[Senate Hearing 111-784]
[From the U.S. Government Publishing Office]






                                                        S. Hrg. 111-784

  CUTTING THE FEDERAL GOVERNMENT'S ENERGY BILL: AN EXAMINATION OF THE 
             SUSTAINABLE FEDERAL GOVERNMENT EXECUTIVE ORDER

=======================================================================

                                HEARING

                               before the

                FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                   INFORMATION, FEDERAL SERVICES, AND
                  INTERNATIONAL SECURITY SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                                 of the

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 27, 2010

                               __________

       Available via http://www.gpoaccess.gov/congress/index.html

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs











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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           JOHN McCAIN, Arizona
MARK L. PRYOR, Arkansas              GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri           LINDSEY GRAHAM, South Carolina
JON TESTER, Montana                  ROBERT F. BENNETT, Utah
ROLAND W. BURRIS, Illinois
PAUL G. KIRK, JR., Massachusetts

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk
                                 ------                                

 SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, 
              FEDERAL SERVICES, AND INTERNATIONAL SECURITY

                  THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan                 JOHN McCAIN, Arizona
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
ROLAND W. BURRIS, Illinois

                    John Kilvington, Staff Director
                 Peter Tyler, Professional Staff Member
    Bryan Parker, Staff Director and General Counsel to the Minority
                   Deirdre G. Armstrong, Chief Clerk














                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Carper...............................................     1
Prepared statement:
    Senator Carper...............................................    33
    Senator McCain...............................................    36

                               WITNESSES
                      Wednesday, January 27, 2010

Nancy Sutley, Chair, Council on Environmental Quality............     5
Richard Kidd, Program Manager, Federal Energy Management Program, 
  U.S. Department of Energy......................................    60
Dorothy Robyn, Ph.D., Deputy Under Secretary of Defense, for 
  Installations and Environment, U.S. Department of Defense......     9
Sam Pulcrano, Vice President, Office of Sustainability, U.S. 
  Postal Service.................................................    12

                     Alphabetical List of Witnesses

Kidd, Richard:
    Testimony....................................................     6
    Prepared statement...........................................    41
Pulcrano, Sam:
    Testimony....................................................    12
    Prepared statement...........................................    59
Robyn, Dorothy, Ph.D.:
    Testimony....................................................     9
    Prepared statement...........................................    52
Sutley, Nancy:
    Testimony....................................................     5
    Prepared statement...........................................    38

                                APPENDIX

Questions and responses for the Record from:
    Ms. Sutley...................................................    70
    Mr. Kidd.....................................................    77
    Ms. Robyn....................................................    96
    Mr. Pulcrano.................................................   106

 
                    CUTTING THE FEDERAL GOVERNMENT'S
                     ENERGY BILL: AN EXAMINATION OF
                   THE SUSTAINABLE FEDERAL GOVERNMENT
                            EXECUTIVE ORDER

                              ----------                              


                      WEDNESDAY, JANUARY 27, 2010

                                 U.S. Senate,      
        Subcommittee on Federal Financial Management,      
              Government Information, Federal Services,    
                              and International Security,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:37 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Subcommittee, presiding.
    Present: Senator Carper.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Good afternoon. The Subcommittee will come 
to order.
    My Republican colleagues are holding a one-day retreat off 
campus, but they are not too far away. But some of them may be 
coming in and joining us later this afternoon, but they are in 
retreat today--not full retreat, but---- [Laughter.]
    And, I might add, we are not, either. But we like to do 
things in a bipartisan basis in this Subcommittee and that is 
our history. Hopefully, we will be able to continue to do that.
    I am very excited about this hearing. It is one of those 
things when I think you actually mix good policy and good 
politics. Like Rutherford B. Hayes used to say, good policy 
makes for good politics, or something to that extent. We will 
see how this rolls, but we have a great panel of witnesses, and 
I am very excited about what you have to share with us.
    The last few years have underscored not only the need, but 
the opportunities for our Nation to rethink its energy use. 
Ever changing energy costs and our Nation's severe economic 
problems have resulted in families and homeowners and 
businesses and local governments and schools all taking a hard 
look at how much they are spending.
    As a recovering governor--that is me--I know what it is 
like to be responsible for coming up with a budget and living 
within its constraints. Within State government, you have to 
make sure that you balance your budget every year. You have to 
make some tough choices and look across government to find ways 
to do, in some cases, more with less. And the Federal 
Government should be no different, at least not remarkably 
different. Becoming more energy efficient is a clear way for 
the Federal Government not only to save money, but to also 
improve the quality of service that we provide to the American 
people.
    President Obama has recognized that the Federal Government 
can lead by example. In October, the President issued Executive 
Order 13514, calling for the Federal Government to step up its 
efforts to conserve energy by challenging agencies to meet a 
number of energy, water, and waste reduction targets. The 
Executive Order establishes a series of energy savings and 
other green government targets for the Federal Government. Each 
Federal agency is required to develop plans to reach those 
targets, and we expect initial reports on the status of those 
plans sometime later this year.
    In the meantime, we should start a dialogue about what the 
Executive Order means for not only our environment, but also 
for our Nation's bottom line. This Subcommittee is always 
looking at the financial implications of new Federal ideas--
sometimes old Federal ideas--and we have to explore some basic 
questions which I hope our witnesses will help us to do today, 
and among those basic questions are these.
    Will the Executive Order save taxpayers' money? What are 
the costs and potential rewards associated with investing in 
energy efficiency or alternative energy strategies? Are there 
financial or bureaucratic challenges that Congress can address 
or at least help to address? In other words, if there are 
opportunities to save money through energy efficiency, why 
aren't we moving more quickly? Is there something we can do 
about that?
    I should point out that we are talking here about not a 
little bit of money. Potentially, we are talking about a lot of 
money. And I should first note that the Federal Government is, 
I believe, the single largest energy user in the Nation, is 
that right? I see a nodding of heads.
    In fiscal year 2008, I am told the total energy consumption 
of the Federal Government in all of our buildings and 
operations was roughly 1.5 percent of all energy consumption in 
the United States. I wonder who is number two? The energy bill 
for the Federal Government that year was almost $25 billion, 
$24.5 billion, or almost one percent of total Federal 
expenditures. Of that roughly $25 billion, over $7 billion was 
spent on energy to operate Federal buildings alone. With a 
price tag that large, there are significant opportunities for 
savings of taxpayer dollars.
    During these times of mind-boggling budget deficits, the 
Federal Government needs to find every way it can to better 
manage its operations and finances, and we also need to find 
ways to put Americans back to work again. I would just sort of 
underscore or put an exclamation point at the end of those 
sentences. We ran up as much new deficit in our first 8 years 
in this decade as we did in the first roughly 208 years of our 
Nation's history. And this last year, we are just coming off 
the heels of the largest single-year deficit that we have ever 
had in our Nation's history.
    As we look ahead, the red ink doesn't get much better. We 
are going to hear a lot, I think, tonight from the President 
about that, which is a good thing. We are also going to hear 
tonight, I am sure, in his State of the Union a fair amount of 
discussion on what we are doing to try to put Americans back to 
work and what we ought to be doing to put Americans back to 
work.
    I just had a very interesting meeting with the CEO of 
Cummins. They make a lot of products, this technology and 
manufacturing company. They figured out that it is possible to 
do good and to do well at the same time, to reduce emissions, 
to make more energy efficient products, and to sell them all 
over the world. At a time and age when a lot of workforces are 
shrinking, here is a company that has increased its workforce 
by more than a quarter, maybe close to 50 percent. So it is 
possible to do good and to do well. They are actually a pretty 
good poster child for that.
    Our Federal Government occupies, I am told, nearly 500,000 
buildings of every shape and size, including buildings like 
this beautiful one that we are in today. We have more than, I 
am told, 1.8 million civilians and we purchase more than $500 
billion per year in goods and services. The scope of these 
assets presents opportunities for businesses and entrepreneurs 
to employ energy saving products and services that will save 
taxpayers money and provide a marketplace for innovation.
    So it is clear that we have an abundance of opportunities 
to lead by example in the Federal Government and that is what 
we need to do--lead.
    Today, we are blessed to have four very knowledgeable 
experts from the Federal Government--well, three, and one from 
sort of like a quasi-Federal Government entity, the Postal 
Service. But we have four very knowledgeable experts today with 
us to share some of their ideas on how we might provide the 
kind of leadership that is needed.
    The first two represent the overall picture of the 
Executive Order from the perspectives of the White House and 
the Department of Energy. The second two witnesses will 
describe the Executive Order from the perspective of a couple 
of very large entities, the Department of Defense and the U.S. 
Postal Service.
    Federal managers appear to want the Executive Order. A 
recent survey of Federal agency managers showed, I believe, two 
things. First, these managers say that green government ranks 
as high in importance as managing human capital and financial 
management. So managers see that taking steps like saving 
energy makes sense in a variety of ways.
    But second, more than half of the respondents to that 
survey said that creating a more green government requires more 
accountability and clear measures of success. I understand that 
these are key goals of the Executive Order.
    Before I close, I must mention a piece of very relevant 
legislation that our full Committee Ranking Member Susan 
Collins introduced last year. I am pleased to be a cosponsor, 
in fact an original cosponsor, of what is called the Federal 
Agency Energy Efficiency Improvement Act of 2009, which has 
many of the same goals of the Executive Order, and I believe it 
is complementary to it. Our legislation has already been 
approved by the full Committee, the Senate Homeland Security 
Committee and Governmental Affairs. We look forward to moving 
it through the full Senate. Although I will be honest with you. 
I can introduce a resolution today that says today is 
Wednesday. I am not sure I could get 60 votes for it in the 
U.S. Senate. Things are tough. [Laughter.]
    But having said that, Senator Collins and I, we team up on 
a lot of stuff, and maybe we can get this one into the end 
zone. I hope so.
    In the next few weeks, I plan on introducing legislation to 
ensure that the money the Federal Government spends on 
improving building efficiency is reaching its full potential. 
New technology demands new skills, I might add, and I have 
introduced a new bill that I think would better ensure that the 
individuals who manage our Federal facilities receive the 
training they need in order to meet these new demands.
    With that having been said, I think we are going to get 
underway here. I am going to say a couple of words about each 
of our witnesses, not at any great length. I am just delighted 
that you are here, delighted that you have prepared for this.
    Our first witness is going to be Nancy Sutley. I was 
pleased to meet her here literally, I think, a year ago. She is 
the Chair of the President's Council on Environmental Quality 
(CEQ), a position once held by former Delaware Governor Russell 
Peterson, who at the tender age of 92 is alive and going strong 
and doing great things for our environment and our State. But 
she is Chair of the President's Council on Environmental 
Quality and works in the White House. She will discuss the 
Executive Order and what it means to the Federal Government and 
what it means for our Nation as a whole. The Council on 
Environmental Quality is a lead entity not only in designing 
the Executive Order, but also in its implementation.
    Our second witness is Richard Kidd. Mr. Kidd is the Program 
Manager of the Federal Energy Management Program residing in 
the Department of Energy. Mr. Kidd will discuss how agencies 
are responding to the Executive Order, what progress has been 
made, and what we can do to make even more progress in the 
future.
    Our next witness is Deputy Under Secretary Dorothy Robyn. 
She joins us from the Department of Defense. Ms. Robyn will 
discuss what progress the Department of Defense has made on the 
energy efficiency front. Far and away the largest consumer of 
energy in the Federal Government, the Department of Defense 
will provide clear examples of the challenges that agencies 
face in pursuing these goals. Currently, the Department of 
Defense accounts for, I am told, almost two-thirds of the 
energy consumed by Federal facilities and buildings.
    Our final witness is Sam Pulcrano, Vice President of 
Sustainability for the U.S. Postal Service. Mr. Pulcrano will 
discuss how the Postal Service long ago understood the business 
case for investing in energy efficiency for their operations. 
We just had a chance to meet yesterday with the Postmaster 
General. We talked about some of these issues. The Postal 
Service has been a real leader in this area, and by his 
position's very existence, Mr. Pulcrano has proven that the 
Postal Service understands the value of making energy 
efficiency a part of their everyday business.
    We thank all the witnesses for being with us today. We will 
begin on the left, if we could, with Ms. Sutley. Your entire 
statement will be made part of the record. In fact, I have read 
your oral statement and it will probably fit within 5 minutes, 
but if you take more than 5 minutes, 6 or 7 minutes, that is 
OK. Then we will come back and do questions once everybody is 
finished with their testimony. Again, we are delighted you are 
all here. This is an important issue. Thanks for joining us.
    Ms. Sutley.

