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Public Sector


    R.C. § 717.02 - Qualifications-based procurement of energy conservation measures by municipalities

    Municipalities in Ohio have broad authority to make a wide variety of public improvements. Many municipalities use that authority to provide critical infrastructure to their communities. Municipalities commonly desire to decrease the energy usage and operational costs associated with the infrastructure provided—out of an interest in being both environmentally and fiscally responsible.

    However, a municipality wishing to undertake such a project will soon face the realization of navigating a complicated series of statutes to procure the multiple professionals involved in the project. Traditionally, the municipality would start by procuring a design professional to design the project, as these projects are often outside the expertise of the city’s in-house design professional. The design professional must be procured under a qualifications-based request for qualifications process.[1] Then, once the design professional designs the improvements, the municipality would put the project out for public bid.[2] In this instance, the municipality must award the contract to the low bid.

    However, given the complexity of these energy conservation measures, many municipalities would prefer to have flexibility in procuring this work. Some municipalities may prefer to have a single vendor to provide a “turnkey” solution—a single entity to both design the improvements and then install the improvements. Other municipalities may wish to utilize a design professional with whom the municipality has an existing relationship, and then select a vendor to assist with the design and install these complex projects based on the vendor’s qualifications, not necessarily a low bid. Thankfully, for these municipalities, the General Assembly has recognized the value that having a qualified firm provide these improvements can bring to the community and has provided for this very framework in R.C. 717.02.

    “Energy conservation measure” defined

    The first step in the procurement process is to determine whether the municipality’s project qualifies as an “energy conservation measure.” New construction and renovation both qualify. The statute defines an “energy conservation measure” as “the construction of, installation or modification of an installation in, or remodeling of, a new or existing building or infrastructure, to reduce energy consumption.”[3] While the statute provides specific examples of energy savings projects that would apply, it also leaves the ultimate determination as to whether a project qualifies to the municipality—the statutory definition includes “[a]ny other construction, modification, installation, or remodeling approved by the legislative authority of the municipal corporation as an energy conservation measure.”[4]

    Additionally, the statute applies to buildings and infrastructure. Again, the statute broadly defines which projects are allowable as “infrastructure,” which “includes, but is not limited to, a water, gas, or electric utility, renewable energy system or technology, traffic control signal, or any other asset owned, operated, or maintained by a municipal corporation.”[5]

    Procurement process

    Municipalities are afforded three methods of procuring energy conservation measures. The municipality may competitively bid the work[6] under either the traditional framework, awarding the contract to the lowest and best bidder, or a modified framework;[7] a charter municipality may procure the work in accordance with its charter;[8] or the municipality may use a qualifications-based competitive proposal process.[9] This proposal process is the focus of this article.

    Selection process

    The municipality must begin the process by advertising the energy conservation project once per week for two weeks.[10] Rather than provide the request for proposals upon request, the municipality’s notice must set a date for distribution of the request for proposals, and that distribution date must be at least ten days after the second publication.[11] Interested firms must request a copy of the request for proposals before noon on the published distribution date.[12] The request for proposals will then include its own response deadline.

    Unlike the other qualifications-based procurement statutes (e.g., design professionals, construction managers at risk, design-builders), R.C. 717.02 does not specify which evaluation criteria must be included in the request for proposal, leaving the municipality with ample flexibility and the ability to tailor the request for proposal to the specific project. Legal counsel experienced in procuring energy conservation measures can assist in developing the request for proposals, tailored to the flexible approach that the municipality decides to utilize.

    After the response deadline, the municipality will evaluate the proposers and the proposals received to identify the “most qualified” vendor.[13] The municipality will evaluate the vendors based on the criteria established in the request for proposals. Once the most-qualified vendor is selected, the municipality may negotiate and enter into a contract with that vendor.

    Energy conservation report

    The selected vendor must first prepare an “energy conservation report.”[14] The content of the report is dictated by statute but includes an analysis of the municipality’s current energy usage, a list of recommended energy improvements to reduce the municipality’s energy usage, an estimate of the cost to install the recommended improvements, and an estimate of the amount of energy, and money, the municipality may save over the life of the recommended improvements.[15]

    Award of installation contract

    After the municipality has reviewed the vendor’s report, the municipality may, but is not obligated to, award a contract to the vendor to install the improvements “most likely to result in the greatest energy savings” to the municipality.[16] Before authorizing an improvement, the municipality’s legislature must find that the amount of money the municipality will save by installing the improvements likely exceeds the cost of installation.[17] The anticipated savings to the municipality may be based on the municipality’s anticipated savings of energy costs, operating costs,  maintenance costs, and avoided capital costs—that is, the anticipated reduction in the cost of future equipment or other capital purchases that results from the implementation of the energy conservation measure(s), compared to the baseline for previous such costs— the lifespan of the proposed improvement.[18] The municipality may rely on the vendor’s calculations of these savings costs included in the vendor’s energy conservation report.[19]

    In sum, R.C. 717.02 provides many advantages to a municipality procuring energy savings measures. Due to the complexity of municipal energy savings measures, the General Assembly has recognized the need for flexibility and the ability for the municipality to use qualifications-based criteria to procure this work. Procuring these projects under R.C. 717.02 affords municipalities the option of either utilizing a qualified design professional and selecting a specialized energy savings vendor to provide design-assist services and install the work, or, if the municipality prefers, select a single firm to provide a “turnkey” package. The qualifications-based procurement ensures the municipality has the confidence that the work will be done proficiently and professionally. Additionally, the criteria for selecting which measures the municipality ultimately installs affords the municipality discretion to ensure that the municipality is only paying for those measures that will likely be cost-efficient in the long term.


    [1] R.C. 153.67 et seq.

    [2] R.C. 735.03, 735.05 (cities); R.C. 731.14, 731.141 (villages). If a municipality adopts a charter, the municipality has the power to waive the statutory competitive bidding requirements that would otherwise apply. This article focuses on municipalities that have not adopted a charter or whose charter does not modify the statutory procurement processes.

    [3] R.C. 717.02(A)(1).

    [4] R.C. 717.02(A)(1)(k).

    [5] R.C. 717.02(A)(2).

    [6] R.C. 717.02(C)(1)(b).

    [7] Under this modified framework, the municipality may instead award the contract to the bidder whose bid is “most likely to result in the greatest energy savings” to the municipality.  R.C. 717.02(C)(2)(a).

    [8] R.C. 717.02(C)(1)(a).

    [9] R.C. 717.02(C)(1)(c).

    [10] Id.

    [11] Id.

    [12] Id.

    [13] R.C. 717.02(C)(2)(b).

    [14] Id.

    [15] R.C. 717.02(B).

    [16] R.C. 717.02(C)(2)(b).

    [17] R.C. 717.02(C)(2)(c).

    [18] Id.

    [19] Id.

    This is for informational purposes only. It is not intended to be legal advice and does not create or imply an attorney-client relationship.

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