                                 CODE OF VIRGINIA

ENERGY PERFORMANCE-BASED CONTRACT PROCEDURES; REQUIRED CONTRACT PROVISIONS (§
45.2-1703)

A. Any contracting entity may enter into an energy performance-based contract
with an energy performance contractor to significantly reduce (i) energy costs
to a level established by the public body or (ii) operating costs of a facility
through one or more energy conservation or operational efficiency measures. For
the purposes of this article, energy conservation or operational efficiency
measures shall not include roof replacement projects, except as provided in
subdivision B 2.

B. 1. The energy performance contractor shall be selected through competitive
sealed bidding or competitive negotiation as set forth in § 2.2-4302.1 or
2.2-4302.2. The evaluation of the request for proposals shall analyze the
estimates of all costs of installation, maintenance, repairs, debt service,
post-installation project monitoring, and reporting. Notwithstanding any other
provision of law, any contracting entity may purchase energy conservation or
operational efficiency measures under an energy performance-based contract
entered into by another contracting entity pursuant to this article even if it
did not participate in the request for proposals if the request for proposals
specified that the procurement was being conducted on behalf of other
contracting entities.

   2. A contracting entity may procure a roof replacement as part of a larger
   energy conservation or operational efficiency measure, including solar, where
   the replacement is necessary for the installation of such measure. Such
   contracting entity may also procure a roof replacement pursuant to &#xA7;
   2.2-4302.1 when the original contract for the energy conservation or
   operational efficiency measure, including solar, does not include a roof
   replacement and the contracting entity determines that the replacement of more
   than 20 percent of the roof is necessary for the installation of such measure.
   Such roof replacements procured separately from a larger energy conservation
   or operational efficiency measure, including solar, shall also be publicly
   noticed on the Department of General Services&#8217; central electronic
   procurement website. All roof replacement projects procured separately
   pursuant to this subdivision shall be designed by a licensed architect or
   professional engineer.

C. Before entering into a contract for energy conservation measures, the
contracting entity shall require the performance contractor to provide a payment
and performance bond relating to the installation of energy conservation
measures in an amount the contracting entity finds reasonable and necessary to
protect its interests.

D. Prior to the design and installation of any energy conservation measures, the
contracting entity shall obtain from the energy performance contractor a report
disclosing all costs associated with such energy conservation measures and
providing an estimate of the amount of the energy cost savings. After reviewing
the report, the contracting entity may enter into an energy performance-based
contract if it finds (i) the amount the entity would spend on the energy
conservation measures recommended in the report will not exceed the amount to be
saved in energy and operation costs more than 20 years from the date of
installation, based on life-cycle costing calculations, if the recommendations
in the report were followed and (ii) the energy performance contractor provides
a written guarantee that the energy and operating cost savings will meet or
exceed the costs of the system. The contract may provide for payments over a
period not to exceed 20 years.

E. The term of any energy performance-based contract shall expire at the end of
each fiscal year but may be renewed annually for up to 20 years, subject to the
contracting entity making sufficient annual appropriations based upon continued
realized cost savings. Such contract shall stipulate that the agreement does not
constitute a debt, liability, or obligation of the contracting entity, or a
pledge of the faith and credit of the contracting entity. Such contract may also
provide capital contributions for the purchase and installation of energy
conservation measures that cannot be totally funded by the energy and
operational savings.

F. An energy performance-based contract shall include the following provisions:

   1. A guarantee by the energy performance contractor that annual energy and
   operational cost savings will meet or exceed the amortized cost of energy
   conservation measures. The guaranteed energy savings contract shall include a
   written guarantee of the qualified provider that either the energy savings or
   operational cost savings, or both, will meet or exceed within 20 years the
   costs of the energy and operational savings measures. The qualified provider
   shall reimburse the contracting entity for any shortfall of guaranteed energy
   savings projected in the contract.

   2. A requirement that the energy performance contractor to whom the contract
   is awarded provide a 100 percent performance guarantee bond to the contracting
   entity for the installation and faithful performance of the installed energy
   savings measures as outlined in the contract document.

   3. A requirement that the energy performance contractor provide to the
   contracting entity an annual reconciliation of the guaranteed energy cost
   savings. The energy performance contractor shall be liable for any annual
   savings shortfall that may occur.

G. The Department shall make a reasonable effort, as long as workload permits,
to:

   1. Provide general advice, upon request, to local governments considering
   pursuit of an energy performance-based contract pursuant to this article; and

   2. Annually compile a list of performance-based contracts entered into by
   local governments of which the Department becomes aware.

HISTORY: 2001, c. 219, § 11-34.3; 2004, c. 197; 2009, c. 399; 2013, c. 583;
2017, c. 259; 2021, Sp. Sess. I, c. 387; 2022, cc. 465, 466.