 TESTIMONY OF NANCY SUTLEY,\1\ CHAIR, COUNCIL ON ENVIRONMENTAL 
                            QUALITY

    Ms. Sutley. Thank you, Mr. Chairman, for holding this 
hearing and the opportunity to appear before you and the 
interest and enthusiasm the Subcommittee has for this issue. I 
will apologize up front. I am getting over a cold, so 
hopefully, I won't start coughing in the middle of this.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Sutley appears in the Appendix on 
page 38.
---------------------------------------------------------------------------
    As you pointed out, the Federal Government is the single 
largest energy consumer in the United States. It owns more than 
500,000 buildings, more than 600,000 vehicles, and purchases 
more than $500 billion a year in goods and services. Given this 
impact and scope, the President recognizes that the Federal 
Government must be a leader in sustainability and in our 
efforts to build a clean energy economy. Cutting the Federal 
Government's energy use will not only reduce our carbon 
footprint, but will also save taxpayers' dollars.
    President Obama signed Executive Order 13514 on October 5 
of last year. The Executive Order sets sustainability goals for 
Federal agencies and focuses on making improvements in 
environmental, energy, and economic performance. I would like 
to take this opportunity to thank all the agencies for their 
hard work and enthusiasm in implementing the goals of the 
Executive Order, including the agencies who are represented 
here today. Meeting these goals will reduce costs, reduce air 
and water pollution, and drive investments in local and clean 
energy jobs.
    The goals and strategies Federal agencies are developing 
will be in harmony with existing statutory energy efficiency 
requirements, such as those in the Energy Policy Act of 2005 
and the Energy Independence and Security Act of 2007. In fact, 
statutory requirements such as metering and building 
recommissioning will help us meet these goals.
    In addition, the Executive Order for the first time 
requires Federal agencies to set a greenhouse gas pollution 
reduction target. The overall Federal Government-wide target 
will be the aggregate commitment of 35 Federal agencies. 
Achieving the reduction goal will be done through a combination 
of efforts, including becoming more energy efficient, reducing 
petroleum use in government fleets, and using more renewable 
energy.
    The investments made by Federal agencies will pay dividends 
for years to come in taxpayer savings. For example, achieving a 
5 percent reduction in greenhouse gas emissions by 2020 from 
the current baseline would save an estimated $1.7 to $2.1 
billion in avoided energy costs.
    Agencies are working towards achieving their targets by 
pursuing a number of strategies. These projects, many of which 
were made possible by Recovery Act funding, will drive long-
term savings, build local market capacity, and create new 
private sector clean energy jobs.
    We know that inefficient energy use in buildings is a major 
contributor to Federal greenhouse gas emissions. Federal 
buildings provide significant opportunities for reducing 
emissions, and the effort is bolstered by the $5.5 billion 
provided in the Recovery Act to the General Services 
Administration (GSA) to renovate and build high-performance 
green Federal buildings.
    Looking forward, implementation of the Executive Order will 
focus on integrating achievement of sustainability goals with 
agency mission and strategic planning. The goal is to optimize 
performance and minimize costs. Detailed agency implementation 
plans are due in June 2010, when each Federal agency will 
deliver a strategic sustainability performance plan to CEQ and 
the Office of Management and Budget (OMB). Each plan will 
prioritize the agency's action toward the goals of the 
Executive Order based on the return on investment. These 
sustainability plans will describe the specific actions 
agencies will take to achieve their individual greenhouse gas 
reduction targets, reduce energy costs, and meet other goals of 
the Executive Order.
    Finally, to ensure accountability, annual agency progress 
will be measured and reported online to the public by OMB 
through its scorecard process. By fulfilling this Executive 
Order, the Federal Government will demonstrate that economic 
performance and a healthy environment go hand in hand.
    Thank you again for the opportunity to be here today and I 
look forward to your questions. Thank you.
    Senator Carper. Thank you, Ms. Sutley, very much, for your 
leadership, as well. Mr. Kidd, welcome.

 TESTIMONY OF RICHARD KIDD,\1\ PROGRAM MANAGER, FEDERAL ENERGY 
         MANAGEMENT PROGRAM, U.S. DEPARTMENT OF ENERGY

    Mr. Kidd. Thank you. Good afternoon, Chairman Carper. We at 
Federal Energy Management Program are responsible for 
facilitating the Federal Government's implementation of sound, 
cost-effective energy management and investment practices in 
order to enhance the Nation's security and environmental 
stewardship. Today, we are examining Presidential Executive 
Order 13514, which establishes greenhouse gas emissions 
reduction as the overarching metric to guide Federal actions 
and investments.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Kidd appears in the Appendix on 
page 41.
---------------------------------------------------------------------------
    The most cost-effective way to achieve these reductions is 
through increased use of energy efficiency technologies applied 
in a whole system, sustainable manner. Not using energy is 
cheaper than buying energy, and the Federal Government, as the 
largest energy consumer in the country, buys a lot of energy--
$25 billion worth in 2008. Of this amount, $7 billion was for 
energy costs in buildings, with associated greenhouse gas 
emissions of over 43 million metric tons of carbon dioxide 
equivalent.
    The good news, though, is that through energy efficiency 
improvements, we can reduce these emissions, avoid future 
costs, and generate positive attendant benefits, such as a 
healthier, more productive Federal workforce.
    Instead of costs and expenditures, think about energy 
efficiency as a stable, reliable source of future savings. For 
instance, in 2008, the Department of Energy avoided $140 
million of its total energy costs as compared with 1985. The 
government's energy intensity decreased 12.7 percent in 2009 
from 2003.
    The private sector is already demonstrating the value of 
energy efficiency. Over a building's 20-plus-year life, the 
owner is likely to pay more in energy costs than in 
construction costs. A 2 percent increase in the up-front costs 
can easily generate a tenfold savings over the life of the 
building.
    This applies to retrofits, as well. For example, the Empire 
State Building, well known to all Americans, is currently 
undergoing a $20 million retrofit that will save $4.4 million 
annually and reduce energy consumption by up to 38 percent. The 
retrofit of the Empire State Building will pay for itself in 
less than 6 years.
    The energy conservation measures chart shown here provides 
a few examples of historic payback periods for some of the 
energy efficiency and renewable technologies that have been 
applied throughout the Federal Government.\1\ Investing in each 
of these various technologies makes financial sense within a 
given payback period.
---------------------------------------------------------------------------
    \1\ The chart referenced by Mr. Kidd appears in the Appendix on 
page 48.
---------------------------------------------------------------------------
    Senator Carper. Excuse me. Are you going to talk at all off 
of this slide? It is hard, I am sure, for some people to see. 
But if you want to take a minute and just walk us through a 
little bit of it--I have a hard copy up here, which is easier 
to see.
    Mr. Kidd. Sure. I would be happy to.
    Senator Carper. Do you want to take just a minute and 
describe the relevance of this slide.
    Mr. Kidd. We have records of most of the major energy 
projects across the Federal Government that have been financed 
through what is called alternate financing, or Energy Savings 
Performance Contracts (ESPCs). In each of those contracts, 
there are identified measures with the associated savings. So 
we picked some of the dozens of technologies that have been 
applied throughout the Federal Government.
    For example, the chart shows that by the application of 
advanced metering, advanced meters pay for themselves in 
roughly 3 months, two-tenths of a year. So I was trying to 
calculate that in months. Lighting pays for itself in about 6 
years. A building envelope improvement is 9 years. And these 
are historical records going back 10 to 15 years. Today's 
technology is better than the technology that we have in our 
database that was entered in the late 1990s. So, in fact, the 
payback periods for these various technologies are actually 
shorter now and will be shorter going forward than they were 
over the past decade or so.
    Senator Carper. OK. Thanks.
    Mr. Kidd. Great. As you can see from this chart, energy 
efficiency investments have the shortest payback periods. But 
renewable power generation is also an important component of 
the Federal Government's effort and also important if we intend 
to reduce our greenhouse gas emissions.
    Though the Federal Government purchased or produced over 4 
percent of its electricity last year from renewable sources, it 
is difficult for all agencies to take advantage of on-site 
renewable energy generation. Except for the Department of 
Defense and the Power Marketing Administrations, agencies 
cannot enter into power purchase agreements longer than 10 
years. The Federal Energy Management Program (FEMP) would like 
all agencies to have authorities of 20 years or more in this 
regard.
    Senator Carper. Say that last sentence one more time, just 
for emphasis.
    Mr. Kidd. OK. Except for the Department of Defense and the 
Power Marketing Administrations, agencies cannot enter into 
power purchase agreements of longer than 10 years. FEMP would 
like all agencies to have authorities of 20 years or more in 
this regard.
    Senator Carper. Thank you.
    Mr. Kidd. This would afford all agencies the opportunity to 
build solar power plants like the one shown here at Nellis Air 
Force Base, which saves the Air Force about $1 million per year 
in avoided electricity expenses.
    Efficiency improvements also generate other direct benefits 
besides cost savings. The General Services Administration 
reported indoor lighting and temperature, which are hallmarks 
of sustainable green buildings, can elevate worker productivity 
by 5 to 15 percent, reduce absenteeism, and improve morale. 
With more natural lighting, as seen at the Internal Revenue 
Service campus in Kansas City, workers experience less eye 
fatigue.
    Senator Carper. Does that mean they can probably catch our 
mistakes better? [Laughter.]
    Mr. Kidd. That is the intent. That would also have the 
attendant benefit of increasing revenue, perhaps.
    Senator Carper. Well, we have a $300 billion tax gap, so 
this maybe will help.
    Mr. Kidd. The Wayne Morris Courthouse in Oregon is rated as 
a LEED Gold by the U.S. Green Buildings Council, partially due 
to its focus on indoor air quality. And the Environmental 
Protection Agency's addition to its Research Triangle Park 
improves indoor air quality as well as saves $1.5 million in 
energy expenses on a $2 million investment. This is just some 
of the potential and some of the examples that exist within the 
Federal Government.
    Looking forward, there is every reason to conclude that the 
Federal Government can be a leader in generating savings while 
increasing performance through energy efficiency. Executive 
Order 13514 outlines the expectation: That by 2030, all new 
Federal buildings must save or produce as much energy as they 
use.
    Senator Carper. Explain that. Just stay on that point. When 
I read that in your testimony, I had to look at it a couple of 
times. What does that mean? Just say it again and explain it.
    Mr. Kidd. Well, Executive Order 13514 outlines the 
expectation that by 2030, all new Federal buildings must save 
or produce as much energy as they use. This is roughly what is 
called a net-zero building, which is a building that produces 
as much energy over the course of a year as it uses in that 
same time frame.
    The strategy to obtain such buildings is to start with a 
whole systems integrated design approach, make the building as 
efficient as possible, super-efficient, and then integrate on-
site renewables to cover what demands exist within the 
building. And we at DOE have a database of net-zero buildings, 
commercial buildings that now exist in America, and near net-
zero and very high-performing buildings that exist in both the 
commercial sector and the public sector.
    So it is out there. It is proven. We can, right now, get 30 
to 60 percent energy reductions in building retrofits and 40 to 
90 percent energy reductions in new builds.
    Senator Carper. Thank you.
    Mr. Kidd. By making greenhouse gas reductions, the 
integrating metric for performance, the Executive Order 
encourages whole systems thinking, establishes a more energy 
efficient Federal Government, a government that will save 
money, protect the environment, enhance security, and cut back 
on greenhouse gas emissions.
    I look forward to your questions.
    Senator Carper. Good. Thanks for that testimony, very much. 
Thanks for reading some of it twice.
    Senator Carper. Dr. Robyn, please proceed.

