Green Building Law Update : Green Building & Construction LEED AP, Lawyer & Attorney Chris Cheatham : Washington DC, Virginia, New York City

I have been hearing rumblings about federal green building policies that are being reduced or axed in Washington D.C.  Now I have a real life example to discuss. 

Kirk Dryer reported on the story last week, but I think its worth discussing further.

The Environmental Protection Agency (EPA) recently announced that it would be relocating its headquarters from downtown Kansas City, Kansas to a more rural location in Lenexa, Kansas.  The General Services Administration (GSA) was ultimately responsible for the real estate decision as it negotiated the EPA lease.  I suggest you read Kaid Benfield's scathing article about the decision if you would like more background. 

In the end, the GSA made a decision based on cost.  It is cheaper to rent in rural Kansas than it is in urban Kansas City.  But for smart growth advocates, the decision was a slap in the face. 

From a legal standpoint, the GSA's decision could actually be overturned in the name of green building policy.  The GSA's decision is being challenged through a bid protest filed by the local government and the Kansas City, Kansas landlord.  A bid protest is a legal challenge to the outcome of a government contract award. 

This appears to be a form of bid protest involving green building policy decisions:  

"The Unified Government of Wyandotte County and the landlord of the property, UrbanAmerica Advisors, have appealed to the GAO to reverse the decision.

...

The GSA submitted a briefing explaining the decision to the General Accounting Office (GAO) on Monday. The details of the motives, however, remain secret."

I am not privy to the bid protest documents, but I imagine the lawyers argued that the urban location should have been selected because it supports the environmental goals of Executive Order 13514.  I doubt the GAO would overturn the GSA decision based on this argument, but we shall see.  The GAO may have to determine whether the GSA can make decision based on cost, when conflicting environmental requirements also exist. 

What do you think? 

Photo credit: Jim Nix

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I first met Daniel Moring as an aide to D.C. Council Member Mary Cheh when we discussed the D.C. Green Building Act.  We recently met up to discuss the General Services Administration's proposal to require greenhouse gas emissions reporting and I asked him to write a post on the topic.  Enjoy and have a great weekend.  

By: Daniel Moring

Although a climate bill lies in shambles at the foot of Capitol Hill as the summer recess approaches, a new approach to evaluating federal contracts by the General Services Administration could go a long way to realizing at least some of the goals of the failed legislation.  GSA won’t stop judging based on what vendors are offering and for how much, but they will give extra consideration for the greenhouse gas footprint of offerings.

Or, to put it more simply: The feds are going Wal-Mart. 

Wal-Mart, recognized across the retail industry for its masterful supply chain management and razor-thin margins, decided in 2007 to use its sheer buying power to move the market.  Wal-Mart committed to reduce 20 million metric tons of CO2 from its business operations, targeting the product lines with the highest ‘embedded emissions,’ a measure of environmental impacts across its lifecycle of manufacture, distribution, and disposal. 

To tackle this wide-ranging objective, Wal-Mart enlisted its over 60,000 suppliers to help investigating and implementing improvement of firms’ environmental footprint, starting with energy and climate impact—or risk being dropped as a vendor. 

The Wal-Mart approach does not go as far as federal actions contemplated, but simply creating an awareness of the greenhouse gas footprint implicit in the supply chain can have a transformative impact on the market, particularly as government remains an attractive [if not the best] client due to persistent sluggishness.  The GSA rules only encompass direct emissions from operations and, while not yet mandatory, could garner additional preference in procurement decisions. 

Although environmental footprinting for your firm may seem like just another government mandate, taking into account your business’ environmental impact and associated costs also presents opportunities to identify inefficiencies, prioritize investments, manage risk, and improve performance while gaining a strategic advantage with a very significant market actor.  As the oft-cited saying goes, “you cannot manage what you do not measure,” so it begins with taking stock, taking aim, and taking action on your company’s environmental impact, starting with vehicle and building energy use. 

The standards and requirements are still developing, but the handwriting is on the wall, and smart companies are beginning to understand the language of environmental management so they can read it and take advantage. 

Daniel Moring is Program Manager for the Washington, DC office of IBC Engineering Services, a sustainable engineering firm that specializes in identifying and reducing energy-related environmental impacts for business and government clients.

