COMMONWEALTH OF KENTUCKY

COMMONWEALTH OF KENTUCKY Request for Proposal For Luther Luckett Correctional Complex Roederer Correctional Complex Additional Locations for Lighting Department of Corrections Energy Savings Performance Contract Solicitation No. RFP-785-1700000020 RFP-24-17 Issued by The Finance and Administration Cabinet On Behalf Of Department of Corrections Kelly Hawkins, CPPB, ESPC Contract Officer Division of Engineering & Contract Administration 403 Wapping Street, 1 st Floor Frankfort, Kentucky 40601 Tel: 502 / 564-4414 Fax: 502 / 564-6822 Email: Kelly.Hawkins@ky.gov 1

Table of Contents Selection Committee Members Agency Contacts Introduction General Results Desired Required Systems and Services Capabilities Overview of Terms and Conditions Contract Term Guarantee Financial Review O & M Savings Technical Energy Audit Procurement Process Site Visits Submission of Written Proposals Proposal Review and Selection of Finalists ESCO Interviews and Ranking Right to Reject Based on Oral Presentations/Interview Preliminary Contract Negotiations Energy Consulting Services/Measurement and Verification Services Project Phases Phase A - Technical Energy Audit and Project Development Phase B - Advance Project Development Phase C - Development of Guaranteed Energy Savings Performance Contract Phase D - Project Implementation Post Phase D - Measurement and Verification Overview of Attachments Attachment A: Proposed Project Schedule Attachment B: Evaluation Criteria Attachment C: Contract Terms and Conditions Attachment D: ESCO Response Attachment E-1: Technical Facility Profile Attachment F: Required Affidavits (To be included with your submittals) 2

FILE NO: TO BE DECIDED REQUESTED BY: Department of Corrections RESPONSE DEADLINE (PROPOSALS DUE): 8/23/2016, 3:00 PM SELECTION COMMITTEE SHORTLIST MEETING: To Be Announced INTERVIEWS: To Be Announced Selection Committee Members for this project: Finance and Administration No. 1: Jhan Gevedon Finance and Administration No. 2: Tim Spencer User Agency No. 1: Phillip Buchy User Agency No. 2: Robert Gimmel User Agency No. 3: Tony Waddell Non-voting Selection Committee Member(s) Division of Engineering & Contract Administration No. 1: Kelly Hawkins, CPPB, ESPC Contracting Officer Division of Facility Efficiency No. 2: Joe Wolford, ESPC Coordinator The ESPC Coordinator, Joe Wolford, will not serve as a voting member of the selection committee. The coordinator shall serve to answer questions regarding the RFP and serve as selection Committee Chair Person with no voting rights. Agency Contacts: Gunvant Shah, Corrections, (502) 564-2094 Alan Watt, Roederer Correctional Complex, (502) 724-0417 Chris Gore, Luther Luckett Correctional Complex, (502) 356-5669 The ESPC Policy Manual may be viewed at the following link: http://finance.ky.gov/services/stateplan/pages/constructionformsandinformation.aspx INTRODUCTION Finance and Administration Cabinet (hereinafter referred to as Owner) seeks specific proposals from interested Energy Services Companies (ESCOs) that are capable of providing comprehensive energy and water management as well as related capital improvement services for selected facilities owned by the Department of Corrections, hereinafter referred to as the Agency. A description of these facilities is provided in Attachment E (Facility Profile) to this RFP. 3

GENERAL RESULTS DESIRED Owner seeks a broad range of services and capital improvements in order to reduce the consumption and related costs of energy and water use in the facilities addressed in Attachment E of this RFP (Facility Profile). These services and capital improvements will be provided and financed through a performance-based contract under which the Owner: a) incurs no initial capital costs b) achieves significant long-term savings, c) achieves a guarantee for energy savings, water savings and operations and maintenance (O&M) savings (O&M savings includes materials and labor savings and will only be applicable at the option of Owner), d) obtains consistent levels of occupant comfort and building functionality, and e) captures ancillary benefits that may accrue as a direct result of such energy-related services and capital improvements, etc. Owner seeks to maximize energy savings and related improvements. Within the framework of available financing, therefore, ESCOs are encouraged to advocate the installation and implementation of improvements providing the greatest possible energy, water, and O&M savings. Essential services and improvements sought are those that will reduce energy and water consumption in Agency facilities (see Attachment E), upgrade capital energy-related equipment, improve building operations and maintenance, save costs through fuel switching or improved demand management, and aid in meeting environmental management responsibilities. REQUIRED SYSTEMS AND SERVICES CAPABILITIES An interested ESCO must have the demonstrated technical and managerial capabilities to address a broad range of building energy and water systems, provide a comprehensive set of energy and water services, and capture the value of any directly related ancillary benefits. Energy systems include, but are not limited to, heating, ventilating and air conditioning (HVAC) equipment, energy management and control systems, lighting systems, domestic hot water systems, the building envelope and other energy using systems not listed here, and renewable energy systems. Water systems include, but are not limited to, devices which reduce water consumption and sewage services such as automatic controls, low-flow sink aerators, showers and toilets, cooling tower modifications, and irrigation system controls or modifications. Energy and water services include, but are not limited to, a technical energy and water audit; the design, acquisition, installation, modification, and commissioning of new and/or existing energy systems. Additional services may include continuing operations and maintenance for all improvements and/or training of Owner s staff on routine maintenance and operation of systems as well as training of occupants. Measurement and verification (per IPMVP) services include appropriate measurement and reporting of the performance and savings achieved from improvements. Ancillary benefits may include, but are not limited to hazardous materials disposal or recycling, improved occupant comfort or building functionality, improved indoor air quality, and any unique benefits that may be provided by regular technology upgrades or advanced proprietary technology. OVERVIEW OF TERMS AND CONDITIONS Contract Term. The contract may be subject to annual appropriations. The duration of the contract will be mutually determined between the ESCO and the Owner based on financial factors so that a positive net cash flow is realized by the Owner. The recommended term for Energy Savings Performance Contracting is twelve (12) years. The term shall include the cost of financing the project. The term may be extended when the aggregate weighted life expectancy of the equipment installed under the project can support a longer term. In no case can the term extend beyond the policy for term limit as determined by the Secretary of the United States Treasury for a QECB as posted on the Treasury Direct website at http://www.treasurydirect.gov/govt/rates/irs/rates_qtcb.htm Guarantee. Improvements and services must result in guaranteed minimum annual energy and water savings option, as well as guaranteed minimum levels of occupant comfort and operations and maintenance 4