TESTIMONY OF DOROTHY ROBYN, PH.D.,\1\ DEPUTY UNDER SECRETARY OF 
 DEFENSE FOR INSTALLATIONS AND ENVIRONMENT, U.S. DEPARTMENT OF 
                            DEFENSE

    Ms. Robyn. Thank you very much, Chairman Carper. My 
testimony today on behalf of the Department of Defense will 
focus on the Department's energy performance. As the Deputy 
Under Secretary of Defense for Installations and Environment, I 
oversee policy and programs related to the energy used on our 
permanent military installations, our bases, both at home and 
overseas. This is the area called facilities energy. I will 
also in my testimony cover so-called operational energy, which 
is the energy that is used in our combat systems and support 
for combat operations.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Robyn appears in the Appendix on 
page 52.
---------------------------------------------------------------------------
    My message today is a fairly straightforward one. The 
Department of Defense has stepped up the long-term effort 
needed to reduce our high level of energy consumption, and this 
effort is driven first and foremost by mission considerations.
    First of all, in a combat setting, in an operational 
setting, our military's heavy reliance on fossil fuels creates 
significant risks and costs that can be measured in reduced 
mission effectiveness and in U.S. soldiers' lives. The best way 
to show this, and I am sorry I don't have it electronically, 
but this is a picture of a convoy going through the Khyber Pass 
in Afghanistan.
    Senator Carper. How can I be sure? [Laughter.]
    That could have been a picture of my backyard and I would 
not have known.
    Ms. Robyn. Let us hope not. A large fraction of the tonnage 
carried by convoys is fuel and water. Convoys are the largest 
and most vulnerable target for insurgent attacks and improvised 
explosive devices (IEDs). The more convoys we send, the greater 
the need for protection and, in turn, for supplies to support 
the protective forces. Marine Corps General Jim Mattis famously 
said during the course of the Iraq War, ``Unleash us from the 
tether of fuel.''
    In addition to the combat operational concern or problem, 
there is a problem with our fixed installations. They are 
dependent on a commercial power grid that is increasingly 
vulnerable to disruption from overload, natural catastrophe, 
and cyber attacks. See the front page story in yesterday's New 
York Times. The Defense Science Board has warned that the 
vulnerability of the grid puts critical military operations 
that are launched from these bases at risk.
    In short, unleashing warfighters from the tether of fuel 
and reducing our installations' dependence on a costly and 
potentially fragile power grid will not simply enhance the 
environment, it will significantly improve the military's 
mission effectiveness. Executive Order 13514 is a tool to help 
us turn these vulnerabilities that I described around. One 
indication that we view it as a very helpful tool is that we 
are developing an aggressive target under the order for 
reducing our greenhouse gas emissions, which are due 
overwhelmingly to our direct energy use.
    Now, operational energy, energy used in theater, is exempt, 
necessarily so, from any regulatory target because our 
immediate goal, our immediate priority is to provide support 
for the warfighter. But reducing the energy demands of our 
operational forces is nevertheless a major focus of our efforts 
to cut energy consumption.
    Senator Carper. Good.
    Ms. Robyn. As I say, we have stepped up the effort. We have 
a long way to go. This is a long change and a cultural change 
for the Department. Let me highlight three areas where we have 
stepped up the effort.
    The first is organizational leadership, commitment from the 
top. The Secretary has expressed his strong support for the 
goal of reducing energy consumption. The Department has created 
the Office of Director for Operational Energy Plans and 
Programs in the Office of the Secretary of Defense. The 
President has nominated Sharon Burke to head this new 
directorate and we hope the Senate will confirm her very soon.
    The Military Departments are standing up their energy 
offices, as well, and the Service Secretaries have, without 
exception, made energy one of their highest priorities. For 
example, in October, Navy Secretary Ray Mabus announced a set 
of ambitious new goals to boost the energy efficiency of the 
Navy and the Marine Corps. His plans include fielding a 
completely sustainable carrier strike group, dubbed ``the Great 
Green Fleet,'' by 2016 and producing half of all the Navy's 
installation energy requirements from renewable sources by 
2020. Those are very ambitious goals. So that is one area of 
leadership.
    Second, we are investing more to make our fixed 
installations, which I oversee, less energy consuming. Our 
basic strategy is a two-part strategy: Reduce the demand for 
traditional energy while increasing the supply of renewables 
energy sources.
    The press has focused on renewables for understandable 
reasons. Pictures like the one Mr. Kidd showed you of Nellis 
Air Force Base, it is incredible, 72,000 solar panels that 
track the sun. I have fabulous slides which I am kicking myself 
for not having brought of things we are doing with wind 
turbines and wave power and all kinds of renewables. 
Geothermal, the Navy has been doing geothermal at China Lake 
for more than 20 years.
    But while the press focus has been on what I call the 
supply side, the renewable side, and that is very important, as 
Mr. Kidd said, the real low-hanging fruit is on the demand 
side. That is where we can really get the big gains. That is 
the most cost-effective thing that we can do. And so our focus 
has been there, and that is in investment in retrofit of 
existing buildings, and we have a lot of them. We account for 
300,000 of the 500,000 Federal buildings. And then also 
investment in new building construction.
    Let me highlight a new initiative that we have just gotten 
underway in the facility energy area. DOD's fixed 
installations, and as I said, there are a lot of them, offer an 
ideal test bed for next-generation energy technologies coming 
out of industry, labs, out of the Department of Energy, and 
university labs. Our built infrastructure is unique for its 
size, 300,000 buildings, 2.2 billion square feet of space. That 
is four times as much as Wal-Mart has. And also for the variety 
of facilities that we have--commissaries, data centers, office 
buildings, and barracks. And that variety captures the 
diversity of building types and climates in the United States 
more broadly.
    As both a real and a virtual test bed, our many facilities 
can assess the technical validity, cost, and environmental 
impact of advanced pre-commercial technologies, technologies 
that are caught in that valley of death between the lab and 
deployment.
    Moreover, in addition to testing those technologies, for 
those that prove effective, we can serve as an early and large 
customer, helping to create a market, much as the Department 
did with everything from electronics to aircraft to the 
Internet. This test bed, using our facilities as a test bed, is 
key to our own needs, but I think it is also going to be an 
essential element of a national strategy to develop and deploy 
the next generation of energy technologies needed to support 
our built infrastructure.
    And then finally, let me mention a third area where we have 
stepped up the effort. We are changing the rules to take 
account of the real cost of fuel used in theater, used in war. 
As I mentioned earlier, the weapons systems and the platforms 
we use have what is called a logistics tail, because of the 
need to deliver fuel under difficult circumstances, and to 
protect the supply lines. That is risky and it is expensive. 
Taking that logistics tail into account, the real cost of fuel 
used in theater, what we call the fully burdened cost of fuel, 
can be as much as an order of magnitude higher than the 
commodity price, at least under certain scenarios. So it can be 
quite expensive.
    Currently, the fully burdened cost of fuel is not captured 
in either the process whereby we set requirements for new 
weapons systems or actually acquire them, the acquisition 
process. So we are implementing two fundamental changes that 
together will represent a systemic change in the way we make 
decisions that affect our energy demand in terms of weapons 
systems. Energy consumption will no longer be an unquestioned 
assumption. It will be seen as a strategic and tactical 
vulnerability. This will take a long time to play out because 
of the life cycle of our systems, but it is a really critical 
change that has been a long time coming.
    So in sum, the military's heavy reliance on fossil fuels is 
both a tactical and a strategic vulnerability, the costs of 
which are exacted in dollars, lives, and reduced mission 
effectiveness. The Executive Order is a tool for helping us 
turn this vulnerability around. Although our goal of energy 
security will require a long-term effort and much remains to be 
done, we are committed to making significant changes. We feel 
we don't have any choice. These changes will not simply enhance 
the environment, they will significantly improve the 
effectiveness of the military mission. Thank you.
    Senator Carper. Great. Thank you very much for that 
testimony. Mr. Pulcrano, welcome.

