This is the accessible text file for GAO report number GAO-12-401 
entitled 'Renewable Energy Project Financing: Improved Guidance and 
Information Sharing Needed for DOD Project-Level Officials' which was 
released on April 4, 2012. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

April 2012: 

Renewable Energy Project Financing: 

Improved Guidance and Information Sharing Needed for DOD Project-Level 
Officials: 

GAO-12-401: 

GAO Highlights: 

Highlights of GAO-12-401, a report to congressional committees. 

Why GAO Did This Study: 

DOD is the largest consumer of energy in the federal government, 
spending about $3.8 billion on facilities’ energy at more than 500 
permanent military installations throughout the world in fiscal year 
2010. The House Armed Services Committee directed GAO to review issues 
related to financing approaches for renewable energy projects on 
military installations. GAO (1) determined the approaches that 
military services are using to finance renewable energy projects and 
the factors the services consider in selecting an approach, (2) 
assessed the extent to which the services have established methods to 
obtain good value and advantageous contract terms and manage risks of 
financing approaches for renewable energy projects, and (3) identified 
the extent to which the services developed guidance, training, and 
other resources to assist officials in selecting and implementing 
financing approaches. 

GAO reviewed applicable legal authorities, guidance, and project 
information from selected projects and interviewed officials from the 
Office of the Secretary of Defense, military services, 10 selected 
installations, and the Department of Energy. 

What GAO Found: 

appropriations, such as operation and maintenance funds, and 
alternative-financing approaches that generally rely on private 
capital, such as arranging financing and implementing a project with a 
private developer or utility. The military services have funded about 
85 percent of nearly 600 projects that were in design, under 
construction, or operating in fiscal year 2011 with up-front 
appropriations, but financed 8 of the 9 large-scale projects and 19 of 
the 57 medium-scale projects with alternative financing. Several 
factors affect the military services’ use of financing approaches, 
including perceived benefits and drawbacks such as how long it takes 
to obtain funding. 

The military services have established methods to help ensure good 
value and advantageous contract terms and to manage the risks of the 
various financing approaches, but the services have not issued 
comprehensive guidance on how and when to prepare analyses for 
renewable energy projects. For example, headquarters and installation 
officials said that military services use business case or other cost 
analyses to help maximize benefits and mitigate drawbacks of the 
selected financing approach. However, GAO found examples of 
installations’ not developing cost analyses or not analyzing different 
financing approaches for projects, as well as uncertainty about how to 
account for some benefits in the analyses, because the military 
services generally do not have guidance to ensure that business case 
analyses are completed and that analyses fully consider the costs and 
benefits of different financing approaches. As a result of not having 
processes and comprehensive guidance in place, the military services 
cannot ensure that decision makers select the financing approach that 
maximizes benefits and mitigates drawbacks or risks of available 
financing approaches. 

The Department of Defense (DOD) and other agencies have made available 
guidance, training, and other resources to assist officials in 
selecting certain financing approaches for renewable energy projects, 
but some guidance on the approaches is inconsistent and information 
sharing at the installation level is ad hoc and not formalized. DOD, 
the Department of Energy, and the military services have developed an 
increasing amount of guidance on the available financing approaches; 
however, GAO found instances where different interpretations of some 
guidance affected the approaches the services used because DOD has not 
issued overarching guidance on using these approaches. As a result, 
the military services may not be taking full advantage of the various 
approaches available to finance projects to meet renewable energy 
goals. Additionally, DOD personnel were generally satisfied with 
training they received on the financing approaches, but DOD does not 
have a formalized process to share information and best practices on 
the approaches among project-level officials across the military 
services at the installation level. As a result, DOD cannot ensure 
that officials responsible for selecting a financing approach have 
timely access on an ongoing basis to information on approaches that 
their counterparts from other services have used and their experiences 
with those approaches. Such information could assist the officials in 
selecting a financing approach that maximizes the benefits and 
minimizes the drawbacks or risks of that approach. 

What GAO Recommends: 

GAO recommends that DOD issue comprehensive guidance to ensure key 
analyses are completed and available--financing approaches are fully 
considered. GAO also recommends that DOD develop a formalized 
communications process to share best practices on financing renewable 
energy projects among installations. DOD generally concurred with 
GAO’s recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-12-401]. For more 
information, contact Brian J. Lepore at (202) 512-4523 or 
leporeb@gao.gov or Frank Rusco at (202) 512-3841 or ruscof@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Military Services Use Multiple Approaches to Finance Renewable Energy 
Projects, and Various Factors Affect the Services' Choices of 
Approaches: 

Military Services Use Methods Designed to Ensure Good Value and Manage 
Risks, but Have Not Issued Comprehensive Guidance: 

Guidance, Training, and Other Resources Support Financing Decisions, 
but Inconsistencies in Interpreting Some Guidance and Ad Hoc 
Information Sharing among Project Officials May Limit the Use of Some 
Approaches: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Selected Financing Approaches Available for Acquisition 
of Renewable Energy or Development of Renewable Energy Projects on DOD 
Installations: 

Appendix III: Summary of Benefits and Drawbacks of Selected Financing 
Approaches for Renewable Energy Projects: 

Appendix IV: Comments from the Department of Defense: 

Appendix V: GAO Contacts and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Key Federal Goals Related to Renewable Energy: 

Table 2: Selected Financing Approaches Available for Acquisition of 
Renewable Energy or Development of Renewable Energy Projects on DOD 
Installations: 

Table 3: Financing Approaches Used for Renewable Energy Projects and 
Number of Projects in Design, under Construction, or Currently 
Operating on Military Installations in Fiscal Year 2011: 

Figures: 

Figure 1: Summary of Benefits of Selected Financing Approaches for 
Renewable Energy Projects Identified by Interviewed Officials at 
Military Service Headquarters and Selected Installations: 

Figure 2: Summary of Drawbacks or Risks of Selected Financing 
Approaches for Renewable Energy Projects Identified by Interviewed 
Officials at Military Service Headquarters and Selected Installations: 

Abbreviations: 

DOD: Department of Defense: 

ECIP: Energy Conservation Investment Program: 

ESPC: Energy Savings Performance Contract: 

EUL: enhanced-use lease: 

PPA: power purchase agreement: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

April 4, 2012: 

Congressional Committees: 

The Department of Defense (DOD) is the largest consumer of energy in 
the federal government. DOD reported spending $15.2 billion on all 
types of energy in fiscal year 2010, with about 25 percent of this 
amount—or about $3.8 billion—spent on energy for facilities at more 
than 500 permanent military installations throughout the world, and 
the remaining amount spent on the energy used for training, moving, 
and sustaining military forces and weapons platforms for military 
operations.[Footnote 1] In addition to the cost of energy, DOD 
reported in 2011 that its dependence on the commercial electricity 
grid for facilities’ energy leaves the department vulnerable to 
service disruptions and places the continuity of critical missions at 
risk. As such, DOD’s strategy for facilities’ energy management seeks 
to, among other actions, increase the supply of renewable and 
alternative energy sources and improve energy security by addressing 
the threat of commercial grid disruption with on-site generation 
capacity.[Footnote 2] Along with providing energy security, DOD 
reported that developing renewable energy on military installations 
can help DOD reduce its reliance on fossil fuels. According to the 
Department of Energy’s Energy Information Administration, fossil fuels 
are used to generate most of the electricity in the United States, 
with about 45 percent of the more than 4 trillion kilowatt hours of 
electricity produced in 2010 generated from coal, about 24 percent 
from natural gas, and about 1 percent from petroleum.[Footnote 3] 

We have previously reported on DOD’s facilities energy efforts. In our 
December 2009 report, we found that DOD faces challenges in meeting 
federal renewable energy goals.[Footnote 4] Among other challenges, we 
reported that renewable energy is often more expensive than 
nonrenewable energy and using renewable energy can be at odds with DOD 
and Department of Energy guidance that calls for DOD to invest in 
energy projects when cost-effective. These higher costs are because of 
the relatively high up-front capital costs of renewable energy 
technologies and the fact that some sources operate intermittently, 
which results in less energy generated compared to the equipment’s 
energy-generation capacity. For example, solar energy can be generated 
only during daytime hours and wind energy can be generated only during 
periods of sustained wind activity. Additionally, we issued a report 
in April 2010 that identified the department’s renewable energy 
projects that were producing energy or under development at that time, 
the costs of each of DOD’s renewable energy initiatives, and the goals 
of each of the initiatives.[Footnote 5] 

In a report accompanying a bill for the National Defense Authorization 
Act for Fiscal Year 2012 (H.R. 1540),[Footnote 6] the House Armed 
Services Committee noted that alternatively financed projects-—which 
generally rely on private capital-—can be of great benefit to DOD, but 
expressed concern that project-level officials may not have the 
necessary information to develop contracts that most effectively 
leverage a variety of factors, including resource potential, federal 
and state incentives, payback periods, state regulations, and other 
regulatory considerations. The Committee directed us to review a 
number of issues related to financing approaches used for renewable 
energy projects on military installations.[Footnote 7] Based on this 
congressional direction, we (1) determined the approaches that the 
military services are using to finance renewable energy projects on 
military installations and the factors that the services consider in 
selecting a financing approach, (2) assessed the extent to which the 
military services have established methods to obtain “good value and 
advantageous contract terms” for renewable energy projects on 
installations and maximize benefits and mitigate drawbacks or risks of 
financing approaches,[Footnote 8] and (3) identified the extent to 
which the military services have developed guidance, training, and 
other resources to assist officials in selecting and implementing 
financing approaches for renewable energy projects. 

To determine the approaches the military services are using to finance 
renewable energy projects on military installations, we compared 
applicable legal authorities—identified through a legal review, DOD 
and Department of Energy guidance, training materials, and previous 
GAO reports—to the financing approaches that DOD has used for projects 
that were in design, under construction, or currently operating in 
fiscal year 2011.[Footnote 9] Through our data collection and 
verification process, we found DOD’s project data to be sufficiently 
reliable for the purposes of this report. To determine the factors 
that the military services consider when selecting a financing 
approach for renewable energy projects, including the benefits and 
drawbacks of each of the financing approaches, we interviewed 
officials from the Office of the Deputy Under Secretary of Defense 
(Installations and Environment), the Defense Logistics Agency-Energy 
office, each of the military service headquarters and their supporting 
agencies, 10 selected installations, and the Department of Energy. We 
identified the installations to include in our review by first 
selecting a nonprobability sample of eight installations—two 
installations per service—to get a mix of the types of financing 
approaches used, the types of renewable energy projects implemented, 
and geographic diversity, with an emphasis on installations that have 
used multiple financing sources and implemented different types of 
projects on an individual installation. We then selected two 
additional installations with unique characteristics to include in our 
sample. The 10 installations in our sample are Fort Irwin and Marine 
Corps Air Station Miramar, California; the U.S. Air Force Academy, 
Colorado; Naval Air Station Jacksonville, Florida; Fort Knox, 
Kentucky; Nellis Air Force Base, Nevada; Marine Corps Air Station 
Beaufort, South Carolina; Fort Bliss, Texas; Hill Air Force Base, 
Utah; and Naval Air Station Oceana, Virginia. 

To determine the extent to which the military services have 
established methods to obtain good value and advantageous contract 
terms for renewable energy projects on installations and maximize 
benefits and mitigate risks of financing approaches, we reviewed 
applicable guidance, directives, and instructions from DOD and the 
military services related to renewable energy projects. Additionally, 
we reviewed project documentation for 2 projects at each of the 10 
installations included in our scope. We also interviewed officials at 
the Office of the Deputy Under Secretary of Defense (Installations and 
Environment), the military service headquarters and their supporting 
agencies, and the 10 selected installations. Additionally, we reviewed 
previous GAO reports related to the identified methods to better 
understand the methods. 

To determine the extent to which DOD has developed guidance, training, 
and other resources to assist officials in selecting and implementing 
financing approaches for renewable energy projects, we reviewed 
existing guidance developed by the Under Secretary of Defense 
(Acquisition, Technology and Logistics) and the military services. We 
also reviewed information on the training offered through DOD, the 
Department of Energy, and other sources, such as conferences. 
Additionally, we spoke with officials at the Office of the Deputy 
Under Secretary of Defense (Installations and Environment), the 
Defense Logistics Agency-Energy office, the military service 
headquarters and supporting agencies, and the 10 selected 
installations to determine the availability, quality, and relevance of 
the guidance, training, and other resources. We also spoke with 
officials from the Department of Energy’s Federal Energy Management 
Program to discuss the types and quantity of training their agency 
provides to DOD personnel. For additional information on the scope and 
methodology of this engagement, see appendix I. 

We conducted this performance audit from June 2011 through April 2012, 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Renewable Energy Goals: 

DOD measures its facilities energy performance against federal 
renewable energy goals. Table 1 lists key laws and an executive order 
that relate to the consumption or production of renewable energy. 

Table 1: Key Federal Goals Related to Renewable Energy: 

Statute or executive order: 42 U.S.C. § 15852 (originally enacted in 
the Energy Policy Act of 2005, Pub. L. No. 109-58, § 203 (2005)); 
Renewable energy-related goal: To the extent economically feasible and 
technically practicable, consume renewable energy equal to at least 3 
percent of all electrical energy consumed from fiscal year 2007 to 
fiscal year 2009, with increases to 5 percent in fiscal year 2010 
through fiscal year 2012, and 7.5 percent in fiscal year 2013 and 
thereafter. The statute also provides additional credit toward these 
goals for agencies with renewable electricity produced on site subject 
to certain conditions. 
For the purposes of this goal, the term "renewable energy" means 
electric energy generated from solar, wind, biomass, landfill gas, 
ocean (including tidal, wave, current, and thermal), geothermal, 
municipal solid waste, or new hydroelectric generation capacity 
achieved from increased efficiency or additions of new capacity at an 
existing hydroelectric project. 

Statute or executive order: 10 USC § 2911(e); 
Renewable energy-related goal: DOD's goal is to produce or procure 
facility energy from renewable energy sources whenever the use of such 
renewable energy sources is consistent with the energy performance 
goals and energy performance master plan for the department and when 
supported by certain special considerations. 
DOD's goal is also to produce or procure not less than 25 percent of 
the total quantity of facility energy consumed within its facilities 
from renewable energy sources during fiscal year 2025 and each fiscal 
year thereafter. 
For the purposes of these goals, the term "renewable energy source" 
means energy generated from renewable sources, including: solar; wind; 
biomass; landfill gas; ocean, including tidal, wave, current, and 
thermal; geothermal, including electricity and heat pumps; municipal 
solid waste; new hydroelectric generation capacity achieved from 
increased efficiency or additions of new capacity at an existing 
hydroelectric project (for purposes of this subparagraph, 
hydroelectric generation capacity is "new" if it was placed in service 
on or after January 1, 1999); thermal energy generated by any of the 
preceding sources. 