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The green building industry has been besieged the last few years with stories about buildings not performing as anticipated.  It appears the federal government has taken notice, and is pushing reforms to green building certification, based on comments by one high-ranking General Services Administration official:  

“'One of the things that I tease the USGBC about is that they really need to re-brand from ‘Leadership in Energy and Environmental Design’ to ‘Leadership in Energy and Environmental Performance,’ and they are picking up on that,' Kampschroer said. 'The GSA is as well, with the idea of continually improving the maintenance of existing buildings.'”

I was surprised to read this comment from a high-profile GSA official.  The GSA relies on the Leadership in Energy and Environmental Design (LEED) rating system to demonstrate that its new construction is green.  Now the GSA is apparently pushing the USGBC to reform its LEED rating system to account for building performance.  

In the article, the Vice President of Autodesk took it a step further and suggested that the federal government needs to completely overhaul the procurement system to ensure improved building energy performance:

"In order to demand more energy-efficient government buildings, he said, federal officials must change their procurement model from the typical system of outlining what they want built, setting an estimated price and awarding a contract to the lowest bidder.

'You have to blow that to smithereens,' said Bernstein, who believes federal officials must start setting broader energy-efficiency guidelines and rethink their incentive structure. 'The government should say, ‘I want this schedule, this LEED rating, this operational efficiency and these design-quality standards,’ and all the profit is a measure of achieving those things.'"

I have no doubt that the USGBC will be revising the LEED rating system in the next few years to include re-certification for new buildings based on energy performance.  The government has been dabbling with performance contracting - contractors that get paid based on reducing energy bills - for some time.   But would the federal government blow up the existing procurement process and require actual energy performance as part of new construction contracts? 

I wouldn't put it past the GSA.  

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It's an understatement to say environmentalists were disheartened by Senator Reid's announcement last week that a comprehensive cap-and-trade bill would be tabled for the year.  But, fear not, environmentalists - and, be fearful, unprepared federal contractors - because the federal government will be regulating greenhouse gas emissions in other ways.  

Back in October 2009, we talked about the groundbreaking Executive Order 13514, which set advanced sustainability requirements for the federal government.  One of the most important parts of the Order is Section 13, which asks the General Services Administration to look into the feasibility of requiring  vendors and contractors to report greenhouse gas emissions. 

The GSA recently released its report, which concludes that it is feasible to implement a "phased approach, for the Federal Government to track and reduce its scope 3 supply chain emissions through coordination with suppliers and other stakeholders."  In short, a greenhouse gas emissions reporting requirement will be phased in, and eventually mandated for federal contracts.

For federal contractors - and eventually state and local contractors - tracking, reporting, and reducing emissions will become an important strategy for winning government contracts. 

While much of the focus of Green Building Law Update has been on green building certification, I plan to shift gears in the coming months and focus more on greenhouse gas emissions reporting requirements for federal contractors.  Why?  

My concern is that construction contractors are not prepared to report greenhouse gas emissions.  

Are you prepared to report your greenhouse gas emissions?    

Photo credit: melancholic optimist

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What Is a "Zero Environmental Footprint"? 

This is an important question for government contractors because the General Services Administration (GSA) recently proposed that the federal government move to a zero environmental footprint.

Unfortunately, I'm not sure anyone has defined this apparently new term.  The GSA's announcement doesn't define "zero environmental footprint."  None of the articles highlighting GSA's proposal defined the term.  The numerous websites that provide greenhouse gas and carbon footprint accounting services do not define zero environmental footprint.  I also couldn't locate a definition through my Twitter, Facebook and LinkedIn friends.  

In the end, I had to rely on a Canadian children's website for a definition.  

The Canadian website Zerofootprint Kids Calculator defines an environmental footprint based on five categories:

(1) Transporation
(2) What you eat
(3) Home & School
(4) What You Use; and
(5) What You Throw Away

If you change "Home & School" to "Home & Work," you actually have a fairly comprehensive list of categories to calculate an adult's environmental footprint.*  

However, contractors will need a better definition of "zero environmental footprint."  The federal government might want to consider defining this important phrase.

*I actually took the YourFootprint quiz and was surprised at my carbon results.  Keep in mind, I live in Washington, DC, I do not own a car, and I live with a environmentally-conscious wife.  Here are my stats:

Carbon Footprint:  Me - 10.4; U.S. average - 9.8
Land:  Me - 1.8; U.S. average - 2.2
Trees:  Me - .3; U.S. average - 4.2
Water:  Me - 1743.2; U.S. average - 1877.9

Photo Credit: isolano

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Executive Order (EO) 13514 continues to have enormous implications for the green building industry.  As you'll recall, EO 13514 requires that federal agencies comply with a number of green building stipulations, including 95% of all applicable contracts meet sustainability requirements.  While the American Recovery and Reinvestment Act (ARRA) invested over $25 billion in green building projects, the Order will have a more long-lasting impact on the industry. 

