This page is intended to help the reader understand available alternatives to the traditional procurement method. This resource showcases relevant case studies and sample bid asks as they relate to sole sourcing and possible energy efficiency procurement exemptions.
Self-Ownership and Code 4217
It is important that districts seeking to own their own buses and infrastructure are familiar with the bidding process. Below is an example of a Request for Proposal (RFP) templates, put together by ZNE Alliance, for the purpose of educating districts on the information they will need to be asking for and providing to different energy service companies in order to obtain a favorable bid.
California districts should also be aware of General Code 4217, which empowers public agencies to forgo a public bid solicitation on certain energy efficiency projects, and engage with a single company of their choosing.
Section 4127 of the California General Code is designed to promote energy conservation, cogeneration, and alternate energy sources at public agency facilities. Adopted in 1984 in response to a statewide energy crisis, the rule allows agencies to single-source energy service contracts, eliminating the need for separate contracting of the design and construction phases. It also allows school districts to aggregate multiple components of a comprehensive energy project under the energy service contract. GC 4217 is administered under the broad auspices of Section 25008 of the California Public Resources Code, which holds that it is “the policy of the state and the intent of the Legislature to promote all feasible means of energy and water conservation and all feasible uses of alternative energy and water supply sources.”
California General Code 4217 grants public agencies an exemption from traditional competitive bidding requirements on energy service contracts related to renewable energy and energy conservation and allows agencies to contract on terms that are determined to be in the best interest of the agency. The agency must demonstrate that the energy-related services will create tangible savings for the contracting public agency versus the status quo.
The language of GC 4217 is broad, allowing public agencies to interpret the Code in ways that are responsive to diverse needs. School districts often authorize energy service companies (ESCOs) to undertake efficiency projects under the umbrella of GC 4217. In general, Rule 4217 can be applied to any renewable energy project which can demonstrate cost savings to the district. For example, many cities and school districts use GC 4217 to enter into power purchase agreements (PPAs) for renewable energy and design-build solar contracts. Some school districts have also used the code to procure electric school bus charging.
As part of the approval process, GC 4217 requires public hearings to be held by the contracting agency for both the energy service contract and, if applicable, the financing agreement, with two weeks of notice given prior to each hearing. Per GC 4217, “Notwithstanding any other provision of law, a public agency may enter into an energy service contract and any necessarily related facility ground lease on terms that its governing body determines are in the best interests of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance.”
To apply Rule 4217 to a clean energy or clean transportation project, the sponsoring agency must make the following findings:
The anticipated reduction in energy costs from the project must exceed the anticipated cost of the project.
If there is a facility ground lease associated with the project, the fair rental value of the ground lease must be offset by the anticipated financial benefits provided by the project.
Prior to entering into an energy service contract, the agency must facilitate a public hearing with at least two weeks of advance notice given.