Statute or executive order: Executive Order 13423; 
Renewable energy-related goal: Ensure that at least one-half of the 
statutorily required renewable energy consumed by an agency in a 
fiscal year comes from "new renewable sources"; 
For the purposes of this goal, "new renewable sources" are those 
sources of renewable energy placed into service after January 1, 1999. 

Source: GAO analysis and DOD. 

[End of table] 

Each of the military services has also established energy goals for 
the service. The Secretary of the Navy set a goal--among other goals--
to derive at least 50 percent of shore-based energy requirements from 
alternative sources by 2020, which exceeds the federal energy goals 
listed above. The Army and Air Force set energy goals that are closely 
tied to the federal goals. Specifically, the Army Energy Security 
Implementation Strategy established a goal to raise the share of 
renewable or alternative resources for power and fuel use, noting that 
this goal also supports federal renewable energy goals.[Footnote 10] 
The Air Force Energy Plan expressed a commitment to increasing its 
available energy supply, including facilities energy, to meet the 
federal energy goals.[Footnote 11] 

Additionally, DOD and the Department of Energy, as part of a joint 
effort, have implemented a task force and pilot project to develop a 
strategy and a process for analyzing the potential for military 
installations to become "net zero" energy installations--that is, 
produce as much energy on site or nearby as consumed in the buildings 
and facilities--and maximize the use of renewable energy resources. 
The four pilot installations are the United States Air Force Academy, 
Colorado; the Army's Kahuku Training Area, Hawaii; Marine Corps Air 
Station Miramar, California; and Naval Support Activity South Potomac, 
Maryland. In addition to its pilot location, the Army, through its own 
net zero initiative, identified six additional net zero energy 
locations and two integrated net zero installations that will be net 
zero energy, net zero water, and net zero waste.[Footnote 12] The 
Secretary of the Navy established a goal to achieve net zero energy at 
50 percent of Navy and Marine Corps installations by 2020. 

To meet the federal and service-specific energy goals, the military 
services are implementing a number of projects to generate renewable 
energy, such as installing solar photovoltaic panels, wind turbines, 
and biomass projects. In addition to generating renewable energy, DOD 
is working to reduce energy demand through energy efficiency and 
conservation measures, such as installing more energy-efficient 
heating and air-conditioning systems or lighting in its facilities. 

Roles of the Office of the Secretary of Defense and the Military 
Services in DOD's Renewable Energy Activities: 

The Deputy Under Secretary of Defense (Installations and Environment) 
is DOD's senior energy official and oversees DOD's implementation of 
the facilities energy goals described above. The Facilities Energy and 
Privatization Directorate within the Office of the Deputy Under 
Secretary of Defense (Installations and Environment) coordinates the 
DOD facilities energy strategy and related programs. 

Within the military services, the offices that oversee installations 
generally also oversee facilities energy efforts. A number of 
organizations are also involved in developing and implementing 
renewable energy projects on the installations, specifically, 

* Key offices involved in the Army's facilities' energy efforts 
include, among others, the Offices of the Assistant Secretary of the 
Army (Installations, Energy, and Environment), the Deputy Assistant 
Secretary of the Army (Energy and Sustainability), and the Assistant 
Chief of Staff for Installation Management; the Installation 
Management Command; the Energy Initiatives Task Force; and the U.S. 
Army Corps of Engineers Engineering and Support Center, Huntsville. 

* Key offices involved in the Navy's facilities' energy efforts 
include, among others, the Offices of the Assistant Secretary of the 
Navy (Energy, Installations, and Environment), the Deputy Assistant 
Secretary of the Navy (Energy), the Commander, Navy Installations 
Command, and the Deputy Chief of Naval Operations (Fleet Readiness and 
Logistics); and the Naval Facilities Engineering Service Center within 
the Naval Facilities Engineering Command. 

* The key office involved in the Marine Corps's facilities' energy 
efforts is the Office of the Deputy Commandant (Installations and 
Logistics), among others. The Naval Facilities Engineering Service 
Center also supports the Marine Corps's energy projects. 

* Key offices involved in the Air Force's facilities' energy efforts 
include, among others, the Offices of the Assistant Secretary of the 
Air Force (Installations, Environment, and Logistics), the Deputy 
Assistant Secretary of the Air Force (Energy), and the Air Force Civil 
Engineer; the Air Force Civil Engineer Support Agency and its Air 
Force Facility Energy Center; and the Air Force Real Property Agency. 

Military Services Use Multiple Approaches to Finance Renewable Energy 
Projects, and Various Factors Affect the Services' Choices of 
Approaches: 

Military Services Use Up-Front Appropriations and Alternative-
Financing Approaches to Finance Renewable Energy Projects on 
Installations: 

To finance renewable energy projects on military installations, the 
military services use up-front appropriations, such as operation and 
maintenance funds or military construction funds, and alternative-
financing approaches that generally rely on private capital, such as 
Energy Savings Performance Contracts or power purchase agreements. 
Each of the financing approaches has its own requirements and legal 
authorities. These financing approaches are not necessarily mutually 
exclusive and different approaches can sometimes be combined to 
finance the same project. For example, the Army is developing a 
project at Fort Irwin in which the Army would lease land to a private 
contractor for up to 50 years through an enhanced-use lease, the 
developer would build a large solar array on the property, and the 
installation would purchase energy that is produced by the project 
through a power purchase agreement. Table 2 provides a summary of 
selected approaches available to finance renewable energy projects on 
DOD installations and appendix II provides a more detailed description 
of these financing approaches and legal authorities. 

Table 2: Selected Financing Approaches Available for Acquisition of 
Renewable Energy or Development of Renewable Energy Projects on DOD 
Installations: 

Up-front appropriations: 

Financing approach: Annual military construction appropriations, 
including the Energy Conservation Investment Program (ECIP); 
Brief summary of approach: The military services can use 
appropriations for military construction for the acquisition, 
construction, installation, and equipment of temporary or permanent 
public works, military installations, facilities, and real property, 
which can include renewable energy projects. In its annual energy 
management report, DOD reported spending $6.2 million on 2 renewable 
energy projects funded with military construction appropriations in 
fiscal year 2010[A]. The Energy Conservation Investment Program, 
administered by the Office of the Deputy Under Secretary of Defense 
(Installations and Environment), is a subset of the Defense-wide 
Military Construction program specifically designated for projects 
that save energy or reduce energy costs. In its annual energy 
management report, DOD reported spending $74.2 million on 32 renewable 
energy projects funded through the Energy Conservation Investment 
Program in fiscal year 2010[A]; 
Project examples: Naval Air Station Jacksonville funded a child 
development center and an integrated training center with military 
construction appropriations, each of which incorporated solar carports 
as part of the larger project. Marine Corps Air Station Beaufort 
funded a barracks building that included a 38.5 kilowatt solar array 
as part of the larger project. The barracks building is under 
construction and expected to be completed in 2012. Marine Corps Air 
Station Miramar installed a solar carport, generating 260 kilowatts, 
and is installing a second, generating 300 kilowatts, using 
appropriated funds through the Energy Conservation Investment Program. 

Financing approach: Operation and maintenance appropriations; 
Brief summary of approach: The military services can use operation and 
maintenance appropriations for certain small military construction 
projects (limited to projects costing less than $750,000), which could 
include renewable energy projects, and certain repairs and 
renovations, which could include energy efficiencies or other energy-
related repairs. The military services fund some renewable energy 
projects using operation and maintenance funds that are managed by the 
installation. Additionally, the Navy, Marine Corps, and Air Force have 
funded renewable energy projects with operation and maintenance funds 
that are managed centrally at the headquarters level. In its annual 
energy management report, DOD reported spending nearly $17 million on 
64 renewable energy projects funded with operation and maintenance 
appropriations in fiscal year 2010[A]; 
Project examples: The U.S. Air Force Academy installed ground source 
heat pumps at several locations that were funded through installation-
managed operation and maintenance funds. One project was for a guard 
house that was not located near a gas line so, according to 
installation officials, the heat pumps were the most cost-effective 
way to heat and cool the facility. Nellis Air Force Base installed 
solar photovoltaic panels to power the installation's marquee sign, 
which was paid for, in part, with the Air Force's centrally managed 
operation and maintenance funds. 

Financing approach: Other up-front appropriations; 
Brief summary of approach: Periodically, Congress makes available 
other direct appropriations that can be used for renewable energy 
projects. For example, DOD reported spending nearly $200 million of 
appropriated funds from the American Recovery and Reinvestment Act of 
2009 on renewable energy projects. DOD has also used appropriated 
funds programmed for the Environmental Security Technology 
Certification Program, DOD's environmental technology demonstration 
and validation program, to fund renewable energy projects on DOD 
installations; 
Project examples: Fort Irwin replaced more than 300 street lights with 
solar street lights using appropriated funding from the American 
Recovery and Reinvestment Act of 2009. DOD is installing a 
demonstration project at the U.S. Air Force Academy, which was funded 
through the Environmental Security Technology Certification Program 
and is expected to be placed into service in 2012. In this project, 
dining hall food waste will be used in an anaerobic digestion process 
to produce methane gas, which produces renewable energy. The project 
will test which nutrients increase the digestion process. 

Alternative-financing approaches: 

Financing approach: Energy Savings Performance Contract (ESPC); 
Brief summary of approach: An Energy Savings Performance Contract is a 
contract between a federal agency and an energy service provider. 
Based on the results of a comprehensive energy audit, an energy 
service company, in consultation with the federal agency, designs and 
constructs a project to save energy and arranges the necessary 
financing. The contractor guarantees that the improvements will 
generate energy cost savings sufficient to pay for the project over 
the term of the contract. Contract terms for Energy Savings 
Performance Contracts can extend up to 25 years. In its annual energy 
management report, DOD reported that the department awarded 22 
projects through Energy Savings Performance Contracts totaling $277 
million in fiscal year 2010; however, most of these were energy 
efficiency, not renewable energy, projects[A]; 
Project examples: Naval Air Station Oceana implemented a number of 
ground source heat pump projects that service more than 1.5 million 
square feet of facilities, including some projects financed through 
Energy Savings Performance Contracts. Hill Air Force Base financed a 
landfill gas-to-energy project with a total capacity of 2.3 megawatts 
through an Energy Savings Performance Contract. Fort Bliss financed a 
solar thermal system to heat a swimming pool--among other energy 
conservation measures--through an Energy Savings Performance Contract. 

Financing approach: Utility Energy Service Contract (UESC); 
Brief summary of approach: In a Utility Energy Service Contract, a 
utility arranges financing to cover the capital costs of a project, 
which are repaid by the agency, generally using appropriated funds, 
over the contract term. Repayments are usually based on estimated cost 
savings generated by the energy efficiency measures, but energy 
savings are not necessarily required to be guaranteed by the 
contractor. In its annual energy management report, DOD reported that 
the department awarded 14 projects through Utility Energy Service 
Contracts totaling $46 million in fiscal year 2010; 
however, most of these were energy efficiency projects[A]; 
Project examples: Naval Air Station Jacksonville financed a solar 
thermal heating project for the Navy Bureau of Medicine and Surgery 
pool and a solar-powered entrance sign through Utility Energy Service 
Contracts. Fort Knox financed a 1.8-kilowatt wind turbine through a 
Utility Energy Service Contract. 

Financing approach: Power purchase agreement (PPA); 
Brief summary of approach: Power purchase agreements for renewable 
energy may take several forms, but all are essentially agreements to 
purchase renewable energy from a private-sector energy producer. For 
example, in some of these agreements, the developer installs a 
renewable energy-system on agency property, and the agency pays for 
the system through its purchase of power over the life of the 
contract. After installation, the developer owns, operates, and 
maintains the system for the life of the contract. DOD refers to power 
purchase agreements undertaken using certain authorities as Energy 
Services Contracts. Depending on the authority used, DOD can enter 
into power purchase agreements for up to 32 years, excluding the 
period for construction; 
Project examples: Nellis Air Force Base purchases electricity 
generated by the 14 megawatt solar array owned by a private contractor 
and located on the installation. Marine Corps Air Station Miramar 
plans to purchase three megawatts of electricity generated by landfill 
gas from a contractor. The landfill is located on Navy property leased 
to the City of San Diego. 

Financing approach: Enhanced-use lease (EUL)[B]; 
Brief summary of approach: An enhanced-use lease allows the military 
services to outlease available nonexcess real property to the private 
sector in return for cash or in-kind consideration, subject to certain 
conditions. Enhanced-use leases have been used for a wide range of 
facility improvement projects, renovations, repair, or new 
acquisitions, to include renewable energy projects. The length of a 
contract for an enhanced-use lease is subject to certain conditions, 
but there is no firm time limit. We have previously reported that 
these leases are often entered into for long periods, such as 25-or 50-
year terms; 
Project examples: The Army is currently developing a project at Fort 
Irwin in which the Army would lease land to a contractor to build a 
500-megawatt solar array. 

Financing approach: Convey utility system to a utility company; 
Brief summary of approach: In this approach the secretary of a 
military department may convey existing utility systems owned by DOD 
to a utility company in exchange for compensation. One type of 
contemplated compensation is provision of power at reduced rates. 
Contracts for provision of power in exchange for conveyance of a 
utility system are limited to 10 years or, subject to certain 
conditions, up to 50 years; 
Project examples: According to military service officials, the 
services have not used this authority for renewable energy projects on 
military installations. 

Financing approach: Sell electricity to a utility; 
Brief summary of approach: This approach involves the secretary of a 
military department selling certain kinds of electricity generated on 
a military installation to a utility (subject to certain requirements) 
and depositing the proceeds in the appropriation account available to 
the relevant military department for the supply of electrical energy. 
Those funds may be used (under certain conditions) to finance certain 
energy related military construction projects; 
Project examples: The Navy used this authority for its geothermal 
plant at Naval Air Weapons Station China Lake, California. According 
to military service officials, the Army, Marine Corps, and Air Force 
have not used this authority for renewable energy projects on military 
installations. 

