Detailed Information on the
Energy Conservation Investment Assessment

Will develop new metrics to provide additional information about the program's results, and will develop even more aggressive targets.

Will continue tracking Savings to Investment Ratio which might decrease due to emphasis on renewable energy projects which require inherently longer paybacks. SIR requirement will stay 1.25/1 minimum. Goal is 2/1

Increase percentage of ECIP funding spent on renewable energy to 35% by September 30, 2008.

Will ensure that the program produces high returns on investment.

Measure: By 2015, reduce energy consumption in Department of Defense (DoD) buildings by 30% from a 2003 baseline.

Explanation:This measure directly links to the program's mission: "To improve energy and water efficiency of existing Department of Defense facilities and minimize costs." This measure's long-term target has increased from a 20 percent reduction to a 30 percent reduction relative to 2003 levels.

Measure: Ratio of savings to investment--Average annual energy savings exceeded average annual program costs by a 4/1 margin within five years of the program's expenditure for the 1997 to 2001 period.

Explanation:While a savings to investment (SIR) rato of 4 to 1 is desireable, an SIR of greater than 1.25 to 1 indicates a positive investment. As energy projects become more complicated and as the Department pursues more renewable energy projects, the SIR will continue to decrease. Again, while a 4 to 1 ration is outstanding, anything above 1.25 to 1 is still great.

Measure: DoD staff has developed a measure of BTU energy savings per dollar of funding to assist in developing even more aggressive targets. This program assists in meeting larger energy conservation goals that cannot be achieved with just ECIP projects.

Explanation:This metric indicates the amount of energy reduction in Billion BTUs of energy per Million dollars invested.

Measure: By 2013, use 7.5 percent renewable energy in Department of Defense (DoD) facilities.

Explanation:This program's long-term goal is to achieve 7.5 percent renewable energy use by 2013. By reaching this goal, the program will help DoD "improve energy and water efficiency of existing Department of Defense facilities and minimize costs."

Measure: By 2025, increase renewable energy usage so that it equals 25 percent of the electric production or procurement in Department of Defense (DoD) facilities in each year. (New measure, added February 2008)

Explanation:The program wants to increase the renewable energy used in DoD facilities. The program's long-term goal is to have renewable energy equal 25 percent of the electric energy used by DoD facilities each year by 2025. Achievement of this goal helps the Department "improve energy and water efficiency of existing Department of Defense facilities and minimize cost."

Is the program purpose clear?

Explanation: To improve energy and water efficiency of existing Department of Defense facilities and minimize costs. Funding for this program was $27 million in Fiscal Year 2002, $35 million in Fiscal Year 2003, $50 million in Fiscal Year 2004, and a proposed $70 million for Fiscal Year 2005 so this progam only addresses a small element of the overall program purpose.

Evidence: Department of Defense Insruction 4170.10 Energy Management Policy, August 8, 1991 establishes the policy to minimize the amount of energy used and its cost; Title 10 United States Code Section 2865 & 2866 authorizes Energy Conservation Investment Program for energy and water projects respectively.

Does the program address a specific interest, problem or need?

Explanation: ECIP is a Military Construction (MilCon) program specifically designated for projects that save energy and water usage and reduce Defense energy and water costs. Reducing energy consumption will maximize cost avoidance applied to rising energy costs.

Evidence: Department of Defense facility energy consumption in 2002 (235 trillion British Thermal Unit (BTU)) was about 2.3% less than the consumption in 2001 (240 trillion BTU). Facility energy costs decresed from $2,797M to 2.6363M avoiding a cost of $160M.

Is the program designed to have a significant impact in addressing the interest, problem or need?

Explanation: Energy Conservation Investment Program is a small, but key component of the Department's energy management strategy.

Evidence: Energy Conservation Investment Program projects make good business sense, historically obtaining about four dollars in life-cycle savings for every dollar invested.

Is the program designed to make a unique contribution in addressing the interest, problem or need (i.e., not needlessly redundant of any other Federal, state, local or private efforts)?

Explanation: The Energy Conservation Investment Program is a Military Construction (MilCon) program specifically designated for projects that save energy and water usage and reduce Defense energy and water costs.