and/or any ancillary services. The combined savings achieved by the installed projects and Owner contribution (if any) must be sufficient to cover all project costs including debt service and contractor fees, maintenance, monitoring and other services, for the duration of the contract. Payments must be linked to actual measured or agreed-to post-retrofit improvements as compared to building performance before the installation of any energy systems and service improvements. All savings projected under the Guaranteed Energy Savings Performance contract shall be guaranteed to the Commonwealth of Kentucky Financial Review. Detailed financial projections of project benefits are dependent upon the scope of technical retrofits finally selected and installed. It is premature to place a major emphasis on projected financial benefits prior to the completion of a detailed engineering study and negotiation of the project structure. Respondents are encouraged to carefully review the evaluation criteria in the RFP under Financial Approach and to respond as fully as possible. In order to provide the best financing option to the Commonwealth of Kentucky, this contract will be awarded under Senate Bill 61 (2002GA) See: http://www.lrc.state.ky.us/kar/200/005/350.htm This project may be funded by the Kentucky Green Bank O&M savings. Any O&M cost savings related to maintenance and operation of the facilities will be rigorously reviewed and, if agreed to, will be limited to those that can be thoroughly documented and approved by Owner. Technical Energy Audit. The technical audit must include estimates of savings for each measure. Also, the cost estimate for each measure must include an estimate of all costs including design, engineering, installation, maintenance, repairs and debt services. PROCUREMENT PROCESS The evaluation and selection of an ESCO (Energy Services Company), and the negotiation and procurement of services will proceed as follows: Site Visits. Prior to the submission of proposals, Owner/Using Agency will arrange a walk-through and/or inspection tour of the buildings described in Attachment E, to this RFP. All ESCOs submitting proposals may attend this walk-through, although the walk-through is not mandatory. All ESCOs are encouraged to carefully review the facility profile information contained in Attachment E and to visit the facility in order to enhance their understanding of existing building conditions and opportunities. To make arrangements for additional site visits contact the following person. Tours may be limited and conducted in a group. Gunvant Shah, (502) 564-2094 Submission of Written Proposals. ESCOs that wish to participate must submit responses as directed in the Attachment: ESCO Response. All submissions become the property of Owner. Extra copies may be returned to the ESCO. All costs associated with submission preparation will be borne by the submitting ESCO. Responses must be prepared as described in the attachment. Proposal Review and Selection of Finalists. Owner will establish a Selection Committee to review and evaluate the written responses to this RFP. Owner reserves the right to reject any or all submissions and to waive informalities and minor irregularities in submissions received and to accept any submissions if deemed in the best interest of Owner to do so. Owner will select a maximum of three (3) ESCOs for further competition (Interviews)(Oral Presentations). If three or less ESCOs submit responses to this RFP, all ESCOs will make oral presentations and be interviewed. In the event of a scoring tie, each scoring selection committee member will have 1(one) vote to break the tie. If the tie has not been broken after selection committee members have voted, the tie will be broken by a toss of the coin. ESCO Interviews and Ranking. Each of the selected ESCOs will participate in a detailed oral interview to answer questions from the Selection Committee and more fully discuss how its approach to this project satisfies the evaluation criteria set forth in this RFP. All persons with major responsibility for the project s 5