Financing approach: Lease-to-own energy production facilities; 
Brief summary of approach: This approach involves the secretary of a 
military department entering into an agreement with a private sector 
entity to "lease-to-own" certain facilities provided at the expense of 
the contractor on a military installation. At the end of the lease, 
title to the property would vest in the United States. This approach 
can be used for a variety of facilities, including energy production 
facilities. Contract terms may not exceed 32 years; 
Project examples: According to military service officials, the 
services have not used this authority for renewable energy projects on 
military installations. 

Source: GAO analysis of approaches and legal authorities. 

Note: We did not include in our analysis certain other approaches that 
could potentially be available to DOD for the financing of renewable 
energy projects, such as approaches that could only be employed in 
narrowly defined situations or that may not be useful departmentwide. 
For example, we excluded 10 U.S.C. § 2686, which authorizes the 
secretary of a military department to sell or contract to sell certain 
specific utilities (including electrical power) to purchasers in the 
immediate vicinity of an activity of the relevant service under 
certain unusual circumstances (e.g. the utility is not otherwise 
available from a local source). 

[A] Office of the Deputy Under Secretary of Defense (Installations and 
Environment), Department of Defense Annual Energy Management Report, 
Fiscal Year 2010 (Washington, D.C.: July 2011). 

[B] The military services refer to certain leases of real property 
undertaken pursuant to the authority in 10 U.S.C. § 2667 as "enhanced-
use leases." 

[End of table] 

The military services have varied in their use of up-front 
appropriations and alternative-financing approaches for renewable 
energy projects on military installations. Based on our analysis of 
DOD's data on renewable energy projects, of the nearly 600 projects 
that were in design, under construction, or currently operating in 
fiscal year 2011, the military services funded about 85 percent of the 
projects with up-front appropriations. Table 3 shows the number of 
renewable energy projects the military services identified as being in 
design, under construction, or currently operating in fiscal year 2011 
and the financing approaches used for the projects. 

Table 3: Financing Approaches Used for Renewable Energy Projects and 
Number of Projects in Design, under Construction, or Currently 
Operating on Military Installations in Fiscal Year 2011: 

Financing approach: Up-front appropriations; 
Army: 158[A]; 
Navy: 160; 
Marine Corps: 71; 
Air Force: 120[B]; 
Total: 509. 

Financing approach: Annual military construction appropriations[C]; 
Army: 42; 
Navy: 19; 
Marine Corps: 7; 
Air Force: 19; 
Total: 87. 

Financing approach: Energy Conservation Investment Program[C]; 
Army: 29; 
Navy: 38; 
Marine Corps: 26; 
Air Force: 21[B]; 
Total: 114[B]. 

Financing approach: Operation and maintenance appropriations; 
Army: 41[A]; 
Navy: 57; 
Marine Corps: 32; 
Air Force: 64[B]; 
Total: 194 [A, B]. 

Financing approach: American Recovery and Reinvestment Act of 2009; 
Army: 27; 
Navy: 34; 
Marine Corps: 4; 
Air Force: 8; 
Total: 73. 

Financing approach: Other up-front appropriations; 
Army: 20[A, D]; 
Navy: 12; 
Marine Corps: 2; 
Air Force: 9; 
Total: 43[A]. 

Financing approach: Alternative financing; 
Army: 26; 
Navy: 23; 
Marine Corps: 20; 
Air Force: 19; 
Total: 88. 

Financing approach: Energy Savings Performance Contract; 
Army: 15; 
Navy: 10; 
Marine Corps: 5; 
Air Force: 8; 
Total: 38. 

Financing approach: Utility Energy Service Contract; 
Army: 8; 
Navy: 10; 
Marine Corps: 13; 
Air Force: 3; 
Total: 34. 

Financing approach: Power purchase agreement; 
Army: 2; 
Navy: 1; 
Marine Corps: 1; 
Air Force: 7; 
Total: 11. 

Financing approach: Enhanced-use lease; 
Army: 1; 
Navy: 0; 
Marine Corps: 0; 
Air Force: 1; 
Total: 2. 

Financing approach: Other alternative-financing approaches; 
Army: 0; 
Navy: 2[E]; 
Marine Corps: 1[F]; 
Air Force: 0; 
Total: 3. 

Financing approach: Total (all projects); 
Army: 184; 
Navy: 183; 
Marine Corps: 91; 
Air Force: 139; 
Total: 597. 

Source: GAO analysis of DOD data. 

Notes: According to military service officials, installations may have 
additional renewable energy projects operating on the installation 
that are not included in these figures. According to the officials, 
these are often smaller projects, such as a solar panel or ground 
source heat pump on a single building, that are funded through 
installation-managed operation and maintenance funds and are not 
reviewed or approved by the military service headquarters. Therefore, 
the headquarters officials may not be aware of the projects. 

There may be differences between the data provided to us by the 
military services above and the data reported by DOD in its annual 
energy management report because DOD only reports the projects that 
are currently producing renewable energy and we reported on projects 
that were in design or under construction in fiscal year 2011, in 
addition to those that were already producing renewable energy in 
fiscal year 2011. 

[A] One Army project was funded with a combination of operation and 
maintenance funds and other up-front appropriations. We listed this 
project in both rows, but only counted the project once in the overall 
totals. 

[B] One Air Force project was funded with a combination of up-front 
appropriations from the operation and maintenance account and the 
Energy Conservation Investment Program. We listed this project in both 
rows, but only counted the project once in the overall totals. 

[C] Projects included in the annual military construction 
appropriations row do not include projects funded through the Energy 
Conservation Investment Program. 

[D] The Army could not provide information on the specific source of 
up-front appropriations for five projects. Therefore, we included 
these projects in the "other up-front appropriations" category. 

[E] The Navy could not provide information on the specific alternative-
financing approach used for two projects. Therefore, we included these 
projects in the "other alternative financing approaches" category. 

[F] The Marine Corps could not provide information on the approach 
used to finance one project, but an official noted that it was not 
funded with up-front appropriations allocated by Marine Corps 
Headquarters. Therefore, we included this project in the "other 
alternative-financing approaches" category. 

[End of table] 

The majority of the military services' renewable energy projects--531 
of 597 projects, or almost 90 percent--are small-scale projects, 
designed to produce less than 1,000-megawatt hours of energy 
annually.[Footnote 13] The services paid for almost 90 percent of 
these small-scale projects with up-front appropriations. Small-scale 
projects include such things as solar panels or ground source heat 
pumps on individual buildings. The services have developed or 
implemented nine large-scale projects, each designed to produce more 
than 50,000-megawatt hours of energy annually. The services financed 
eight of the nine large-scale projects with alternative-financing 
approaches. These large-scale projects include a biogenic methane gas 
project at Fort Knox, financed through a Utility Energy Service 
Contract, and a 500-megawatt solar project currently in design at 
Edwards Air Force Base, California. Finally, the services have 
developed or implemented 57 medium-scale projects, each designed to 
produce between 1,000-and 49,999-megawatt hours of energy annually. 
The services funded 38 projects, or two-thirds of these medium-scale 
projects, with up-front appropriations and the remaining one-third 
with alternative-financing approaches. These medium-scale projects 
include ground source heat pumps at Marine Corps Air Station Beaufort, 
financed through an Energy Savings Performance Contract; and wind 
turbines at F.E. Warren Air Force Base, Wyoming, financed through up-
front appropriations from the Energy Conservation Investment Program. 

Use of Financing Approaches Is Affected by Various Factors: 

The decision to use a specific financing approach, whether up-front 
appropriations or alternative financing, is dependent on a number of 
factors, including the benefits and drawbacks or risks of the specific 
approach and the limitations of some financing approaches. Officials 
we interviewed from the Office of the Deputy Under Secretary of 
Defense (Installations and Environment), military services' 
headquarters, selected military installations, and the Department of 
Energy identified a number of benefits and drawbacks or risks of the 
financing approaches for renewable energy projects. Appendix III 
provides a summary of the benefits and drawbacks or risks that these 
officials identified. In several cases, the benefits and drawbacks or 
risks present trade-offs for decision makers to consider in selecting 
a financing approach. Key issues and trade-offs that the officials 
identified include: 

* Up-front appropriations versus long-term finance charges. Some 
officials mentioned the length of time it can take to navigate the 
programming and budgeting process and to obtain appropriations as a 
drawback to using the up-front appropriated funding approaches for 
renewable energy projects. Specifically, some officials stated that it 
can take three to five years from project submission within the 
service through beginning construction for projects funded through 
military construction appropriations--including the Energy 
Conservation Investment Program--because of the length of the budget 
and appropriations cycle. In contrast, when financing a renewable 
energy project with an alternative-financing approach, the 
installation can pay back the costs over time while obtaining the 
benefit of the project--such as renewable energy production--almost 
immediately after the project is constructed. However, several 
officials noted that paying for the project using an alternative-
financing approach often leads to a costlier project in the long term 
when compared to the same project paid for using up-front appropriated 
funding because of the cost of private financing. We have previously 
reported that alternative-financing approaches may be more expensive 
over time than full, up-front appropriations since the federal 
government's cost of capital is lower than that of the private sector. 
[Footnote 14] 

* Operation and maintenance of equipment. According to several 
officials, the operation and maintenance of equipment is a benefit of 
most alternatively financed projects and a drawback of projects funded 
with up-front appropriations. Projects financed with an alternative-
financing approach generally involve the contractor operating and 
maintaining the equipment during the contract period, whereas the 
government typically is responsible for the operation and maintenance 
of equipment purchased with appropriated funds. Officials cited this 
as a significant benefit of alternatively financed projects--and a 
drawback of projects funded with up-front appropriations--because, 
according to the officials, installations often do not have personnel 
on-staff with the knowledge, skills, or expertise to operate and 
maintain the equipment needed to generate renewable energy. Officials 
noted, however, that for projects financed with Energy Savings 
Performance Contracts or Utility Energy Service Contracts, the 
contract period could be a relatively short period of time. According 
to these officials, after the contract period ends, the installation 
assumes ownership--and therefore the operation and maintenance--of the 
equipment, which can be a drawback of these two approaches. 

* Availability of funding. Some military service headquarters and 
installation officials said that, in recent years, they have preferred 
to use up-front appropriations to pay for renewable energy projects on 
installations since an increased amount of appropriated funding has 
been available for such projects through the American Recovery and 
Reinvestment Act of 2009, the Energy Conservation Investment Program, 
and centrally managed operation and maintenance funding from the 
military services. However, officials said that they expect they will 
need to seek alternative financing for renewable energy projects in 
the future due to likely reductions in the availability of up-front 
appropriated funding. Some officials noted that a drawback of each of 
the appropriated fund sources is that renewable energy projects must 
compete with other projects for funding and renewable energy projects 
are often a lower priority than other projects because of the 
relatively higher cost and lower savings generated from such projects. 
For example, officials at some installations said that they generally 
do not use installation-managed operation and maintenance funds for 
renewable energy projects because of competing demands for this 
funding for repairs and other maintenance of existing facilities on 
the installation. With regard to the Energy Conservation Investment 
Program, renewable energy projects must compete against other 
renewable energy projects as well as energy efficiency projects for 
limited funding and, according to officials, energy efficiency 
projects are often more cost-effective than renewable energy projects 
and receive higher priority for funding. 

In addition to the benefits and drawbacks of the financing approaches, 
not all financing approaches are suitable in all circumstances. For 
example, an enhanced-use lease requires that a military department 
have land that is not needed for the time for public use, but is not 
excess to DOD's needs. In our previous report on enhanced-use leasing, 
we found cases where the military was leasing back property that had 
been included in an enhanced-use lease and cases where there appeared 
to be reasonable potential that the property included in a lease might 
be needed for military purposes over the lease's term, particularly in 
cases where the leased property was located in the interior, rather 
than at the perimeter, of the installation.[Footnote 15] Additionally, 
although the military services could potentially use existing 
authorities to convey a renewable energy system to an electric utility 
company[Footnote 16] or sell renewable energy to a utility,[Footnote 
17] the installation must have a renewable energy generation facility 
on the installation to use those authorities. According to military 
service headquarters officials, there are several issues with using 
these authorities for renewable energy projects; for example, 
officials said that the use of these authorities is complicated. 
Additionally, the military services may not have such facilities on 
the installations. Furthermore, some installations have not been able 
to use certain approaches because of constraints that are outside of 
the installation's control. For example, officials at three 
installations said that they are not able to use Utility Energy 
Service Contracts at their installations because the area electric 
utility company does not participate in the program. Additionally, 
officials at two installations said that they are limited in the 
alternative-financing approaches that they can use for renewable 
energy projects since the installations are serviced by regulated 
utilities. For example, officials at one of the installations said 
that they believe that they cannot implement any project in which they 
pay a contractor directly for the energy generated by the kilowatt 
hour--which is how contracts for projects financed through a power 
purchase agreement are typically paid--since the local utility is the 
only entity allowed to sell energy in the area. 

DOD Plans to Expand Its Use of Alternative-Financing Approaches: 

Moving forward, DOD plans to expand its use of alternative-financing 
approaches for renewable energy projects. In its Strategic Management 
Plan for fiscal years 2012 and 2013, DOD established a goal to 
increase operational and installation energy efficiency to reduce 
costs and improve energy security, among other benefits.[Footnote 18] 
One of the key initiatives within this goal is to expand the use of 
alternative financing for energy efficiency and renewable energy 
projects by 15 percent, as measured by the dollar value of awarded 
contracts, by the end of fiscal year 2015. According to DOD's annual 
energy management report for fiscal year 2010, DOD awarded $323 
million in contracts for energy efficiency and renewable energy 
projects that were financed with Energy Savings Performance Contracts 
and Utility Energy Service Contracts.[Footnote 19] Thus, DOD would 
need to award nearly $50 million more in contracts, or a total of 
about $372 million, to meet this goal. An official from the Office of 
the Deputy Under Secretary of Defense (Installations and Environment) 
said that the Office of the Secretary of Defense plans to measure 
progress toward the goal annually based on the military services' 
submissions for DOD's Annual Energy Management Report. At the time of 
our review, the Office of the Secretary of Defense had not provided 
information to the military services about the goal, but an official 
said that the office is establishing a working group to assist the 
services in initiating and completing projects financed with 
alternative-financing approaches through improved collaboration and 
communication among stakeholders and sharing best practices. 