Evidence: The Energy Conservation Investment Program is currently the only Defense-wide program using direct appropriation to achieve energy efficiency

Is the program optimally designed to address the interest, problem or need?

Explanation: Share-savings contracts are another contracting vehicle to obtain energy efficiencies through alternative financing in which private energy service companies or munical utilities finance and perform energy savings retrofits with no up-front payments but instead are reimbursed from a share of the savings generated. However the cost for financing these share -shaving contracts increases the contract cost considerably as compared to direct finded energy conservation investment progroam projects. Additionally, private venture interests are only attracted to projects with high payback. Energy Conservation Investment Program complements the Department's energy management strategy by targeting more capital intensive projects that may not be attractive to private interest.

Evidence: Share-in savings contracts are estimated to cost 40% to 50% percent more on average than the up front funding of an Energy Conservation Investment Program project.

Does the program have a limited number of specific, ambitious long-term performance goals that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The long-term energy reduction goal of the Department of Defense is to reduce energy consumption on a British Thermal Unit (BTU) per square footage basis. The Department reports its progress in achieving this goal annually to the Department of Energy.

Evidence: Department of Defense Instruction 4170.10 Energy Management Policy, August 8, 1991 establishes Executive Order (EO) 12759 as minimum energy conservation goals; Executive Order 13123 supercedes EO 12759 and requires Federal agencies to improve energy efficiency in : 1) Federal buildings by 35% relative to 1985 levels by 2010 2) industrial and laboratory facilities by 25% relative to 1995 levels by 2020. Results are reported via the annual Department of Defense Annual Energy Management Report. In Fiscal Year 2002, the Department reduced energy consumption by 25 percent in buildings and 20.74 percent in industrial facilities.

Does the program have a limited number of annual performance goals that demonstrate progress toward achieving the long-term goals?

Explanation: The annual energy reduction goal for the Department of Defense to reduce energy consumption on a British Thermal Unit (BTU) per square footage basis consuistently to achieve long term reduction reduction goals. The Department reports its progress in achieving this goal annually to the Department of Energy.

Evidence: Defense agencies report annually on improving energy efficiency: 1) Reduction of energy consumption in Federal buildings by 1.5% annually. 2) Reduction of energy consumption in Industrial and laboratory facilities by 1.5% annually. Results are reported via the annual Department of Defense Annual Energy Management Report. In Fiscal Year 2002 the Department reduced energy consumption in buildings by 2.5 percent and decreased energy consumption in industrial facilities by 0.5% from Fiscal Year 2001.

Do all partners (grantees, sub-grantees, contractors, etc.) support program planning efforts by committing to the annual and/or long-term goals of the program?

Explanation: The Assistant Secretary of Defense establishes Departmental conservation program goals, methods of measurements, and criteria for the execution of the Military Construction-funded Energy Conservation Investment Program. Department of Defense Components measure and report progress in meeting energy conservation goals annually as feeder information to the Department's Annual Energy Management Report..

Evidence: Department of Defense 4170.10 Energy Management Policy, August 8, 1991 establishes policies and provides guidance for the management of energy resources; Energy Conservation Investment Program Guidance, March 17, 1993 updates policy to meet the goals set by the Energy Policy Act of 1992 and for the continued management of the Energy Conservation Investment Program; Department of Defense attainment of energy reduction goals are reported via the annual Department of Defense Annual Energy Management Report.

Does the program collaborate and coordinate effectively with related programs that share similar goals and objectives?

Explanation: While Energy Conservation Investment Program is the only Defense-wide direct funded energy efficiency program, projects are validated to ensure that they are not duplicated by share-in savings contract vehicles for energy efficiency such as Energy Savings Performance Contract and Utility Energy Savings Contracts. Projects are reverified to avoid duplication and non-valid projects are removed from the Energy Conservation Investment Program list prior to issuance of the Congressional notification.

Evidence: Projects are validated on a Military Construction Data Sheet (DD Form 1391); A formal list of selected projects are submitted to congress via a Congressional notification for each Fiscal Year; The Department of Defense Annual Energy Management Report addresses all expendures of funding and programs attributing to energy conservation.

