Across the country, grantees strive to be absolutely clear regarding American Recovery and Reinvestment Act (ARRA) funding for their projects. In the case of an Energy Savings Performance Contract* (ESPC), which can be characteristically different than a renewable energy project, requirements may be difficult to understand. In this Blog post, we attempt to clarify some of the circumstances that require compliance.
* An ESPC is an agreement between a customer and an Energy Services Company (ESCO). Based on a comprehensive energy audit, the ESCO arranges to finance and implement an energy savings project for an existing building that needs an upgrade. Customers repay the cost of the improvements according to the terms of a contract. The energy savings the customers enjoy once the work is completed offsets these payments.
Question: If a grantee enters into an ESPC, and the ESCO performs the work in compliance with the Davis-Bacon Act’s required wage rates, is all work associated with the project subject to Davis-Bacon provisions, including work funded by the energy savings? In other words, is it possible to only apply Recovery Act requirements to a portion of the project?
Answer: Any project funded whole or in part by Recovery Act funds must comply with certain requirements, such as the Davis-Bacon and Buy American provisions. If an ongoing project receives Recovery Act funding, the requirements (including Davis-Bacon) become effective the moment funding is approved for use on the project.
In the case of Davis-Bacon, a “project” consists of all construction and labor required to complete the building or project, regardless of the number of contracts or assistance agreements involved. This holds true as long as all contracts and assistance agreements are closely related in purpose, time, and place.
Dividing an ARRA-funded project into separate or smaller contracts and assistance agreements, in an attempt to avoid complying with Buy American, Davis-Bacon, or other requirements on even a portion of the project, is expressly prohibited if the activities are at all related to the whole. However, occasionally major construction activities occur in isolated phases that have a distinct purpose, time, or place. In these cases, there could be separate Recovery Act contracts or assistance agreements, and base funding would carry separate requirements.
If you have additional questions regarding compliance with Davis-Bacon or other Recovery Act provisions as they relate to ESPCs, please submit a comment to this post or contact a Technical Assistance Provider.
----------
Content for this Blog post courtesy of Sentech-SRA/ICF International