Department of Defense Releases Funding Announcement for Integrated Biofuels Production Enterprise

by Wilson Sonsini Goodrich & Rosati
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The Department of Defense recently released a long-awaited $210 million Funding Opportunity Announcement (FOA) to support the development of commercial-scale drop-in biofuels production through the use of the Defense Production Act (DPA) Title III Program. The FOA is derived from the Memorandum of Understanding (MOU) signed by the Navy, the Department of Energy (DOE), and the Department of Agriculture (USDA) to invest up to $510 million in advanced drop-in biofuels and complements the DOE Biomass Program's recent funding announcement for pilot and demonstration-scale biorefineries (previous WSGR Alerts on the MOU and DOE funding announcement are available here and here).

The FOA reinforces the Pentagon's continued support for biofuels investment despite criticism from lawmakers on Capitol Hill. In announcing the FOA, Navy Secretary Ray Mabus expressed his strong belief that the United States' dependence on foreign oil is a strategic vulnerability that can only be addressed by reducing the military's reliance on petroleum as the sole source of fuel.

The objective of the FOA is to create an Integrated Biofuels Production Enterprise (IBPE) comprised of one or more complete domestic value chains capable of producing 10 million gallons of drop-in replacement biofuels per year. The complete value chain will include feedstock production and logistics; conversion facilities (Integrated Biorefineries); and fuel blending, transportation, and logistics. Applicants are encouraged to form teams that include each stage of the value chain to ultimately develop a commercial-scale biorefinery that will produce military-grade transportation biofuels.

Total federal government expenditures for the projects chosen under the FOA will amount to $210 million and will be divided into two phases. The agencies anticipate that approximately five Phase 1 awards will be made at up to $6 million each ($30 million total government share). Subsequently, the agencies will down-select up to three Phase 2 awardees. Though officials anticipate that total government funding for Phase 2 will be $180 million, funding is subject to FY13 and later funding appropriations. Government share for each award will likely be around $70 million, though award amounts will depend on total government funding as well as the number of Phase 2 awardees. Funding recipients will be required to share at least 50 percent of the costs in each phase of the process.

Funding for these projects will be managed by the Office of the Secretary of Defense (OSD) and executed by the Department of Defense Executive Agent Program Office, a component of the Manufacturing Technology Division (AFRL/RXM) of the Materials and Manufacturing Directorate, Air Force Research Laboratory. Project proposals are due on August 13, 2012, no later than 3:00 p.m. ET. The full solicitation can be found here.

For more information, please contact Taite McDonald (tmcdonald@wsgr.com), Chris Groobey (cgroobey@wsgr.com), or another member of Wilson Sonsini Goodrich & Rosati's energy and clean technology practice.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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