Officials from two of the military services raised concerns about 
DOD's ability to meet the Strategic Management Plan's goal. One 
military service official said that the service has already planned 
enough projects funded with up-front appropriations to meet federal 
renewable energy goals for the next 2 years, making the number of 
alternatively financed projects within the service very low for fiscal 
year 2012 and unnecessary for fiscal year 2013. An official from 
another service indicated that DOD's ability to award more 
alternatively financed projects is outside of the military service's 
control and raised concerns that uncertainty about how the 
availability of federal and state incentives, as well as the condition 
of the financial markets, will affect that service's ability to 
attract private sector capital for alternatively financed projects. 
While officials from these two services raised concerns about meeting 
specific goals for awarding contracts for alternatively financed 
projects, officials from each of the military services' headquarters 
acknowledged that they expect that they will need to expand the use of 
alternative-financing approaches for renewable energy projects in the 
future to help the services meet the federal renewable energy goals in 
the long term. 

Military Services Use Methods Designed to Ensure Good Value and Manage 
Risks, but Have Not Issued Comprehensive Guidance: 

Input from Headquarters Organizations and Supporting Agencies Is 
Designed to Ensure Good Value and Advantageous Contract Terms: 

According to a number of military service headquarters and 
installation officials, input from headquarters organizations and 
supporting agencies is a key method the military services use to help 
ensure that they receive good value and advantageous contract terms 
for renewable energy projects on installations. This input is designed 
to help ensure that the military services receive good value and 
advantageous contract terms for renewable energy projects since 
officials in the headquarters organizations and supporting agencies 
often have expertise and experience in overseeing the development and 
implementation of renewable energy projects and contracting for such 
projects. The military services differ in the organizations involved 
in developing and implementing renewable energy projects on 
installations, as well as the roles and responsibilities of these 
organizations. For each of the military services, installation 
officials generally develop smaller projects, such as projects to 
install solar panels on individual buildings or incorporate ground 
source heat pumps into individual buildings. The Army and Air Force 
have instituted more centralized processes--discussed below--to 
develop and implement larger renewable energy projects on 
installations, such as the large solar array project currently in 
development at Fort Irwin. 

According to military service headquarters and installation officials, 
the military services' headquarters organizations and other supporting 
agencies provide input on proposed projects throughout the project 
development process, which the officials believe helps the military 
service obtain good value and advantageous contract terms for 
renewable energy projects on the installations. This input has taken 
different forms, as discussed below, and some formats for providing it 
were recently established and are still evolving. 

* At the headquarters level, the Secretary of the Army established the 
Energy Initiatives Task Force in September 2011 to develop and 
implement large-scale renewable energy projects--defined as those 
greater than 10 megawatts--on Army installations. According to Army 
headquarters and installation officials, the task force provides 
knowledge and experience in developing large-scale projects and works 
with installation officials to develop and implement projects, 
including developing contracts. For example, the task force has worked 
with officials at Fort Bliss on three potential projects on the 
installation and with officials at Fort Irwin on a proposed 500-
megawatt solar array. Additionally, the task force plans to provide 
information and assistance, as requested, to installations when 
developing and implementing smaller renewable energy projects. With 
regard to supporting agencies, the U.S. Army Corps of Engineers' 
Engineering and Support Center in Huntsville, Alabama, assists 
installations with developing and implementing renewable energy 
projects financed through Energy Savings Performance Contracts, 
Utility Energy Service Contracts, or the Energy Conservation 
Investment Program, including developing contracts for such projects. 
According to Army headquarters officials, the Engineering and Support 
Center's expertise in renewable energy technologies and contracting 
processes helps installations with the project development and 
contracting processes and to obtain good value and advantageous 
contract terms for renewable energy projects. 

* At the headquarters level, the Navy developed an energy-return-on-
investment tool to compare the financial and nonfinancial costs and 
benefits of renewable energy projects across the service. The tool, 
which was used for the first time for projects submitted as part of 
the fiscal year 2012 budget request, allows Navy headquarters 
officials to rank and compare energy projects submitted by 
installations and invest in projects that deliver the best return on 
investment. Navy headquarters officials review the proposed projects 
and, based on five criteria, make a recommendation to the installation 
about the best financing approach for the energy project. With regard 
to supporting agencies, the Naval Facilities Engineering Command's 
Engineering Service Center provides input on proposed projects by 
assisting installations with developing and implementing renewable 
energy projects, including developing contracts for projects. 
According to Navy headquarters and installation officials, the 
Engineering Service Center has expertise in renewable energy 
technologies, as well as contracting for a variety of types of 
projects, which helps in developing and implementing projects on the 
installations. 

* Marine Corps headquarters officials consult with installations as 
needed to help installations develop and implement renewable energy 
projects. According to a Marine Corps official, the Marine Corps has 
not established a formal or centralized process like the Navy and 
leaves decisions about financing approaches for renewable energy 
projects to installation commanders, who are responsible for 
developing renewable energy projects and identifying the financing 
approach. The official said this is due, in part, to the service's 
smaller size and more frequent contact between headquarters officials 
and installation energy managers that allow the headquarters officials 
to make suggestions informally to installations if headquarters 
officials think another financing approach is a better fit for a 
particular project. The Naval Facilities Engineering Command serves as 
the Marine Corps' contracting agent for construction projects and 
utility purchases, and the Marine Corps relies on its engineering 
expertise to identify measures to maximize the use of renewable energy 
sources within Marine Corps facilities, as well as in developing 
contracts for renewable energy projects. 

* The Air Force Real Property Agency and the Air Force Civil Engineer 
Support Agency are beginning to work closely with Air Force 
installations to develop renewable energy projects, including 
selecting the financing approach for a project and developing the 
contract, according to Air Force Headquarters officials. The Air Force 
has begun to rely more on the Air Force Civil Engineer Support Agency 
to manage renewable energy projects funded with up-front 
appropriations or financed through power purchase agreements and--to 
the extent that they are used--Energy Savings Performance Contracts 
and Utility Energy Service Contracts, and on the Air Force Real 
Property Agency to manage all projects--including renewable energy 
projects--that use an enhanced-use lease. These agencies have each 
produced manuals that contain information on developing and 
implementing renewable energy projects financed through their 
respective approaches. Among other tasks, the Air Force Civil Engineer 
Support Agency reviewed the potential for large renewable energy 
projects at each Air Force Installation and is beginning to develop 
business case analyses for these projects, with a focus on completing 
the analyses for those projects that are most feasible first. 
According to Air Force headquarters and installation officials, the 
Air Force Civil Engineer Support Agency and Air Force Real Property 
Agency have expertise related to renewable energy and contracting 
processes that help ensure that the military service obtains good 
value and advantageous contract terms for renewable energy projects. 

Cost Analyses Are Designed to Help Maximize Benefits and Mitigate 
Drawbacks or Risks of Financing Approaches, but Military Services Have 
Not Issued Comprehensive Guidance on Preparing Analyses: 

According to a number of military service headquarters and 
installation officials we interviewed, the military services use 
business case analyses or other more limited cost analyses, such as 
life-cycle cost analyses, as a second key method designed to help 
maximize the benefits and mitigate the drawbacks or risks of the 
selected financing approach; however, the military services have not 
issued comprehensive guidance on preparing such analyses for renewable 
energy projects. As we have previously reported, a business case 
analysis, sometimes called an economic analysis or cost-benefit 
analysis, is a comparative analysis that presents facts and supporting 
details among competing alternatives.[Footnote 20] A business case 
analysis considers not only all of the life-cycle costs of a project, 
but also quantifiable and nonquantifiable benefits. It should be 
unbiased by considering various financing approaches and should not be 
developed solely for supporting a predetermined solution. Considering 
various financing approaches as part of the business case analysis can 
help maximize benefits and mitigate drawbacks of the selected 
financing approach if these benefits and drawbacks are included in the 
analysis. 

Each of the military departments has issued guidance on business case 
analyses or economic analyses,[Footnote 21] but a business case 
analysis is not mandatory for all renewable energy projects. 
Additionally, with the exception of the Navy guidance, which has an 
appendix on economic analyses for energy projects, the servicewide 
guidance is not specific to analyses for renewable energy projects. 
While the Navy guidance has an appendix on analyses for energy 
projects, it has not been updated since 1993 and does not provide 
information on the energy-return-on-investment tool, which--according 
to Navy headquarters officials--project officials are supposed to use 
when submitting renewable energy projects for review, nor does the 
guidance mention many of the available funding approaches for 
renewable energy projects, such as Energy Savings Performance 
Contracts or power purchase agreements. Moreover, while some 
installation officials we interviewed used their respective 
servicewide guidance, others said that they were not aware of the 
guidance, and other officials who were aware of the guidance said that 
it is not used for analyses for most renewable energy projects. In 
addition to the servicewide guidance, the military services have 
limited information in their energy-related guidance on cost analyses 
for renewable energy projects. This information is often specific to 
the cost analyses for a particular financing approach, rather than 
applicable to all approaches. 

Based on our review, the military services' energy-related guidance 
does not generally require a business case analysis, but typically 
requires that a lifecycle cost analysis should be completed for each 
renewable energy project. While these cost analyses may provide 
decisionmakers with information about the lifecycle costs of the 
project, they typically do not include an analysis of alternative 
methods for executing a given project. Additionally, we identified 
several renewable energy projects that were developed or implemented 
in recent years for which the project officials had not completed any 
cost analysis. As part of our review, we requested business case 
analyses or other supporting analyses, such as cost analyses, for 2 
projects at each of the 10 installations included in our review, for a 
total of 20 projects. Based on our review of these analyses, we found 
that: 

* Officials provided analyses for 14 of the 20 projects. Eight of 
these projects were placed in service between 2004 and 2011, and six 
projects were in development or under construction at the time of our 
review. Officials provided cost analyses in a variety of formats, from 
a real estate market study and best use analysis for a project 
financed through an enhanced-use lease to the form used by DOD to 
submit requirements and justification in support of requests for 
military construction to Congress, commonly referred to as a DD form 
1391, for a project funded through the Energy Conservation Investment 
Program. 

* Installation officials said that analyses were not conducted for 5 
of the 20 projects. These five projects were placed in service from 
2009 through 2011. According to installation officials, analyses were 
not performed for some of the projects because the renewable energy 
project was part of a larger project financed through an existing 
Energy Savings Performance Contract or was not part of the original 
military construction project. For example, an official at one 
installation said that an analysis was not performed for the renewable 
energy aspects included in a project to construct an operations 
facility paid for with military construction funds because project 
bids came in below estimates and the service's construction agent 
invested the difference in energy enhancements for the project. In 
another case, an installation did not perform a cost analysis for a 
small project to install photovoltaic panels on the installation 
marquee because the photovoltaic panels had been purchased by another 
organization for another purpose and the command that oversees the 
installation was seeking proposals for using the panels. 

* Installation officials could not locate the analysis that had been 
completed for the one remaining project, which was placed in service 
in 2009. An official said that the energy manager who developed the 
project has since left the position and that the project documentation 
at the installation did not include the cost analysis for the project. 

In addition to our review of cost analyses, the DOD Inspector General 
and the Naval Audit Service have each conducted reviews of renewable 
energy projects funded with up-front appropriations from the American 
Recovery and Reinvestment Act. These auditors found that 13 Navy 
projects, 1 Marine Corps project, and 3 Air Force projects were not 
properly planned and supported, in that installation officials could 
not provide documentation to support payback analyses or did not 
perform cost analyses for some of the projects and, in other cases, 
implemented projects with limited financial benefits.[Footnote 22] For 
example, the Naval Audit Service reported that the photovoltaic 
systems that they reviewed are expected to save about $704,000 
annually after an investment of about $87 million; thus, it would take 
more than 120 years for the savings to exceed the costs. 

Additionally, we identified nonquantifiable benefits that installation 
officials were unsure how to address or account for in a business case 
analysis or other cost analyses because the military services have not 
issued comprehensive guidance in these areas. One example is related 
to the consideration of energy security when developing business case 
analyses. DOD has emphasized the importance of renewable energy as a 
way to enhance energy security for installations. Recently, the 
Congress included a provision in the fiscal year 2012 National Defense 
Authorization Act related to considering the potential energy security 
benefits that a renewable energy project may provide to an 
installation.[Footnote 23] However, officials at some installations 
and military service headquarters said that--with the exception of a 
Navy analytical tool--there is not a way to account for the potential 
energy security benefits that a project may provide to an installation 
in cost analyses.[Footnote 24] Furthermore, some installation 
officials were unsure of how to account for the benefits of achieving 
service initiatives, such as the net zero initiative, in cost 
analyses. Without information on the costs and benefits to include in 
a cost analysis and how to account for nonquantifiable benefits, the 
military services cannot ensure that these analyses are comparable 
across renewable energy projects within a military service. 
Comparability of analyses across proposed projects within a service is 
important because results of the analysis are key factors used to 
prioritize renewable energy projects within the service for some 
financing approaches, such as the Energy Conservation Investment 
Program. Without processes and guidance to ensure that analyses are 
comparable across projects within the service, the military services 
cannot ensure that they are selecting and implementing the projects 
that best meet the goals of the financing approaches. 

While installations provided cost analyses for 14 of the projects we 
reviewed, only 1 of the cost analyses we reviewed included an 
evaluation of different financing approaches. Specifically, the U.S. 
Air Force Academy developed a business case analysis for its 
photovoltaic solar array project that compared five options for 
financing the project, including one option in which a private 
developer would own the solar array and the installation would 
purchase energy through a power purchase agreement, and another 
alternative in which the installation would own the solar array. 
[Footnote 25] We have previously reported in our work on capital 
planning that, as part of a review and approval process, leading 
organizations develop decision packages, such as business case 
analyses, to justify capital project requests.[Footnote 26] We 
reported that leading practices include analyzing alternative 
approaches to address capital needs, which could help agencies 
determine whether alternative financing is the most appropriate way of 
acquiring capital. However, the cost analyses we reviewed do not 
include an analysis of the costs and benefits of different financing 
approaches because the military services have not issued comprehensive 
guidance for their renewable energy projects that require project 
officials to include such information. In 2011, the DOD Inspector 
General reported similar findings for two military services, stating 
that the Navy and Marine Corps energy policies did not include 
comprehensive processes for planning and selecting energy projects, to 
include requirements unique to energy projects.[Footnote 27] As a 
result of not having comprehensive guidance to help ensure that 
installations complete the analyses and evaluate the costs and 
benefits of different financing approaches, the military services 
cannot ensure that decision makers will select the financing approach 
that best maximizes the benefits and mitigates the drawbacks or risks 
of the available financing approaches for renewable energy projects. 

