Life Cycle Costing by State Governments

Abstract

To encourage energy conservation, Congress established the State Energy Conservation Program under the Energy Policy and Conservation Act of 1975 (EPCA). This law authorized federal assistance to states for the preparation and execution of energy conservation plans. There are five mandatory measures required for participation in this assistance program, one of which is that each state adopt: . . mandatory standards and policies relating to energy efficiency to govern the procurement practices of such state and its political subdivisions.' A July 1979 evaluation of this requirement by the Environmental Law Institute for the U.S. Department of Energy, however, found that: .... state and local energy efficient procurement programs, with few exceptions, have barely advanced beyond infancy. This article focuses chiefly on the activities of those governments which have been exceptions to this generalized observation. The principal energy efficient purchasing practice used by these governments is life cycle costing (LCC). Explanation will be made of how to perform LCC and what types of products lend themselves most readily to this practice. Next, there will be a discussion of the significant psychological, structural, and procedural barriers which make it difficult for both state and local governments to perform LCC. Finally, a number of suggestions will be offered as to how these barriers can be partially overcome.