    TESTIMONY OF SAM PULCRANO,\1\ VICE PRESIDENT, OFFICE OF 
              SUSTAINABILITY, U.S. POSTAL SERVICE

    Mr. Pulcrano. Thank you. Good afternoon, Mr. Chairman. I am 
pleased to represent the Postal Service here today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Pulcrano appears in the Appendix 
on page 59.
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    My testimony will center on three main points: How the 
Postal Service has been and will continue to be a 
sustainability leader; the details of our environmental 
initiatives; and how we can partner with the Federal 
Government.
    In 2008, the Postal Service established a dedicated Office 
of Sustainability to coordinate energy, fuel, recycling, and 
sustainability programs within our 33,000 facilities, nearly 
217,000 vehicles, and with our approximately 600,000 employees. 
We approached sustainability as an initiative that was 
fundamental to our business plan. Adopting sustainable 
practices is not only good for the environment, it also helps 
us reduce our operational cost.
    Last October, President Obama signed Executive Order 13514, 
Federal Leadership in Environmental, Energy, and Economic 
Performance. Although this Executive Order does not apply to 
the Postal Service, we were extremely honored when the White 
House press release accompanying the Executive Order recognized 
our work.
    Our leadership activities have included releasing the first 
Federal Government greenhouse gas emissions inventory, and our 
first ever sustainability report, which highlights our progress 
and looks at our future challenges.
    Some of our environmental achievements include reducing our 
energy intensity since 2003 by nearly $250 million each year; 
saving $42 million in fuel costs in quarter one of this year; 
implementing green teams that saved over $4 million last year; 
saving $3 million in a short agency-wide energy challenge that 
we initiated last year; avoiding approximately $1 million in 
costs last year via green IT initiatives; and we recycled over 
200,000 tons of waste last year.
    Moving forward, we have set targets to build upon these 
successes. Three of these targets coincide with the Federal 
agencies' targets. They are to reduce energy use and intensity 
in our facilities by 30 percent, reduce petroleum use by 20 
percent, and increase our use of alternative fuel by 10 
percent. By 2020, we have also incorporated our own goal to 
reduce greenhouse gas emissions by 20 percent.
    Our roughly 33,000 facilities vary greatly and provide 
unique challenges and large-scale opportunities for energy 
management efforts. We have conducted facility audits, 
modernized facility infrastructure and control systems, and 
improved processes and systems to allow for more effective and 
efficient management of our energy consumption. To help ensure 
ongoing success, we evaluate each energy impacting project and 
have implemented energy information systems.
    Another one of our priorities is managing fuel consumption. 
Our 217,000 vehicle fleet is, on average, approximately 18 
years old, and travels more than 1.2 billion miles a year, and 
we are consistently looking for ways to reduce it environmental 
impact. Vehicles are critical to our mission and we are 
thinking hard about what steps will best take us into the 
future and focusing on customer service and energy efficiency 
as our guiding goals.
    The Postal Service has always led the way in testing 
alterative fuel vehicles, which can use a variety of clean 
fuels. Currently, we have about 44,000 alternative fuel 
vehicles in our fleet and we are now gathering data on how best 
to improve our long life vehicles. Those are the delivery 
vehicles that you see each and every day in your neighborhood. 
We are investing $250,000 to assist five electric vehicle 
technology companies in researching and developing an electric 
vehicle conversion solution for those neighborhood vehicles. 
These projects will provide invaluable information on what 
might work best to transition our aging long life vehicle 
fleet. By working together with industry, our goal is to find a 
solution that is environmentally friendly, compatible with our 
business needs, and cost effective.
    We have also worked with consumers on environmental 
initiatives. On our Website, we created a special green 
section. At usps.com/green, customers can find helpful facts 
and suggestions, along with tools to improve their 
environmental awareness, measure their carbon emissions, and 
create conservation plans.
    We also have a Post Office Lobby Mail Recycling Program 
that we plan to expand to 8,000 offices in 2010. The program 
places secure recycle bins in post offices for customers to use 
when they are finished reading their mail. The simple but very 
effective message of the program is ``Read, Respond, and Please 
Recycle.''
    We look forward to working with the Congress on any 
legislation that will help the Postal Service to continue to 
fulfill its mission for the American public, ensure financial 
responsibility, and promote sustainable business practices.
    To close, I feel confident in saying that the Postal 
Service is ready to take the next steps in our green leadership 
role. Because of our size, the Postal Service could serve as a 
catalyst for leading the rest of the Nation toward a greener 
future.
    I appreciate your consideration. Thank you for inviting me 
to speak and discuss these important matters. I would be 
pleased to respond to any questions that you may have.
    Senator Carper. Good. Mr. Pulcrano, thank you very much for 
wonderful and encouraging testimony.
    I like to say that sometimes people would rather see a 
sermon than hear one, and I think in a number of respects, the 
Postal Service has shown us a sermon, really by your behavior, 
and I just applaud you for that. That is one of the reasons why 
you are here and why we wanted you to be here.
    Yesterday, I got to do something that was a lot of fun. I 
have a neat job that the people of Delaware have given me. It 
has some downsides from time to time, but a lot of upsides, as 
well. Yesterday, I got to drive the Chevrolet Volt. I call it 
the most advertised car in the world that has never been built. 
[Laughter.]
    It is something that the car makers developed and I have 
been following since I was in Detroit at the Detroit Auto Show 
several years ago when it was first unveiled by General Motors. 
What a fun car to drive. Did anybody here in the audience ever 
drive an electric car? If you have, raise your hand. They are 
not only clean and quiet, but they are also just a lot of fun.
    The fellow who was riding shotgun with me was the guy who 
was the development team leader for the Volt for the last 
several years and we had a good time driving. We drove on a 
slalom course that was on a huge parking lot where they used to 
have the D.C. Convention Center. I just drove as fast as I 
could and scared him to death. [Laughter.]
    Mr. Pulcrano. That is the nice thing about those vehicles.
    Senator Carper. He said, I am about to lose a car that is 
probably worth a million dollars because of this guy's driving. 
[Laughter.]
    But when we finished the drives around and around, he said 
to me, this vehicle has the ability, if it is at home or 
wherever it is being charged at night, he said, they lose 
electricity and the home has actually the ability to move the 
electricity the other way and to use the battery of the vehicle 
to provide electricity for the home. About a year earlier, I 
had driven another electric car back in Delaware that had been 
developed using a different platform.
    But the idea was to take some next steps on vehicle-to-
grid, where again we use a whole fleet of batteries in vehicles 
for storage, maybe for electricity you can create by offshore 
wind or onshore wind, or by solar or other renewables where the 
sun doesn't always shine and the wind doesn't always blow. So 
when it does, store the electricity, and when you need it, you 
just pull it out of the batteries of vehicles.
    I think this is something the Postal Service might be 
looking at. I don't know how familiar you are with the 
prospects for doing that, but I think it is something that you 
all might be looking at. I am always thinking about ways to 
save or make money. As the Postal Service faces these enormous 
deficits, you all have done a very nice job managing down the 
size of your workforce and finding a lot of efficiencies, 
looking for other ways to make money. But if you have any 
thoughts about what kind of potential there might be for the 
Postal Service with all their vehicles--how many vehicles do 
you say they have?
    Mr. Pulcrano. We have 217,000. About 170,000 deliver mail 
each and every day.
    Senator Carper. Given your business model and all those 
vehicles you have, is there any potential for not just saving 
money, but actually making some money through a vehicle-to-grid 
approach using your 200-and-some-thousand vehicles for that 
purpose?
    Mr. Pulcrano. We have explored that, Senator. In fact, we 
have met with the University of Delaware, which has developed a 
vehicle-to-grid technology. It is relatively expensive at this 
current time as there is no economy of scale in production.
    Mr. Kidd and I, and our teams have met several times. We 
have met with some of the electric providers and we have had 
conversations about being willing to test that technology and 
look at what opportunities it may present to the Postal 
Service.
    Senator Carper. Good. Well, I will be interested to see 
what you turn up. Thank you.
    Let me go back to Ms. Sutley, if I could. How long have you 
been in your job so far?
    Ms. Sutley. It has been just a year.
    Senator Carper. What is it like?
    Ms. Sutley. It has been a very exciting year.
    Senator Carper. It sure has been, hasn't it?
    Ms. Sutley. It certainly has.
    Senator Carper. You get to work on a lot of interesting 
stuff.
    Ms. Sutley. Absolutely.
    Senator Carper. Former Governor Peterson, who I mentioned 
earlier, the former governor of Delaware, from 1968 to 1972, 
has been one of my mentors, but he said one of the best jobs he 
ever had was the job that you now hold.
    The Executive Order that we are here talking about lays out 
some measures of success in saving energy and achieving other 
goals. For example, the agencies will report on greenhouse gas 
emission reductions and the reductions of petroleum-based fuels 
for the Federal fleet, which I think you have already said. 
Although the Executive Order does not require a report of cost 
issues, I believe knowing the financial ramifications could be 
very helpful. For example, knowing Federal agencies saved 
millions or tens of millions of dollars over the previous year 
due to increased energy efficiency investment would, I think, 
underscore the importance of Federal leadership.
    I just want to ask you, could the White House include cost 
savings estimates as part of its regular reporting? Have you 
given that any thought? Is that something that you all have 
discussed? Are you open to doing that? Your thoughts?
    Ms. Sutley. Well, thank you, Senator. I am always happy to 
hear about my distinguished predecessors at CEQ, and as you may 
know, we are celebrating our 40th anniversary this year, so it 
is a great institution.
    The Executive Order really tries to drive performance, and 
in a couple of ways. First of all, the oversight of the 
Executive Order is with the Office of Management and Budget and 
with the Council on Environmental Quality. So we want to make 
sure that we are achieving the twin goals of environmental 
improvement as well as cost savings for the taxpayers. The 
sustainability plans that the agencies will submit in June, the 
greenhouse gas emission reduction goals that they have already 
submitted are really based on trying to prioritize those 
actions that will save the most money. And then we have the 
opportunity through the OMB process and through the scorecards 
to report on performance. So certainly open to looking at ways 
