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Remarks by Administrator Johnson at the National Association of Energy Service Companies’ Federal Market Workshop

As prepared for delivery

Remarks by
Martha Johnson
U.S. General Services Administration
National Association of Energy Service Companies Federal Market Workshop
Washington, D.C.
3/22/2012

 

I’m delighted to be here to open the National Association of Energy Service Companies’ Federal Market Workshop.

I’m going to set some context for how the federal government, in general, and GSA, in particular, are thinking about our country’s energy future and the role that energy service companies can play in the “brave new world” we see ahead.

To begin, though, I’d like to get us all on the same page about GSA – who we are and what we do.

As I said, I’m delighted to join you today in no small part because I don’t have to start my speech – as I often do – by saying that GSA doesn’t stand for the Girl Scouts of America or the Gay Straight Alliance. It stands for the General Services Administration.

We do the buying and building – the business – of government, and we do it at scale. GSA manages and guides a river of consumption worth nearly $95 billion dollars that includes everything from the world’s largest charge card program to information technology services to travel procurement. We manage a fleet of more than 220,000 vehicles and guide the acquisition of an additional 200,000. GSA is also the nation’s largest landlord, with more than 360 million square feet of owned and leased space – more than 2 percent of U.S. commercial real estate. In other words, we are big. Yes, I am a woman who talks about the joys of being at scale, sized, massive.

GSA is also the government’s front door. Our tools and policies are often the entrance for the public into the full breadth of government services. And, to close the metaphor, we’re the government’s back door. We handle the disposal of property, helping agencies auction or otherwise relinquish space shuttles, cars, lighthouses, and, by some estimates, 10,000 computers a week. So that’s who we are. Under ordinary circumstances it’s a big job. But as we all know, these are not ordinary circumstances.  

Our country faces serious challenges both at home and abroad. Our troops need support, our veterans need care, our children need good schools and our infrastructure needs an upgrade. As federal agencies see their budgets slashed, the need for their services has seldom been greater.  Although we’re seeing real, steady progress across our economy – and February marked the 24th month of straight private sector job growth – too many Americans still feel the pain and anxiety of unemployment.

And underpinning all of this are the projections for energy consumption over the next several decades. According to a recent report by the Organization for Economic Co-operation and Development, global carbon dioxide emissions from energy reached an all-time high of 30.6 gigatons in 2010. Without a change in course, by 2050, carbon dioxide emissions from energy consumption will rise 70 percent, and 85 percent of energy sources will come from fossil fuels.  The challenge is clear, and the stakes are set. But there is no silver bullet. As author Bill McKibbon says, what we need is silver buckshot.

For three years, President Barack Obama has been aggressive about common-sense, actionable policies for our national energy portfolio. He has directed the federal government – the largest energy consumer in the U.S. economy – to reduce its greenhouse gas emissions from direct sources by 28 percent by 2020. He has directed federal agencies to reduce their greenhouse gas emissions from indirect sources, such as those from employee business travel and commuting, by 13 percent by 2020. And last year, the government released its first-ever comprehensive greenhouse gas emissions inventory, allowing federal agencies to leverage data to gauge the effectiveness of their renewable energy investments and their energy and fuel-efficiency efforts.

It’s an impressive list of accomplishments. But the president hasn’t stopped there. In his State of the Union address, the president articulated a sensible and sustained blueprint for a new energy era for America. This blueprint lays out a 21st century strategy that develops every source of American-made energy – not just oil and gas, but wind power and solar power, biofuels and fuel-efficient cars and trucks that get more miles to the gallon. It’s a strategy based on prosperity and an economy fueled by homegrown and alternative energy sources designed and produced by American workers. The blueprint emerges from the work of the past three years and lifts our eyes to the horizon. It challenges us – the government, the public and industry – to ask and to answer what if, how come and why not.

That’s the spirit with which I’m speaking to you today. Solving our nation’s energy challenges requires more than business as usual. We will need to be deeply innovative and totally collaborative about how we design, use, update, and dispose of our building inventory. GSA stands on the front lines of this mission. Let me pull that apart a little bit.

