Contract Vehicle in the DOD Driveway

The U.S. Army is equipped with the tools it needs to fulfill renewable energy targets, but project approval processes are lengthy.
By Katie Fletcher | November 03, 2014

The U.S. Department of Defense intends to acquire 25 percent of its power from renewable energy sources by 2025, a substantial amount when considering its $20 billion annual energy bill makes it one of the largest energy consumers in the world. All three major branches of the U.S. military have made commitments to sourcing power from renewable energy, taking various approaches to meet those targets.


The U.S. Army launched a $7 billion renewable energy procurement program in 2012 in an effort to keep its commitment. The U.S. Army Corps of Engineers, Engineering and Support Center and the Army’s Energy Initiatives Task Force teamed up to drive the first-of-its-kind contracting vehicle forward.The indefinite delivery indefinite quantity (IDIQ) multiple award task order contracts (MATOCs) were issued to qualify sets of contract awardees to compete for future Army renewable energy projects through project-specific contracts called task orders. “The concept of the multiple award task order contract was developed as a way to prequalify companies to bid on task orders that would allow them to compete on a level playing field without regard to whether they are qualified to do the job,” says Amanda Simpson, executive director of the newly established Office of Energy Initiatives, formerly the Energy Initiatives Task Force.


MATOC Mechanics


The EITF Simpson led was established over three years ago to look at opportunities to leverage renewable energy and bring energy security to Army installations. The task force was able to successfully do this, Simpson says, so the Secretary of the Army has asked the EITF to transition to an enduring organization. Since Oct. 1, with the start of the new fiscal year, the task force formed the permanent Office of Energy Initiatives. As head of the new office, Simpson plans to continue to help identify, award and complete renewable energy projects across the country.


The first request for proposals (RFP) were issued in August  2012 and last year 58 MATOCs were awarded across four energy sectors: solar, wind, biomass and geothermal. An additional 21 MATOCs were awarded at the beginning of this year after further evaluation by the government. Out of the total 79 MATOC-qualified companies, there are 15 in biomass holding contracts. Out of the 52 applicants, the 15 selected include Acciona Energy North America Corp.; ECC Renewables LLC; EDF Renewable Energy; Emerald Infrastructure; Energy Answers International Inc.; EIF United States Power Fund IV LP, Needham, Massachusetts; Energy Management Inc.; Honeywell International Inc.; MidAmerican/Clark Joint Venture; Pacolet Milliken Enterprises Inc.; Siemens Government Technologies Inc.; Stronghold Engineering; Energy Systems Group LLC; Ameresco Inc., and Wheelabrator Technologies Inc. “This solicitation seeks ‛best value’ for the government in accordance with Federal Acquisition Regulation Part 15,” says Debra Valine, chief public affairs USACE. “It is the intent to award to all responsible and qualified companies whose proposals conform to the solicitation and are rated acceptable or better.”


The Source Selection Authority holds the responsibility of ensuring proper conduct of the process and making the final source selection decision, Valine says. The main factors that are assessed when selecting the companies include technical and management experience, financial capability, past performance, small business and price. “After the government individually evaluates and rates each proposal, the SSA determines which proposals are responsible and qualified,” Valine says.


Now that the pool of qualified firms and contractors for renewable energy technologies has been selected, they must wait until competitive task order RFPs are issued for them to bid on and compete for individual power purchase agreement (PPA) task order contracts. “As renewable energy opportunities at Army installations are assessed and validated, the U.S. Army Corps of Engineers, Engineering and Support Center, Huntsville, will issue a competitive task order RFP to the prequalified MATOC companies for the specific technologies,” Valine says.


In late July, the first RFP was put into drive for on-site solar renewable electricity at Redstone Arsenal in Huntsville, Alabama, but an RFP for biomass still remains in park, searching for the right project to rev up the contract vehicle. Task orders are still moving through the approval process at the pentagon, Simpson says. 


Awardees Await Opportunities


 The biomass MATOC awardees awaiting opportunities like these have varied views on how successful this type of contracting vehicle will be in enhancing their biomass business. MATOC awardees, Siemens and Ameresco see value. Siemens was the only team to be selected under all four energy sectors. It partnered with Bechtel and AECOM to win the four contracts. “Our biomass experience is unique in the marketplace,” says Judy Marks, president and CEO of Siemens Government Technologies Inc. “We have industry knowledge and regulatory expertise to help the Army address those risks associated with today’s evolving and complex biomass market.”


Marks mentioned Siemens’ experience with biomass development projects, such as its commercial carpet gasification facility at Shaw Industries in Dalton, Georgia. The facility turns carpet scraps into power for its own manufacturing facility. “This has resulted in lower and cleaner plant emissions, reduced carpet waste in landfills and savings up to $2.5 million per year,” Marks says. “We will pursue similar types of efficiency, innovation and effectiveness to help the U.S. Army increase its biomass capability.”


