The Department of the Air Force (DAF) is spearheading the creation of a Defense Energy Consortium (DECo), a first-of-its-kind, public-private partnership program.
The members of the consortium—including financiers, small businesses, non-traditional defense contractors, utilities, and energy service companies—will be responsible for fully financing prototype and follow-on projects using private capital, rather than tax appropriations, to achieve the necessary energy resilience and mission assurance at DAF installations worldwide.
Leading with Innovation
DECo will leverage the Department of Defense’s Other Transaction Authority (OTA) a streamlined acquisition process that is exempt from Federal Acquisition Regulation, which will enable innovative, non-traditional defense contractors to engage with DoD without having to endure costly government procurement processes.
OTA has been central to game-changing innovation. The National Aeronautics and Space Administration (NASA) used its OTA authority to go to the moon and outpace the Soviet Union in the great Space Race. Fifty years later NASA used OTA to privatize space travel to the International Space Station. DoD first used its OTA authority to work with industry to arm unmanned aerial vehicles, which forever changed the face of warfare and national defense strategies. DAF plans to use OTA to access innovative energy resilience technology, deploy commercial off-the-shelf technology in novel ways, and implement new business models all at the scale, speed, and cost-effectiveness needed to meet our pressing energy resilience challenges.
Financing the Future
By leveraging prototyping authorities under 10 USC 4022, DAF asks consortium members to fully finance prototypes. In return, successful projects would be eligible for sole-source follow-on contracts that potentially span 30 to 50 years. To facilitate this, DECo will require the selected consortium management organization to establish a fund to raise billions in capital. This public-private partnership will facilitate a balanced exchange of project resources like real estate, staff, and data with industry capital and expertise, ultimately enabling an energy ecosystem that is scalable and sustainable. What makes this consortium different from others is that it will contain both financier and technology partners working collaboratively to provide mutual support and accountability through the project lifecycle.
Ensuring Federal Alignment
DECo emerged from congressional directives in committee reports and statutory text under the FY22 and FY23 National Defense Authorization Acts, which explicitly urged the Department of Defense to establish a consortium-based approach to energy resilience. The initiative has received high-level support from flag officers and senior executives as it prepares to release a Request for Proposals to formalize the DECo structure. Once launched, DECo will operate under a consortium management agreement outlining its operational rules, membership recruitment policies, project portfolio development, and internal rate of return expectations, among other elements.
Building Greater Capacity
DECo marks a defining shift in how federal energy infrastructure is planned and financed. Importantly, DECo aligns with Executive Order 14265, “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base,” by moving from traditional FAR-based procurement approaches to a modernized approach leveraging OTA. DECo is currently DAF-led. However, as the platform evolves, other military services may eventually participate, which can increase opportunities within the consortium for specialized contracting. With a novel framework to utilize funding and broader expertise to improve energy resilience, this forward-thinking platform will transform defense energy strategy for decades to come.
For more information about DECo and partnership opportunities, contact the Air Force Civil Engineer Center at afcec.engineerspark@us.af.mil.
By: Mr. Kirk Phillips, Director, Air Force Office of Energy Assurance
