VanRoekel: OMB has no role in approving energy-savings contracts

U.S. CIO Steven VanRoekel raised some eyebrows with his answer to a question from a House Democrat about energy savings performance contracts (ESPCs) at a House Oversight and Government Reform Government Operations Subcommittee hearing on July 25.

Asked by ranking member Gerry Connolly (D-Va.) about the Office of Management and Budget's role in approving ESPCs that deal with data center optimization, VanRoekel said  OMB "doesn't have a role" except for the "interpretation of policy" or "when procurements achieve a certain threshold," in which a review board reviews those prospective ESPC deals.

In the brief exchange, VanRoekel said OMB provides counsel to agencies, but emphasized that the decision of whether to carry out an ESPC deal is an agency decision.

The comments generated discussion among industry insiders from several energy savings performance companies (ESCOs) waiting to see what happens with the first potential blockbuster ESPC deal between Lockheed Martin and the Department of Energy. As FCW reported in June, that deal would allow DOE to optimize two of its data centers with no capital investment. An expected $70 million in saved energy costs would be paid to Lockheed Martin.

The deal, though, was held up in early 2013 by OMB for undisclosed reasons, even as the Navy, General Services Administration, NASA and Department of Transportation were at various stages of selecting ESCOs or looking to release notices of opportunity. One DOE official, testifying June 27 before the House Science, Space and Technology Committee's Energy and Oversight panel, said the continued hold up is now a DOE decision, a signal to some that DOE is capitulating to OMB.

The deal has attracted bipartisan Congressional attention, most recently with five lawmakers writing a bicameral letter in mid-July directing Energy Secretary Ernest Moniz and OMB Director Sylvia Burwell to clarify positions on the ESPC deal. The letter has not received an official response, but rumors about who is drafting a reply picked up steam in the wake of VanRoekel's remarks this week.

If the Lockheed Martin-DOE deal sinks, industry reps fear ESPCs won't be viable for data center optimization.

OMB previously did not comment about its role in data center ESPCs or the DOE-Lockheed Martin deal, but VanRoekel's admission that OMB can play a role in the process is important.

When FCW asked OMB about its review board, what its threshold is for involvement in a potential ESPC deal or what policy OMB has to interpret, a spokesperson referred FCW to a 2011 Presidential Memorandum on the implementation of ESPCs and a 2012 OMB Memorandum on the use of ESPCs in federal buildings.

"OMB provides guidance to agencies regarding the implementation of these memoranda," the spokesperson said.

FCW found no mention of review boards or data center optimization in those memoranda.