CBS Newsletter
Fall 1994
pg. 3

Aerial view of Washington D.C.

News From the D.C. Office

The federal government is the largest single purchaser in the world for many energy-related products. Federal buying power-along with that of state and local agencies-represents a largely untapped resource to increase the energy efficiency of consumer products and commercial equipment. LBL is helping the DOE Federal Energy Management Program (FEMP) develop and lead a government-wide initiative to capture this market-transforming opportunity. Jeff Harris and others in LBL's D.C. office are heading FEMP's efforts to identify how future federal purchases can be more energy-efficient.

The U.S. government spends more than $70 billion a year to purchase supplies and equipment, of which an estimated $10-20 billion are energy- related products. In the aggregate, state and local government buying power appears to be roughly three to four times greater than the entire federal market. For all levels of government, procurement of energy-efficient products would save both energy and money. By considering the life-cycle costs of efficient products, not just first costs, government is better serving the long-term interest of taxpayers and the public.

In addition, government purchasing can have a large effect on the overall market in two important ways. First, coordinated interagency and intergovernmental purchasing using the same energy-efficient criteria can help shift the mix of products manufactured and sold to all consumers, public and private-while bringing down costs through manufacturing volume and competition. Second, public sector purchasing can help create a "market-pull" for new technologies not yet commercially available. Adapting the "developmental procurement" methods used in weapons procurement, civilian agencies could issue credible offers to purchase advanced products, better than any now available, once they meet performance and cost specifications.

Federal initiatives to increase the purchase of energy-efficient products are authorized under the 1992 Energy Policy Act, recent Office of Management and Budget policy letters, and Executive Orders concerning federal energy management and environmentally preferred products. Coordinating federal purchasing with other levels of government, and with utility demand-side management programs, can further strengthen the market demand for energy- efficient new technologies and products. Finally, energy efficient procurement, including a new, government-wide "Procurement Challenge," exemplifies the type of voluntary, market-oriented actions favored in the Administration's Climate Change Action Plan.

Throughout the federal government, procedural reforms are needed to help redirect purchase decisions toward today's best energy-efficient practice, and to open up the federal market for tomorrow's more advanced technologies. To implement a recent Executive Order, DOE is cosponsoring an interagency "Procurement Challenge." This program encourages all agencies to change their own buying patterns, whether through direct purchases from commercial sources, acquisition through the supply agencies (Defense Logistics Agency and the General Services Agency), or "indirect" purchases made as part of larger construction and service contracts. Agencies participating in the Challenge make a voluntary pledge to lead the way in "best-practice" buying (products that are among the 25% most energy efficient) or in committing to purchase new, advanced technologies more efficient than any now on the market.

To exploit government purchasing as a market-pull resource will require a redefinition of procurement, and the associated attitudes and rules for thousands of practitioners. Instead of choosing among existing product offerings, government will take an active, explicit role in market-shaping: setting targets for more energy-efficient products and creating market incentives to expand the available options-not only for government itself but for all consumers.

—Nancy Casey-McCabe & Jeff Harris

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Nancy Casey-McCabe & Jeff Harris
Environmental Energy Technologies Division
1250 Maryland Ave., Suite 150
Washington D.C. 20024
(202) 484-0880; (202) 484-0888 fax

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