Guidance, Training, and Other Resources Support Financing Decisions, 
but Inconsistencies in Interpreting Some Guidance and Ad Hoc 
Information Sharing among Project Officials May Limit the Use of Some 
Approaches: 

Amount of Guidance on Financing Approaches Has Increased, but Some 
Inconsistent Interpretations Exist: 

Within the past 3 years, the Under Secretary of Defense (Acquisition, 
Technology and Logistics); the Department of Energy; the military 
service headquarters or supporting agencies; and at least one 
installation have developed or updated guidance on the approaches that 
can be used to finance renewable energy projects on installations, but 
we found that different interpretations of some of this guidance 
affected the financing approaches each service used. At the department 
level, DOD's installation energy management instruction identifies 
partnerships with the private sector through alternative financing as 
a crucial tool for financing energy efficiency measures and allowing 
installations to improve their infrastructure, to include upgrades 
with renewable energy systems.[Footnote 28] Additionally, the services 
have developed some guidance for their installations on alternative 
financing of renewable energy projects. For example, the Air Force 
Civil Engineer Support Agency and the Air Force Real Property Agency 
have developed detailed guidebooks to assist installations in 
developing power purchase agreements and enhanced-use leases, 
respectively, for renewable energy projects. The Army has developed an 
Energy Savings Performance Contract Policy Handbook, and the Marine 
Corps has issued specific guidance to regional and installation 
commanders that they incorporate solar technologies for new facilities 
and major roof replacement projects when feasible.[Footnote 29] The 
recent Navy and Marine Corps Energy Project Management Guide provides 
some guidance for selecting a financing approach for energy and water 
conservation projects in general. Navy officials said they saw the 
benefit of developing additional guidance on selecting the proper 
financing approach specifically for renewable projects, particularly 
in addressing factors such as renewable energy certificates and state 
incentives, among others. We also found an example of an installation 
that has established its own guidance. Fort Knox has developed a 
facility design guide that identifies energy design requirements to be 
included in contracts for energy projects at the installation to help 
it meet federal renewable energy goals. 

DOD is taking steps to expand its guidance on financing approaches. 
DOD's installation energy management instruction briefly mentions the 
availability of two alternative-financing approaches--Utility Energy 
Service Contracts and Energy Savings Performance Contracts--but the 
instruction does not identify other approaches, nor does it provide 
guidance on selecting a financing approach. An official from the 
Office of the Deputy Under Secretary of Defense (Installations and 
Environment) told us that DOD is in the process of developing an 
overarching policy on the authorities available to fund renewable 
energy projects. The official expected the effort to result in a 
guidance memo and a handbook, although the office had not established 
time frames for completing these documents at the time of our review. 
Also, Army officials said they will be issuing new guidance to support 
the activities of the service's new Energy Initiatives Task Force. 
This guidance is projected to be published in spring 2012 and is 
expected to include a renewable energy execution plan and tool kits to 
provide a process for pursuing large-scale renewable energy projects. 

Service and installation officials had varying perceptions of the 
availability, quality, and relevance of the guidance on financing 
renewable energy projects. Some officials believed existing guidance 
was adequate. Several officials acknowledged that more information on 
selecting the financing approaches would be helpful, such as more 
information on regulatory issues or the best financing approach to use 
for renewable energy projects. In addition, some officials said that 
there was too much guidance available on developing renewable energy 
projects, noting that the amount of guidance was a challenge because 
available guidance is dispersed. Some officials said that it is left 
to installation-level officials to locate the information they need. 
Officials at one installation, for example, said that it would be 
useful to centralize the guidance on the different approaches 
available for funding renewable energy projects so that the 
information can be accessed in one location. 

Despite the availability of this guidance on the various approaches 
that can be used to finance renewable energy projects, we found 
instances where different interpretations of some of this guidance 
affected the financing approaches the services used because DOD has 
not issued overarching guidance on the selection and use of these 
financing approaches. For example, Army and Navy installations use 
Energy Savings Performance Contracts and Utility Energy Service 
Contracts for their renewable energy projects, often citing the 
benefits of having a developer construct and manage the project and 
having established relationships with local utility companies. The Air 
Force, on the other hand, has used Energy Savings Performance 
Contracts and Utility Energy Service Contracts in the past, but Air 
Force Facilities Energy Center officials told us they are not 
currently using them to finance new renewable energy projects because 
of uncertainty about whether such projects are considered energy 
conservation measures and whether the projects are economically 
viable. Air Force officials told us that projects with long payback 
periods are typically not economically viable and additional costs, 
such as financing costs and other overhead costs to manage contracts, 
and the ability to sell renewable energy certificates or have access 
to state tax incentives can affect whether an Energy Savings 
Performance Contract or Utility Energy Service Contract is the most 
cost effective approach to finance a renewable energy project. 
[Footnote 30] Developers can sometimes use the revenues from the sale 
of renewable energy certificates or tax incentives that some states 
make available to commercial entities or utilities, such as sales tax 
exemptions or rebates for implementing certain renewable technologies, 
for example, to help offset the higher costs of renewable energy 
projects. 

As a result of these different concerns and interpretations, the 
military services may not be taking full advantage of the various 
financing approaches that are available to finance projects to meet 
renewable energy goals. For example, officials from both the Office of 
the Deputy Under Secretary of Defense (Installations and Environment) 
and the Department of Energy described how different interpretations 
among the military services regarding one authority for power purchase 
agreements previously limited the use of that authority.[Footnote 31] 
Until recently, some services interpreted this authority as applying 
to geothermal energy only. DOD has since clarified this authority as 
applying to all renewable energy sources and the services are 
beginning to implement more projects using this authority, such as a 
project to increase production at a developer-operated power plant 
that is powered by methane gas from the landfill adjacent to Marine 
Corps Air Station Miramar. 

Training on Financing Approaches Is Available within and outside DOD: 

DOD personnel participated in training provided by DOD and other 
sources on the various financing approaches for renewable energy 
projects and were generally satisfied with this training. Within DOD, 
the services provide training to installation personnel on developing 
renewable energy projects, including on how to select a financing 
approach. Much of the service-level training is provided by the 
services' commands or agencies responsible for engineering or 
installation management. For example, the Air Force Civil Engineer 
Support Agency developed just-in-time training that provides basic 
information about power purchase agreements and identifies the steps 
to follow in pursuing projects financed with this approach. According 
to Air Force officials, the agency also meets with representatives 
from the service's 13 major commands as part of the agency's regular 
program management reviews to educate the commands on various aspects 
of renewable energy, including the financing approaches for renewable 
energy projects. The Army Corps of Engineers has a training program 
for personnel involved in contracting for Energy Savings Performance 
Contracts and Utility Energy Service Contracts, and the Energy 
Initiatives Task Force plans to implement a training curriculum on 
developing large-scale renewable energy projects using alternative 
financing, within the next 12 months. Additionally, Army Installation 
Management Command provides training to installation energy managers. 
Some service officials also told us that their energy management 
personnel can receive training through courses provided by military 
educational institutions, such as the Air Force Institute of 
Technology. 

Personnel at the military service headquarters and installations also 
receive training from other sources, particularly through the 
Department of Energy's Federal Energy Management Program's online and 
on-site training. Department of Energy officials told us that the 
Federal Energy Management Program provides monthly training 
opportunities on a variety of issues, including alternative-financing 
approaches, through its seminars and other training courses, which are 
offered via Webcast and interactive television. Additionally, the 
Federal Energy Management Program provides on-site training to 
agencies upon request. Department of Energy officials told us that 
although the Federal Energy Management Program has not tailored its 
existing workshop and Webcast training specifically for DOD, 
presenters generally provide information on DOD's unique authorities 
for renewable energy projects.[Footnote 32] Other training venues 
include sessions held in conjunction with conferences and courses 
provided by industry and local institutions of higher education. 
Officials at Marine Corps Air Station Miramar, for example, told us 
they can receive energy-related training from the local utility as 
well as from a local nonprofit organization and an area university. 

Officials were generally satisfied with the availability, quality, and 
relevance of the training they received from DOD and other sources, 
although some officials at the military service headquarters and 
installations acknowledged gaps in the training and the need to 
continue to update the training as new guidance is issued. As with 
guidance, some officials told us they were interested in receiving 
additional training in areas such as federal and state incentives that 
are available for use on renewable energy projects or state and 
jurisdictional variables that can affect an installation's ability to 
implement such projects. Additionally, some installation officials 
cited concerns with having sufficient staff available to put that 
training to use in developing and managing renewable energy projects. 

Other Resources Provide Information-Sharing Opportunities, but 
Coordination among Project Officials Is Ad Hoc and Not Formalized: 

In addition to training opportunities, DOD and other agencies have 
made available other resources--such as conferences, working groups, 
and consultations with energy experts--to assist officials in 
selecting financing approaches for renewable energy projects, but 
coordination at the installation level remains ad hoc and not 
formalized. First, DOD officials participate in numerous energy-
related conferences, such as the annual GovEnergy conference that 
provides energy management training and information to federal 
employees and government stakeholders. In addition to this training, 
GovEnergy also provides opportunities for participants to share 
information, both formally and informally, about best practices and 
the lessons that they have learned from their experiences developing 
and implementing renewable energy projects; develop partnerships with 
energy managers from other federal agencies; and attend meetings 
specific to their service that are held in conjunction with the 
conference. Military service officials also attend energy forums, such 
as the Naval Energy Forum or the Army and Air Force Energy Forum. 
These forums are a venue for the services to get the perspectives of 
senior leadership from DOD, federal agencies, Congress, and industry 
regarding energy, including sharing information on their experiences 
developing and implementing renewable energy projects. Second, 
military service headquarters officials told us that the service 
headquarters' energy focal points meet regularly to share information 
on energy issues, including financing approaches. Third, headquarters 
and subordinate command level officials participate in a variety of 
federal working groups, such as the Federal Utility Partnership 
Working Group, the Energy Savings Performance Contract Steering 
Committee, and others. The Federal Utility Partnership Working Group 
consists of federal agencies, utilities, and energy service 
organizations and meets twice per year to, among other things, develop 
strategies and procedures for the implementation of renewable energy 
projects at federal sites. Finally, Department of Energy officials 
told us that, in addition to one-on-one consultations with Federal 
Energy Management Program experts, installations can also work through 
the Federal Energy Management Program for access to experts at the 
Department of Energy laboratories. For example, the Pacific Northwest 
National Laboratory issued several reports assessing various military 
installations for potential renewable energy project opportunities, 
many for projects funded through the American Recovery and 
Reinvestment Act of 2009. The Department of Energy also publishes case 
studies and articles related to renewable energy project financing on 
its Web site and collects and disseminates information on other 
resources through interagency meetings and contacts with agency 
representatives. 

In addition to these federal-level efforts, we found that each service 
has developed mechanisms for sharing information within the service, 
such as best practices and lessons that officials learned from the 
projects, including working groups, Web sites, and service-specific 
conferences. The Navy, for example, has established an Energy Project 
Execution Team comprised of Naval Facilities Engineering Command 
engineers that meets several times a year to share information about 
projects and best practices or lessons learned from implementing all 
types of energy projects. Examples of Army Web sites used to share 
best practices include the Installation Management Command's Garrison 
Commanders' Web site and the Assistant Chief of Staff for Installation 
Management's energy program Web site, which Army officials described 
as sources for learning about renewable energy projects at other Army 
installations. Similarly, both Air Combat Command and the Air Force 
Civil Engineer Support Agency have communities of practice that 
maintain Web sites with information such as guidance and policy 
documents related to energy, examples of projects, and sample military 
construction project data sheets for installations to download. The 
military services also sponsor conferences, such as the Army's January 
2012 net zero conference that was intended to support the efforts of 
the Army's overall net zero initiative and pilot installations through 
training sessions, information from industry representatives, and 
interactions among Army installations as they move toward the net zero 
goals in energy, water, and waste. 

Additionally, we found some coordination among the services within 
geographical regions. For example, Fort Irwin officials highlighted 
the coordination that takes place through the Desert Managers Group. 
This group was established in 1997 under the Mojave Desert Ecosystem 
Program to address environmental and energy issues in the region and 
includes stakeholders from other federal agencies; local utilities, 
governments, and institutions of higher education; non-governmental 
organizations; and the other installations in the region--Edwards Air 
Force Base, Marine Corps Air Ground Combat Center Twentynine Palms, 
and Naval Air Weapons Station China Lake. According to the officials, 
the four DOD bases hold a separate session in conjunction with this 
group's quarterly meetings to share ideas and their experiences, to 
include exchanging information on energy issues. Similarly, officials 
at Fort Bliss told us that they have begun discussions to improve 
collaboration with two New Mexico installations located nearby--
Holloman Air Force Base and the Army's White Sands Missile Range--to 
assess the potential for regional energy solutions. 

While information sharing is taking place across the services at the 
headquarters level, opportunities to share information across the 
services are limited at the installation level even though some 
decisions about the renewable energy projects are made at the 
installation level. According to the Standards for Internal Control in 
the Federal Government, information should be communicated to the 
management and others within an organization who need it and in a form 
and within a time frame that enables them to carry out their 
responsibilities.[Footnote 33] These standards state, among other 
things, that effective communications should occur in a broad sense 
with information flowing down, across, and up the organization and 
that there should exist adequate means of communicating with and 
obtaining information from external stakeholders that may have a 
significant impact on the agency's achieving its goals. However, DOD 
has not instituted a formalized process to share information on the 
financing of renewable energy projects across the military services at 
the installation level. Officials we spoke with at several 
installations said that coordination and information sharing at their 
level was done on an ad hoc basis and told us that they would benefit 
from more formalized coordination and access to information among 
installations from the different services on best practices regarding 
renewable energy projects. For example, some officials said that they 
learned about other services' renewable energy projects through 
participating in conferences but said they would benefit from a more 
formalized way to learn about how other services are selecting and 
implementing renewable energy projects. Because the coordination and 
communication process remains ad hoc and not formalized, DOD cannot 
ensure that officials responsible for selecting a financing approach 
have timely access on an ongoing basis to information on the 
approaches that their counterparts from other services have used, 
including best practices and the lessons that other officials have 
learned from their experiences, which could better assist them in 
selecting a financing approach that maximizes the benefits and 
minimizes the drawbacks or risks of that approach. 