technical design, management and contract negotiation are encouraged to be present at the interview. Each oral interview may be tape-recorded. A more complete description of the interview process and format will be sent to each of the selected ESCOs. Based on results from both the written responses to the RFP and the oral interviews, the Selection Committee Team will select the highest evaluated ESCO such that contract negotiations will proceed. Right to Reject Based on Oral Presentation/Interview The Commonwealth reserves the right to reject any or all proposals in whole or in part based on the Oral Presentation/Interview. Preliminary Contract Negotiations. Owner has the right to reject the highest evaluated ESCO if costs are not determined reasonable. In that event, Owner has the right to begin negotiations with the second highest evaluated ESCO. Energy Consulting Services/Measurement and Verification Services The agency at their option may choose to utilize non professional consulting services to provide 3 rd party review of technical audits, provide measurement and verification services, and commissioning. Energy Service Companies (ESCO s) shall provide with their proposal the certifications of their respective firms to perform energy consulting services. ESCO s shall have a current Kentucky Engineering Permit. Project Phases Phase A-Technical Energy Audit and Project Development. The highest evaluated ESCO will perform a Technical Energy Audit and develop the scope of the Guaranteed Energy Savings Performance project. At the end of this Phase the ESCO will report their findings and make a recommendation for the scope of the project. The Owner will select the work to be done. Cost and payback information will only be estimated values and used to aid in the selection of work to be done. If an acceptable technical energy audit and project has not been developed within 75 days from the date of ESCO selection, negotiations with the next-ranked ESCO may be initiated. The cost for this Technical Energy Audit will not be reimbursed in the event a contract cannot be agreed on. Phase B-Advanced Project Development. This phase of the work is where the ESCO further investigates the work selected by the Owner and completes the cost analysis in detail. As part of Advanced Project Development (Phase B) the ESCO shall solicit multiple competitive bids for each Energy Conservation Measurement (ECM) proposed. A copy of the solicitation and bids for each ECM shall be submitted to the Division of Facility Efficiency prior to contract award. This shall include quotes for equipment, fixtures, installation, and design, as applicable to each energy conservation measure proposed. The information at this point will be detailed enough that a contract can be developed. Failure to complete this phase within a mutually agreed upon duration shall be terms for canceling further negotiations with the ESCO selected for the project. Prior to Phase C, the FAC shall administer the procurement for financing the project on behalf of the Using Agency. FAC will obtain a rate lock for the project to be used in the final cash flow for the project. The rate lock is available for sixty (60) days. Phase C-Development of Guaranteed Energy Savings Performance Contract. Following successful completion of the technical energy audit, Owner intends to negotiate a performance contract to implement the project. Owner has the option to decline any or all performance contract agreements. The ESCO will complete working drawings, and develop a detailed project schedule including construction time. These will be submitted to the Department of Corrections and Division of Facility Efficiency for approval. The ESCO will submit a complete set of contract exhibits/office of Financial Management (OFM) review documents within fifteen (15) days for the date the rate lock was obtained in Phase B. Phase D-Project Implementation. Actual contracted work is being done and monitored by the ESCO, Department of Corrections and Division of Facility Efficiency. Project meetings for the duration of the construction period will be conducted by the ESCO. Post Phase D- Measurement and Verification. Savings are verified. Payments are disbursed per the terms of the contract. When the Using Agency and FAC has determined it is in the best interest of the Commonwealth, the Commonwealth Energy Management and Controls System (CEMCS) may be used as an alternative method for measurement and verification (M&V). This may be used in lieu of third party M&V or M&V provided by the ESCO. Utilization of CEMCS M&V does shall not affect the requirement of the ESCO to guarantee the savings for the term of the contract. 6

OVERVIEW OF ATTACHMENTS To aid companies in their response to this request the following items are attached: Attachment A: Attachment B: Attachment C: Attachment D: Attachment E: Proposed Project Schedule Evaluation Criteria Contract Terms and Conditions ESCO Response Technical Facility Profile(s) For Information Purposes Only The ESCO will be responsible for verification of all information contained in the Technical Facility Profile. 7

ATTACHMENT A: PROPOSED PROJECT SCHEDULE The following schedule is the proposed schedule, and may change during the project. ACTIVITY DATE Site Visit/Walk Through: Luther Luckett Correctional Complex Dawkins Road Box 6 LaGrange, KY 40031 8/4/2016, 9:00 AM ET Roederer Correctional Complex P O Box 69 LaGrange, KY 40031 Proposals Due Proposal Review and Selection of Finalists ESCO Interviews and Ranking Notice of Award to top-ranked ESCO Begin Project Phases (A, B, C, D) 8/23/2016, 3:00 PM To Be Announced To Be Announced To Be Announced Within 15 days from Notice of Award 8

