A New Energy for Old Problems

Jane Roschen, Divina Li, and Clara Pomper

Preface

Since 2017, the Defense Acquisition University (DAU) has offered innovation training for the Defense Acquisition Workforce through the DAU Leadership Center. DAU bases its innovation training on the Lean Startup method as practiced in Stanford University’s Hacking for Defense (H4D) program. An article in the May-June 2018 Defense AT&L magazine described the first H4D course at DAU. Since then, DAU has run three additional H4D courses and many shorter workshops through industry partners BMNT and Dcode. The latest DAU innovation training event was the Innovation and Entrepreneurship Lab offered at the George Washington University in February 2020.

DAU and the George Washington University Law School (GW Law) entered into a strategic partnership in 2019. The purpose of the partnership was to make studying Government Procurement Law accessible to the Defense Acquisition Workforce. Although not originally designed as such, the strategic partnership also provided a bridge between DAU and the next generation of acquisition professionals. DAU collaborated with GW Law for its Alternative Spring Break project described in this article. The Innovation and Entrepreneurship Lab, unlike a typical college outreach, gave the students a real-world problem to solve as their orientation to government procurement policy. The student team used the Lean Startup method to solve their assigned problem. It is quite possible you can apply the same method to reach solutions to your own problems—and find better solutions, faster. If you want to know more about innovation training at DAU, please contact me at [email protected].

—David L. Gallop, Ph.D.
Director, DAU Leadership Center 

The rising generation strives to be change-makers, applying strategic and sustainable solutions to make the federal government function more efficiently. George Washington University Law School (GW Law) and the Sustainable GW (https://sustainability.gwu.edu/) program partnered to offer students an opportunity to participate in the Environmentally Sustainable Policymaking Procurement Project (ESPPP). On Feb. 7, curious students listened to practitioners and policymakers share what they believe are the biggest environmental challenges facing government procurement today. Cyndi Valina, a former official with the General Services Administration, introduced the team to a problem experienced across federal procurement, contracting, and program management—making federal facilities more environmentally friendly. The structure of the project catered to our generational strengths of socialization and enthusiasm to find solutions to energy-efficiency procurement policy. Having investigative autonomy during this project, we used our research, collaborative interviews, and critical thinking to address the problem and find the gaps. In the few weeks we had to investigate, the accomplishments and strides we made are large enough to truly make a difference in the procurement world. Our energetic passion overcame resistance, complacency, and behavioral hesitation. We are novices in federal procurement. However, we believe the skills we practiced in our Lean Startup learning journey are essential to problem solving in government in general and defense acquisition specifically.

Context

The Guiding Principles for Sustainable Federal Buildings are a set of goals for new and existing federal buildings to be or become more environmentally sustainable. These principles cover a wide variety of sustainability elements: water efficiency and runoff management, green energy, internal air quality, and health. New federal buildings are constructed with the Guiding Principles already in mind; but existing structures struggle to meet these goals.

The most common way for agencies to procure energy-saving and facility improvement is through Energy Savings Performance Contracts (ESPCs). These are long-term, guaranteed-savings contracts between agencies and private-sector contractors for energy, water, and ancillary benefits. ESPCs have no upfront capital funding or congressional appropriations. Instead, as shown in Figure 1, the Energy Service Companies (ESCOs) are compensated directly through energy cost savings. As a result, the agency’s utility costs decrease, operation budgets stabilize, and capital or additional funds can be allocated elsewhere. Because contractors are paid through the savings, ESPCs provide a budget-neutral option for greater agency sustainability.

In newer buildings, ESPCs are sometimes criticized for outlasting the lifespan of the equipment they install, and this can make an ESPC seem counterproductive or even obsolete. However, because of a guaranteed savings scheme, operations are less expensive while more closely managed by the ESCO throughout the performance period. For older buildings, ESPCs can leverage water conservation, improved insulation, lighting, as well as HVAC (heating, ventilation, and air conditioning) and storm water-management mechanisms to support agencies meeting the milestones set forth in the Guiding Principles.

