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BACKGROUND Energy performance contracting is a turnkey service, sometimes compared to design/build construction contracting, which includes a comprehensive set of energy efficiency, renewable energy, and Water Conservation measures, and often is accompanied with guarantees that the savings produced by a project will be sufficient to finance the full cost of the project. Turnkey Service - The ESCO provides all of the services required to design and implement a comprehensive project at the customer facility, from the initial energy audit, design engineering, construction management, commissioning, and long- term monitoring and verification of project savings. Comprehensive Measures - The ESCO tailors a comprehensive set of measures to fit the needs of a particular facility, and can include energy efficiency, renewables, distributed generation, water conservation and sustainable materials and operations. Project Financing - The ESCO arranges for long-term project financing that is provided by a third-party financing company in lieu of financing provided by the City. Project Savings Guarantee - The ESCO provides a guarantee that the savings produced by the project will be sufficient to cover the cost of project financing for the life of the project. SELECTION PROCESS In August 2011, the City issued a Request for Qualifications (RFQ) in accordance with California Government Code §4217.16, which states, "Prior to awarding or entering into an agreement or lease, the public agency may request proposals from qualified persons. After evaluating the proposals, the public agency may award the contract on the basis of the experience of the contractor, the type of technology employed by the contractor, the cost to the local agency, and any other relevant considerations. The public agency may utilize the pool of qualified energy service companies established pursuant to Section 388 of the Public Utilities Code and the procedures contained in that section in awarding the contract." Five ESCOs submitted responses to the RFQ: Honeywell Corporation, Chevron Energy Services, Johnson Controls, Inc., Schneider Electric, and Siemens. All of the ESCOs met the minimum qualifications. Staff conducted panel interviews/evaluations for all five ESCOs and performed a second round of interviews for the top two, as well as extensive reference checks. The interview panel ultimately selected Honeywell Corporation based on its qualifications familiarity with the City's operations and goals and ranking against the RFQ evaluation criteria. Page 2 of 3