Are independent and quality evaluations of sufficient scope conducted on a regular basis or as needed to fill gaps in performance information to support program improvements and evaluate effectiveness?

Explanation: Evaluations are conducted on an as needed basis. In the past10 years, the General Accounting Office (GAO) and Department of Defense audit organizations issued 79 reports on Department of Defense energy management. Audits specifically incorporating Energy Conservation Investment Program include two from GAO, one from Department of Defense Inspector General and four from the Air Force Audit Agency with no major findings.

Evidence: Executive Summary of Department of Defense Inspector General Draft Report, Audit Coverage of Department of Defense Energy Management, Project No. D2002-D000CG-0047 did not indentify any major negative findings with the program.

Is the program budget aligned with the program goals in such a way that the impact of funding, policy, and legislative changes on performance is readily known?

Explanation: Obtaining energy conservation goals solely through the Energy Conservation Investment Program program would be cost prohibitive.

Evidence:  

Has the program taken meaningful steps to address its strategic planning deficiencies?

Explanation: Changes in guidance to correct strategic deficiencies are inlcuded in the annual call for program year projects. Allocation of funds and project prioritization were modified in 2000 for 2002 and beyond projects to encourage better obligation rates and use of more renewable energy projects.

Evidence: Memorandum From Deputy Under Secretary (Installations) requesting Fiscal Year 2002 Energy Conservation Investment Program projects, prepared August 18, 2000

Are acquisition program plans adjusted in response to performance data and changing conditions?

Explanation: Allocation of funds to the Defense Components are determined by a formula that takes into account the component's previous years energy consumption and the obligation rates of unexpired Energy Conservation Investment Program funds for the last five years.

Evidence: Department Memorandum requesting future Fiscal Year Energy Conservation Investment Program projects altered the funding allocation method from best savings to investment ratio by project to a "fair share" basis in order to take into account the Defense Agency's energy usage and past obligation performance.

Has the agency/program conducted a recent, meaningful, credible analysis of alternatives that includes trade-offs between cost, schedule and performance goals?

Explanation: While an internal Office of Secretary of Defense program-wide review of Energy Conservation Investment Program scheduled for Fiscal Year 2002 has not occurred, each Energy Conservation Investment Program project is analyzed to considered economical alternatives. This analysis is included in the Military Construction Data Sheet (DD Form 1391) for each project.

Evidence: Military Construction Data Sheet (DD Form 1391) prepared for each project includes a section discussing encomical alternatives considered based on a Life-Cycle Cost-Analysis.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The Defense Components provide periodic updates (annually at a minimum) to the program manager on obligation status on their projects . Obligation rates on unexpired funds are used to determine future allocation. Additionally, monthly financial reports are provided to show execution of funds.

Evidence: Email dated August 6, 2002, subject "Energy Conservation Investment Program Obligation Worksheets"; requesting updated information on execution of projects. 1002 Accounting Report which shows obligation of projects as recorded in Defense Finance and Accounting System.

Are Federal managers and program partners (grantees, subgrantees, contractors, etc.) held accountable for cost, schedule and performance results?

Explanation: Obligation rates on unexpired funds are used to determine future allocation. This allocation method awards timely execution performance by maximizing the future funding allocation and minimizes future funding allocation with poor execution performance

Evidence: Action Memo requesting Future Fiscal Year Energy Conservation Investment Program projects delinates the allocation of funding method in which consideration of energy usage and prior year obligation performance are applied.

Are all funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: Title 10 United States Code Section 2865 & 2866 requires congressional notification for each project prior to execution which ensures that funding is spent for intended purposes. Obligation rates for recent years has been hindered by delays in issuing funding to Defense components for execution. These delays resulted from determining intent of congressional language stipulating usage of funds other then what was requested in the Presidents Budget ($6 million to conduct Service-wide renewable energy assessment in Fiscal Year 2002 and controls for Pentagon Renovation in Fiscal Year 2001). Energy Conservation Investment Program obligation rate for Fiscal Year 199 through Fiscal Year 2002 is 91% and is currently 65% for Fiscal Year 2003.