Our organization has embraced what we’re calling ZEF – a zero environmental footprint goal.  It’s a BHAG – a big hairy audacious goal. It has galvanized us – created a huge magnet that is pulling everything about how we work.  

When President John F. Kennedy looked to the stars and challenged the country to put a man on the moon and bring him safely home, we had no idea how to do it. Yet within the decade, Neil Armstrong took his giant leap. The energy and environmental challenges of today require similar vision and similar willingness to try, test, risk, and model. ZEF is our own moonshot, and already, we are finding synergies, ideas, and new levels of performance. This is important, and it’s important for GSA to lead.

The federal government is an organization filled with superlatives. It’s the largest employer in the country. It’s the largest landlord, the biggest energy consumer, and the largest user of electronics. Our utility bill is $24 billion every year. GSA carries the operational weight for this vast enterprise. As a result, if GSA doesn’t pursue a zero footprint, it’s not an exaggeration to say that the government can’t achieve energy reductions.

Now, I confess that I’m a put-on-a-sweater, save-the-soap-bits, regifting, hybrid-driving mama.  Personally, I resonate with this agenda. But that’s not what is motivating me in my work. I’m about running a government that is more effective and efficient.

I want our organizations embracing sustainability because it is, first, an agenda about no waste. It wrings inefficiencies out of the marketplace and gets rid of the unnecessary and unused systems, processes, and spaces. And, second, it is an agenda about new, better, “judo” solutions for how we do our work and deliver mission. This is about innovation – American innovation at work in our American government. I quote the president: the “transition to clean energy has the potential to grow our economy and create millions of jobs - but only if we accelerate that transition.” So GSA is hitting the G-A-S.

I will focus today on our buildings for purposes of keeping my talk under 10 hours. We have some 360 million square feet of space that we own or lease. We are one of the world’s largest landlords. And we are working with some significant legacy. We started focusing on energy-efficiencies in buildings back in the 1970s during that energy crisis. Our first green roof was installed in 1975. We are proud that our federal buildings are currently 22 percent more efficient than their commercial equivalents. Our work has already taught us a lot.

As a next level of performance, we have committed that all new construction or major renovations be gold certified in Leadership in Energy and Environmental Design – minimum. This is a real commitment and builds on the rich history of design excellence that GSA has championed for decades. But we all know that to see progress in energy-efficiency, we can’t rely solely on new construction. We have to get serious about our existing building stock. That’s why last December as part of the Better Buildings Initiative, the president announced nearly $4 billion in combined federal and private-sector energy upgrades to buildings during the next two years.

These investments are a triple win. They save energy costs, they will create tens of thousands of jobs, and they don’t cost the taxpayers anything because they pay for themselves. And, I’d suggest that there’s yet one more “win,” because they are strictly performance-based, energy saving performance contracts incentivize innovation and promote smart risk assessments. To support the president’s $2 billion target for federal buildings, in that last month, GSA has issued two ESPC notices of opportunity.  

The first, posted four weeks ago, is for the Washington, D.C., Heating and Operations Transmission District – the system of more than 12 miles of tunnels and pipes that heat and cool more than 90 buildings including the White House and the Smithsonian museums. When it was built almost a century ago, the system burned 230 tons of coal – a day. Today, it produces more than 2.2 billion pounds of steam a year. We’re asking the private sector to help bring down the cost, deliver value to taxpayers, and give us a modern solution.

The second notice, announced two days ago (March 20), is for our Deep Retrofit Challenge, a list of 30 buildings in 17 states and territories that we are offering for ESPCs. The challenge asks 16 energy service companies to work collaboratively to find the deepest retrofits possible with financing terms of 25 years or less. The goal? Get our buildings to net zero energy use – or better. The challenge is about performance and innovation. Typically, federal ESPC projects realize 20 percent reductions. In Germany, they see 45 percent reductions or higher. Why don’t we? The answer requires us to rethink and rework the entire ESPC chain from design to financing to management.

The distinguished oncologist Dr. Martin Raber is fond of telling young doctors entering the field of cancer research that the “big limitation in the fight for the cure is imagination.” The same could be said for ESPC design.  We need to broaden the approach, explore new areas of progress, and above all start asking the right questions. In the past, our ESPCs may have been limited by the level of reductions requested by the government. If we asked for a 15 percent reduction, that’s what we got.