Process

Our team, three GW Law students, one Public Health Master’s student, and an undergraduate student of International Affairs, started a journey of discovery together. A personal commitment to being leaders in sustainability practices created a common team goal, and led us to utilize our interdisciplinary backgrounds to test our own policy ideas with fresh eyes.

On launch day, Dr. David Gallop of the Defense Acquisition University’s Leadership Center taught the student competitors the technique of the Lean Startup, a tool used by entrepreneurs to determine the viability of their product or idea in the real world. Looking at our procurement problems like startup innovators situated the teams in a holistic framework, empowering our investigation without a siloed perspective. We could fluidly observe and explore the problem from outside and inside the government, on behalf of the government.

To uncover underlying factors of delayed implementation, our group interviewed stakeholders and observed the outlook of various archetypes, gained insight on the problem, tested our hypotheses, and most important, found the links between people pained by the problem and possible saboteurs (beneficiaries of the status quo), or those who would benefit from solving the problem.

In addressing the core problem, we reframed our discovery and identified vulnerabilities in federal energy management. As we spoke to personnel affected by the resistance to ESPCs, our team sought to understand the logical connection between the driving factors that promote energy efficiency projects, the unaddressed needs, and the existing resources to inform and incentivize guideline and ESPC implementation.

There were many facets of government procurement to be investigated—the continued operations of ESPCs, ongoing discussions of Green guidelines as mission-based values of agencies fluctuate, the evaluation of existing programs such as the Federal Energy Management Program (FEMP), and the current setbacks in private-public partnerships. We asked questions such as: How flexible are agency building management budgets, are the Green Guidelines discussed annually, and why are building operators and facilities managers not focusing operations on energy efficiency and other sustainable practices?

Throughout our interviews, we found a consistent need for increased collaboration across functional specialties. Our interviewees were professionally diverse—contracting managers, chief sustainability officers, building managers, project facilitators, procurement specialists, and private certification managers. While engaged in conversations of genuine learning and gradual solution building, we tested our hypotheses:

• There is a lack of championship in agencies to initiate the Guiding Principles.
• There is a lack of mission-based agency sustainability objectives.
• Due to a lack of funding, sustainable renovations to agency buildings cannot be managed internally.
• The language and communication surrounding ESPCs is convoluted.
• Stakeholders are unaware of the opportunities and benefits.

Finding the Key: A Missing Champion

Setting off from our very first interview with a sustainability management expert, Kehan DeSousa, we found a clue: The inability to recoup value can be an immediate deal-breaker for investing time, money, and commitment into energy efficiency projects. After researching the benefits of ESPCs, we learned that they could deliver energy cost savings. Energy efficiency provides overall resilience and longevity to institutions—basically a long-term return on investment. So, why were relevant stakeholders and collaborators not dedicated to putting in the time and effort to achieve energy efficiency through ESPCs?

Our interviews showed a disconnect between the ESPCs and Guiding Principles. As our minimal viable product, we tested which key cultural and operational factors play essential roles in promoting a continued dialogue within government procurement. A few agencies exemplified “best practices.” The acting deputy director of Veterans’ Affairs (VA), Cynthia Cordova, stressed that the VA’s incorporation of the Guiding Principles into sustainability certifications and data sets translated into sustainable energy management. The procurement team at FEMP described similar problems to those beneficially addressed at the VA. For example, the VA’s central office, addressed as a key asset by FEMP, now is an essential proponent of these operations. Similarly, the Chief Sustainability Officer of the National Archives and Records Administration, Mark Sprouse, was able to use ESPCs successfully, but advised us that employees’ lack of familiarity with the contracts and irregular or coarse administration directives made it hard to implement ESPCs.

Guy Van Syckle, senior manager at the sustainable investment company, Hannon Armstrong, helped us crystallize our thinking: There is no deficit of opportunity—it’s all about the agency and contracting officer’s motivation. Pushing ESPCs forward requires a champion.