Why do I say this?  General Services Administration (GSA) Adminstrator Martha N. Johnson's recent statement regarding the GSA's zero environmental footprint goal suggest how far agencies may go to implement the Order:

"Citing the president’s Executive Order 13514, Johnson highlighted the agency’s mission to assist other federal agencies to make greater strides in sustainability, excel at greening initiatives, and increase federal building performance. Johnson proposed that the federal government move to a zero environmental footprint, and she stressed that GSA is setting its sights on 'eliminating the impact of the federal government on our natural environment. . . .'

Johnson outlined a number of areas in which GSA could take the lead toward greening the government. These include cultivating green-centered public/private partnerships, aiming for only green products on the federal supply schedules, and using the federal building portfolio as a green proving-ground for new sustainable building and design technologies. . . ."

Administrator Johnson's statements are a signal of what is to come from GSA and other federal agencies.  Under the Executive Order (pdf), the GSA has broad authority to make recommendations to "green" federal contracting:

"Within 180 days of the date of this order, the General Services Administration . . . shall review and provide recommendations ... regarding the feasibility of working with the Federal vendor and contractor community to provide information that will assist Federal agencies in tracking and reducing scope 3 greenhouse gas emissions related to the supply of products and services to the Government." 

Additionally, under Section 13 of the Order, the GSA has been asked to provide recommendations regarding "using Federal Government purchasing preferences or other incentives for products manufactured using processes that minimize greenhouse gas emissions. . . ."

The GSA is preparing to overhaul the way the federal government purchases services and supplies.  But what exactly is a zero environmental footprint? 

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While preparing for my presentation "Legal Considerations When Building Green" for the National Research Council, I contemplated what proposals I wanted to make to the federal agency representatives that would be in attendance. 

The federal government is pushing federal investment in green buildings through $25 billion allocated from the American Recovery and Reinvestment Act and through the Executive Order 13514, which includes numerous building efficiency requirements. As federal agencies attempt to implement green building programs, it is important to facilitate and share green building knowledge across the numerous federal agencies.

As I contemplated making what I thought was a drastic proposal, the GSA released the following information:

"GSA has made significant changes that will strengthen its role in helping the Obama Administration make the federal government a leader in sustainability.

First, the Office of Federal High-Performance Green Buildings has been moved from PBS [Public Buildings Service] to the Office of Governmentwide Policy. . . .

As part of governmentwide policy, the Office of Federal High-Performance Green Buildings will expand its reach to provide federal agencies with measurement tools and policies to meet its sustainability mandates."

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A coalition of forest product companies ("the Coalition") has filed a complaint with the Federal Trade Commission (FTC) regarding, in part, the United States Green Building Council’s preference for Federal Stewardship Council-certified (FSC) wood products. The Coalition has asked the FTC Bureau of Competition to provide guidance to the USGBC and other rating systems regarding the endorsement of product certifications.

If the FTC decides to provide such guidance, the USGBC’s LEED rating system will obviously be affected.  I am particularly interested in the implications of FTC action for green building regulations that have incorporated the LEED rating system.

In its complaint, the Coalition takes a shot across the bow aimed at federal agencies that have adopted the LEED rating system:

“The favoritism shown FSC-certified products by USGBC is inconsistent with the American National Standards Institutes's (“ANSI”) due process requirements and OMB Circular No. A-119, which establishes the principles that voluntary, private sector standards must meet if federal agencies wish to use them, including openness, balance, due process, an appeals process, and consensus.”

In short, the Coalition is arguing that federal agencies are improperly requiring LEED certification for the design and construction of federal buildings. This allegation is not a new one.  Most green building regulations that require LEED certification also permit “an equivalent” certification in order to avoid antitrust issues like the ones raised by the Coalition’s complaint.

But many federal agencies exclusively require LEED certification for federal projects. The most obvious example is the General Services Administration, which builds and maintains a large percentage of federal buildings.  The GSA's website describes its LEED mandate:

“As a means of evaluating and measuring our green building achievements, all GSA new construction projects and substantial renovations must achieve Silver certification through the Leadership in Energy and Environmental Design (LEED®) Green Building Rating System of the U.S. Green Building Council.”

