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Another Deep State Company Gets $100 Million Energy Contract

Lost amid coverage of the mayor’s budget proposal last week was D.C. Council’s approval of a five-year, $100 million sustainable energy contract in which Mayor Muriel Bowser’s office intervened to benefit a politically connected company that has been criticized for “deficiency” and “lack of transparency” in reporting methods.

The contract for what’s known as D.C.’s “Sustainable Energy Utility” (or SEU) was awarded to Vermont Energy Investment Corp., a nonprofit firm that has held the contract since 2011. It won over a D.C.-based joint venture despite a record of questionable expenses and inflated performance ratings.

The local company, Public Performance Management, that lost the bid had applied to become what’s known as a Certified Business Enterprise, which would have earned it preference points and possibly changed the outcome of the award. But after the Department of Small and Local Business Development indicated that it would waive a filing deadline, the mayor’s office stepped in and denied the application, according to sources familiar with the matter.

Mayoral intervention in approval processes such as these is contentious and can make the difference between winning or losing a multimillion dollar award. But documents obtained through the Freedom of Information Act also point to other troubling aspects of the contract.

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Vermont Energy, known to some D.C. officials as the Vermont Mafia, has a D.C. office managed by former Pepco vice president Ted Trabue that administers programs to reduce consumption of natural gas and electricity, increase renewable energy, reduce commercial energy demand, and grow green-collar jobs.

Trabue is an established presence in District politics, having served as president of the D.C. State Board of Education and a board member of the Chamber of Commerce and the D.C. Building Industry Association. Sources familiar with him say he has been politically protected from one mayor to the next. For instance, he was close to Warren Graves, chief of staff to former city administrator Allen Lew in the Vince Gray administration, which made oversight a challenge. He also co-chaired the Transportation, Environment, Sustainability and Infrastructure Committee of Bowser’s transition team—along with Tommy Wells, director of the Department of Energy & Environment.

Trabue manages roughly 50 employees, who are apparently treated well. Records show he billed the city $47,000 for coffee and catering over the last three fiscal years—which runs afoul of contracting best practices.

For the same time period, he billed more than $34,500 for meals over $100. In FY 2015, he billed the city $4,000 for a single meal at Acacia Bistro, claiming an exemption from disclosing further details.

The job requires being mobile and making connections in the right places, and Trabue takes full advantage. From FY 2014 through FY 2016, he billed more than $52,000 in questionable travel and miscellaneous expenses, including one “miscellaneous reimbursable expense” of $5,000 and more than $4,500 in American Express travel-related expenses in one month alone. Over that time, the city paid more than $60,000 for memberships that do not appear to be energy related: Chamber of Commerce, Bisnow, the Building Industry Association, and the Restaurant Association of Metropolitan Washington. It paid $5,000 to Union Kitchen in February 2015 for reasons unknown and more than $9,000 for parking in FY 2015 and FY 2016. A couple hundred dollars went for a tuxedo rental in October 2014 and $120 to a charity event. The contractor even billed for its anniversary party.

The SEU partnership team includes a government and community relations consultant who has consistently billed the city $20,000 per month for years—a cost Wells considers reasonable for responding to D.C. Councilmembers’ or the business community’s questions about recruiting clients or the performance of the energy program. But some categories should not be billed for, Wells says. 

“Do not bill us for food,” he says, adding that he does not like billing for travel, either. “It comes down to what does it take to reach the goals in the contract, and what is the government going to pay for.”

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Then there is the issue of Vermont Energy’s performance.

Based on a review of contract documents, the company was required to achieve energy savings equal to 1 percent of overall consumption in 2011, with an incentive bonus once it reached 80 percent of that goal. But when it did not reach the goal, it simply lowered the bar to create what became known as “minimum benchmarks,” third-party audits and annual reports show. Those “benchmarks” were eventually further lowered to 50 percent of the goal for electricity savings and 22.5 percent for natural gas, documents show.

In FY 2014 and FY 2015, for instance, the contractor met less than half of its performance benchmarks for reduction in energy usage. What it met were artificial “minimum” benchmarks that were created as financial incentives, not as performance measures. 

If one were to imagine letter grades for such performance, Loose Lips found that on roughly half of its performance benchmarks from 2014 to 2016, the contractor would have gotten a D or worse. Yet at a recent oversight hearing before Ward 3 Councilmember Mary Cheh, chair of the Committee on Transportation and the Environment, Trabue claimed, without challenge, that the contractor met its benchmarks for all three of those years. 

Despite such representations, others noticed the grade inflation.

The SEU Advisory Board’s 2015 annual report noted an “important observation” about Vermont Energy’s reporting of its renewable energy targets and the “minimum requirements” for natural gas and electricity savings. “It highlights a deficiency, or lack of transparency, in the current SEU reporting method,” states the report, which calls for a “more meaningful assessment of the accomplishment of SEU’s purposes.”

Wells, the DOEE director, seems wise to the game. He says benchmarks will be evaluated over a multi-year period under the new contract and that he has asked his staff to identify any “confusion, problems, or ambiguities” needed to clear them up. “You start with the contract,” Wells says. “You don’t start with an interpretation of the contract or by looking at past performance.”

In defending the company’s performance, Trabue says that when the city set up the contract it did not analyze the cost of achieving maximum levels of energy savings. He says D.C. negotiated a change around 2013-2014 to incorporate “minimum” benchmarks. Wells, however, says any agreements outside the contract must be codified as an amendment. Neither Wells nor Trabue could point to such an amendment.

Nevertheless, Trabue says, his D.C. program is a national leader that manages multiple programs, including hiring for green jobs, energy-saving services for small businesses, and investments in solar energy. “There is no apples-to-apples comparison to other states,” he says. “Given the funding D.C. has today, we still don’t have enough to hit our energy goals.”

Wells disagrees. “I believe it is clear in the contract,” he says. “They have to show us what they spend, and they get reimbursement. If they reach the benchmarks, they get a bonus.”

As for why Bowser would intervene on behalf of the contractor, Cheh’s office says it has requested documents but had not received them by press time.



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