that we can show the taxpayers what they are getting for these 
investments.
    Senator Carper. What I am going to do is just follow up in 
writing with a request that you further explore that. I see 
value in reporting cost savings, along with some of the other 
measures of success that you have cited in energy efficiency. 
So I am going to follow up, and if that is something that you 
all think might have value, I would be delighted if you would 
run with that ball.
    Mr. Kidd, you have given us a chart that you were good 
enough to put up on the screen that shows the time for energy 
savings to actually break even and then start making money. 
Some, such as new photovoltaic panels, could take years to pay 
off. Others, like metering, which you pointed out, smart 
metering, much quicker, sometimes in a matter of months--2 
months, in fact, from your graph, if I am not mistaken. Does 
this show that the Federal Government needs to take more of a 
long-term view of the economics of energy savings? In other 
words, the Federal Government should think not just about the 
cost maybe this year or this month, but over the next 5 years 
or even 10 years? If you could take that one for starters, I 
would appreciate it.
    Mr. Kidd. Well, sir, that is actually a very easy one. The 
answer is yes.
    Senator Carper. Thank you very much. [Laughter.]
    Mr. Kidd. Sir, as I said in my spoken remarks and in my 
prepared testimony, we need to think of our expenditures as 
investments, investments in energy efficiency, and investments 
in renewable power. We need to recognize that the payback 
period for some of these investments is longer than the one-
year budget cycle or an election cycle. We need to think about 
the cumulative benefits, not just the cost-benefits, but the 
other attendant social benefits, as well, whether it is 
increased work or productivity, a better experience for the 
great American public when they come in to a Federal building, 
or, as Dr. Robyn pointed out, benefits such as the security and 
welfare of our soldiers. So we certainly need to take the long 
view.
    One of the things that we in FEMP are doing in support of 
all our Federal customers is that we are trying to provide 
decision support tools and planning models based on marginal 
abatement cost curves, based on best practice in the private 
sector, trying to guide the other agencies' investment 
decisions so that they will get the highest amount of benefits 
possible from their expenditures.
    Senator Carper. Thank you. I am going to ask you another 
question, if I could. Your metering example. I found just 
especially intriguing. It kind of jumped off the chart at me, 
in fact. And I note that your chart showed savings could be 
realized in just a couple of months. I understand with advanced 
metering technology a facility manager can known in real time 
when there is a spike in energy use.
    I don't know who said this, but somebody once said, what 
gets measured gets managed. That is a phrase that most of us 
have probably heard. I also understand that in companies like 
Wal-Mart--I visited one of their big facilities in Delaware 
recently--advanced metering is employed, they think it saves 
money and that is why they are interested, in part, in doing 
it.
    Am I missing something? Do you think Federal agencies 
should adopt advanced metering as a technology with a 
relatively quick payback period? Maybe you are already doing it 
and I am not even aware of it, but----
    Mr. Kidd. The Federal agencies have a number of statutory 
requirements on metering and building audits and assessments 
which are closely related to metering. By the data that we 
have, the Federal agencies are actually ahead of where they 
need to be. This is EISA Section 432. Advanced metering 
certainly has the potential, where applicable and appropriate, 
to generate these high returns. So you might not want to meter 
every single building or every single piece of equipment in the 
building. But when you look at the realm of the possible and 
you have the idea of having an electronic device on every 
facility and all the major energy-using equipment in that 
facility--your heating, ventilation, and cooling (HVAC), your 
boilers, your chillers, your air handling equipment--and the 
use is reported nearly instantaneously, you can then get to the 
point where you can control and direct your building to operate 
efficiently.
    One of the greatest areas for energy efficiency is to just 
use the energy efficiency investments that have already been 
installed on the premises. There have been a number of cases 
reported where Federal agencies or others have an efficiency 
measure or an energy conservation measure that is not being 
used.
    Senator Carper. I think that is a good point, but can you 
just give us a couple of examples where that has proven true?
    Mr. Kidd. I will go ahead and point a finger at our own 
agency, the Department of Energy. There was recently an IG 
audit that indicated we had setback controls which were not 
being used. A setback control is like a building thermostat. It 
turns the temperature down when people go home and turns the 
temperature up when folks come to work in the morning. An 
advanced metering system that was measuring building 
performance would have immediately identified that and flagged 
it for correction.
    Our ideal state is to get to a place where Federal 
buildings are continuously commissioned. Commissioning right 
now is a process where outside experts come into your building 
and make sure everything is working. It is like taking your car 
on a service schedule to the dealer once or twice a year and 
they make sure your car is working. Continuous commissioning is 
where we would harness the powers of meters and associated IT 
technology to make sure your building is commissioned 
continuously and it is updated and operating at peak 
performance all the time.
    Senator Carper. All right. Thank you.
    I want to ask the next question of Dr. Robyn and Mr. Kidd. 
You both mentioned two interesting public-private partnership 
tools. Incentivizing private businesses to partner with the 
Federal Government is a useful approach, I think especially 
when the investment dollars come from the private sector. I 
understand that the power purchase agreements allow the private 
sector to economically make use of military land to build 
solar-powered generators.
    And so, for example, if the Dover Air Force Base, a major 
installation in our State, would--and, I might say, the current 
holder of the Commander in Chief Outstanding Air Force Base in 
the World--want an alternative energy project, the City of 
Dover, which is the local utility, by the way, could agree to 
pay for and construct a solar power facility using the Dover 
Air Force Base's land or their building space. In return, the 
Air Force Base would receive electricity at a reduced rate.
    And energy service performance contracts are, I am told, 
another creative way to pay for energy efficiency projects, 
such as more efficient heating and control units for buildings. 
But both can often mean that there is no need for the initial 
Federal investment, but see savings for Federal agencies.
    So with that as a backdrop, could you all just take a 
minute or two and talk about the power purchase agreements 
employed by the Department of Defense as well as the energy 
service performance contracts? Dr. Robyn.
    Ms. Robyn. Sure. We are using power purchase agreements, 
enhanced use leases, other mechanisms like that at a number of 
the renewable projects.
    For example, at Fort Irwin in Southern California, huge 
Army National Training Center, the Army Corps of Engineers is 
partnering with two developers, not the local utility but two 
energy developers, to build a 500-megawatt solar facility. I 
mean, that is phenomenally big.
    Senator Carper. That is huge.
    Ms. Robyn. Yes. It is immense. I think Fort Irwin's peak 
power need is something like 35 megawatts, so it is several 
orders of magnitude----
    Senator Carper. How big is this facility, the base?
    Ms. Robyn. Well, Fort Irwin is immense----
    Senator Carper. Bigger than Delaware? We are immense. 
[Laughter.]
    Ms. Robyn. We have 31 million acres of ranges and 
installations, and I used to know what that was equivalent to 
in terms of a State, but I can not remember.
    Senator Carper. Several Delawares.
    Ms. Robyn. I am sure it is not as big as Delaware. 
[Laughter.]
    So, yes, enhanced use leases, power purchase agreements are 
absolutely critical to these sort of deals. The Fort Irwin 
project will be somewhere on the order of $1.5 billion, and as 
you say, the private sector will finance that. What Fort Irwin 
will get is a reduced rate on electricity. There may be some 
sort of a preferential treatment in the case of an emergency 
for critical operations.
    Senator Carper. Before you move on----
    Ms. Robyn. Yes?
    Senator Carper [continuing.] Again, how much money in the 
investment? How many dollars goes into that investment?
    Ms. Robyn. How much are we putting into--I don't know. Mr. 
Kidd, do you know?
    Mr. Kidd. It is not in the footnote here.
    Ms. Robyn. I think I have some numbers on Energy Savings 
Contractors (ESCOs). Well, this is a combined number for----
    Senator Carper. What was the total investment?
    Ms. Robyn. For Fort Irwin--or just that one project?
    Senator Carper. That one project.
    Ms. Robyn. It is around $1.5 billion. There have been 
different numbers reported in the press.
    Senator Carper. And some of that is from private----
    Ms. Robyn. That will all be private money.
    Senator Carper. OK. So in terms of taxpayer dollars that 
are involved in that project, how much would that be?
    Ms. Robyn. I don't think there will be any----
    Senator Carper. Zero?
    Ms. Robyn. Yes.
    Senator Carper. Is that correct?
    Ms. Robyn. Right.
    Senator Carper. OK. So $1.5 billion in private dollars, 
maybe nothing from the Federal Government. And in return for 
that, the Federal Government gets less expensive electricity.
    Ms. Robyn. Right.
    Senator Carper. And do we know how much less? Ten percent? 
Twenty, 30, 40 percent?
    Ms. Robyn. I think in the case of Nellis Air Force Base 
with a 14-megawatt facility which provides roughly a quarter of 
their needs is saving $1 million per year.
    Senator Carper. All right.
    Ms. Robyn. A million a year. Can I say a word about Energy 
Savings Performance Contracts (ESPCs)? And Mr. Kidd really is 
the expert on ESPCs, and they are a wonderful mechanism 
because, again, it allows the Federal Government to make 
improvements that it would not otherwise be able to by having 
Honeywell or some other ESCO be paid out of the savings, the 
savings that the Federal Government would otherwise get in its 
energy bill as a result of the new technology.
    But let me just mention one issue with ESPCs and it ties 
back to my notion of a test bed. When a military installation 
or when a Federal agency works with an ESCO, and ESCOs are the 
ones who carry out ESPCs, the ESCO is trying to minimize its 
risks----
    Senator Carper. I am not real good on acronyms. Go ahead 
and say what that stands for.
    Ms. Robyn. ESCO is Energy Savings Contractor. I think of 
Honeywell because I met with Honeywell, but there are many 
companies that are ESCOs. Honeywell is one of the largest. 
Johnson Controls is another one. There are a lot of very small 
ones that specialize in--for example--putting daylighting into 
Federal buildings, and they are terrific. But their goal is to 
minimize their risk. That is how they make money. And so they 
want to use technology that does not entail risk.
    We, the Federal Government, should be willing to take on 
some risk and that is what we would be doing and the test bed 
concept envisions that. We have facilities. We are willing to 
take some risk. Come try your novel technology out on us. We 
can afford to be patient and to take some risk. When you use an 
ESCO, there is an opportunity cost to doing that because you 
