Nevada Administrative Code Chapter 333A - State Performance Contracts for Operating Cost-Savings Measures
🔍 Overview: NAC Chapter 333A — State Performance Contracts for Operating Cost-Savings Measures
NAC Chapter 333A governs how the State of Nevada enters into performance-based contracts with private entities for cost-saving improvements in the operation of state-owned facilities.
These are energy efficiency contracts (also called "performance contracts") where the vendor guarantees that improvements will reduce utility or operational costs, and the savings pay for the improvements over time. No up-front capital is typically required from the state.
🏛️ Statutory Basis
NAC Chapter 333A implements and clarifies Nevada Revised Statutes (NRS) Chapter 333A, which authorizes performance contracts for cost-saving measures such as:
Energy efficiency retrofits,
HVAC upgrades,
Lighting improvements,
Water conservation systems,
Building automation controls.
📘 Key Provisions of NAC Chapter 333A
1. Definitions (NAC 333A.010 – 333A.030)
Defines key terms such as:
“Operating cost-savings measure” – systems or improvements that reduce costs of energy, water, or other utilities.
“Performance contract” – an agreement where a provider installs cost-saving improvements and guarantees savings.
“Qualified service company” – an entity that has the technical and financial capacity to carry out the improvements.
2. Qualification of Service Companies (NAC 333A.100 – 333A.160)
Service providers must apply and be pre-qualified by the State Public Works Division (SPWD).
Applications include proof of:
Prior experience,
Financial capacity,
Technical qualifications,
Personnel with expertise in energy savings systems.
SPWD evaluates and maintains a list of qualified providers.
3. Proposal and Contract Process (NAC 333A.200 – 333A.310)
The agency seeking improvements works with the SPWD to issue a Request for Proposals (RFP) to qualified companies.
Proposals must include:
Preliminary energy audit,
Proposed improvements,
Estimated cost savings,
Financing terms.
After evaluation, the agency selects a proposal and enters into a performance contract.
The contract must:
Specify guaranteed savings,
Detail payment schedules (typically tied to savings),
Define measurement and verification protocols.
4. Measurement and Verification (M&V) of Savings (NAC 333A.320 – 333A.360)
M&V is critical to ensure that savings are real and auditable.
Rules require:
Baseline data collection,
Ongoing reporting,
Independent verification (in some cases).
If savings fall short of the guarantee, the provider must pay the difference.
5. Financing and Cost Recovery (NAC 333A.400 – 333A.430)
Projects may be financed through:
Lease-purchase agreements,
Third-party financing,
Tax-exempt bonds.
No contract may exceed 15 years unless specifically authorized.
All financing must comply with Nevada’s procurement and fiscal management laws.
⚖️ Legal Principles and Case Law Concepts
Although there is limited published case law specific to NAC Chapter 333A, administrative law and contract law principles apply. Here are key doctrines and hypothetical examples:
1. Enforceability of Guaranteed Savings
Legal principle: A performance contract includes a guarantee of future utility savings.
Implication: If savings are not realized, the service company is contractually liable for the shortfall.
✅ Hypothetical: A contractor guarantees $100,000 in annual energy savings. The state measures only $80,000 in savings. The contractor is required to reimburse the $20,000 shortfall.
2. Public Contracting Compliance
Legal principle: Government entities must follow strict procurement procedures to prevent favoritism, fraud, or abuse.
Implication: If a contract is awarded without proper bidding or vetting, it could be voided or challenged.
✅ Hypothetical: A state agency bypasses the RFP process and awards a contract to a non-qualified company. A competitor challenges the contract, and a court voids it for violating NAC 333A procurement rules.
3. Good Faith and Fair Dealing
Legal principle: All contracts—especially those involving performance metrics—require good faith from both parties.
Implication: Manipulating baseline data or falsifying savings reports could result in breach of contract or even fraud.
✅ Hypothetical: A service provider inflates the energy baseline to make it appear that greater savings were achieved. The state audits the figures and sues for misrepresentation.
4. Administrative Dispute Resolution
Many performance contracts include administrative or arbitration clauses for resolving disputes before resorting to litigation.
Courts uphold such clauses as long as due process is preserved.
5. Government Immunity and Contractual Waiver
Generally, state agencies enjoy sovereign immunity, but when entering into contracts, they may waive immunity for breach claims.
Thus, service companies may bring claims in court for non-payment if the agency fails to honor the contract.
🧾 Summary
| Aspect | Description |
|---|---|
| Purpose | Facilitate energy- and cost-saving upgrades to public buildings with no upfront cost to the state. |
| Who Can Participate | Only pre-qualified “qualified service companies.” |
| Contract Terms | Must include guaranteed savings and M&V provisions. |
| Legal Framework | Based on NRS 333A and NAC 333A. |
| Enforcement | Breach of contract claims, audit reviews, procurement challenges. |
| Disputes | Subject to administrative and legal remedies. |
✅ Final Note
NAC Chapter 333A is a powerful tool for Nevada to modernize its public infrastructure while ensuring fiscal responsibility and measurable outcomes. It blends public procurement law with energy efficiency initiatives, all within a framework that emphasizes accountability, transparency, and legal compliance.
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