If the FTC were to find that the USGBC’s preference for FSC-certified wood products constitutes anti-competitive behavior, hundreds of green building regulations across the country and in Washington D.C. will have to be re-written.

The implications of the FTC action on the complaint are staggering.

What other implications do you see?

Related Links:

• USGBC Accused of Anti-competitive Practices (GBLU)
• FSC, USGBC Accused of Deception, Anti-Competitive Practices (Green Source)
• Letter:  Forest Certification and Law and Standards (Complaint)(pdf)
• GSA - Sustainable Design Program (GSA)

Photo:  Eighty734

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(WBJ) (subscription req.)

(GSA)

(GBLU)

(GBLU)

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Something very important popped out at me when I re-read the New York Times article about the green buildings not performing as anticipated.  The green building highlighted for poor energy performance is a General Services Administration building: 

"The building’s cooling system, a major gas guzzler, was one culprit. Another was its design: to get its LEED label, it racked up points for things like native landscaping rather than structural energy-saving features, according to a study by the General Services Administration, which owns the building."

Photo: wilkins lee

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Reminder:  Don't forget to register for Green Building Law Update's Birthday Happy Hour

If you are looking for green building projects resulting directly from the American Recovery and Reinvestment Act, then the General Services Administration is the agency for you. The GSA received $5.5 billion to support its High Performance and Sustainable Buildings program. Previously, I had reported that the GSA was requiring LEED certification and preferred LEED silver certification. Turns out, those requirements have changed:

As a means of evaluating and measuring our green building achievements, all GSA new construction projects and substantial renovations must achieve Silver certification through the Leadership in Energy and Environmental Design (LEED®) Green Building Rating System of the U.S. Green Building Council. Projects are encouraged to exceed LEED® Silver and achieve LEED® Gold.

Back in April, we reported on an initial list of ARRA projects published by the GSA. Since then, very little information was available regarding these projects. Bisnow recently reported on the first GSA ARRA project award that I have seen:

[C]ongrats again to sponsor Grunley Construction for landing a renovation contract for the Mary E. Switzer Building at 330 C St., SW. Having completed Phase I in 2008, GSA put Grunley back to work using Recovery Act funding. The project includes: interior construction removal (including Hazmat); a "green roof system"; renovated elevators; and, three 2-story atriums, like the one above. Work is underway, due in July 2011. Designed by HNTB, it's aiming LEED Silver.

The Grunley-GSA contract is just the tip of the iceberg. ENR recently reviewed tremendous progress made by the GSA in awarding ARRA projects:

After taking about six weeks just to produce its list of stimulus projects, GSA has shifted into overdrive. It has awarded contracts totaling nearly $1.1 billion for projects involving about 120 buildings. Twenty of those projects account for more than $940 million of that total.

Most of those funding commitments came in a burst of awards announced since early July, according to Anthony Costa, acting commissioner of GSA’s Public Buildings Service. “At least 20 of the 120 projects are already under construction,” he told the House Transportation and Infrastructure Committee at a July 31 hearing. “The rest will begin soon.”

Even more GSA recovery-act work is on the way. Costa says the agency plans to award another $1 billion in ARRA contracts by Dec. 31, with the goal of having 91% of the $5.5 billion under contract by Sept. 30, 2010.

Of course, it's nearly impossible to report on stimulus projects without highlighting the fact that bids are much lower than anticipated. In the case of GSA ARRA projects, bids are coming in 10 to 15 percent below government estimates. I have serious concerns about bids coming in below government estimates, which I will discuss in more detail next week.

Links:

GSA Sustainable Design Program (GSA)

Grunley! (Bisnow)

New GSA Contracts Starting to Surge (ENR)

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I have previously speculated that stimulus green building projects will be at risk of underbidding.  Now we have real evidence.  Remember the $5.5 billion that the General Services Administration received from the stimulus to fund green building construction and retrofits?

"Bids came in far lower than we expected, but the upside is that because of that, we have been able to fund more projects," said Paul Prouty, acting administrator for the General Services Administration.

You may recall that the GSA requires that all new construction projects achieve LEED certification and prefers that its projects achieve LEED Silver certification.  With the fierce competition for GSA projects, you can bet that the winning bids will include LEED Silver certification promises. 

Underbidding these GSA projects with promises of LEED certification is bound to lead to problems.  Underbidding makes it more difficult to deal with changes to the design and construction.  Underbidding makes it more difficult for contractors to deal with changes in design and construction plans:

[Paul Shaughnessy, president of BSI Constructors in St. Louis] warned that some contractors are bidding so low they could find themselves unable to cover even the slightest unexpected construction costs.

