Going After the Government's Green
from September/October 2008
by Venessa Wong
Those Toyota hybrids in government parking lots and the eco-friendly supplies in federal, state, and local agency offices are part of a drive to buy green products. From town halls to the Pentagon, officials are launching procurement programs aimed at fuel conservation, renewable energy, sustainable materials, and related greenery. The federal spending alone runs well into the billions.
Can your company get some of the action? Yes, but only with a lot of homework. “This is not a business for the fainthearted,” says Gloria Berthold, president of TargetGov, an Elkridge, Maryland, consulting firm. Companies, she notes, are often unprepared for the long sales cycles typical of government contracts lasting 12 to 24 months.
Some of the juiciest opportunities are at the local level. “Cities appear to have taken the lead when it comes to the sheer volume of requests for proposals and bids requiring green building practices and standards,” says Irvine Alpert, executive vice president of Onvia Inc., a Seattle company that gathers data on government contracting and other things. According to the American Institute of Architects, the number of cities with green building programs has more than quadrupled, from 22 in 2003 to 92 today. One of the biggest projects is the $107 million Seattle Central Library, erected by Hoffman Construction Co. of Portland, Oregon. At the other end of the scale: the $35,000 contract that Louisville, Kentucky, awarded Luckett & Farley, a hometown firm, to retrofit the roof of the six-story Metro Development Center, replacing tar and gravel with vegetation as a way to cut heating and air-conditioning bills.
Except in rare cases, city money goes to the lowest bidder, wherever it’s located. For example, Covanta Holding Corp. in Fairfield, New Jersey, is extending its presence in Hempstead on New York’s Long Island by way of a 25-year contract that could yield $1 billion of waste-disposal fees.
Companies selling energy services have a big opportunity. Federal contractors are offering so-called ESPCs (energy savings performance contracts) that grant suppliers some of the savings achieved by efficiency improvements. Johnson Controls’ $3.8 billion portfolio of performance contracts, the largest in the country, is composed mostly of public-sector deals. Among them: a $51 million ESPC for a comprehensive energy- and facility-systems upgrade at the Marine Air Ground Task Force Training Command in Twentynine Palms, California. Energy-services companies are also bidding for “utility energy services contracts” that share cost savings. Energy Systems Group, a facilities-management and energy company in Newburgh, Indiana, recently landed a $5.7 million deal to handle energy-saving renovations at Naval Station Norfolk in Virginia.
For all the increased demand, selling to the U.S. government isn’t any easier than it used to be. Jeff Newman, a partner at the law firm Foley & Lardner LLP in Washington, D.C., says that by the time the government posts what it’s looking for on fedbizopps.gov, its clearinghouse for contracts, the word is out and companies with the best contacts may already have made their bids. Moreover, novices in dealing with the government quickly learn that the application process is arduous. But in the current environment, companies with clearly defined strategies for winning eco-contracts stand to rake in plenty of green.