are putting in some existing technology as opposed to trying 
out something more novel that might be the next generation of 
technology. So that is a cautionary note on the ESPC concept.
    Senator Carper. All right. Thank you.
    Mr. Kidd, any point you want to make on this before we move 
to the next one?
    Mr. Kidd. I never pass up an opportunity to talk about all 
financing and public-private partnerships.
    Senator Carper. OK.
    Mr. Kidd. I think all the Federal agencies appreciate the 
authorities that Congress has given them to enter into private-
public partnerships in the area of energy savings and renewable 
energy production. Congress has given the Federal Government 
four tools: UESCs, Utility Energy Savings Contracts; ESPCs, 
Energy Savings Performance Contracts; PPAs, power purchase 
agreements; and enhanced use leases (EU's). These are the major 
mechanisms for investment in energy efficiency and renewables 
in the Federal Government.
    We don't have all the data for 2009, but it looks like last 
year, 2009, was the best year ever in terms of Federal 
investment in energy efficiency projects. Nearly an 80-some-
percent increase over the previous year. And of that investment 
amount, roughly two-thirds came from appropriations and one-
third came from these various mechanisms. Without these 
mechanisms, the Federal investment basically would have been 
one-third less, and that adds up and makes a difference.
    I alluded to it earlier in my testimony: I would like to 
see the authorities on these mechanisms expanded so that all 
agencies are on an equal footing. Even agencies that have land, 
like Nellis Air Force Base, and where it makes financial sense 
to enter into a power purchase agreement, if the agreement is 
for more than 10 years, they can't enter into it right now.
    Senator Carper. Well, what should we do about that?
    Mr. Kidd. We have discussed it with your staff. It is just 
a matter of taking the authorities that are available to the 
Department of Defense and extending them to all the Federal 
agencies.
    Senator Carper. OK. Thank you.
    Mr. Kidd. On ESPCs, Energy Savings Performance Contracts, I 
would like to align myself with the comments of Dr. Robyn. 
These are a great tool when appropriately managed and used 
where it makes sense to do so. They do have some limitations. 
They are not perhaps as aggressive as we in the Federal 
Government would like. And there is also an attendant cost of 
capital expense.
    So last year, it looks like the Federal Government made 
about $440 million of investment. None of that money came from 
appropriated funds. But the ESCO, the company that did the 
work, borrowed the money, and it makes the total project cost 
about 2.4 times higher.
    One of the things that I would like to see us do and work 
collectively is to reduce the cost of capital to the Federal 
agencies. When the project basically has the good faith and 
trust of the Federal Government as the basis of risk, we should 
be paying full market rates for the cost of capital as if you 
were a company borrowing the money on Wall Street. Thank you.
    Senator Carper. And you already discussed that with our 
Subcommittee staff?
    Mr. Kidd. They are all nodding their heads, so I think that 
is yes.
    Senator Carper. That is a good sign. Thank you.
    Dr. Robyn, let me come back to you. You represent quite a 
unique agency. The Department of Defense is tasked with the 
mission of keeping our Nation safe. If the Department of 
Defense can't perform this task, there probably wouldn't be any 
Postal Service or Department of Energy or budget process. There 
might not even be a legislative body like the Congress.
    The point is that the Department of Defense's ability to 
achieve its mission is in many ways the most important mission 
of any agency in our Federal Government. Many would argue that 
nothing should get in the way of this mission or make it harder 
for the Department to achieve it. And I am sure you have 
encountered many of these advocates from time to time in the 
Pentagon.
    This means that you and some of your colleagues in charge 
of the Department of Defense's energy policies and energy use 
have not an easy assignment. How are you going to incorporate, 
or how are you endeavoring to incorporate energy efficiency 
into an agency that historically has had an unhindered mandate 
to use whatever resource it needs to protect this country? Has 
energy efficiency and the Department of Defense's mission ever 
been at odds? My guess is they probably have. You actually 
alluded to this a little bit in your testimony. But how do you 
make energy efficiency harmonize with the Department of 
Defense's mission?
    Ms. Robyn. A couple of months ago, Nancy Sutley and I were 
meeting with a senior Defense official--I won't say who it was, 
but somebody quite senior who at one time worked on the staff 
in the Senate, and he said to both of us, the change here with 
respect to energy is reminiscent to him of what happened with 
child care many years ago, in the late 1980s. He said, Congress 
told the Department, you have to provide child care for service 
members, and the Department was resistant to it, but within a 
year they had pivoted and embraced it and the services have 
among the best child care programs that there are in the 
Federal Government.
    And, he said, the same thing has happened with energy 
efficiency, that we get it because of the tremendous 
operational restrictions that this tether of fuel has placed on 
us. It has become very graphic in Iraq and Afghanistan, how 
difficult it is to operate when you have to have these long 
convoys. And so I think there is a way--a sense in which people 
get it in a way that they have not before.
    Now, it is true that operational energy is exempt from the 
target. It has to be. We can't be on the hook to meet a target 
because we don't know how many wars we will be in, if any. And 
it will take a long time, at least with respect to weapons 
systems. But I think the Department has been a leader in 
technology forever and I think that will be the case here. We 
won't be the leader when it comes to a lot of the energy 
technology. That will be the Department of Energy (DOE). But we 
will be a test bed.
    And I don't sense resistance to it. What I sense is 
impediments of the kind that Mr. Kidd has talked about. It is 
just the Federal Government budget is structured in such a way 
that we don't have a capital budget, and so when an investment 
makes sense over time, we have to figure out a way to pay for 
that up front that doesn't get scored by OMB, and these 
mechanisms that we have been talking about are ways to do that.
    Senator Carper. Mr. Pulcrano, the Executive Order that we 
are talking about--what is the number----
    Mr. Pulcrano. Thirteen-five-one-four.
    Senator Carper. Executive Order 13514 calls on agencies to 
better monitor the energy they are using, and in your 
testimony, you mention how the Postal Service tracks its energy 
use through a single system. I believe you call it the 
corporate energy interface. Is that what it is called? You 
probably have an acronym for it.
    Mr. Pulcrano. That is one of our measurements. It is the 
energy management system.
    Senator Carper. All right. Just take a minute and explain 
to us how this system works, if you would, please, and what 
kinds of rewards that the monitoring at that level can bring to 
an agency. And I would invite the other witnesses to also 
comment on the benefits, if you see them, in such a system and 
perhaps why all agencies haven't considered following the 
Postal Service's lead. Maybe they are.
    Mr. Pulcrano. Let me talk about this in a couple stages. 
First, at the Postal Service, we have an inventory of 33,000 
facilities that we directly manage. Of those 33,000, we have 
selected 2,000 that are the largest facilities, and they 
account for about 75 percent of our overall electrical energy 
use.
    Senator Carper. So how many facilities do you have, 33,000?
    Mr. Pulcrano. Thirty-three-thousand.
    Senator Carper. You picked 2,000 and they represent 70 
percent of the----
    Mr. Pulcrano. These 2,000 facilities represent 75 percent 
of our total energy use. So we have narrowed it down and we are 
focusing on those particular facilities. We started this 
program in 2007 and currently we are aggressively conducting 
energy audits at each and every one of those facilities. We 
have completed 500 of them to date. We started with the 
largest. To give you a sense of the scale, most of those 
facilities are approximately a million square feet--our 
facility in downtown Manhattan, Morgan Station, which has a 
green roof, I might add--is 2.2 million square feet. So we have 
targeted and completed the largest facilities.
    Based on those audits, we examine possible capital 
improvements and put them in rank order. We look for a maximum 
return on investment because currently we are in difficult 
economic circumstance. We really have to be very careful how we 
invest our money. So we look for the best return.
    We also have an energy management system. To date we have 
6,800 of our facilities in that system, and the system monitors 
all our use. It provides our fuel use, our natural gas use, our 
energy use, etc. We are able to track it on a month-to-month 
basis and we measure performance against the goals we have set 
corporately. We have tied those goals to our individual 
managers' performance, this year, and next year, it will be 
compensable. This year, we are baselining it.
    We have the National Performance Assessment (NPA) system. 
It is the methodology by which our management team across the 
country is recognized. The NPA assesses progress toward a 
number of corporate goals--safety goals, service goals, etc. 
This year, one of the new goals is baselining an energy index. 
It counts for both fuel reduction and electricity reduction, 
and we have weighted them appropriately. This is how we have 
tied it to our managers' individual performance. This year, we 
are baselining. Next year, it will become part of their 
compensable bonus program.
    The other thing that we are doing is in those 500 largest 
facilities, much as Mr. Kidd has discussed, our facilities 
group is going to meter those facilities and we are going to 
bring it into a central command system so that we can monitor 
those largest facilities' energy use in real time. So if we see 
a spike in energy use compared to yesterday or compared to last 
year, same time, we would be able to pick up the phone and call 
that plant manager and say, something is not right. I mean, it 
is really to that extent that you can do this. So that is how 
we are targeting it.
    Senator Carper. Good stuff.
    Do any other witnesses want to comment on some of the 
things that Mr. Pulcrano just mentioned? Go ahead, please, Mr. 
Kidd.
    Mr. Kidd. Thank you very much. I note a common theme in 
some of your questions and some of the answers, and that is the 
emphasis on behavioral and cultural change. In my remarks, I 
mentioned the requirement for an integrated whole systems 
approach. There is no single technology. And one of the most 
critical components of any suite of technologies or any efforts 
is leadership and an emphasis on cultural change. Your smartest 
meter doesn't matter if no one pays attention to what it is 
telling them.
    So I think all across the Federal Government, the agencies 
are starting cultural changes now, and Dr. Robyn mentioned the 
increased emphasis that this is being given, both structurally 
and organizationally in the Department of Defense. I work with 
all the Federal agencies, and I would say that trend is 
occurring across the Federal Government. The Federal agencies 
are embracing the need for cultural change, and this is 
highlighted and reinforced by the Executive Order.
    Senator Carper. Well, I would say this is the change we 
need.
    Let me come back to you, if I could, Ms. Sutley. It seems 
to me from our testimony today that adding energy efficiency to 