Conclusions: 

DOD spends billions of dollars each year to provide electricity and 
other energy to more than 500 permanent installations worldwide and 
has been developing renewable energy projects to help reduce these 
costs, meet federal renewable energy goals, and improve energy 
security on its installations. DOD is planning to increase its use of 
renewable energy at installations to meet federal renewable energy 
goals, as well as service-specific goals, in the coming years and 
plans to continue financing these efforts through both up-front 
appropriations and alternative financing. However, without processes 
and comprehensive guidance in place to ensure that project officials 
complete the analyses and evaluate the costs and benefits of different 
financing approaches, the military services cannot ensure that 
decision makers--whether they are at the installation level or 
headquarters level--are choosing the financing approach that best 
maximizes the benefits and mitigates the drawbacks of the available 
financing approaches. Additionally, while some decisions are becoming 
more centralized within the military services, installation officials 
still play a key role in developing and implementing renewable energy 
projects on installations. DOD, the military services, and subordinate 
organizations are developing additional guidance to assist officials 
in making decisions about the financing approach for a particular 
project; however, without overarching guidance to establish a clear 
and consistent framework for using the alternative-financing 
approaches, military services and installations may not have all of 
the information that they need to take full advantage of all available 
financing approaches. Similarly, the military services have 
established processes to share information and best practices or 
lessons learned on financing approaches for renewable energy projects 
at the headquarters level, as well as within each military service, 
but without such information at the installation level, where the 
project proponents are usually located, DOD may be missing 
opportunities to implement projects using different financing 
approaches that could help the department meet its renewable energy 
goals in a cost effective way. 

Recommendations for Executive Action: 

GAO is making three recommendations to the Secretary of Defense. 

* To better ensure that the military services select a financing 
approach that best maximizes the benefits and mitigates the drawbacks 
or risks of available approaches, we recommend that the Secretary of 
Defense direct the Under Secretary of Defense (Acquisition, Technology 
and Logistics), the Deputy Under Secretary of Defense (Installations 
and Environment), and the military services to issue comprehensive 
guidance that establishes and clearly describes the military services' 
processes to ensure that business case analyses are completed and that 
these analyses fully consider the costs and benefits of different 
financing approaches for renewable energy projects. 

* To help enable officials to better understand how to use all of the 
approaches that are available to finance projects to meet renewable 
energy goals, we recommend that the Secretary of Defense direct the 
Under Secretary of Defense (Acquisition, Technology and Logistics) and 
the Deputy Under Secretary of Defense (Installations and Environment) 
to develop overarching guidance about the use of available financing 
approaches for financing renewable energy projects and direct the 
military services to update their guidance accordingly. At a minimum, 
this guidance should include the requirements and restrictions of the 
underlying authorities and any DOD-specific guidelines for using up-
front appropriations and alternative-financing approaches for 
renewable energy projects. 

* To improve the information-sharing resources that are available to 
assist officials in selecting a financing approach that maximizes the 
benefits and minimizes the drawbacks or risks of that approach, we 
recommend that the Secretary of Defense direct the Under Secretary of 
Defense (Acquisition, Technology and Logistics) and the Deputy Under 
Secretary of Defense (Installations and Environment) to develop a 
formalized communications process, such as a shared Web site or other 
appropriate approach, that will enable officials at military 
installations to have timely access on an ongoing basis to information 
related to financing renewable energy projects on other installations, 
including best practices and lessons that other installations have 
learned from their experiences in financing their renewable energy 
projects. 

Agency Comments and Our Evaluation: 

In written comments on a draft of this report, DOD partially concurred 
with one recommendation and fully concurred with two others. DOD's 
comments are reprinted in their entirety in appendix IV. DOD also 
provided technical comments, which we have incorporated as 
appropriate. The Department of Energy also reviewed a draft of this 
report but did not provide any comments. 

DOD partially concurred with our first recommendation to issue 
comprehensive guidance related to preparing business case analyses for 
renewable energy projects. DOD stated that the department recognizes 
the importance of establishing credible and effective guidance for 
such analyses, but does not believe that a business case analysis must 
include an analysis of all potential financing approaches because some 
approaches would not apply to some projects. Nothing in our 
recommendation prevents DOD from exercising judgment in which 
financing approaches are or are not considered as appropriate. As 
stated in our report, we agree that not all financing approaches are 
suitable in all circumstances. As such, we would not expect a business 
case analysis to consider the costs and benefits of financing 
approaches that were not suitable for a specific project. For example, 
we would not expect a military service to analyze the costs and 
benefits of a project financed through an enhanced-use lease if the 
installation did not have adequate land available for the purpose in 
the first place. However, we believe that in most circumstances more 
than one financing approach may be suitable for a project and, 
therefore, should be considered as part of the business case analysis. 
We believe that DOD's comments are consistent with the intent of our 
recommendation. 

DOD concurred with our second recommendation to develop overarching 
guidance about the use of available financing approaches and direct 
the military services to update their guidance accordingly. DOD 
expects to develop this guidance, which will include requirements and 
restrictions related to the authorities and discuss the variety of 
approaches and strategies for financing renewable energy projects 
although the department did not specify a time frame for taking this 
action. 

DOD concurred with our third recommendation to develop a formalized 
communications process to share information on financing renewable 
energy projects among installations. DOD stated that the department 
agrees that it is necessary to develop such a process, which will 
enhance DOD's ability to leverage best practices among installations 
and personnel. DOD plans to initiate an alternative-financing energy 
working group with representatives from around the department for this 
purpose. As long as this working group establishes some method to 
allow project-level officials to share information, including best 
practices and lessons learned from their experiences, we believe this 
planned action meets the intent of our recommendation. 

We are sending copies of this report to the Secretary of Defense; the 
Secretaries of the Army, the Navy, and the Air Force; the Commandant 
of the Marine Corps; the Secretary of Energy; the Director, Office of 
Management and Budget; and interested congressional committees. In 
addition, this report is available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov/]. 

If you or your staff have any questions about this report, please 
contact Brian J. Lepore at (202) 512-4523 or leporeb@gao.gov or Frank 
Rusco at (202) 512-3841 or ruscof@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made key contributions to 
this report are listed in appendix V. 

Signed by: 

Brian J. Lepore: 
Director Defense Capabilities and Management: 

Signed by: 

Frank Rusco: 
Director Natural Resources and Environment: 

List of Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Daniel K. Inouye: 
Chairman: 
The Honorable Thad Cochran: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate: 

The Honorable Howard P. McKeon: 
Chairman: 
The Honorable Adam Smith: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable C. W. Bill Young: 
Chairman: 
The Honorable Norman D. Dicks: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

[End of section] 

Appendix I: Scope and Methodology: 

This appendix provides information on the scope of our work and 
methodology to (1) determine the approaches that the military services 
are using to finance renewable energy projects on military 
installations and the factors that the services consider in selecting 
a financing approach, (2) assess the extent to which the military 
services have established methods to obtain good value and 
advantageous contract terms for renewable energy projects on 
installations and maximize benefits and mitigate drawbacks or risks of 
financing approaches, and (3) identify the extent to which the 
military services have developed guidance, training, and other 
resources to assist officials in selecting and implementing financing 
approaches for renewable energy projects. For the purposes of this 
review, we defined "renewable energy" as energy derived from any of 
the following fuel sources: biomass; geothermal; hydropower; solar; 
wind; ocean energy, including wave, tidal, current, and ocean thermal 
energy; and other sources, such as landfill gas and municipal solid 
waste, that are constantly replenished. This energy can be applied in 
any form, including electricity, heating, or small-scale applications 
such as streetlights or trash compactors. Our definition differs from 
the definitions used for computation of the relevant federal energy 
goals, as noted in the body of the report. We focused on facilities 
energy efforts in the United States and overseas and excluded 
operational energy and vehicles from our review. Additionally, we 
focused on the military services' renewable energy efforts--which 
comprise the vast majority of DOD's renewable energy projects--and 
excluded the defense agencies and other defense organizations from our 
review since their projects represent a small subset of the total. 
Finally, we focused on DOD's efforts to generate renewable energy and 
excluded from our review nuclear energy and efforts that only 
addressed energy efficiency or conservation. 

To determine the extent to which the military services are using 
available approaches to finance renewable energy projects on military 
installations, we first reviewed applicable legal authorities, DOD and 
Department of Energy guidance and training materials, and reports by 
GAO and other federal agencies to identify available financing 
approaches. We also discussed the available funding approaches with 
knowledgeable officials from the DOD and Department of Energy offices 
mentioned below. Then we compared the financing approaches that DOD 
has used to the available approaches. We obtained information on the 
military services' renewable energy projects that were designed, 
constructed, or operating in fiscal year 2010 from the inventory 
generated during another GAO review.[Footnote 34] We compared the list 
to service-specific and DOD-wide sources of information to identify 
additional projects that were in design, under construction, or began 
operating in fiscal year 2011 that were not included in the original 
list, as well as to identify the approach used to finance the 
renewable energy project, so that our final list included all projects 
that were in design, under construction, or currently operating in 
fiscal year 2011. We provided the updated lists to the military 
services and requested that service officials (1) review the data to 
ensure that the information was accurate, (2) provide updates to the 
data, including any additional projects not identified in the list 
provided, to include any new projects in fiscal year 2011, and (3) 
provide information that we were unable to obtain from another source, 
such as information on the financing approach. We used this data 
collection and verification process to assess the reliability of the 
data and we found the data to be sufficiently reliable for the 
purposes of this report. 

Additionally, to determine the factors that the military services 
consider when selecting a financing approach for renewable energy 
projects, to include the benefits and drawbacks or risks of each of 
the financing approaches, we interviewed officials from the Office of 
the Deputy Under Secretary of Defense (Installations and Environment); 
the Defense Logistics Agency-Energy office; each of the military 
service headquarters and their supporting agencies, including the U.S. 
Army Corps of Engineers Engineering and Support Center (Huntsville), 
the Naval Facilities Engineering Command, the Air Force Civil Engineer 
Support Agency, and the Air Force Real Property Agency; 10 selected 
installations; and the Department of Energy. To identify the 
installations to include in our review, we first selected a 
nonprobability sample of eight installations--two installations per 
service--to get a mix of the types of financing approaches used, the 
types of renewable energy projects implemented, and geographic 
diversity, with an emphasis on installations that have used multiple 
financing sources and implemented different types of projects on an 
individual installation. These eight installations are Fort Irwin and 
Marine Corps Air Station Miramar, California; the U.S. Air Force 
Academy, Colorado; Naval Air Station Jacksonville, Florida; Fort Knox, 
Kentucky; Marine Corps Air Station Beaufort, South Carolina; Hill Air 
Force Base, Utah; and Naval Air Station Oceana, Virginia. We then 
selected two additional installations with unique characteristics to 
include in our sample: Nellis Air Force Base, Nevada, is the home to 
one of the largest solar photovoltaic arrays in the nation and Fort 
Bliss, Texas, is planned to be one of the Army's two "integrated net 
zero" installations.[Footnote 35] 

To determine the extent to which the military services have 
established methods to maximize benefits and mitigate risks of 
financing approaches and obtain good value and advantageous contract 
terms for renewable energy projects on military installations, we 
reviewed guidance, directives, and instructions from DOD and the 
military services related to renewable energy projects. We also 
reviewed related guidance from the Office of Management and Budget for 
cost effectiveness analyses. Additionally, we reviewed project 
documentation for selected projects at the 10 installations included 
in our scope. For example, we requested business case analyses or 
similar analyses for 2 projects at each of the 10 selected 
installations and reviewed these analyses. We also interviewed 
officials at the Office of the Deputy Under Secretary of Defense 
(Installations and Environment), the military service headquarters and 
their supporting agencies, and the 10 selected installations. 
Additionally, we reviewed previous GAO reports related to the 
identified methods to better understand the methods. 

To determine the extent to which DOD has developed guidance, training, 
and other resources to assist officials in selecting and implementing 
the financing approaches for renewable energy projects, we reviewed 
existing guidance developed by the Under Secretary of Defense 
(Acquisition, Technology and Logistics) and the military services. We 
also reviewed information on the training offered through DOD, the 
Department of Energy, and other sources, such as conferences. 
Additionally, we spoke with officials at the Office of the Deputy 
Under Secretary of Defense (Installations and Environment), the 
Defense Logistics Agency-Energy office, the military service 
headquarters and supporting agencies, and the 10 selected 
installations to obtain their perspectives on the availability, 
quality, and relevance of the guidance, training, and other resources. 
We also spoke with officials from the Department of Energy's Federal 
Energy Management Program to discuss the types and quantity of 
training their agency provides to DOD personnel. 

We conducted this performance audit from June 2011 through April 2012 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Selected Financing Approaches Available for Acquisition 
of Renewable Energy or Development of Renewable Energy Projects on DOD 
Installations: 

Up-front appropriations: 

Financing approach: Annual military construction appropriations, 
including the Energy Conservation Investment Program (ECIP); 
Summary of approach related to financing renewable energy projects: 
The acquisition, construction, installation, and equipment of 
temporary or permanent public works, installations, facilities, and 
real property is typically financed through military construction 
appropriations.
The Energy Conservation Investment Program is a subset of the 
defensewide Military Construction program specifically designated for 
projects that save energy or reduce defense energy costs. The program 
supports construction of new high-efficiency energy systems and the 
improvement and modernization of existing systems. Projects funded 
through the Energy Conservation Investment Program can include energy 
efficiency, water conservation, and renewable energy projects; 
Selected legal authorities for approach[A]: 10 U.S.C. § 2802, et seq; 
See also annual military construction appropriation acts, e.g. the 
Military Construction and Veterans Affairs and Related Agencies 
Appropriations Act, 2010, Pub. L. No. 111-117, Division E (2009). 

Financing approach: Operation and maintenance appropriations; 
Summary of approach related to financing renewable energy projects: 
Certain small military construction projects may be undertaken with 
operation and maintenance funds (limited to projects costing less than 
$750,000), and these projects could include renewable energy projects. 
Additionally, certain repairs or renovations to existing structures 
may also be financed through operation and maintenance funds. These 
renovations may sometimes include energy efficiencies or other energy-
related repairs; 
Selected legal authorities for approach[A]: 10 U.S.C. § 2805; 
10 U.S.C. § 2854; 10 U.S.C. § 2811. 