ATTACHMENT B: EVALUATION CRITERIA The criteria listed below will be used in the evaluation of written submissions of ESCO proposals and as needed by the Selection Committee during oral interviews, as appropriate. These criteria will be applied and interpreted solely at the discretion of Owner. Proposals should include all necessary information that is pertinent to these evaluation criteria. Additional information required for proper assessment of proposals may be requested from the ESCO at the discretion of Owner. The Selection Committee recognizes that it is premature, prior to the completion of a detailed engineering study and negotiation of the project structure, to place a major emphasis on projected financial benefits. Therefore, Owner will place the most emphasis on qualifications and will place less emphasis on the sample audit or on initial estimated savings. The criteria are not ranked in order of importance. 1. Project Management (Scoring weight: 30) A. Responsiveness to Goals. Responsiveness to the specific goals identified in the RFP and attachments. B. Comprehensiveness of Services. Comprehensiveness of management, maintenance, and monitoring services offered. C. Benefits of Services. Specific benefits to Agency of proposed services. D. Project Management Interface. Ability to interface ESCO s project management with Owner s project management. E. Coordination of Construction. Demonstrated ability to coordinate project construction with Owner s project team, local utilities, subcontractors, equipment suppliers, facility personnel and occupants. ESCO will give a high priority to the occupant hours of operation and preference of duration of interruption, if any. F. Construction Management. Ability to effectively manage construction, repairs, regular service and emergencies. G. Training Provisions. Quality of provisions for training Agency's facility staff and occupants. H. Assignment of Responsibility. Clear assignment of responsibility for various project tasks to specific individuals. I. Implementing Project Schedule. Ability to complete all phases of the project on schedule, with minimal disruption to Agency's mission and facilities. 2. Technical Approach (Scoring Weight: 40) A. Understanding of Conditions. Understanding of the existing building conditions, systems, operations and schedules. B. Technical Qualifications. Qualifications and relevant experience of the technical design staff. C. Technical Approach. Comprehensiveness and clarity of the technical approach to this project based on improvements likely to be included. Quality of conceptual design presented in oral interview. D. Responsiveness of Strategies. Approach to adapting control strategies, equipment, and 9

maintenance practices in response to changes in utility rates, technology, and building conditions in order to enhance project performance. E. Experience of Key Personnel. Number of past projects completed by the person(s) responsible for this project s technical design that include technical measures proposed for this project. F. Quality of Sample Audit. Quality of a sample audit for a similar type of facility completed by the person(s) responsible for project technical design. G. Baseline Calculation Methodologies. Reasonableness of the typical baseline energy and water use calculation methodology. H. Approach to Maintenance Contracts. Approach to maintenance contracts, including required length and relationship to performance guarantee. I. Extent of Owner Involvement. Willingness to allow Owner s staff to perform installation or maintenance on equipment. J. Past Project Performance. Documented energy savings of previous projects managed by the ESCO. K. Reference Checks. Reliability of equipment performance of ESCO's past performance contracting projects, based on reference checks. 3. Financial Approach (Scoring Weight 20) A. Financial Soundness. Financial soundness and stability of the ESCO. Completeness and strength (financial viability) of most recent annual financial statements. B. Performance Guarantee. Terms of the guarantee of the project s financial performance. C. Insurance Capability. Provide documentation that your firm can comply with the minimum insurance requirements for this project. D. Measurement and Verification. Clarity of sample measurement and verification report. E. Pricing Approach. Approach and experience in providing desired pricing methodology. a. Identify the percentage of the savings generated from this project you (ESCo) would commit to project implementation. Project implementation is defined as labor, material, and equipment used for installation of the energy/utility conservation measures (ECM s). The percentage associated with this commitment will/may be used in contract negotiations. Owner s contingency should be included here. b. Identify ESCo s audit cost, engineering, cost, project development costs, project management (during the implementation) costs, OHP, and other costs not directly used for project implementation. ESCo s contingency should be included. c. Identify the percentage of savings you would normally expect to be used for post implementation services. These services would include measurement and verification, training, and other support services. The total percentage assigned to part a, b, c. above shall total 100%. Note: Pricing methodology and cost markups will be evaluated during ESCO selection (see Procurement Process of this RFP). 10

4. Legal Approach (Scoring Weight: 10) A. Adjustments to Baseline. Contractual provisions to accommodate changes in building energy use regarding occupancy, operating schedule, weather, etc., including adjustments to the energy use baseline. B. Contract Flexibility. Flexibility of contract to accommodate needs of Owner/Agency. C. Early Termination Provisions. The quality of provisions for early termination of the contract at the initiative of either party. 5. Existing Workload vs. Capacity (Scoring Weight: 20) A. Current ESPC Projects in Progress. Projects that your firm will be actively working during the time frame for this project. B. Manpower/ Resource Availability. Identify the personnel and resources that will be committed to this project. Identify all subcontractors that will be used for design services, management services, etc. C. Ability to Complete the Project. Demonstrate ability to leverage the needed resources to implement the project on schedule. 6. Responsiveness to RFP (Scoring Weight: 20) Completeness of all sections of the RFP, concise response to the RFP, organization of the response to the RFP, submission of extraneous information not required by the RFP. 7. Oral Presentations/Interviews (Scoring Weight: 60) Project management team. (30) Response to questions. (20) Presentation. (10) 11

