ENVIRONMENTAL PROTECTION AGENCY
ENVIRONMENTAL FINANCIAL ADVISORY BOARD
DEC 1 0 2001
Dr. James Gallup, PE
SBIR Program Manager
National Center for Environmental Research (8722R)
1200 Pennsylvania Avenue, NW
Washington, DC 20460
Dear Dr. Gallup:
Thank you for your electronic mail of October 10,2001, requesting comments from the
Environmental Financial Advisory Board (EFAB) and the Environmental Finance Centers (EFC)
on the draft Small Business Innovation Research (SBIR) program solicitation scheduled to open
January 21,2002.
As described in the solicitation, the research topics cover technologies for stormwater
runoff, combined sewer overflows, and contaminated sediments. We felt that given the general
orientation of EFAB toward finance issues and in particular the emphasis placed by the
solicitation on affordable and cost-effective technologies that it would be best to focus our
attention on these matters.
Heather Himmelberger, Director of the New Mexico Environmental Finance Center
provided the following comments which we believe effectively captures our interest in the
solicitation. She first discusses cost and affordability issues and then outlines a series of
questions that we believe will help reviewers incorporate the issue of costs. For the sake of
completeness we have included her comments in their entirety and recommend them to the
Office of Research and Development for use in the SBIR program.
Comments provided by Heather Himmelberger, P.E., Director of the Environmental
Finance Center serving Region 6:
-------
"In my experiences as an Environmental Engineer, I have certainly had the opportunity to
evaluate technologies of many types for many different purposes, including the evaluation of
new or emerging technologies. There is no question that cost should be a consideration of the
review, although there is certainly room for discussion regarding what place or importance the
cost evaluation has in the overall review. It is important to allow cost to be considered without
unduly stifling creativity or the development of important technologies. The bottom line is cost
should be in the mix, but should be balanced against other factors.
That said, the next step is to determine how to consider cost It is important to know
what something is going to cost a system over the long term (capital and operation and
maintenance for the life of the system/equipment.) It is also important to know whether the
technology may have other more subtle cost implications. Would it require a higher level
operator that would impact cost and ability to use the technology in a remote or rural setting (i.e.,
greater pay, more training, difficult to attract an operator), would it require the disposal of a
hazardous waste, would it involve daily interaction with a system, etc. These factors, which
most likely are not fully covered hi the O&M cost, need to be examined as well.
In terms of cost effectiveness, this determination can only be made by comparing the new
technology with the existing technologies, or in lieu thereof, to the existing practice. Therefore,
some of this information would have to be supplied with the application. In terms of
affordability, it is not possible to make such a determination hi a vacuum. Two similarly sized
systems may have drastically different affordability criteria. The technology might be affordable
in City A which has low unemployment, high salaries, etc., but completely unaffordable in City
B which has high unemployment, lower salaries, declining population base, etc. This may be
true even if City B receives full grant funding for the capital costs. Quite often, it is the O&M
costs which are the bigger problem, not the capital costs. Therefore, instead of determining
affordability per se, the proposer can be asked to supply incremental cost information that can be
used to examine affordability for a specific location.
Given the discussion above, the following list of questions were developed that may help
reviewers incorporate the issue of cost.
1. What size range of system would this technology apply to?
2. What are the capital and operating costs (O&M) for the technology over the size range
specified in Number 1?
3. Is there an existing technology (or technologies) that already meets this need?
4. What is the current cost of the technology(ies) that meet this need within the size range
stated above? Cost for capital expense and cost for operation and maintenance.
-------
5. How does the cost of your technology (as stated in Number 2) compare to the cost of the
current technology over the stated size range? Both for capital and O&M costs.
6. What is the useful service life of your technology expected to be? How does that
compare to the useful service life of the current technology(ies)?
7. Describe the cost benefits of your technology (if any). In particular, is your technology
cheaper to install or operate, is your technology more cost effective from a life-cycle cost
perspective, is your technology more cost effective over a particular size range?
8. If your technology is not more cost effective than existing technologies, what other
benefits would your technology offer that would make it desirable to install even if it is
not less expensive?
9, If your technology is addressing a need for which there are no competitive existing
technologies, describe how the costs of your technology (O&M and capital) compare to
the current practice of not using this type of technology at all. [For example, if your
technology addresses underground evaluation of water pipe and there is no technology
that does this type of evaluation, how does the cost of using this technology and
completing infrastructure upgrades compare to the current practice of completing
upgrades. Is there a cost savings or some other type of benefit associated with the
technology. There may be a cost savings associated with doing repairs only on the part of
the pipe that appears to have problems based on the evaluation rather than removing the
whole pipe,]
10. Consider the incremental cost of using your technology for different sized systems. This
cost can be calculated for various system sizes that fall within your appropriate size range
on a monthly cost per household basis. This calculation needs to consider capital and
operation and maintenance costs. A range of incremental costs can be calculated for
various financing models. The three scenarios to consider are: capital costs completely
funded by grants and O&M funded solely by system users, capital costs funded at 0%
grant for 20 years and O&M funded solely by system users, capital costs funded at 4%
for 20 years, O&M costs funded solely by system users. Each of these scenarios needs
to be completed for the selected size ranges.
11. Does your proposed technology require additional skills, expertise, or unusual practices
that are not currently required? For example, how much operator attention does the
system require? Is there a hazardous waste generated which must be disposed of? Would
the technology require a higher level certified operator? Would it require any special
skills or training? Are there any locational considerations (can't be too close to certain
other facilities, has to be enclosed, etc.)?"
-------
We appreciate your offering this second opportunity to submit comments to the SBIR
program and hope that you find them helpful. Both EFAB and the EFCs would like to continue
working with your Office, especially in the area of commercialization of promising
environmental technologies. Please let us know if you are interested in further collaboration by
contacting George Ames at (202-564-4998).
Sincerely,
Robert O. Lenna A. Stanley Meiburg
Chair, EFAB Executive Director
cc: EFAB Members
EFC Directors
Mike Ryan, Deputy Chief Financial Officer
Joe Dillon, Comptroller
------- |