Performance contracts (sometimes called ESPCs or EPCs) in which an energy service company (ESCO) coordinates installation and maintenance of efficiency improvements in a customer's facilities and is paid from the associated energy savings, are an option for companies with large projects or multiple smaller projects that could be aggregated under one agreement. Energy savings performance contracts (ESPCs) allow federal agencies to procure energy savings and facility improvements with no up-front capital costs or special appropriations from Congress. An ESPC is a partnership between an agency and an energy service company (ESCO).
Since the inception of U.S. Department of Energy (DOE) indefinite-delivery, indefinite-quantity (IDIQ) ESPCs in 1998, agencies have used the ESPC contracting vehicle since 1998 to significantly reduce energy and operating costs and make progress toward meeting federal sustainability goals.
The Federal Energy Management Program (FEMP) provides agencies with expert assistance, guidance, and training to help them implement ESPC projects that are technically excellent, legally sound, and a good deal for the government. FEMP's activity in this area stems from the legislation that authorizes federal ESPCs, which also made FEMP the federal organization responsible for creating and providing services to enable all agencies to implement successful ESPC projects.