Evidence: Action Memos requesting future Fiscal Year Energy Conservation Investment Program projects stress the importance of timely execution obligation; Fiscal Year 2004 MilCon Appropriations Conference Report 108-132, Fiscal Year 2003 MilCon Appropriations Conference Report 107-731, Fiscal Year 2002 MilCon Appropriations Conference Report 107-246 and Fiscal Year 2001 MilCon Appropriations House Committee Report 106-614 direct use of Energy Conservation Investment Program funding.

Does the program have incentives and procedures (e.g., competitive sourcing/cost comparisons, IT improvements) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: Selection of Energy Conservation Investment Program projects is based on Savings-to-Investment Ratios (SIR) estimated through life cycle cost analysis. Historically, this program obtains about four dollars in life-cycle savings for every dollar invested. Fiscal Year 2003 projects had an average Saving-to-Investment Ratio of 3.4. Because investment in more renwable energy projects is desired, and given that renewable energy projects do not have as high an SIR as more traditional projects, In FY 2003, we began tracking another metric that relects annual energy savings (BTU reduction) associated with the investment. Fiscal Year 2003 projects had an average of 17 MMBTUs reduction per $1M invested.

Evidence: Action Memo requesting future Fiscal Year Energy Conservation Investment Program projects delinates allocation of funding based on enery usage and prior year execution; Saving-to-Investment Ratios, economical payback, and annual MBTU energy reductions based on Life-Cycle Cost-Analysis are developed for each project and submitted on a Military Construction Data Sheet (DD Form 1391) ;

Does the agency estimate and budget for the full annual costs of operating the program (including all administrative costs and allocated overhead) so that program performance changes are identified with changes in funding levels?

Explanation: Program wide cost are not tracked, however administration cost and overhead on a project basis are estimated on the Military Construction Data Sheet (DD Form 1391) in determineing the amount for each Energy Conservation Investment Program MilCon project.

Evidence: Overhead and administration costs for each project are included in the Military Construction Data Sheet (DD Form 1391).

Does the program use strong financial management practices?

Explanation: Obligation rates are determined by comparing Defense components independent reporting to Defense Finacing and Accounting Services reports. Department of Defense's overall financial management has problems, and does not receive a clean audit report.

Evidence: Executive Summary of Department of Defense Inspector General Draft Report, Audit Coverage of Department of Defense Energy Management, Project No. D2002-D000CG-0047 reported no major negative findings.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: Consistently maintaining high obligation rates has been a challenge for the program in recent years. Program amounts were reduced in the Budget requests for Fiscal Year 2000 and Fiscal Year 2001 to encourage better program management and allow for outstanding projects to be completed. Additionally, allocation of funds and project prioritization were modified in Fiscal Year 2000 for Fiscal Year 2002 and beyond projects to encourage better obligation rates and use of more renewable energy projects.

Evidence: Program Budget Decision No. 377 reduced funding reguest to encourage better execution; Memorandum From Deputy Under Secretary (Installations) requesting Fiscal Year 2002 Energy Conservation Investment Program projects modified allocation method to encourage better obligation rate and use of more renewable energy projects.

Does the program define the required quality, capability, and performance objectives for deliverables?

Explanation: In Fiscal Year 2002 the Department reported a reduction in energy consumption in buildings of 25% since 1985 and 20.74% in Industrial facilities since 1990. Energy Conservation Investment Program is a small, but key component of the Department's energy reduction.

Evidence: The Fiscal Year 2002 Department of Defense Annual Energy Management Report detailed a reduction in energy consumption in buildings of 25% since 1985 and 20.74% in Industrial facilities since 1990.

Has the program established appropriate, credible, cost and schedule goals?

Explanation: Savings-to-Investment Ratios (SIR) estimated through life cycle cost analysis are a key component in selection of Energy Conservation Investment Program projects. Historically, the program obtains about four dollars in life-cycle savings for every dollar invested. Fiscal Year 2003 projects had average Savings-to-Investment Ratio of 3.4.

Evidence: Each project's Savings-to-Investment Ratios (SIR) estimated through life cycle cost analysis are in incorporated on a Military Construction Data Sheet (DD Form 1391); The Congressional notification of proposed projects for Fiscal Year 2003 identified an overall Savings-to-Investment Ratio of 3.4.

