Lockheed signs energy-performance contract with DOE

The Energy Department has  forged a partnership with Lockheed Martin to increase energy efficiency through data center consolidation and IT enhancements.

The partnership is the first use of a federal Energy Savings Performance Contract to reach sustainability goals through improved IT practices, DOE and Lockheed Martin officials said. ESPC contracts let agencies embark on energy-savings projects without upfront capital costs and without special congressional appropriations.

DOE will focus on projects for the agency’s headquarters, IT infrastructures and the Continuity of Operations facility in Albuquerque, N.M., said Jake Wooley, manager of IT Sustainability Programs within Energy’s Office of the CIO.

Complexity could jeopardize data center consolidation

Energy has done a lot to improve the energy efficiency of its IT infrastructure at all of the agency’s sites, even before the Obama administration launched the Federal Data Center Consolidation Initiative and issued Presidential Executive Order 13514, which sets sustainability goals for federal agencies and focuses on making improvements in their environmental, energy and economic performance, Wooley said.

However, projects associated with energy savings and data center consolidation were paid for through appropriated funds. “But it is a matter of necessity now. We are looking at ways to leverage other financing capabilities in the reduced budget environment,” Wooley said.

Funding for major data center consolidation and IT infrastructure modernization projects can be quite difficult and, as a result, Energy’s CIO Office has to look outside of the box to finance and complete these projects, he said.

DOE’s Energy Savings Performance Contract and Utility Energy Service Contract have been used extensively across the federal government for energy efficiency improvements to some major facilities' infrastructures.

If the objective is energy savings and both contracts contain a component of operation and maintenance savings, DOE officials reasoned, then Energy should be able to use a contract like ESPC for IT modernization even though IT investments operate under a different life cycle than a major facility upgrade.

“We could use those contracts to do major IT infrastructure upgrades and data center consolidation,” Wooley said. “That is what we are doing here.”

The next step was to find energy service companies that are a part of the ESPC contracts to help Energy achieve its goals. When Energy sent out its notice of opportunity, there was significant interest from energy service companies, he said.

Energy selected Lockheed Martin, which has a record of implementing energy efficient IT enhancements at DOE’s Hanford site in Washington State, said Greg Caplan, senior manager for energy performance contracting with Lockheed Martin Information Systems & Global Solutions, Civil.

Together the two organizations have shown that IT practices such as data center consolidation, virtualization and cloud computing can help federal agencies reach their sustainability goals and save money, Caplan said.

Lockheed Martin will perform a preliminary assessment, at no cost to the government, where the company will baseline the infrastructure and identify energy and maintenance costs, Wooley said. The process is a collaborative effort with DOE.

Lockheed then will make recommendations for new capabilities, infrastructures or systems and provide the associate energy and operation and maintenance savings. The preliminary assessment should take 30 to 60 days.

“Then we pick and choose which projects we want them to focus on,” Wooley said.

Afterward, Lockheed conducts an investment grade audit, where the company does engineering and develops a business case for investment in those projects.

The business case will identify the costs, the capital investments, where the savings will come from, everything DOE needs to write a task order, Wooley said. The government does not pay Lockheed Martin until DOE starts to achieve the energy, operations and maintenance savings, he noted.

Energy officials want to retrofit DOE’s Germantown, Md. data center. DOE officials want to raise the power usage effectiveness level to make the facility a green data center. Then they hope to consolidate IT systems in server rooms and data centers located at DOE headquarters into the new green data center.

At the same time, DOE officials want to modernize IT infrastructure with a focus on thin clients, virtual desktops and even possible improvements to video conferencing. The aim is to determine which IT projects would be appropriate for an ESPC contract.

“They obviously have shorter life cycles than a facility upgrade,” Wooley said. “It is our hope that we will find opportunities for IT infrastructure upgrades that will be able to apply,” he noted.

Agencies might be able to mix and match ESPC contracts with appropriated funds.

If you find good investment but the return on investment exceeds what you had hoped for the life cycle of a project, you might be able to use appropriated funds if you have them, Wooley explained.

So ESPC is something that can be combined or used with appropriated funds to achieve major IT infrastructure transformation, he said.

“I wouldn’t say [ESPC contracts] are the only solution.” But in some cases, they might be an ideal contract vehicle to get upfront capital, Wooley noted.

A model for agencies

Energy’s partnership with Lockheed Martin could be a model for other agencies to follow, with the changes in the program to address IT transformation, said Doug Bourgeois, vice president and chief cloud executive with VMware.

By upgrading technology along with the energy efficiency of physical infrastructures, agencies are going to save more than they would otherwise. Plus, they would use private-sector capital investment in order to do so, said Bourgeois, who was director of the Interior Department’s National Business Center prior to joining VMware.

A challenge across government is agencies are not aware of the program or that an IT component has been added to help them carry out their data center consolidations plans, he noted.

At a recent luncheon attended by agency chief financial officers and deputy CFOs, many were not aware of the ESPC program but were interested in learning more about how the contract vehicle could be used to fund bigger cost-saving initiatives than pure energy efficiency, Bourgeois said.