ATTACHMENT C: CONTRACT TERMS AND CONDITIONS The minimum conditions Owner will accept from the selected ESCO are described below. This section defines the scope of services related to the technical requirements that will be included in any final contract. It also defines the key contractual provisions. 1. Scope Of Services (Technical Requirements) The Scope of Services must be included in any performance contract Owner enters into and must include the following items at a minimum: A. Technical Audit. The ESCO's proposed contract terms must include the performance and presentation of results from a detailed technical audit of acceptable quality to Owner. The minimum annual energy, water and O&M cost savings and financing period will be negotiated. The technical audit must include estimates of savings for each measure. Also, the cost estimate for each measure must include an estimate of all costs including design, engineering, installation, maintenance, repairs and debt services. ESCO will use current market rates for this phase as applicable for ESPC financing. B. Standards of Comfort. Specific standards of comfort shall be stated in the Contract Documents and shall meet minimum established industry standards. The ESCO will be responsible for maintaining the levels of comfort for each building as specified in the RFP or in any final agreement. Persistent failure to maintain the defined climate and lighting conditions will constitute a default. C. Professional Engineer Involvement. A registered professional engineer must supervise, review and approve design work done under this contract. The engineer may be an employee of the ESCO and must be registered in the state of Kentucky. D. Guaranteed Savings. Owner requires a minimum annual guaranteed level of combined savings and improved performance approach to the project. If the project does not generate the guaranteed level of savings in any given year, the ESCO will be responsible for reimbursing Owner the amount of the shortfall necessary to pay for annual project financing and all related contract obligations. Excess savings will not be used to reimburse the ESCO for any payments made due to shortfalls in other years. Improvements and services must result in guaranteed minimum annual energy and water savings option, as well as guaranteed minimum levels of occupant comfort and operations and maintenance and/or any ancillary services. A guarantee is required to equal or exceed the calculated and agreed-to savings attributable to all energy saving measures for each year during the contract period. The combined savings achieved by the installed projects must be sufficient to cover all project costs including debt service and contractor fees maintenance, monitoring and other services, for the duration of the contract term. Annual savings will be verified at a specified time each year in order to determine if the ESCO s guarantee needs to be exercised. E. Construction Management. The ESCO will be required to work with current building management and maintenance personnel in order to coordinate construction and provide appropriate training in operations and maintenance of all installed improvements. No equipment or other improvements will be installed that would require Agency to hire additional personnel unless contract negotiations produce an explicit exemption for a specific installation. Maintenance responsibilities shall be proposed in detail in the contract. F. Equipment Standardization. All equipment installed that is comparable to similar equipment at sites operated by Agency shall be of the same manufacturer for standardization of equipment, unless accepted by Owner/Agency. G. Maintenance Manuals. At least three (3) sets of operation and maintenance manuals for each site will be provided for all equipment replacements and/or upgrades at each location. Manuals are subject to approval of Owner/Agency. Upon completion of the contract, the ESCO shall provide to 12

Owner/Agency a single comprehensive schedule of necessary preventative maintenance for all installations for the five (5) years following contract closeout. H. As-Built Drawings. Where applicable, ESCO must provide mylar and disk, reproducible "as built" and record drawings (or such electronic equivalents as may be agreed to with Owner/Agency) of all existing and modified conditions associated with the project, conforming to typical engineering standards. These should include architectural, mechanical, electrical (including detailed wire diagrams), structural, and control drawings and operating manuals within 30 days of completion of installation. I. Follow-up Monitoring and Maintenance Services. Following the installation and implementation of improvements the ESCO will be responsible for maintaining and monitoring the measures to ensure optimal performance, however; Owner has the option to decline these services or negotiate for a reduced term of services. Scope Of Services (Owner Requirements) A. Owner Inspection. Owner/Agency must have the right to inspect, test, and approve the work conducted in the facilities during construction and operation. Owner/Agency shall have the right and access to the account books, records, and other compilations of data that pertain to the performance of the provisions and requirements of this agreement. If the contract negotiations call for cost-plus or open book pricing, then the accounting books of the ESCO must be accessible by Owner/Agency. Records shall be kept on a generally recognized accounting basis, and calculations will be kept on file in legible form and retained for three years after closeout. Owner/Agency retains the right to have its representative visit the site during the audit and implementation phases of the project, and to attend relevant on-site or off-site meetings of the ESCO and/or its subcontractors. B. Final Approval of Owner. Owner retains final approval over the scope of work and all end-use conditions. Owner shall not be liable to make payment to the ESCO for any work performed, unless such work was approved by the Owner. C. Property of Drawings, Reports and Materials. All drawings, reports and materials prepared by the ESCO specifically in performance of this contract shall become the property of Owner and will be delivered to Owner as needed or upon completion of construction. The format for these will be determined by the Division of Facility Efficiency. D. Compliance. All work completed under this contract must be in compliance with all applicable federal, state and local laws, rules and regulations such as building codes and appropriate accreditation certification and licensing standards. Work must be in accordance with sound engineering and safety practices and in compliance with all Owner regulations relative to the premises. The ESCO and its subcontractors will be responsible for obtaining any and all required governmental permits, consents and authorizations and for payment of any and all state and city required taxes and fees which result from this contract. E. Handling of Hazardous Materials. All work completed under this contract must be in compliance with all applicable federal, state and local laws, rules and regulations regarding waste disposal and treatment/disposal of any hazardous material that could result from this project. Work must also be in accordance with sound engineering and safety practices, and in compliance with all reasonable Owner rules relative to the premises. All costs associated with removal of hazardous material, as identified as part of this project, will be the responsibility of the ESCO and shall be included in the total project cost. Ownership of all hazardous materials shall remain with the Commonwealth. Coordination for all hazardous materials removal will be through Maziar Torabi, Division of Engineering and Contract Administration. Removal of all refrigerant shall be included where applicable. F. Subcontractor Approval. Owner/Agency retains the right to approve any ESCO selected 13