Financing approach: Other up-front appropriations; 
Summary of approach related to financing renewable energy projects: 
Periodically, Congress makes available other direct appropriations 
that can be used for renewable energy projects. For example, DOD used 
funds from the American Recovery and Reinvestment Act of 2009 on 
renewable energy projects. DOD has also used appropriated funds 
programmed for the Environmental Security Technology Certification 
Program, DOD's environmental technology demonstration and validation 
program, to fund renewable energy projects on DOD installations; 
Selected legal authorities for approach[A]: See, for example, military 
construction funds provided in the American Recovery and Reinvestment 
Act of 2009 (Pub. L. No. 111-5 (2009)). 

Alternative financing: 

Financing approach: Energy Savings Performance Contract (ESPC); 
Summary of approach related to financing renewable energy projects: An 
Energy Savings Performance Contract is a contract between a federal 
agency and an energy service company. The energy service company 
conducts a comprehensive energy audit for the federal facility and 
identifies improvements to save energy. In consultation with the 
federal agency, the energy service company designs and constructs a 
project that meets the agency's needs and arranges the necessary 
financing. The contractor guarantees that the improvements will 
generate energy cost savings sufficient to pay for the project over 
the term of the contract. Payment to the contractor is contingent upon 
realizing a guaranteed stream of future energy and cost savings, with 
any savings in excess of that guaranteed by the contractor accruing to 
the federal government. Contract terms for Energy Savings Performance 
Contracts can extend up to 25 years; 
Selected legal authorities for approach[A]: 42 U.S.C. § 8287. 

Financing approach: Utility Energy Service Contract (UESC); 
Summary of approach related to financing renewable energy projects: In 
a Utility Energy Service Contract, a utility arranges financing to 
cover the capital costs of a project, which are repaid by the agency 
over the contract term, usually based on estimated cost savings 
generated by the energy efficiency measures. One key difference 
between a Utility Energy Service Contract and an Energy Savings 
Performance Contract is that Utility Energy Service Contract 
contractors are not necessarily required to guarantee that the project 
will generate sufficient savings to repay the capital costs; 
Selected legal authorities for approach[A]: 10 U.S.C. § 2913; 
42 U.S.C. § 8256. 

Financing approach: Power purchase agreement (PPA); 
Summary of approach related to financing renewable energy projects: 
Power purchase agreements for renewable energy may take several forms, 
but all are essentially agreements to purchase renewable energy from a 
private sector energy producer. In some cases a power purchase 
agreement may simply be a long-term purchase agreement entered into 
with a utility to lock in an attractive rate for renewable energy. 
Another potential use of power purchase agreements is in conjunction 
with enhanced-use leasing as an incentive for the private lessee. In 
this scenario, a private entity would finance the construction of 
power generation equipment and installation on government land and 
provide for operation and maintenance of the system for the term of 
the contract. The system would typically be privately owned and the 
federal facility would agree to purchase the electricity through a 
long-term power purchase agreement. DOD refers to power purchase 
agreements undertaken using certain authorities as "energy services 
contracts."
The length of the allowed contract term varies based on the authority 
used for the power purchase agreement. Under 10 U.S.C. § 2410q, DOD 
can enter into contracts for up to 5 years generally, or up to 10 
years in certain circumstances. Under 10 U.S.C. § 2922a, DOD can enter 
into contracts for up to 30 years. Under 10 U.S.C. § 2809, DOD can 
enter into contracts for up to 32 years, excluding the period for 
construction; 
Selected legal authorities for approach[A]: 10 U.S.C. § 2410q; 
10 U.S.C. § 2922a; 10 U.S.C. § 2809. 

Financing approach: Enhanced-use lease (EUL)[B]; 
Summary of approach related to financing renewable energy projects: An 
enhanced-use lease is a lease that allows the military services to 
outlease available nonexcess real property that is not needed for the 
time for government use to the private sector in return for cash or in-
kind consideration. Enhanced-use leases have been used for a wide 
range of facility improvement projects, renovations, repair, or new 
acquisitions, to include renewable energy projects. The length of a 
contract for an enhanced-use lease is subject to certain conditions, 
but there is no firm time limit. We have previously reported that 
these leases are often entered into for long periods, such as 25-or 50-
year terms; 
Selected legal authorities for approach[A]: 10 U.S.C. § 2667. 

Financing approach: Convey utility system to a utility company; 
Summary of approach related to financing renewable energy projects: In 
this approach the secretary of a military department may convey 
existing utility systems owned by DOD to a utility company in exchange 
for compensation. One type of contemplated compensation is provision 
of power at reduced rates. Contract terms are limited to 10 years or, 
subject to certain conditions, up to 50 years; 
Selected legal authorities for approach[A]: 10 U.S.C. § 2688. 

Financing approach: Sell electricity to a utility; 
Summary of approach related to financing renewable energy projects: 
This approach involves the secretary of a military department selling 
certain kinds of electricity generated on a military installation to a 
utility (subject to certain requirements) and depositing the proceeds 
in the appropriation account available to the relevant military 
department for the supply of electrical energy. Those funds may be 
used (under certain conditions) to finance certain energy-related 
military construction projects; 
Selected legal authorities for approach[A]: 10 U.S.C. § 2916. 

Financing approach: Lease-to-own energy production facilities; 
Summary of approach related to financing renewable energy projects: 
This approach involves the secretary of a military department entering 
into an agreement with a private sector entity to "lease to own" 
certain facilities provided at the expense of the contractor on a 
military installation. At the end of the lease, title to the property 
would vest in the United States. This approach can be used for a 
variety of facilities, including energy production facilities. 
Contract terms may not exceed 32 years; 
Selected legal authorities for approach[A]: 10 U.S.C. § 2812. 

Source: GAO analysis of approaches and legal authorities. 

Note: We did not include in our analysis certain other approaches that 
could potentially be available to DOD for the financing of renewable 
energy projects, such as approaches that could only be employed in 
narrowly defined situations or that may not be useful departmentwide. 
For example we excluded 10 U.S.C. § 2686, which authorizes the 
secretary of a military department to sell or contract to sell certain 
specific utilities (including electrical power) to purchasers in the 
immediate vicinity of an activity of the relevant service under 
certain unusual circumstances (e.g., the utility is not otherwise 
available from a local source). 

[A] Many of these approaches may be authorized by several legal 
authorities used in concert, or independently authorized by multiple 
legal authorities. Our table includes a selection of authorities 
relevant to each approach, but is not necessarily exhaustive. 

[B] The military services refer to certain leases of real property 
undertaken pursuant to the authority in 10 U.S.C. § 2667 as "enhanced-
use leases." 

[End of table] 

Appendix III: Summary of Benefits and Drawbacks of Selected Financing 
Approaches for Renewable Energy Projects: 

Figure 1: Summary of Benefits of Selected Financing Approaches for 
Renewable Energy Projects Identified by Interviewed Officials at 
Military Service Headquarters and Selected Installations: 

[Refer to PDF for image: illustrated table]
   
Benefit: Contractor may be eligible for certain incentives that can 
help make a project more cost-effective; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Empty]. 
        
Benefit: Limited or no agency up-front capital is required, can 
finance project over time while getting benefit of the project 
immediately; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Check]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Check]. 

Benefit: Developer operates and maintains equipment or operations and 
maintenance can be added to contract; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Check]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Check]. 

Benefit: Known long-term electricity price allows service to better 
budget for energy costs; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Empty]. 

Benefit: Contractor guarantees energy savings; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Benefit: No additional private sector financing charges makes project 
cheaper for the government in the long term; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Check]; 
Energy Conservation Investment Program[A]: [Check]; 
Operation and maintenance appropriation: [Check]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Benefit: Installation or military service receives full savings from 
implementing the project immediately rather than after financing is 
repaid; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Check]; 
Energy Conservation Investment Program[A]: [Check]; 
Operation and maintenance appropriation: [Check]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Benefit: Funding is specifically for energy projects, so less 
competition than for other sources; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Check]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Benefit: Limited paperwork requirements to request funding; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Check]; 
Operation and maintenance appropriation: [Check]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Benefit: Generally the contract is for purchasing energy, so the 
government does not have to pay the contractor if the project does not 
produce energy, depending on the terms of the contract; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Check]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Empty]. 

Benefit: Contract is with the local utility, with which the 
installation already has an established relationship; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Source: GAO analysis of interviews with DOD officials. 

[A] For the purposes of our analysis, we considered benefits 
specifically mentioned for the Energy Conservation Investment Program 
separate from the benefits of annual military construction 
appropriations. 

[End of figure] 

Figure 2: Summary of Drawbacks or Risks of Selected Financing 
Approaches for Renewable Energy Projects Identified by Interviewed 
Officials at Military Service Headquarters and Selected Installations: 

[Refer to PDF for image: illustrated table] 

Drawback or risk: Projects are generally more costly to the government 
due to private financing costs; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Check]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Check]. 

Drawback or risk: Limited federal sector experience in implementing 
the approach; installation officials may not be familiar with approach; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Check]. 

Drawback or risk: Approach may not be available for all facilities or 
installations; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Check]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Check]. 

Drawback or risk: Cannot ordinarily leverage state tax incentives 
because project is owned by the federal government; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Check]; 
Energy Conservation Investment Program[A]: [Check]; 
Operation and maintenance appropriation: [Check]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Check]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Drawback or risk: Some key incentives that make projects financially 
viable are ending soon or public funding for such incentives is 
limited; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Check]. 

Drawback or risk: Installation is responsible for operation and 
maintenance of equipment, but personnel may not have needed expertise; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Check]; 
Energy Conservation Investment Program[A]: [Check]; 
Operation and maintenance appropriation: [Check]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Drawback or risk: Lengthy process to receive project approval and 
funding; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Check]; 
Energy Conservation Investment Program[A]: [Check]; 
Operation and maintenance appropriation: [Check]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Drawback or risk: Contracts are often complex, challenging, or time 
consuming to develop and implement; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Check]. 

Drawback or risk: Concerns with, or difficulties in, using approach 
specifically for renewable energy; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Check]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Check]. 

Drawback or risk: Projects require extensive or time-consuming 
analysis to develop; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Check]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Check]. 

Drawback or risk: Limited funding available and projects must compete 
for funding; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Check]; 
Energy Conservation Investment Program[A]: [Check]; 
Operation and maintenance appropriation: [Check]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Drawback or risk: Limits on total cost of project established in law, 
so approach can only be used to fund small projects that do not 
generate much renewable energy; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Check]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Empty]; 
Utility Energy Service Contract: [Empty]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Drawback or risk: Installation or military service does not receive 
full amount of savings from the project until the contractor is repaid; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Check]; 
Power purchase agreement: [Empty]; 
Enhanced-use lease: [Empty]. 

Drawback or risk: Termination of contract may require payment to the 
contractor; 
Up-front appropriations: 
Annual military construction appropriations[A]: [Empty]; 
Energy Conservation Investment Program[A]: [Empty]; 
Operation and maintenance appropriation: [Empty]; 
Alternative financing approaches: 
Energy Savings Performance Contract: [Check]; 
Utility Energy Service Contract: [Check]; 
Power purchase agreement: [Check]; 
Enhanced-use lease: [Check]; 

Source: GAO analysis of interviews with DOD officials. 

[A] For the purposes of our analysis, we considered drawbacks or risks 
specifically mentioned for the Energy Conservation Investment Program 
separate from the drawbacks or risks of annual military construction 
appropriations. 

[End of figure] 

[End of section] 

Appendix IV: Comments from the Department of Defense: 

Office of The Under Secretary Of Defense: 
Acquisition, Technology and Logistics: 
3000 Defense Pentagon: 
Washington, DC 20301-3000 

March 23, 2012: 

Mr. Brian J. Lepore: 
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Mr. Lepore: 

This is the Department of Defense (DoD) response to the GAO draft 
report, GAO-12-401, "Renewable Energy Project Financing: Improved 
Guidance and Information Sharing Needed for DOD Project-Level 
Officials," dated April 2012 (GAO Code 351614). 

Detailed comments on the report recommendations are enclosed. 

Sincerely, 

Signed by: 

Joseph K. Sikes: 
Director, Facilities Energy and Privatization: 

Enclosure: As stated. 

[End of letter] 

GAO Draft Report Dated APRIL 2012: 
GAO-12-401 (GAO CODE 351614): 

"Renewable Energy Project Financing: Improved Guidance And
Information Sharing Needed For DOD Project-Level Officials" 

Department Of Defense Comments To The GAO Recommendations: 

Recommendation 1: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Acquisition, Technology and 
Logistics), the Deputy Under Secretary of Defense (Installations and 
Environment), and the military services to issue comprehensive 
guidance that establishes and clearly describes the military services' 
processes to ensure that business case analyses are completed and that 
these analyses fully consider the costs and benefits of different 
financing approaches for renewable energy projects. 

DoD Response: Partially Concur. The Department recognizes the 
importance of establishing credible and effective guidance for energy 
project business case analyses for the military services. However, the 
Department does not believe that a business case analysis must include 
an analysis of all potential financing mechanisms. Certain authorities 
and their associated financing strategies may not apply to certain 
renewable energy projects and an in-depth analysis of their economic 
benefit would be unnecessary. 

Recommendation 2: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Acquisition, Technology and 
Logistics) and the Deputy Under Secretary of Defense (Installations 
and Environment) to develop overarching guidance about the use of 
available financing approaches for financing renewable energy and 
direct the military services to update their guidance accordingly At a 
minimum, this projects guidance should include the requirements and 
restrictions of the underlying authorities and any DOD-specific 
guidelines for using up-front appropriations and alternative financing 
approaches for renewable energy projects. 

DoD Response: Concur. The Department understands the importance of 
informing relevant stakeholders of renewable energy project financing 
authorities and the benefits of their usage. The Department expects to 
develop this comprehensive guidance that will include specific 
authority requirements and restrictions and will discuss the variety 
of approaches and strategies for financing renewable energy projects. 

Recommendation 3: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Acquisition, Technology and 
Logistics) and the Deputy Under Secretary of Defense (Installations 
and Environment) to develop a formalized communications process, such 
as a shared website or other appropriate approach, that will enable 
officials at military installations to have timely access on an 
ongoing basis to information related to financing renewable energy 
projects on other installations, including best practices and lessons
that other installations have learned from their experiences in 
financing their renewable energy projects. 