Ameresco has a 20-MW biomass cogeneration facility in Aiken, South Carolina, at the DOE’s Savannah River Site. Nicole Bulgarino, vice president-federal with Ameresco, says the company plans to be responsive as opportunities present themselves with the MATOC program, and will encourage its Army customers to utilize this vehicle. “We have to have a vehicle to work with federal government agencies, and this is another avenue to do these large-scale renewable projects, rather than using performance contracting or another type of contracting vehicle that may be more restrictive or not completely applicable to a large-scale renewable project,” Bulgarino says.


One of the less-restrictive aspects of the contract is that it is long-term, up to 30 years, in comparison to the 10-year constraints that the rest of the federal government has. This, according to Simpson, makes it more economical. “This MATOC leverages 10 USC 2922a, which gives the DOD the unique authority to contract up to 30 years for renewable energy PPAs,” Valine says.


The $7 billion capacity expended for PPAs is money already allocated to pay the Army’s utility bills. “Under each PPA, the Army will only purchase the energy that is produced; no generation assets will be required,” Valine says. “Selected contractors of the MATOC will finance, design, build, operate, own and maintain the energy plants.”


Even though the long-term contract may make projects more economical, there are still fiscal constraints, and not all the selected biomass companies have confidence that their efforts will be awarded under the program. Although companies have been awarded a MATOC, they are now only eligible to bid on future specific contracts with no guarantee of having a bid accepted. The companies also have no knowledge at this time when opportunities to bid will present themselves. However, since this is an ambitious and new undertaking for the Army, most understand that these efforts will take time.


One constraint with proposed biomass projects is that the power procured from them has to compete with power from the grid. “Right now, under fiscal constraints that we are handed, all of our long-term contracts for energy have to be at or below what we forecast the price of power from the grid to be,” Simpson says. “We do believe that there is a value to energy security, it’s just no one can assess, nor has Congress given us approval to pay for, that added security.”


Simpson believes there are opportunities for industry to be competitive with grid-connected power, but the Army doesn’t have a price premium that it is approved to pay at this time.


Securing Energy Security


MATOC and other renewable energy procurement pathways are spurred by the need for more energy security on military installations. This, in fact, is the ultimate goal, rather than for environmental, governmental or publicity reasons. “What the Army is doing through the EITF with the Office of Energy Initiatives is focused not so much on we want to put renewable energy on our installations, it’s that we want energy security, so that our Army is ready to do the job whenever they are called,” Simpson says. “To do that, we can leverage renewable energy through private, third-party financing.”


On a similar note, a leadership meeting between the American Council on Renewable Energy and the DOD, emphasized that renewable energy projects help reduce the national defense’s vulnerability. According to ACORE, 99 percent of 500-plus military bases on U.S. soil rely on the commercial grid. A significant problem resulting from this reliance has been demonstrated with 87 power outages of eight or more hours at bases. The Center for National Policy released a paper making the same claim. The report says most on-base renewable energy power systems are configured to offset electricity purchases from the grid, but cannot provide power to the base during blackouts. Even facilities with diesel generators as a backup power source are susceptible to sustained blackouts due to limited fuel and potential fuel delivery interruptions.


Biomass for Power Assurance 


Biomass can serve as a dependable energy source to power through potential outages. “When we look at solar and wind, for example, those are wonderful renewable resources—it is great when we have that type of generating asset on our installations—but they are subject to the weather,” Simpson says. “Solar panels don’t generate electricity at night and wind turbines don’t generate electricity unless the wind is blowing; biomass has the ability to provide power 24/7, as long as there is sufficient feedstock available.”


Another component playing into energy security is today’s technological environment, which Simpson says military personnel refer to as “reach-back capability.” “A soldier on the battlefield is connected through a variety of electronic means, all the way back to data centers, intelligence sources back here in the continental U.S.,” Simpson says. “Those command and control facilities are critical to the operations that our soldiers conduct every day, and more so during times of conflict. Without that reach-back, which of course is dependent upon the access of electricity to keep the telecommunication links operational, there is a missing link in our ability to perform our missions.”


Although specific biomass project information with MATOC cannot be shared, Simpson says 13 projects are currently in the works under the four technologies with a dozen more behind that. Even though there is no public information on biomass projects or even an estimate of when information will be released, the Army is and will be purchasing renewable energy from a few biomass projects under different acquisition vehicles. “In each one of those cases, we are bringing energy security to our installations, because that is indeed the driver, and when we can do that without spending appropriated dollars that tells us that industry can be our partners in this,” Simpson says.


Three projects Simpson mentions are the 60-MW biomass facility at Fort Drum in New York, a 60-MW peaking station that is biodiesel capable at Schofield Barracks, Wheeler Army Airfield in Hawaii, and a requisition on a biomass facility at Red Stone Arsenal in Alabama, where the current MATOC RFP for solar has been issued. Simpson stresses that it is important that the Army access electricity there because of an outage the base experienced three years ago after a bad storm. The base lost electricity for eight days in that case. “So having a biomass facility to provide electricity in a situation like that is quite crucial,” Simpson adds. “We are looking at other biomass opportunities across the 50 states, and I think one of the things we often look for with biomass is what is the access and long-term longevity of the feedstock.”

Author: Katie Fletcher
Staff Writer, Biomass Magazine
701-738-4920
kfletcher@bbiinternational.com