Today is different. Today, we want you to bring us your best ideas – and then make them better. We’re not interested in incrementalism. We’re not interested in piecemeal. We’re not interested in stale thinking. We want bold ideas. We want creative solutions. We want transformational approaches.

That’s the philosophy behind the challenge, and that’s our expectation going forward. Importantly, this challenge puts both GSA and industry into the same boat: We’re committing 30 of our buildings to the project, and the energy service companies are committing their tools and expertise. Everyone’s cards are on the table. We’re in this together.

Because of its joint buy in, the challenge reduces individual risk. Reducing risk will, in turn, reduce the cost of capital. Reducing the cost of capital will make future projects more attractive to the government and the private sector. In short, this challenge holds the promise of reshaping the way that energy retrofits are conducted going forward.

But as you all know, upgrading a building’s “hardware” can only do so much. To really achieve energy reductions, we have to reduce our use. It’s as much about behavior as it is about green “bling.” And, fundamentally, to reduce our environmental footprint, we need to reduce our physical footprint. So, in addition to the president’s ESPC target, and on top of the Deep Retrofit Challenge, GSA is encouraging space consolidation, boosting our capabilities around mobile work, and testing new approaches to workspace at our headquarters office here in downtown Washington.

Here’s how we think about it: We have turned our historic headquarters at 1800 F St. in Washington into a laboratory for the possibility of a mobile, networked government workforce. The building was built in 1917, and it was a monument to modernity at the time: It had water fountains! But as the decades dragged on, the windows were sealed and the casements closed. Air-conditioning units were installed in every room, and the energy use went up. And up. And up. It grew long in the tooth. It needed an upgrade.

The building accommodated 2,400 people when we moved out 15 months ago. When we move back in 12 months from now, we’ll be able to put 4,500 people in. How are we doing that? It’s neither hard nor complicated; it has good precedent in the private sector, but it requires a rethink of how government approaches workspace. To start, we won’t have any personal space. Private rooms, pull-aside areas, conference nooks, and quiet places? Yes. Personal, solely dedicated offices? No.

And I’m walking the talk. My office in that building is the third largest in D.C. It’s larger than a basketball court. It’s got a fireplace and wrought iron casements. It’s historic, it’s steeped in history, and I won’t be moving back in. Just like today, I’ll be working out of a cubicle.

What does that mean for the face of government? Think about it: For decades, government has built offices based on per-square-foot requirements for employees. Yet the turnstile numbers in our lobbies tell us exactly what they’ve been telling the private sector for years: On Tuesdays, Wednesdays, and Thursdays, we only have 45 percent occupancy rate in our buildings. The number goes down on Mondays and Fridays. Employees are on the road, in training, at conferences, meeting with clients, or going to the dentist. They’re doing exactly what every other worker in the American service economy does, but we’ve been building their offices as if they still worked in the 1950s. It’s time for a reboot, and it’s starting at GSA’s headquarters.

Now, I know that the title of today’s event is the Federal Market Workshop, so I’d like to take advantage of the brain trust assembled here and pose some questions to you. After all, the story of American innovation is not about government or industry going it alone. It’s about partnership and collaboration. It’s about working together, arm in arm, hand in hand. Together, we have researched and discovered. Together, we have incentivized and financed. Together, we have shared risk while seeking to avoid the reckless.

Today’s workshop, the president’s commitment, and the Deep Retrofit Challenge follow in the footsteps of this collaborative tradition. So how can government help industry achieve the deepest possible retrofits? What new financing mechanisms should we explore? How can we more effectively tackle risk so that the financial sector sees ESPCs as lending opportunities? Finally, how can we start thinking about ESPCs from a portfolio perspective rather than from an individual, one-off perspective?

Today’s conversations are important to us. Please share your ideas. We need to spot trends, learn your challenges, and recognize when messages aren’t clear. And be demanding. Demand our openness and our creativity. Together, I’m confident that we will succeed in building the brighter future for our country and a more vibrant economy for our future.

Thank you.