subcontractor prior to its commencement of work on this project. Names and qualifications must be submitted at least two weeks in advance. G. Applicability of O&M. Any O&M cost savings related to maintenance and operation of the facilities will be rigorously reviewed and, if agreed to, will be limited to those that can be thoroughly documented and approved by Owner. H. Credits, Rebates, Incentives. The Commonwealth encourages respondents to become aware of all incentive programs being offered by public utility companies, governmental bodies, and other interested parties as may be relevant to the implementation of energy conservation retrofit projects. The economic value of any incentives, as may be applicable to installation costs, shall be included in the project savings analysis. All rebates, credits, tax credits, incentives, grants, or other monetary benefits available from the implementation of this project will accrue to the benefit of the Commonwealth. The ESCO will include in the cost of the project, the administrative and financial support required under any such program. I. Capital Cost Avoidance Funds. Funds may be available from the agency to enhance the financial feasibility of the project. If specific funds are known to exist they will be identified in the RFP. Funds may be identified from maintenance or operating accounts after the specific scope for this project is identified. J. Contract Term. The contract may be subject to annual appropriations. The duration of the contract will be mutually determined between the ESCO and the Owner based on financial factors so that a positive net cash flow is realized by the Owner. The current ESPC Policy has a recommended maximum term of twelve (12) years. 2. Contractual Provisions THE FOLLOWING TERMS AND CONDITIONS WILL FORM THE BASIS OF THE CONTRACT BETWEEN THE SUCCESSFUL RESPONDENT AND THE COMMONWEALTH. A. THE CONTRACT AND THE CONTRACT DOCUMENTS 1. The Contract: The Contract between ESCO and Owner, consists of the Contract Documents. 2. The Contract Documents: Contract Documents include RFP, the IGA (Industrial Grade Audit), and scope of all ECM s (Energy Conservation Measures) proposed and accepted by the owner, and other written documents, including drawings, shop drawings, and other submittals, approved by the owner after the contract is signed. 3. Complete Agreement: The Contract, together with ESCO s and Surety s performance and payment bonds for the Project, constitutes the entire and exclusive agreement between Owner and Contractor with reference to the Project. The Contract supersedes any and all prior documents, discussions, communications, representations, understanding, negotiations or agreements by and between the parties. The contents of the ESCO s submissions in response to this solicitation may become part of any final agreement between Owner and the contractor. 4. Contract Interpreted as A Whole: The Contract is intended to be an integral whole and shall be interpreted as internally consistent. The work under this contract includes compliance to the terms of the RFP, the Contract, and the scope of the project established by the ESCO and approved by the Owner/Agency. Compliance with any one part does not constitute compliance with the entire Contract agreement. 5. Provision Of All Things Required: If the scope of work established by the ESCO and approved by the Owner/Agency requires work not specifically identified in the Contract, the ESCO shall be 14

responsible for the unidentified work. 6. Privity Only With Contractor: Nothing contained in the resulting Contract shall create, nor be interpreted to create, privity or any other relationship whatsoever between owner and any person except the Contractor. 7. Agreed Interpretation Of Contract Terms: When a word, term, or phrase is used in the Contract Documents, it shall be interpreted or construed first, as defined herein; second, if not defined, according to its generally accepted meaning in the construction industry; and third, if there is no generally accepted meaning in the construction industry, according to its common and customary usage. Headings are used herein solely for convenience. 8. Term Include Intended To Be Encompassing: Include, includes, or including, as used in the Contract Documents, shall be deemed in all cases to be followed by the phrase, without limitation. 9. Use of Singular And Plural: Words or terms used as nouns in the Contract Documents shall be inclusive of their singular and plural forms, unless the context of their usage clearly requires a contrary meaning. 10. Definition Of Material Breaches Not Exhaustive: The specification herein of any act, failure, refusal, omission, event, occurrence or condition as constituting a material breach of the Contract shall not imply that any other, non-specified act, failure, refusal, omission, event, occurrence or condition shall be deemed not to constitute a material breach of the Contract. 11. Order Of Precedence: In the event of any conflict, discrepancy, or inconsistency among any of the Contract Documents which make up the Contract Documents, the following shall control: a. As between figures given on plans and scaled measurements, the figures shall govern; b. As between large scale plans and small scale plans, the large scale plans shall govern; c. As between plans and specifications, the requirements of the specifications shall govern; d. As between this document and the plans or specifications, this document shall govern. B. CONTRACTOR S OBLIGATIONS 1. Contractor is professionally and fully qualified to act as the contractor for the Project. Architects and Engineers utilized on this Project will be licensed in the State of Kentucky. 2. Contractor will maintain all necessary licenses, permits or other authorizations necessary to act as Contractor for the Project until Contractor s duties have been duly satisfied. 3. Contractor has the expertise, experience, and knowledge as well as the necessary personnel and financial capability to perform the services of this Project. 4. Plans and specifications relating to this project shall be approved by the Department of Housing Building and Construction. 5. Contractor assumes full responsibility to Owner for the improper acts and omissions of its Subcontractors or others employed or retained by Contractor in connection with the Project. 6. Plans and specifications relating to this Project shall be approved by the Department for Facilities and Support Services and the Client Agency. 15