Has the program conducted a recent, credible, cost-benefit analysis that shows a net benefit?

Explanation: Each project's Military Construction Data Sheet (DD Form 1391) contains a Saving-to-Investment Ratio develop through Life-Cycle Cost Analysis and is validated by the components technical branch prior to be considered for the program.

Evidence: Each project's Saving-to-Investment Ratio develop through Life-Cycle Cost Analysis is included in Military Construction Data Sheet (DD Form 1391).

Does the program have a comprehensive strategy for risk management that appropriately shares risk between the government and contractor?

Explanation:  

Evidence:  

Has the program demonstrated adequate progress in achieving its long-term outcome goal(s)?

Explanation: In Fiscal Year 2001 the Department reported a reduction in energy consumption in buildings of 25% since 1985 and 20.74% in Industrial facilities since 1990. Energy Conservation Investment Program is a small, but key component of the Department's energy reduction.

Evidence: Achievemnt of goals are reported via the annual Department of Defense Annual Energy Management Report. In Fiscal Year 2002 the Department reduced energy consumption by 25 percent in buildings and 20.74 percent in industrial facilities.

Does the program (including program partners) achieve its annual performance goals?

Explanation: In Fiscal Year 2002 the Department reported a reduction in energy consumption in buildings of 2.5 percent from 2001 and a reduction of .5 percent in Industrial facilities from 200. The Department has already meet the Fiscal Year 2005 industral goal. Energy Conservation Investment Program is a small, but key component of the Department's energy reduction.

Evidence: Achievemnt of goals are reported via the annual Department of Defense Annual Energy Management Report. In Fiscal Year 2002 the Department reduced energy consumption in buildings of 2.5 percent from 2000 and decreased consumption by 0.5 percent in Industrial facilities from 2001.

Does the program demonstrate improved efficiencies and cost effectiveness in achieving program goals each year?

Explanation: In Fiscal Year 2002 the Department reported a reduction in energy consumption in buildings of 25% since 1985 and 20.74% in Industrial facilities since 1990. Energy Conservation Investment Program is a small, but key component of the Department's energy reduction.

Evidence: Achievemnt of goals are reported via the annual Department of Defense Annual Energy Management Report. In Fiscal Year 2002 the Department reduced energy consumption in buildings of 2.5 percent from 2001 and decreased consumption 0.5 percent in Industrial facilities from 2001.

Does the performance of this program compare favorably to other programs with similar purpose and goals?

Explanation: Energy Conservation Investment Program projects make good business sense, historically obtaining about four dollars in life-cycle savings for every dollar invested. Fiscal Year 2003 Energy Conservation Investment Program projects had average savings-to-investment ratio of 3.4. Share-savings contracts are another contracting vehicle to obtain energy efficiencies through alternative financing, however the cost for financing increases the contract cost considerably. Share-in savings contracts are estimated to cost 40% to 50% percent more on average than an Energy Conservation Investment Program funded project over the life cycle of the equipment.

Evidence: The Congressional notification of proposed projects for Fiscal Year 2003 identified and average Savings-to-Investment Ratio of 3.4 percent.

Do independent and quality evaluations of this program indicate that the program is effective and achieving results?

Explanation: In the past10 years, the General Accounting Office (GAO) and Department of Defense audit organizations issued 79 reports on Department of Defense energy management. Audits specifically incorporating Energy Conservation Investment Program include two from GAO, one from Department of Defense Inspector General and four from the Air Force Audit Agency with no major findings.

Evidence: The Executive Summary of Department of Defense Inspector General Draft Report, Audit Coverage of Department of Defense Energy Management, Project No. D2002-D000CG-0047, did not address any major negative findings of the Energy Conservation Investment Program.

Were program goals achieved within budgeted costs and established schedules?

Explanation: Energy Conservation Investment Program obligation rate for Fiscal Year 199 through Fiscal Year 2002 is 91% and is currently 65% for Fiscal Year 2003. No cost over runs exceeding 25% have occurred.

Evidence: Action Memo requesting Fiscal Year 2005 energy Conservation Investment Program projects dated November 6, 2003 summarized an 84 percent obligation rate from Fiscal Year 1999 to 2003.