with implementing energy savings • Quality of project history and documented savings performance of past projects • Quality of customer service on past projects • Reliability of equipment performance on past projects • Quality of technical skills on past projects

30. IFP EVALUATION CRITERIA NON-NEGOTIABLE Project Management • Ability to effectively manage past project construction • Ability to manage equipment repairs, regular service, and emergencies effectively on past projects • Quality of ESCO’s communication skills

31. IFP EVALUATION CRITERIA NON-NEGOTIABLE Technical • Comprehensiveness of technical approach to past projects • Ability to plan and complete all schedule phases of past projects • Quality of operations and maintenance services on past projects

32. IFP EVALUATION CRITERIA NON-NEGOTIABLE Financial • Financial soundness and stability of the ESCO • Demonstrated ability to provide or arrange project financing on past projects

33. IFP EVALUATION CRITERIANEGOTIABLE Project Management • Comprehensiveness of maintenance, monitoring, and measurement and verification services • Proposed O&M strategies

34. IFP EVALUATION CRITERIANEGOTIABLE Technical • Quality of investment grade audit report • Quality of approach to project commissioning • Quality of approach to calculating baseline energy consumption • Quality of approach to savings measurement and verification • Quality of provisions for training facility staff • Quality of customer savings reporting

35. IFP EVALUATION CRITERIANEGOTIABLE Financial • Reasonableness of financial assumptions for the proposed project • Details of proposed financing arrangement

36. HOW TO DO CLIENT REFERENCES FOR IFP • Check similar projects • Check at least three references; five is better • Develop a standardized list of questions to be ranked by the client reference • Phone interviews of knowledgeable clients is the most efficient method • Allow client reference to conduct actual rankings

37. CLIENT REFERENCE QUESTIONSPROJECT MANAGEMENT • How would you rank the ESCOs’ management of subcontractors? • How would you rank their handling of change orders and repairs? • How would you rank their handling of project logistics and scheduling?

38. CLIENT REFERENCE QUESTIONSPROJECT MANAGEMENT • How would you rank the overall quality of their project manager? • How would you rank their quality control on project installation? • How would you rank the quality of their project commissioning?

39. CLIENT REFERENCE QUESTIONS QUALITY OF ESCO STAFF • How would you rank the quality of their communications skills? • Would you do another project with the same people? • How would you rank the quality of their technical skills?

40. CLIENT REFERENCE QUESTIONS QUALITY OF ESCO STAFF • How would you rank their customer service? • What was their strongest capability? • What was their weakest area in your opinion?

41. CLIENT REFERENCE QUESTIONSENERGY SAVINGS PERFORMANCE • How would you rank the energy savings performance of the project? • How would you rank the consistency, quality and timeliness of their customer savings reports? • What percent of predicted savings were stipulated (i.e., not requiring M&V)?

42. CLIENT REFERENCE QUESTIONS RELIABILITY OF EQUIPMENT • Did the ESCO install high quality equipment? • Does the installed equipment achieve the design intent? • Does the equipment operate reliably? • Did the installed equipment create any new operation or maintenance problems? If so, did the ESCO solve them effectively? • Does the ESCO appropriately monitor equipment performance?

43. CLIENT REFERENCE QUESTIONSTECHNICAL CAPABILITIES • What were the main measures included besides lighting and controls work? • Did the ESCO capture the available savings opportunities and minimize life cycle costs? • Did the ESCO provide adequate documentation for all of the savings measures installed? • How would you rank the quality of the ESCO’s overall project design? • If you were to change any aspect of the project scope, what change would you make? Why?

44. CLIENT REFERENCE QUESTIONSPROJECT PERFORMANCE • Did the ESCO meet the project schedule? • Design phase • Project construction phase • Quality of the post-construction services? • Equipment performance monitoring • Ongoing equipment maintenance and training • Savings M&V for the full term of the contract • Does any EMS system the ESCO installed provide user-friendly system monitoring and control?

45. IFP ESCO EVALUATIONRANKING GUIDELINES • Be consistent in your rankings and avoid the “halo and horns” effect • Just because an ESCO is superior or unacceptable on some criteria, does not mean the ESCO is superior or unacceptable on all criteria

46. IFP ESCO EVALUATIONRANKING GUIDELINES • It is very helpful to defer any rankings until you have reviewed proposal submissions on that criterion from all ESCOs so that you can get a feel for the range of quality. • You can sort the ESCOs based on how they compare to each other on that criterion: 1 3 5 Worst ESCO Avg ESCO Best ESCO

47. IFP ESCO EVALUATIONRANKING GUIDELINES • Using a scale of 1-5 pts., average performance is a 3 • 0 or 1pt. should be given when the information provided is incomplete, non-responsive, or poor quality • 5 pts. should be given rarely, to truly superior performance compared to other ESCO written submissions

48. IFP ESCO EVALUATIONRANKING GUIDELINES • If you find that a majority of your rankings are 4 pts., you may not be making effective comparisons between ESCOs. • Carefully review the submissions for differences in quality. Remember that your job is to rank the ESCOs.

49. IFP ESCO EVALUATIONRANKING GUIDELINES • “Unable to rank” means the evaluator has insufficient personal knowledge or experience to evaluate the data provided. This should be a rare occurrence unless the evaluation task has been improperly assigned to someone with inadequate training and/or background. • This ranking category does not hurt the ESCO’s average score on this criterion.

50. IFP ORAL INTERVIEWGUIDELINES • The goal of the interview is to get a complete understanding of the ESCOs’ proposals, capabilities, design staff, technical analysis, and project costs. • Limit prepared ESCO presentations to 15 minutes. • Prepare 2 sets of questions: General and Proposal-specific • If you have detailed technical questions, supply them to the ESCO in advance of the interview.