DoD Response: Concur. The Department agrees that it is necessary to 
establish a more formalized communications method regarding the 
financing of renewable energy projects. This communication will 
enhance our ability to leverage best practices among our installations 
and personnel. The Office of the Deputy Under Secretary of Defense for 
Installations and Environment will be initiating an alternative 
financing energy working group with representatives from around the 
Department for this purpose. 

[End of section] 

Appendix V: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Brian J. Lepore, (202) 512-4523 or leporeb@gao.gov; or Frank Rusco, 
(202) 512-3841 or ruscof@gao.gov: 

Staff Acknowledgments: 

In addition to the contacts named above, Ernie Hazera, Assistant 
Director; Harold Reich, Assistant Director; Karyn Angulo; Hilary 
Benedict; Michael J. Hanson; Carol Henn; Charles Perdue; Mike Silver; 
Erik Wilkins-McKee; and Michael Willems made key contributions to this 
report. 

[End of section] 

Related GAO Products: 

Renewable Energy: Federal Agencies Implement Hundreds of Initiatives. 
[hyperlink, http://www.gao.gov/products/GAO-12-260]. Washington, D.C.: 
February 27, 2012. 

Defense Infrastructure: DOD Did Not Fully Address the Supplemental 
Reporting Requirements in Its Energy Management Report. [hyperlink, 
http://www.gao.gov/products/GAO-12-336R]. Washington, D.C.: January 31, 
2012. 

Defense Infrastructure: Department of Defense Renewable Energy 
Initiatives. [hyperlink, http://www.gao.gov/products/GAO-10-681R]. 
Washington, D.C.: April 26, 2010. 

Defense Infrastructure: DOD Needs to Take Actions to Address 
Challenges in Meeting Federal Renewable Energy Goals. [hyperlink, 
http://www.gao.gov/products/GAO-10-104]. Washington, D.C.: December 18, 
2009. 

Advanced Energy Technologies: Budget Trends and Challenges for DOE's 
Energy R&D Program. [hyperlink, http://www.gao.gov/products/GAO-08-556T]. 
Washington, D.C.: March 5, 2008. 

Advanced Energy Technologies: Key Challenges to Their Development and 
Deployment. [hyperlink, http://www.gao.gov/products/GAO-07-550T]. 
Washington, D.C.: February 28, 2007. 

Department of Energy: Key Challenges Remain for Developing and 
Deploying Advanced Energy Technologies to Meet Future Needs. 
[hyperlink, http://www.gao.gov/products/GAO-07-106]. Washington, D.C.: 
December 20, 2006. 

Renewable Energy: Increased Geothermal Development Will Depend on 
Overcoming Many Challenges. [hyperlink, http://www.gao.gov/products/GAO-06-629]. 
Washington, D.C.: May 24, 2006. 

Energy Savings: Performance Contracts Offer Benefits, but Vigilance Is 
Needed to Protect Government Interests. [hyperlink, 
http://www.gao.gov/products/GAO-05-340]. Washington, D.C.: June 22, 2005. 

Meeting Energy Demand in the 21st Century: Many Challenges and Key 
Questions. [hyperlink, http://www.gao.gov/products/GAO-05-414T]. 
Washington, D.C.: March 16, 2005. 

Capital Financing: Partnerships and Energy Savings Performance 
Contracts Raise Budgeting and Monitoring Concerns. [hyperlink, 
http://www.gao.gov/products/GAO-05-55]. Washington, D.C.: December 16, 2004. 

Budget Issues: Alternative Approaches to Finance Federal Capital. 
[hyperlink, http://www.gao.gov/products/GAO-03-1011]. Washington, D.C.: 
August 21, 2003. 

[End of section] 

Footnotes: 

[1] Department of Defense, Office of the Deputy Under Secretary of 
Defense (Installations and Environment), Department of Defense Annual 
Energy Management Report Fiscal Year 2010 (Washington, D.C.: July 
2011). 

[2] Energy security for DOD means having assured access to reliable 
supplies of energy and the ability to protect and deliver sufficient 
energy to meet operational needs. We have previously reported that 
because certain renewable energy technologies, such as solar and wind, 
provide intermittent power, they require expensive batteries to store 
the energy they produce or supplementary, conventional generation to 
ensure uninterrupted power. GAO, Defense Infrastructure: DOD Needs to 
Take Actions to Address Challenges in Meeting Federal Renewable Energy 
Goals, [hyperlink, http://www.gao.gov/products/GAO-10-104] (Washington, 
D.C.: Dec. 18, 2009). 

[3] U.S. Energy Information Administration, Electric Power Annual 2010 
(December 2011). In 2010, nuclear power was used to generate about 20 
percent of the country's electricity, with hydropower and other 
renewable sources comprising about 10 percent. 

[4] [hyperlink, http://www.gao.gov/products/GAO-10-104]. 

[5] GAO, Defense Infrastructure: Department of Defense Renewable 
Energy Initiatives, [hyperlink, http://www.gao.gov/products/GAO-10-681R] 
(Washington, D.C.: Apr. 26, 2010). 

[6] H.R. Rep. No. 112-78. 

[7] Throughout this report, we use the term "financing approaches" to 
generically refer to projects funded either through up-front 
appropriations or alternative financing approaches. We define 
appropriated funding as "up-front" when DOD has been appropriated 
sufficient funds to pay for the full cost of the renewable energy 
project before a commitment is made for the project, as opposed to 
appropriated funds DOD uses to make payments on capital borrowed 
through certain types of alternative financing approaches. We define 
"alternative financing" as ways of financing capital assets other than 
through full, up-front appropriations. We have previously reported 
that full, up-front appropriations are the best way to maintain 
governmentwide fiscal control. See GAO, Budget Issues: Alternative 
Approaches to Finance Federal Capital, [hyperlink, 
http://www.gao.gov/products/GAO-03-1011] (Washington, D.C.: Aug. 21, 2003). 

[8] For the purposes of this review, we defined the phrase "good value 
and advantageous contract terms" to mean an acquisition outcome that 
provides an overall benefit to the government. 

[9] For the purposes of this review, we focused on the military 
services' renewable energy efforts--which comprise the vast majority 
of DOD's renewable energy projects--and excluded the defense agencies 
and other defense organizations from our review since they comprise 
only a small subset of the total number of projects. Additionally, we 
focused on DOD's efforts to generate renewable energy and excluded 
from our review nuclear energy and efforts that only addressed energy 
efficiency or conservation. For more information on the scope of our 
review, including the definition of renewable energy, see appendix I. 

[10] U.S. Army, Army Energy Security Implementation Strategy 
(Washington D.C.: Jan. 13, 2009). 

[11] U.S. Air Force, Air Force Energy Plan (Washington, D.C.: 2010). 

[12] The Army's six net zero energy locations are Fort Hunter Liggett, 
Parks Reserve Forces Training Area, and Sierra Army Depot, California; 
Fort Detrick, Maryland; West Point, New York; and Kwajaelin Atoll, 
Republic of the Marshall Islands. The Army's two integrated net zero 
locations are Fort Bliss, Texas, and Fort Carson, Colorado. Integrated 
net zero installations are comprised of three components: net zero 
energy, net zero water, and net zero waste. A net zero energy 
installation produces as much energy on site as it consumes in a year. 
A net zero water installation limits the consumption of freshwater 
resources and returns water back to the same watershed so as not to 
deplete the groundwater and surface water resources of that region in 
quantity and quality over the course of a year. A net zero waste 
installation reduces, reuses, and recovers waste streams, converting 
them to resource values with zero landfill over the course of a year. 

[13] To put this in context, according to the Department of Energy's 
Energy Information Administration, the average American household used 
nearly 11,500-kilowatt hours (or 11.5-megawatt hours) of electricity 
in 2010. 

[14] GAO, Capital Financing: Partnerships and Energy Savings 
Performance Contracts Raise Budgeting and Monitoring Concerns, [hyperlink, 
http://www.gao.gov/products/GAO-05-55] (Washington, D.C.: Dec. 16, 2004). 

[15] GAO, Defense Infrastructure: The Enhanced Use Lease Program 
Requires Management Attention, [hyperlink, 
http://www.gao.gov/products/GAO-11-574] (Washington, D.C.: June 30, 
2011). The statutory provision requiring that the leased property not 
be needed for the time for public use was added in 2008, after many of 
the leases we reviewed in that report had been signed. 

[16] 10 U.S.C. § 2688. 

[17] 10 U.S.C. § 2916. 

[18] Department of Defense, Department of Defense Strategic Management 
Plan FY 2012-FY2013 (Sept. 20, 2011). 

[19] Department of Defense, Department of Defense Annual Energy 
Management Report: Fiscal Year 2010 (July 2011). 

[20] GAO, GAO Cost Estimating and Assessment Guide: Best Practices for 
Developing and Managing Capital Program Costs, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C.: March 2009). 

[21] Office of the Deputy Assistant Secretary of the Army (Cost and 
Economics), U.S. Army Cost Benefit Analysis Guide (Apr. 8, 2011); 
Naval Facilities Engineering Command, Economic Analysis Handbook 
(October 1993); Air Force Instruction 65-509, Business Case Analysis 
(Sept. 19, 2008) and Air Force Manual 65-510, Business Case Analysis 
Procedures (Sept. 22, 2008). 

[22] Department of Defense Inspector General, American Recovery and 
Reinvestment Act Wind Turbine Projects at Long-Range Radar Sites in 
Alaska Were Not Adequately Planned, D-2011-116 (Arlington, Va., Sept. 
30, 2011); The Department of the Navy Spent Recovery Act Funds on 
Photovoltaic Projects That Were Not Cost-Effective, D-2011-106 
(Arlington, Va., Sept. 22, 2011); and American Recovery and 
Reinvestment Act Project-Solar and Lighting at Naval Station Norfolk, 
Virginia, D-2011-045 (Feb. 25, 2011). Naval Audit Service, American 
Recovery and Reinvestment Act of 2009 - Photovoltaic Projects at 
Hampton Roads, VA, and Navy Installations in Florida, Texas, and 
Mississippi, N2011-0060 (Washington, D.C.: Sept. 22, 2011). 

[23] Pub. Law No. 112-81 § 2822 (2011). 

[24] Energy security is considered in the Navy's energy-return-on-
investment tool in that the tool includes information on the project's 
ability to provide reliable energy to critical infrastructure in the 
project's overall score. 

[25] The DOD Inspector General reviewed this project and found that 
the U.S. Air Force Academy incorrectly categorized all costs of the 
project as a utility company connection charge and incorrectly 
exempted the project from a subpart of the Federal Acquisition 
Regulation, but found that the Academy properly justified the project. 
Department of Defense Inspector General, U.S. Air Force Academy Could 
Have Significantly Improved Planning, Funding, and Initial Execution 
of the American Recovery and Reinvestment Act Solar Project, D-2011-
071 (Arlington, Va., June 16, 2011). 

[26] [hyperlink, http://www.gao.gov/products/GAO-05-55]. 

[27] Department of Defense Inspector General, The Department of the 
Navy Spent Recovery Act Funds on Photovoltaic Projects That Were Not 
Cost-Effective, D-2011-106 (Arlington, Va., Sept. 22, 2011). According 
to an official from the office of the DOD Inspector General, at the 
time of our review the Navy and Marine Corps had not yet implemented 
this recommendation. 

[28] Department of Defense Instruction 4170.11, Installation Energy 
Management (Dec. 11, 2009). 

[29] Assistant Deputy Commandant for Installations and Logistics 
(Facilities) Memorandum, Roofing System Design and Construction for 
MILCON Building Projects and Major FSRM Roof Replacements (Oct. 16, 
2009). 

[30] In the United States, renewable energy production essentially 
creates two products: the energy itself and an associated commodity, 
called a renewable energy certificate, which represents a certain 
amount of energy generated using a renewable resource. Renewable 
energy certificates are bought and sold in a fashion similar to stocks 
and bonds. 

[31] 10 U.S.C. § 2922a. 

[32] Department of Energy officials explained that they typically 
tailor their on-site training to the needs of the individual agency or 
site. 

[33] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[34] GAO, Renewable Energy: Federal Agencies Implement Hundreds of 
Initiatives, [hyperlink, http://www.gao.gov/products/GAO-12-260] 
(Washington, D.C.: Feb. 27, 2012). See appendix I for information 
on data collection for the original list. 

[35] Integrated net zero installations are comprised of three 
components: net zero energy, net zero water, and net zero waste. A net 
zero energy installation produces as much energy on site as it 
consumes in a year. A net zero water installation limits the 
consumption of freshwater resources and returns water back to the same 
watershed so as not to deplete the groundwater and surface water 
resources of that region in quantity and quality over the course of a 
year. A net zero waste installation reduces, reuses, and recovers 
waste streams, converting them to resource values with zero landfill 
over the course of a year. 

[End of section] 

GAO’s Mission: 

The Government Accountability Office, the audit, evaluation, and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the 
performance and accountability of the federal government for the 
American people. GAO examines the use of public funds; evaluates 
federal programs and policies; and provides analyses, recommendations, 
and other assistance to help Congress make informed oversight, policy, 
and funding decisions. GAO’s commitment to good government is 
reflected in its core values of accountability, integrity, and 
reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO’s website [hyperlink, http://www.gao.gov]. Each 
weekday afternoon, GAO posts on its website newly released reports, 
testimony, and correspondence. To have GAO e-mail you a list of newly 
posted products, go to [hyperlink, http://www.gao.gov] and select “E-
mail Updates.” 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of 
production and distribution and depends on the number of pages in the 
publication and whether the publication is printed in color or black 
and white. Pricing and ordering information is posted on GAO’s 
website, [hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 
MasterCard, Visa, check, or money order. Call for additional 
information. 

Connect with GAO: 

Connect with GAO on facebook, flickr, twitter, and YouTube.
Subscribe to our RSS Feeds or E mail Updates. Listen to our Podcasts.
Visit GAO on the web at [hyperlink, http://www.gao.gov]. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 
Website: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]; 
E-mail: fraudnet@gao.gov; 
Automated answering system: (800) 424-5454 or (202) 512-7470. 

Congressional Relations: 

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-4400
U.S. Government Accountability Office, 441 G Street NW, Room 7125
Washington, DC 20548. 

Public Affairs: 
Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149 
Washington, DC 20548.