U.S. Department of Energy Energy Efficiency and Renewable Energy

Developing and Managing the Vendor and Contractor Network

With a loan loss reserve fund (LRF) program, before funds can be released from the financial institution to the contractor, certain checks and balances must be in place to ensure that work is being done on American Recovery and Reinvestment Act (ARRA)-eligible projects by competent contractors, and the work has been satisfactorily completed.

A key component of this chain is building and maintaining a qualified contractor network. Programs underway are using various models for building and maintaining such a network, examples of which include the following:

  • Community Action Agency/Program — Of the 1,000+ long-established community action agencies  around the country, many perform upgrades on low-income housing and have fully established contractor networks. Grants totaling $90 million have recently been issued under ARRA to support the use of a wide range of energy efficiency and renewable energy technologies by over 100 high-performing local weatherization providers across the country (e.g., see the U.S. Department of Energy’s Sustainable Energy Resources for Consumers Projects). This represents a large pool of competent energy efficiency contractors that, with appropriate coordination, could be used to form the foundation of a larger energy efficiency contractor network. Agreements can be executed with the community action agencies to utilize this pool of qualified and certified low-income weatherization contractors for a more community-wide program. See the example from Bellingham, Washington

  • Construction Permits — This model takes advantage of the local processes of issuing construction permits and verifying proper completion of projects. Most municipalities have some variation of a Department of Construction and Land Use. These departments employ inspectors to permit construction projects and verify the completed work’s compliance with safety standards. This model uses an interdepartmental agreement to pay the cost of permit inspectors also validating energy efficiency projects. See the example from Kitsap County, Washington.

  • Third-Party Consultants — A number of nonprofit organizations exist for the purpose of reducing energy consumption through weatherization programs. Each of these organizations has its own associated pool of qualified contractors. A municipality orchestrating its residential energy efficiency/renewable energy retrofit program can contract with the third-party consultant to develop and manage work with the energy efficiency contractors. See the examples from Milwaukee, Wisconsin, and Bainbridge Island, Washington.

The steps required for proper distribution of loan funds in a residential energy efficiency retrofit project are as follows:

  • An energy auditor determines the scope of work.

  • An energy efficiency contractor is selected from a pool of pre-certified contractors.

  • Oversight is performed on the participating contractor.

  • Satisfactory completion of the work is certified.

  • The funds are disbursed to the contractor.

Also see the Program Examples of Vendor and Contractor Network Development and Management.