"The risky side is you're seeing some very thinly capitalized companies making low bids out of desperation," he said. "Their bids are so thin that should something go wrong, they would have very little capital to fix things."

Simply put, the stage is set for LEEDigation.   

Photo:  Our Hero

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While the General Services Administration announced stimulus projects last week, they have no time to rest.  In fact, choosing the stimulus projects may have been the easiest part of the process.

The next step is contract procurement and administration.  Due to staffing vacancies at the GSA, the administration process may prove difficult : 

"Meanwhile, the ranks of contracting officers who make the day-to-day contracting decisions at the GSA have been shrinking since 2005, through attrition, outsourcing and a convoluted federal hiring process that many say discourages talented people from applying."

The GSA is not the only federal agency that is currently understaffed and tasked with administering billions in stimulus funds.  The Department of Energy must figure out how to administer over $38 billion in stimulus funds and the DOE Office of the Inspector is being upfront about the difficulties the agency is facing:

"The infusion of these funds and the corresponding increase in effort required to ensure that they are properly controlled and disbursed in a timely manner will, without doubt, strain existing resources."

In reading the DOE Inspector General's Report, it seems almost inevitable that some fraud will occur:  "As the Recovery Act implementation proceeds, all parties should recognize that the potential risk of fraud increases dramatically when large blocks of funds are quickly disbursed."

How can these understaffed agencies avoid fraud?

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General Services Administration, I am impressed. 

The American Recovery and Reinvestment Act mandated that the GSA determine projects that would receive $5.5 billion by April 3, 2009.  The GSA beat this mandate, making its list of projects available on April 2, 2009 (hat tip to the Washington Business Journal for breaking the story ).

If you were hoping to benefit from the GSA projects in the D.C. metro area, you have a much better opportunity of working on these projects in the District than in other surrounding localities.  D.C. is set to receive $1.2  billion for GSA projects.  According to the Washington Business Journal, "the amount of work slated for D.C. appears to be more than any other jurisdiction. By contrast, GSA plans to modernize only five buildings for $66 million in Virginia and two buildings for $25 million in Maryland."

A full list of GSA projects receiving funding is available here.  Here's a list of GSA projects in D.C., Virginia and Maryland slated to receive funding:

Washington D.C.

• Department of Homeland Security headquarters, St. Elizabeths Hospital west campus, Southeast, $450,000,000
• Department of Commerce Herber Hoover Building (phase II and III), 14th Street and Constitution Avenue NW, $225,638,000
• GSA headquarters (phase I), 1800 F St. NW, $161,293,000
• Lafayette Building (phase I), 811 Vermont Ave. NW, $128,827,000
• Mary Switzer Building (phase II), 330 C St. SW, $68,241,000
• Department of Interior Building (phase IV), 19th & C streets NW, $63,450,000
• Department of State Truman Building, 2201 C St. NW, $14,735,000
• Veterans Administration, $1,499,000
• Lyndon B. Johnson Federal Building, $4,162,000
• Elijah Barrett Prettyman Courthouse, $3,662,000
• IRS Building, $1,506,000
• Ariel Rios Fed Building, $1,337,000
• GSA-Regional Office Building, $592,000
• Wilbur J Cohen Building, $16,701,000
• Winder Building, $1,865,000
• Theodore Roosevelt Building, $23,551,000
• Robert C. Weaver Building, $3,663,000
• Howard T. Market National Courts, $2,070,000
• Tax Court, $8,083,000
• 601 - 4th St, NW, $2,150,000
• US Secret Service Headquarters, $1,601,000
• EPA East and West and Connecting Wing, $4,564,000
• Reagan ITC and Garage, $16,161,000

Virginia

• Franconia Warehouse, Franconia, $9,512,000
• Martin V.B. Bostetter Courthouse, Alexandria, $1,699,000
• Advanced Systems Center, Reston, $690,000. 
• Poff Federal Building, Roanoke, $50,968,000
• Robert Merhige Courthouse, Richmond, $3,500,000

Maryland

• New Carrolton Federal Building, Lanham, $1,647,000 
• CMS HQ Complex, Woodlawn, $23,723,000

The federal website, www.fedbizopps.gov, should have more information about these projects very soon.  Any luck finding information? 

Wondering how to successfully bid these projects?  My "Getting Green from the Stimulus" slideshow is a good start.

Photo Credit:  JPhilipson

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