7. Compliance With Laws and Regulatory Requirements: Contractor shall comply with the lawful requirements of all federal, state, and local authorities having lawful jurisdiction over the Project. 8. No asbestos or environmentally hazardous material may be installed as part of this project. C. TERMINATION 1) Termination Of Contract For Convenience Of Owner: The Owner, for any reason whatsoever, may terminate the contract for its own convenience when it determines that such termination will be in the best interest of the Commonwealth of Kentucky. The Owner shall give written notice of such termination to the Contractor. The Contractor shall incur no further obligations in connection with the Work and the Contractor shall stop work when such termination becomes effective. The Contractor shall also terminate outstanding orders and Subcontracts. The Contractor shall settle the liabilities and claims arising out of the termination of Subcontracts and orders. The Owner may direct the Contractor to assign the Contractor right, title and interest under termination orders or Subcontracts to the Owner or its designee. The Contractor shall transfer title and deliver to the Owner such completed or partially completed Work and materials, equipment, parts, fixtures, information and Contract rights as the Contractor has. The Commonwealth shall negotiate a fair and just settlement with the Contractor in accordance with 200 KAR 5:312 Section 2. The Contractor failure to submit his termination claim shall not stay the statute of limitations under KRS 45A.260(2). 2) Termination Of Contract For Cause: If the Contractor should be adjudged as bankrupt, or if he should make a general assignment for the benefit of his creditors, or if a receiver should be appointed on account of his insolvency or, if the Contractor does not perform the Work, or any part thereof, in a timely manner, supply adequate labor, supervisory personnel or proper equipment or materials, or if it fails to timely discharge its obligations for labor, equipment and materials, or proceeds to disobey applicable law, or otherwise commits a violation of a material provision of the resulting Contract, then the Owner, in addition to any other rights it may have against the Contractor or others, and to the extent permitted by law, may terminate the performance of the Contractor upon thirty (30) days written notice by registered mail of declaration of default and assume possession of the Project site and of all materials and equipment at the site and may complete the Work. 3) In the event the employment of the Contractor is terminated by the Owner for cause pursuant to the Paragraph 2 above and it is subsequently determined by a Court of competent jurisdiction that such termination was without case, such termination shall thereupon be deemed a Termination for Convenience under that paragraph and the provisions of that paragraph shall apply. 4) Termination of Contract for Failure to Execute Financing: The owner at its sole discretion may terminate the contract if the Agency or University benefited herein fails to execute financing at or below a rate required to match the rental payment schedule within 45 days following the execution of the ESPC contract. The Agency or University shall enter into a Master Lease or other written proof of binding financing related to the ESPC to the Finance & Administration Cabinet, Department for Facilities and Support Services, 403 Wapping Street, Frankfort, KY within the prescribed date above by 4:30 p.m. If the Agency or University benefited herein fails to furnish a Master Lease or other written proof of binding financing within the prescribed time, then the Commonwealth may terminate the contract. The Commonwealth will not incur any costs whatsoever as a result of termination under this paragraph including, but not limited to, partially completed work, labor, materials, equipment, parts, fixtures, designs, and/or drawings 16

D. PREVAILING WAGE LAW REQUIREMENTS These rates are not to be considered final, are for information only and are subject to change prior to negotiations. If 90 days or more has elapsed since last wage rate request, new rates must be obtained for inclusion in final contract document. If rates have changed, ESCO will be permitted to adjust pricing accordingly. If pricing changes, Office of Financial Management shall review new figures, and a new approval is required. This is available as an attachment located at http://eprocurement.ky.gov. After the solicitation is found, you will click on attachments and download from the link. Contact kelly.hawkins@ky.gov for additional assistance. 1. Compliance Required on Covered Projects. In performing the Work, the Contractor and Subcontractors are required to comply with the wage and hour requirements prescribed by the Act Relating to Contracts for Public Works, KRS 337.505 337.550, except where the Contract or Subcontract meets the exemption requirements for certain public works construction projects as set forth under KRS 337.010. 2. Wage and Hour Requirements for Covered (Non-exempt) Projects: a. On covered (non-exempt) Contracts, the Contractor and Subcontractor shall pay all laborers, workmen and mechanics performing Work under this contract not less than the rate of wages set forth in the prevailing wage schedule, incorporated in the Supplemental Conditions of the Contract Documents, as determined by the Kentucky Department of Labor in accordance with the provisions of KRS 337.505 through KRS 337.550. b. On covered Contracts, the Contractor shall post and keep posted in a conspicuous place or places at the site of the Work a copy or copies of prevailing rates of wages and the working hours as prescribed in the Contract Documents. c. Any laborer, workman, or mechanic worked in excess of eight (8) hours per day or forty (40) hours per week, except in cases of emergency caused by fire, flood, or damage to life or property, shall be paid not less than one and one-half (1 ½) times the basic hourly rate of pay as fixed by law for all overtime worked. The determination of when an emergency exists shall be made by the public authority letting the contract as provided for by the law. d. Overtime is to be computed at not less than one and one-half (1 ½) times the indicated BASE RATE for all hours worked in excess of eight (8) per day, or in excess of forty (40) per week. However KRS 337.540 permits an employee and employer to agree in writing, that the employee will be compensated at a straight time base rate for hours worked in excess of eight (8) hours in any one workday but not more than ten (10) hours worked in any one workday; if such written agreement is prior to the over eight (8) hours in a workday actually being worked, or where provided for in a collective bargaining agreement. The fringe benefit rate is to be paid for each hour worked at a straight time rate for all hours worked. e. This applies to all prevailing wage determinations issued by the Labor Cabinet. As a point of clarification, if no collective bargaining agreement exists, employers must have a signed agreement with each employee on each project. These agreements must be maintained at the employer s office along with the payroll records. f. On covered Contracts, the Contractor and Subcontractors shall keep full and accurate payroll records covering all disbursements of wages to their employees to whom they are required to pay not less than the prevailing rate of wages. Records shall indicate the hours worked each day by each employee in each classification of work and amount paid each employee for his work in each classification. Payroll records are to be maintained within the state for one year after completion of the contract. These records are to be open for inspection and transcript 17

