article: SECTION 1. SHORT TITLE. This Act may be cited as the ``National Defense Energy Savings Act of 2003''. SEC. 2. ENERGY SAVINGS PERFORMANCE CONTRACTS. (a) Contracts Authorized.--The Secretary of Defense may enter into an energy savings performance contract under this section for the sole purpose of achieving energy savings and benefits ancillary to that purpose. The Secretary may incur obligations under the contract to finance energy conservation measures so long as guaranteed savings exceed the debt service requirements. (b) Terms and Conditions.-- (1) Contract period.--Notwithstanding any other provision of law, an energy savings performance contract may be for a period of up to 25 years beginning on the date on which the first payment is made by the Secretary pursuant to the contract. The contract need not include funding of cancellation charges (if any) before cancellation, if-- (A) the contract was awarded in a competitive manner, using procedures and methods established under this section; (B) the Secretary determines that funds are available and adequate for payment of the costs of the contract for the first fiscal year; (C) the contract is governed by part 17.1 of the Federal Acquisition Regulation; and (D) if the contract contains a clause setting forth a cancellation ceiling in excess $10,000,000, the Secretary provides notice to Congress of the proposed contract and the proposed cancellation ceiling at least 30 days before the award of the contract. (2) Costs and savings.--An energy savings performance contract shall require the contractor to incur the costs of implementing energy savings measures, including at least the cost (if any) incurred in making energy audits, acquiring and installing equipment, and training personnel, in exchange for a share of any energy savings directly resulting from implementation of such measures during the term of the contract. (3) Other terms and conditions.--An energy savings performance contract shall require an annual energy audit and specify the terms and conditions of any Government payments and performance guarantees. Any such performance guarantee shall provide that either the Government or the contractor is responsible for maintenance and repair services for any energy related equipment, including computer software systems. (c) Limitation on Annual Contract Payments.--Aggregate annual payments by the Secretary to a contractor for energy, operations, and maintenance under an energy savings performance contract may not exceed the amount that the Department of Defense would have paid for energy, operations, and maintenance in the absence of the contract (as estimated through the procedures developed pursuant to this section) during term of the contract. The contract shall provide for a guarantee of savings to the Department, and shall establish payment schedules reflecting such guarantee, taking into account any capital costs under the contract. (d) Rulemaking.--Not later than 90 days after the date of the enactment of this section, the Secretary, with the concurrence of the Federal Acquisition Regulatory Council, shall issue final rules to establish the procedures and methods for use by the Department of Defense to select, monitor, and terminate energy savings performance contracts in accordance with laws governing Federal procurement that will achieve the intent of this section in a cost-effective manner. In developing such procedures and methods, the Secretary, with the concurrence of the Federal Acquisition Regulatory Council, shall determine which existing regulations are inconsistent with the intent of this section and shall formulate substitute regulations consistent with laws governing Federal procurement. (e) Implementation Procedures and Methods.--The procedures and methods established by rule under subsection (d) shall-- (1) provide for the calculation of energy savings based on sound engineering and financial practices; (2) allow the Secretary to request statements of qualifications, which shall, at a minimum, include prior experience and capabilities of contractors to perform the proposed types of energy savings services and financial and performance information, from firms engaged in providing energy savings services; (3) allow the Secretary to presume that a contractor meets the requirements of paragraph (2) if the contractor either-- (A) has carried out contracts with a value of at least $1,000,000,000 with the Federal Government over the previous 10 years; or (B) is listed by a Federal agency pursuant to section 801(b)(2) of the National Energy Policy Act (42 U.S.C. 8287(b)(2)); (4) allow the Secretary to, from the statements received, designate and prepare a list, with an update at least annually, of those firms that are qualified to provide energy savings services; (5) allow the Secretary to select firms from such list to conduct discussions concerning a particular proposed energy savings project, including requesting a technical and price proposal from such selected firms for such project; (6) allow the Secretary to select from such firms the most qualified firm to provide energy savings services based on technical and price proposals and any other relevant information (7) allow the Secretary to permit receipt of unsolicited proposals for energy savings performance contracting services from a firm that the Department of Defense has determined is qualified to provide such services under the procedures established pursuant to subsection (d) and require facility managers to place a notice in the Commerce Business Daily announcing they have received such a proposal and invite other similarly qualified firms to submit competing proposals; (8) allow the Secretary to enter into an energy savings performance contract with a firm qualified under paragraph (7), consistent with the procedures and methods established pursuant to subsection (d); and (9) allow a firm not designated as qualified to provide energy savings services under paragraph (4) to request a review of such decision to be conducted in accordance with procedures, substantially equivalent to procedures established under section 759(f) of title 40, United States Code, to be developed by the board of contract appeals of the General Services Administration. (f) Transition Rule for Energy Savings Performance Contracts Under National Energy Conservation Policy Act.