our Federal buildings could save a whole lot of money. In fact, 
it is already starting to in a variety of places. However, I 
could imagine that those watching the budget for Federal 
buildings could see the Executive Order as maybe an additional 
burden, higher costs during our times of economic challenge and 
huge Federal budget deficits.
    Doesn't the Executive Order require a very cost-effective 
and common sense planning process which is the requirement to 
consider energy efficiency and other sustainability measures 
during the planning for new building construction? Isn't that 
part of it?
    Ms. Sutley. Thank you, Senator. The whole thrust and theme 
of the Executive Order is to really make it an integrated 
system to build sustainability into everything that agencies do 
and that the sustainability plans focus on the highest priority 
for those investments that pay back the quickest and that save 
the most money. So there is real opportunity here, and as you 
have heard from my colleagues at the table, these are real 
world examples of how agencies large and small have been able 
to implement those things.
    The other thing I would say is that--not only for buildings 
that are managed by the General Services Administration and the 
Department of Defense, or they are using Recovery Act money 
when they do building refurbishments and some deferred 
maintenance and things like that, looking to improve the energy 
performance of those buildings, and that is already paid for.
    So we believe that there is real opportunity to make the 
investment now to save the taxpayers money, to create clean 
energy jobs, and to make the Federal Government more 
sustainable overall.
    Senator Carper. OK. As I mentioned earlier, the amount of 
buying power that the Federal Government possesses is 
remarkable. Unfortunately, a lot of buying power, we are 
borrowing from around the world and we are buying way too much, 
as you know. But we buy over a half-trillion dollars' worth of 
products every year. In fact, our 500,000 Federal buildings 
represent about, I am told, about 5 percent of the total 
commercial real estate in our Nation.
    How does the Executive Order work to leverage this enormous 
buying power to help grow the emerging green sector of our 
economy? How can we work with the private sector to help 
provide a healthy or healthier marketplace for innovation? And 
sort of a follow-up to that, how can we use energy efficient 
technologies in our Federal buildings to spur the wider 
adoption of these technologies in the rest of our Nation's 
buildings?
    Ms. Sutley. Just to say, I think, with respect to the 
procurement power of the Federal Government, and we can go back 
to World War II to when the Federal Government essentially 
institutionalized recycling, when they asked people to save 
their nylons and tin cans and things like that, and up to more 
recent times, the Federal Government really being one of the 
first parts of our economy to think about spurring on 
investment in innovation and green buildings. So the Federal 
Government has not only a history of doing this and across many 
sectors, not just the green sector, but for many entities who 
sell goods and services to the Federal Government, the Federal 
Government is often their largest customer.
    So the innovation and entrepreneurship that will emerge 
from making it--for requiring agencies to think about green 
procurement, is to find ways to remove some of the barriers to 
green procurement, we think will drive innovation and 
entrepreneurship in the green sector. This enormous buying 
power that the Federal Government will provide real opportunity 
for businesses, small and large, to innovate and to provide 
green services and goods to the Federal Government.
    Senator Carper. Good. Does anyone else want to take a shot 
at that?
    Mr. Pulcrano. We are exploring other alternatives. 
Currently we have about 10 facilities that have significant 
solar arrays and we are looking at how we might increase our 
use of solar energy.
    Our supplies management group is examining how we can focus 
our purchase systems and recommend which products they should 
buy that are the most environmentally friendly. What products 
are ``green products,'' etc. Those are the products that we as 
an organization prefer that our folks buy. Additionally, we 
increased our alternative fuel use 26 percent last year.
    We are looking at where we can use our buying power, to 
drive in that direction. To be, not only a sustainable 
enterprise ourselves, but also to partner with suppliers who 
have the same principles, green leadership, and guidance 
factors that we are embracing.
    Senator Carper. Dr. Robyn, anything you want to add to this 
question?
    Ms. Robyn. Not to sound like a broken record----
    Senator Carper. Go ahead. Actually, I think repetition is 
good. [Laughter.]
    Ms. Robyn. Let me make two points. The first is that when 
you talk about $500 billion in buying power, it sounds 
incredible, and it is. There are a lot of impediments that you 
have to work your way through. I think we buy Energy Star 
electronic products, but we disable the features in many cases 
for security reasons, and security turns out to be an issue 
when running them. When you try to install advanced meters, you 
run into problems with the Chief Information Officer on a base 
because it fouls up some other things. So, I mean, it is not 
easy. If I could understand why we don't have advanced meters 
or advanced energy management information systems at all of our 
installations, I would understand everything. I mean, it is not 
easy. So it is a complicated problem.
    But the good news is--and this goes back, again, to the 
test bed concept--where I think the Defense Department can 
really make a contribution is using its procurement power as an 
early technology adopter, but also an early customer of 
technology that can help create markets, and that is happening 
with renewable technology, but it can also happen with energy 
efficiency technology.
    So when we think about the procurement power of the Federal 
Government, we need to think about that procurement at a very 
early stage when technology is coming out of the labs and it 
isn't yet commercial and the Federal Government has the ability 
to fill that gap.
    Senator Carper. OK. Thank you. Mr. Kidd.
    Mr. Kidd. Well, I agree with everything that the other 
panelists have said. I would just digress a little bit and talk 
to your last point about how we can spur wider adoption. I 
think this is where the Federal Government can play a unique 
role in exhibiting to the American people the realm of the 
possible.
    We get wider adoption when the average American goes to 
their hardware store and chooses to buy the LED light as 
opposed to the incandescent light, and there are some unique 
opportunities in the Federal Government. First of all, the 
Postal Service has 30,000-plus facilities that are basically in 
every community in America; and every American at one time or 
the other goes to the Post Office. Why can't they go to a net-
zero Post Office every time they go and see what is possible 
and come back to their home and make the same sort of 
purchasing decisions in their home?
    An even sweeter spot is in the Department of the Interior. 
We have 500,000 Federal buildings. We have 756 visitor centers 
in the Department of Interior that get over 500 million 
visitors a year, and these visitors go to these interpretive 
centers to learn. Why can't they learn what the realm of the 
possible is for net-zero energy and take that back to their 
schools and their churches and their households and say, we saw 
the Federal Government do it. We can do the same.
    Senator Carper. Great points.
    I am going to a question that sometimes I ask panelists 
when we have a little bit of time at the end. I have a couple 
of comments that I am going to make when we conclude, but I 
just want to extend to each of you the opportunity to maybe add 
a point or two that maybe you didn't have a chance that you 
might think might be helpful in this endeavor, or maybe to 
reemphasize something that you have already said.
    Mr. Pulcrano, anything else that you want to reemphasize or 
just a point that when somebody else was testifying, you said, 
well, that reminds me of something I would like to say?
    Mr. Pulcrano. I think you provided the opportunity, 
Senator. You are very familiar with our financial situation.
    Senator Carper. And I commend you very much, as I did the 
Postmaster General yesterday, for working as diligently as you 
are on so many fronts to rein in costs, control your expenses, 
and also to look for other ways to develop new sources of 
revenue, and I just urge you to continue both.
    Mr. Pulcrano. Well, we thank you. On behalf of the Postal 
employees, I want to thank you, Senator.
    What we at the Postal Service need is the flexibility, 
really, to determine what our network will be in the future. We 
have a tremendous opportunity and it is a subject that draws 
various responses. We need to look at things like changing our 
network to go to 5-day delivery. If we were to go to 5-day 
delivery, for example, that would be a 15 percent reduction, 
about 24 million gallons a year, in our fuel use, and the 
environmental impact that would bring with it. We would still 
be able to provide the service, the universal service at 
affordable rates to the American public, which is our mission. 
We need to have flexibility to make those types of network 
decisions.
    Senator Carper. All right. Thank you.
    Mr. Pulcrano. Thank you.
    Senator Carper. Before we turn to Dr. Robyn, I would say on 
5-day service, some of my colleagues, as you know, are not 
enthusiastic about it, in fact, quite the opposite. But there 
are some who are supportive of giving you that kind of 
flexibility. We probably can learn from what other countries 
have done in that regard.
    When I was governor of Delaware, I served on the Amtrak 
Board, and we tried, as Amtrak does today, to figure out how to 
rein in their growth, their costs. One of the things we sought 
to do was to reduce frequencies on certain train routes outside 
of the Northeast Corridor, service where we used to provide it 
every day of the week, or 5 or 6 days a week, we would go down 
to 4, 3, or 2 days a week.
    And what we found is that when we reduced the frequencies 
on a daily basis, we saw the bottom drop out in terms of the 
folks who would take the train on those routes because there 
were less opportunities, like on a round trip, to come back on 
the same day. People just stopped thinking about using the 
train. So there are those kinds of unanticipated consequences 
we just need to be mindful of. But this is a point that the 
Postmaster General reiterated again yesterday--I appreciate 
your raising it again today.
    Mr. Pulcrano. Thank you for listening.
    Senator Carper. Thank you very much. Mr. Kidd.
    Mr. Kidd. Sir, I would like to just express my appreciation 
to you and your staff for giving me the opportunity to be here 
and I look forward to working with them as we go forward.
    Senator Carper. Thank you. Ms. Sutley.
    Ms. Sutley. Thank you, Senator. One thing I don't think we 
talked a lot about today was how we reached out when the 
President signed the Executive Order to all Federal employees 
to solicit their ideas----
    Senator Carper. Oh, good. That is smart.
    Ms. Sutley [continuing]. About how we can green the 
workplace, and----
    Senator Carper. Did you get a lot of responses?
    Ms. Sutley. The responses were overwhelming. We had a 
voting system and we had 165,000 votes. We had a lot of really 
good ideas, and I think there is such interest and enthusiasm 
among Federal employees, both civilian and military, for 
greening the workplace, great ideas to save money and great 
ideas to make their workplaces better places to work, and these 
are ideas that will not only help the Federal Government save 
money, but are also ideas that could be shared among non-
Federal, State and local government and private sector 