3. APPRENTICES by the Department of Labor at any reasonable time. Apprentices (for all classifications of work) shall be permitted to work only under an apprenticeship agreement approved by the Kentucky Supervisor of Apprenticeship and by the Kentucky Apprenticeship Council which is recognized by the Bureau of Apprenticeship and Training, U.S. Department of Labor. E. INSURANCE REQUIREMENTS 1. The Contractor shall furnish the Owner with certificates evidencing the required insurance coverage prior to commencing work. Contractor shall keep up-to-date copies of such certificates on file with Owner until work is completed. Owner may require Contractor to submit policy endorsements or complete policy copies of the required insurance. 2. Contractor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by Contractor, its agents, representatives, employees or subcontractors 3. Minimum Scope of Insurance Coverage shall be at least as broad as: a. Insurance Services Office commercial general liability coverage ( occurrence Form CG 0001, Ed. 10/93). b. Insurance Services Office Form CA 0001 (Ed. 12/93) covering automobile liability, Code 1 any auto. c. Workers compensation insurance as required by the Labor Code of the Commonwealth of Kentucky and employers liability insurance. 4. Minimum Limits of Insurance Contractor shall maintain limits no less than: a. Commercial General Liability: (To be determined) combined single limit per occurrence for bodily injury, personal injury and property damage with an (to be determined) annual aggregate. b. Automobile Liability: $500,000 combined single limit per accident for bodily injury and property damage. c. Workers Compensation and Employers Liability: Workers compensation limits required by the Labor Code of the Commonwealth of Kentucky and employers liability limits of $1,000,000 per accident. 5. Deductibles and Self-Insured Retentions No deductibles, or self-insurance retentions. 6. Other Insurance Provisions The policies are to contain, or be endorsed to contain, the following provisions: 18

Commercial General Liability and Automobile Liability Coverages: a. Owner, its officers and employees are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of the Contractor; general supervision of the work by Owner; products and completed operations of the contractor; premises owned, occupied or used by the Contractor, or automobiles owned, leased, hired or borrowed by the Contractor. The coverage shall contain no special limitations on the scope of protection afforded to Owner, its officers or employees. b. The Contractor s insurance coverage shall be primary insurance as respects Owner, its officers and employees. Any self-insurance maintained by Owner shall be excess of the Contractor s insurance and shall not contribute to it. c. Any failure to comply with reporting provisions of the policies shall not affect coverages provided to Owner, its officers or employees. d. The Contractor s insurance shall apply separately to each insured against whom claim is made or suit is brought except with respect to the limits of the insurer s liability. e. Workers Compensation and Employers Liability Coverage. The insurer shall agree to waive all rights of subrogation against Owner, its officers and employees for losses arising from work performed by the Contractor for Owner. f. All Coverages. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to Owner. g. Acceptability of Insurers 1. Insurance is to be placed with insurers with an A.M. Best s rating of no less than A VII, authorized to write insurance in the Commonwealth of Kentucky. 2. Verification of Coverage 3. The Contractor shall furnish the owner with certificates evidencing the required insurance coverage prior to commencing work. Contractor shall keep up-to-date copies of such certificates on file with Owner until work is completed. Owner may require Contractor to submit policy endorsements or complete policy copies of the required insurance. h. Subcontractors 1. Contractor shall include all subcontractors as insured under its policies or shall furnish separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein. 2. The Contractor shall provide all Risk Insurance in an amount of not less than one hundred percent (100%) of the insurable value of all the work. The coverage, is to be written on CP00200695 or equivalent acceptable to the Commonwealth. All coinsurance clauses in the Risks Insurance policy will be waived. All rights of subrogation against the Owner (i.e. the Commonwealth) will be waived by the insurer. Such insurance shall be for the benefit of the ESCO, Owner and any Subcontractor engaged on this project, as the Owner shall find their respective 19