--In the case of an energy savings performance contract entered into by the Secretary or the Secretary of Energy pursuant to the authority granted by section 801 of the National Energy Conservation Policy Act (42 U.S.C. 8287), the Secretary may maintain the contract under this section, making whatever contract modifications as the Secretary determines are necessary to conform to the provisions of this subsection. (g) Pilot Program for Nonbuilding Applications.-- (1) In general.--The Secretary may carry out a pilot program to enter into up to 10 energy savings performance contracts for the purpose of achieving energy savings, secondary savings, and benefits incidental to those purposes, in nonbuilding applications. (2) Selection.--The Secretary shall select the contract projects to demonstrate the applicability and benefits of energy savings performance contracting to a range of non- building applications. (3) Report.--Not later than three years after the date of the enactment of this Act, the Secretary shall submit to Congress a report on the progress and results of the pilot program. The report shall include a description of projects undertaken; the energy and cost savings, secondary savings and other benefits that resulted from such projects; and recommendations on whether the pilot program should be extended, expanded, or authorized. (h) Definitions.--In this section: (1) Energy savings.--The term ``energy savings'' means a reduction in the cost of energy, from a base cost established through a methodology set forth in the energy savings performance contract, utilized in an existing federally owned building or buildings or other federally owned facilities as a result of-- (A) the lease or purchase of operating equipment, improvements, altered operation and maintenance, increased capacity or payload, or technical services; or (B) the increased efficient use of existing energy sources by cogeneration or heat recovery, excluding any cogeneration process for other than a federally owned building or buildings or other federally owned facilities. (2) Energy savings performance contract.--The term ``energy savings performance contract'' means a contract that provides for the performance of services for the design, acquisition, installation, testing, operation, and, where appropriate, maintenance and repair of an identified energy conservation measure or series of measures at one or more locations. Such contracts-- (A) may provide for appropriate software licensing agreements; and (B) shall, with respect to an agency facility that is a public building, as defined in section 13(l) of the Public Buildings Act of 1959 (40 U.S.C. 612(l)), be in compliance with the prospectus requirements and procedures of section 7 of the Public Buildings Accountability Act of 1959 (40 U.S.C. 606). (3) Nonbuilding application.--The term ``nonbuilding application'' means-- (A) any class of vehicles, devices, or equipment that is transportable under its own power by land, sea, or air that consumes energy from any fuel source for the purpose of such transportability, or to maintain a controlled environment within such vehicle, device, or equipment; or (B) any Federally owned equipment used to generate electricity or transport water. (4) Secondary savings.--The term ``secondary savings'' means additional energy or cost savings that are a direct consequence of the energy savings that result from the energy efficiency improvements that were financed and implemented pursuant to the energy savings performance contract. Such secondary savings may include energy and cost savings that result from a reduction in the need for fuel delivery and logistical support, personnel cost savings and environmental benefits. In the case of electric generation equipment, secondary savings may include the benefits of increased efficiency in the production of electricity, including revenue received by the Federal Government from the sale of electricity so produced. (5) Secretary.--The term ``Secretary'' means the Secretary of Defense.
summary: National Defense Energy Savings Act of 2003 - Authorizes the Secretary of Defense to: (1) enter into an energy savings performance contract (for a period of up to 25 years) for the sole purpose of achieving ancillary energy savings and benefits; and (2) incur obligations under the contract to finance energy conservation measures so long as guaranteed savings exceed the debt service requirements. Directs the Secretary to issue final rules establishing implementation procedures and methods that meet specified requirements. Authorizes the Secretary to implement a pilot program to enter into up to ten energy savings performance contracts in nonbuilding applications.