Our discoveries of what has been lacking in federal energy procurement did not come from the library or a textbook. The sustainability experts we interviewed consistently articulated the same setbacks to Guiding Principles compliance. The Lean Startup approach provides license to write your own field book of questioning and innovation. As we continued our dialogues with stakeholders, we uncovered the procurement cycle through a value proposition in every conversation. By propping the value proposition as a vehicle for an entrepreneurial mindset, we found that substantive promise existed outside of a schooled solution.

Identifying Solutions

In evolving toward sustainable practices, this project proved to us students how clear the solutions can be when you take a step back, communicate broadly, and look at the issues in a system-based approach. From a standpoint of rallying support for sustainability projects, GW Director of the Office of Sustainability Meghan Chapple illuminated targets for progress. The changing seasons of organizational missions direct the need for procurement to be a tool, not a driver, to sustain momentum. The driver, rather, is creation of goals and targets that decrease carbon emissions, conserve resources, reduce environmental degradation, and maintain facility resiliency. Practical and ambitious goals for federal building energy management and sustainability have been set through the Guiding Principles, but they have not been tailored to agency-specific needs, goals, and targets.

ESPCs need a champion familiar with the agency’s central mission, and a cohort of resources and information-sharing to make sustainability a reality and reap the rewards.

We concluded, from our conversations with experts and stakeholders, that a broad-based behavioral hesitation has impeded ESPC utilization. ESPCs need a champion familiar with the agency’s central mission, and a cohort of resources and information-sharing to make sustainability a reality and reap the rewards. We came to recognize that if ESPCs are leveraged through a cultural shift, a call to action for fulfilling the Guiding Principles not only will evolve sustainable performance in government procurement but will provide mutually beneficial resilience to the agency’s operations.

This is how we formulated our Solution Conjecture. Throughout the interviews, we valued and tested certain propositions for use as concrete steps toward engaging contracting personnel to transform how ESPCs are used in government procurement. We wanted to find a platform to institutionalize the idea that procurement can be a tool that employs energy savings, resiliency, and productivity metering to realize and fulfill agencies’ missions. Once this target is set, we believe that our solution-hypothesis would create a cultural acceptance that loops everyone into having an employee participation in the goals and elements of the Guiding Principles. Building occupants’ role in procurement sustainability can involve evaluating electric vehicle charging needs, consideration of off-site renewables, support for occupants’ health, or gaining accessibility to the Environmental Protection Agency’s ENERGY STAR Portfolio Manager for benchmarking and other such activities.

Cultural shifts require commitment, time, and consistency. To make progress, we propose that a webinar series be designed to address resistance to the new ideas. We feel that this could evolve into a natural mandate by embracing mission-based bottom-up participation and approaches. This path is outlined in Table 1.

A training webinar designed to bridge government and the private sector could lower barriers to entry of participation in optimizing federal buildings, fleets, and environments. The first step before even reaching the Green Path is to build coordination and heightened discourse among building management, contractors, and chief sustainability officers. A commitment to increased familiarity can build momentum toward advocating a cultural shift involving all interested parties. Even employees whose job descriptions are not centered on building performance or energy efficiency, can be involved and prove foundational to community involvement and investment in sustainability projects. In this way, sustainability can expand beyond a niche. By adjusting sustainable renovation and initiative to cater to mission-based values, the central office is more easily engaged and, therefore, sustainable procurement is standardized through joint bottom-up and top-down approaches.

A Path Forward

We identified a few key concrete Green Steps that could push the Green Path forward and aid in organizing Green guidelines and ESPC champions. The webinars are meant to highlight the mission-specific opportunities that can be found in energy-saving projects through the ESPCs, therefore increasing communications between private and public partners in furtherance with the Guiding Principles. In the webinar space, as detailed in Table 2, participants can study similar situations to their own agencies, identify any hassle factors, learn best practices for leveraging preservation law, and connect with private sector ESCOs and civil society organizations that focus on sustainability to drive an increase in demand for third-party certification and evaluation. Outside the webinar space, champions could advertise the benefits of leveraging budget appropriations with ESPCs to bundle larger resilience projects and informational steps on how to negotiate ESCO profit savings and margins for higher-hanging fruit projects such as green roofs, in-house composting bins, or installation of solar panels.