employers, too. But we were just bowled over by how much 
enthusiasm there was among Federal employees.
    Senator Carper. Well, that is great to hear.
    I do have another question for you. Some of you already 
mentioned ideas. I don't want to let a panel like this slip 
away without asking for you to add some things to our ``to do'' 
list here, not just in this Subcommittee but in the Congress, 
things that we can do to help support the initiatives that will 
enable us to not just reduce greenhouse gases, not just reduce 
our dependence on fossil fuels, but save us real money.
    Some of you mentioned a couple of things that would be 
helpful for us to do. Maybe if you could each give us another 
idea or two. You can reiterate what you have already said, but 
just give us a couple of items for our ``to do'' list here, 
please. What can we do to help? You have mentioned a number of 
things that we are doing, that we have done, but if you also 
mention a couple of things we ought to be doing or should 
consider. If you have another idea or want to reiterate one, 
please, use this opportunity. Anybody?
    Ms. Sutley. Let me just start with a little bit of an 
overview, just to say that in asking the agencies to do these 
sustainability plans, I think we will learn a lot, and we have 
already heard them. These folks are the real experts about some 
of the impediments and barriers and things that--in the complex 
series of rules that the Federal Government lives under, both 
budgetary and otherwise. I think we will learn a lot about 
where there may be impediments that we need to remove, and you 
have heard some of them today. We would just be very interested 
in continuing the discussion with the Subcommittee and with 
yourself about some of those ideas.
    Senator Carper. OK, thanks.
    Mr. Kidd, I know you mentioned at least one of them and 
said, I think, something to the effect of giving other agencies 
outside the Department of Defense some of the same prerogatives 
that the Department enjoys, but if you want to mention that one 
again or any others, go ahead.
    Mr. Kidd. Sir, I will just mention the ones I was able to 
get on your provided piece of paper here in a short amount of 
time. Earlier, there was an interagency working group and we 
submitted a range of suggested legislative actions to your 
Subcommittee and other committees that went through that, and 
so your staff have those. I will highlight a few things that 
were in there as well as some others.
    (1) Expand the power purchase and enhanced use lease 
authority to all agencies. (2) Extend the term of a renewable 
power contract. Right now, the Federal Government cannot buy 
renewable power for more than 10 years, for example, biomass 
power for a plant, which adds price volatility to some of our 
renewable actions. (3) I mentioned reduce the cost of capital 
for Federal ESPC projects. (4) Clarify under the ESPC 
authorities the ability to use combined funds and recognize the 
implications that it has in the budget process. (5) And then 
also allow for expanded generation capacity for agencies to 
receive back the money that they would create from expanding 
their authorities.
    For example, we have a number of turbines across America in 
Federal dams. These turbines are working fine. They are in the 
middle of their engineering life. They have 16 or 20 more years 
to go before we would ever want to replace them. But if we were 
to replace them with newer technology, we could increase by 5, 
10, 15 percent the amount of power produced by that dam for the 
same amount of water, but there is no financial incentive for 
the agency that owns the turbines to do so now because they 
don't get to keep the difference or any portion of the 
difference. And we could generate a longer list with more time.
    Senator Carper. I have always been intrigued by how do we 
harness financial incentives in order to drive good public 
policy behavior, and whether it is in health care and 
incentivizing people to take better care of themselves, stop 
smoking, lose weight, that kind of thing to help drive down 
health care costs to agencies.
    The Veterans Department, when they sell a property, they 
get to keep part of the proceeds. Meanwhile, we have all these 
tens of thousands of abandoned properties, surplus properties 
that we don't need that we pay security and utilities for. For 
the most part, the agencies that own them, they have to spruce 
them up to sell them. They don't get any money to spruce them 
up, get them ready to sell, and then when they sell them, they 
don't get to keep any of the proceeds. With the VA, we do. They 
get to keep maybe 20 percent of the proceeds to use in their 
programs.
    What you just said just reminds me of financial incentives 
and I especially like that idea. Thank you.
    Mr. Pulcrano, last word?
    Mr. Pulcrano. Well, I think I have raised the issue that we 
are most concerned about at this time. I thank you for the 
opportunity.
    Senator Carper. Not at all. In closing--let me see, what 
time is it? It is about 4:15. In about 4 hours and 45 minutes, 
my colleagues and I will be over in the House of 
Representatives, and we will be hearing from the President 
there who will begin addressing us and our Nation around 9 p.m. 
Eastern time this evening. We expect him to talk about a whole 
lot of things, our economy and how to create more jobs, how to 
get this economy moving even more quickly in the right 
direction, what to do to try to extend health care, not just to 
people who don't have it, but how to rein in the growth of 
health care costs and improve quality outcomes.
    He is going to be talking with us about how to reduce our 
Federal budget deficit and the flood of red ink that we have 
seen rising over the last 9 years now, to try to slow that 
down, to stem that flood. There are a number of things on that 
point that I expect him to talk about. We expect him to call 
for a freeze, essentially a freeze on domestic discretionary 
spending starting in the next fiscal year for 3 years and then 
extend it beyond that to not exceed the rate of inflation.
    We expect for him to call for the establishment of a 
bipartisan commission that would be empowered to look at our 
government rather broadly with respect to especially 
entitlement programs, but other spending, as well, and to come 
back to us with recommendations on what to do to help rein in 
their costs a bit and to make them more sustainable for the 
long term and to talk to us honestly about revenues, a panel of 
Democrats and Republicans, maybe drawing from some of my former 
colleagues, people that have worked here that now are doing 
other things with their lives. And those are all good and 
important.
    When President Obama was a U.S. Senator, I remember being 
in the Senate Chamber on the last day that he spoke as a 
Senator. It was right after the election. And I wrote down on 
the back of an envelope and I gave to Melissa about six or 
seven things that the Subcommittee had been looking at that 
would enable us to spend our money more wisely. He said, ``I 
can't read your handwriting.'' [Laughter.]
    Actually, he probably could, if he tried. But he said, why 
don't you put it in a letter or memo to me so not only I can 
read it, but other people will be able to read it, as well. And 
among the things I suggested to him, if we are interested in 
controlling spending and being better stewards of taxpayers' 
dollars, go after improper payments. That is the amount of 
money that is being misspent, largely overspent, in the tens of 
billions of dollars every year.
    And not just go after improper payments, but all levels of 
Federal Government domestic spending, and defense spending, 
entitlements. But when we find out that we have improperly 
spent money, that it has gone to places it shouldn't go, go out 
and get the money back. And in some cases, hire a private 
contractors to do it and let them keep a portion of the money 
that we have recovered.
    And we are starting to do that at Medicare. I think last 
year we recovered $700 million in just three States from fraud, 
going after the money--I think they should go after all 50 
States. We are going to take some of those lessons and go after 
Medicaid fraud money and recover that, split the money 50-50 
with the States and use private contractors.
    I mentioned to the President, on the back of my envelope, 
the discussion that we had a $300 billion annual tax gap, 
monies that are owed to the Treasury and not being collected. 
We have some idea who owes it and we need to do a much better 
job of getting that money. We have major weapons systems 
overruns, as Dr. Robyn probably knows. I think in 2001, the 
estimate from major weapons system cost overruns was about $45 
billion in 2001. Last year, it was about $295 billion. It flat 
lines. Actually, the last 2 years, I think the level of 
overruns has been flat, but it is still a huge amount of money.
    I mentioned all that surplus property, a lot of which is 
just hanging around. We need to figure out what we can offload 
and stop spending money on utilities and security and so forth 
there.
    We also found out that there is a huge focus these days on 
cyber security, not just kids trying to hack into our systems, 
not just criminal elements, but literally sovereign nations and 
elements in other nations trying to steal our identities, steal 
our secrets for weapons systems and do other kinds of mischief. 
There is a lot of focus on that, not nearly as much focus on 
how much we spend on IT, system development, and how we don't 
do a very good job of understanding what we need and managing 
the IT system development.
    And all those are just ideas. Those are things that will 
enable us to be better stewards. If we just work on all of them 
and focus, we will be better stewards of our taxpayer dollars.
    And another great example of how we can save a lot of money 
for our taxpayers is what you have all been talking about here 
today. In the case of a number of agencies, we are really 
starting to realize a substantial savings. And the great thing 
about it is for those of us who care about the environment, and 
we all do, this does good things for our environment. We reduce 
our reliance on foreign oil. It makes us more energy 
independent. We do good things for the air that we breathe and 
we create the opportunity for a lot of innovation in this 
country, a lot of development of new products that we can not 
just consume and use in the Federal Government, but all across 
our country, and we can sell them in other countries.
    Just as I said earlier, I was talking with the CEO of 
Cummins earlier today and they were telling me about all the 
products that they are developing here and selling around the 
world to conserve energy and reduce pollution. So there are a 
lot of payouts. This is not just a win-win situation, it is a 
multiple-win situation.
    We need to be setting a good example in the Federal 
Government. We need to be leading by our example. In some 
cases, we don't provide very good examples. I think in this 
case, we are providing a good example. We are providing the 
kind of leadership that is needed. And to the extent that those 
of us in the Legislative Branch can be supportive and more 
encouraging, we want to do that. You have given us some good 
ideas, so we thank you for those.
    Thank you very much for your testimony today. Thank you for 
what you are doing with your lives. And just extend to your 
colleagues when you go back to work that we are mindful of the 
work that is being done and grateful and just keep it coming.
    With that having been said, we will adjourn. Oh, one last 
thing. Some of my colleagues who were unable to join us today 
will want to submit questions for your responses in writing. I 
would just ask, when you receive those, just respond to them 
promptly.
    Thank you so much.
    [Whereupon, at 4:24 p.m., the Subcommittee was adjourned.]



                            A P P E N D I X

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