Organizations and groups across diverse sectors are meeting the ambition of sustainability goals by investing in teams to ensure the continued operation, management, and success of energy-saving projects. Dedicated advocates and champions can change how we fundamentally look at the federal government’s sustainability practices and will be the torchbearers in realizing accessibility, awareness, and ease of procurement resiliency.

Table 2. Green Steps Toward Energy Savings in Federal Building Energy Management

• Empower agencies to turn Guiding Principles compliance into mission-specific endeavors. 

• Study similar situations within agencies. 

  • Use of an energy credit system. 

• Identify the “Hassle Factor(s).” 

• Use Best Practices for leveraging preservation law. 

• Integrate sustainability-oriented civil societies into federal energy procurement because “NGOs have longer-term investment.” 

  • Have multiple certifications, and performance re-evaluations every 5 years. 

  • Ensure that proper training is in place to secure operation and management (i.e., Green Globes certification criteria). 

  • Have a drive to increase market demand for third-party certification. 

Summary

Here are some great things discovered in our student project that we think the Defense Acquisition Workforce could use:

As students entering this space, we were able to explore with fresh eyes the impediments that may exist. Outside of our normal classroom application, we were empowered to be change agents and we internalized this power into passion and discovery. Younger Millennials and Generation Z personnel can accomplish important tasks with little supervision if empowered to do so. Autonomy provides both a sense of accomplishment and belonging.

The core of our findings did not lie in the library, but in utilizing the human skill of interviewing beneficiaries. Interviewing numerous experts across diverse relevant fields has been an exciting and rewarding experience as competitors of the Environmentally Sustainable Policymaking Procurement Project Competition because we have seen that the solution is tangible and feasible. Resources exist for vigorously exploring problems and identifying their solutions while assessing every transaction’s value.

As the procurement lead of the FEMP team said, “You can’t outsource a champion.” “Unfreezing” the status quo is a human-centered challenge and cannot be addressed by merely writing new policy. Shifting the culture of how agencies procure through a bottom-up solution is more likely to succeed if it has a champion. Awareness, accessibility, and motivation deliver functionality to an ecosystem that embraces innovative procurement tools and techniques. Engaging a champion takes social and emotional intelligence and an action plan that will invalidate saboteurs through participatory action and discourse.

ESPCs are a micro public-private partnership that can be replicated. The long-term savings payback of the ESPCs do not derive from large front-end investment costs, incentivizing a public-private partnership. With the correct champion who will uphold a cultural commitment to the time and energy it takes to manage such a contract, this procurement model could be widely implemented across federal agencies.

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ROSCHEN received a B.A. in International Affairs from the George Washington University (GW) in 2020. She has enrolled in the M.S. in Sustainability Management program at Columbia University’s School of Professional Studies.

LI is a second-year student at GW Law and plans to specialize in environmental and energy law.

POMPER is a second-year student at GW Law specializing in environmental law. Prior to law school, she specialized in Environmental Studies and American Politics at Vassar College.

The authors can be contacted at [email protected], [email protected], and [email protected].

NOTE: Other team members contributing to this project included: Daniel Bickle, JD Candidate, GW Law; Myles Rogers, MPH Candidate in Environmental Health Science and Policy in GW’s Milken Institute School of Public Health and Sustainability Fellow, D.C. Sustainable Energy Utility. The team worked under the direction of Karen Thornton’s, director of the Government Procurement Law Program at GW Law School, and Dr. Robert Orttung, a Research Professor and the director of Research for Sustainable GW.

The views expressed in this article are those of the author alone and not the Department of Defense. Reproduction or reposting of articles from Defense Acquisition magazine should credit the authors and the magazine.