"U.S. Army Issues RFP for Renewable Projects"

by Skadden, Arps, Slate, Meagher & Flom LLP

[authors: Lance T. Brasher, Martin Klepper, Whitney E. Washington]

The U.S. Army (the Army), on August 7, 2012, issued a request for proposals (RFP) for the eventual procurement of $7 billion in renewable and alternative energy under up to 30-year power purchase agreements (PPAs) from solar, wind, geothermal, biomass and other projects. Projects will be owned, developed, constructed and operated by developers using private sector financing and will be located at or near Army installations. Proposals from developers seeking contracts with the Army allowing them to later bid for project-specific task orders must be submitted no later than 2 p.m. CST on October 5, 2012.

Qualifications for the ID/IQ Contract

The U.S. Army Corps of Engineers, through the U.S. Army Engineering and Support Center in Huntsville, Ala., issued a Multiple Award Task Order Contract RFP under which it intends to award multiple Indefinite Delivery/Indefinite Quantity (ID/IQ) type contracts to all qualified and responsible offerors. To qualify, offerors must submit proposals no later than October 5, 2012, receive the required minimum acceptable ratings in the five evaluation factors and have reasonable and realistic pricing. The five evaluation factors include (i) technical and management experience in developing, operating and maintaining a renewable energy project and in performing under a PPA, (ii) financial capability for development, construction, operation and maintenance and organizational management approach towards performance assurance, (iii) past performance, including references and questionnaires, (iv) small business participation and (v) maximum unit price and attendant certifications.

Eligible Technologies

Eligible technologies include PV and concentrating solar, wind, geothermal, biomass, including refuse-derived fuels and other alternative technologies. Hybrid projects combining one or more of the five eligible technologies can be proposed as well. Maximum Unit Prices

Responses to the RFP must include maximum unit prices per kWh hour for each technology for which the offeror is making a proposal, which would apply to project-specific task orders awarded during specific time periods. The time periods include a three-year base period and up to seven one-year option periods. Maximum unit prices should be based upon the offeror’s estimate of the total cost for development, construction, operation and maintenance of the renewable energy production facility, but should not include ancillary or incidental costs such as land use fees, grid interconnection fees, National Environmental Policy Act environmental mitigation requirements or other costs that are not directly related to the planning, design, construction, operation and maintenance of the energy production facility. These ancillary and incidental costs will be priced separately and evaluated for each project-specific task order.

Task Orders

The Army will issue a task order for each project and may specify a particular technology. Offerors that have been selected for that technology will be invited to submit a proposal for a PPA for that project at a price not to exceed the applicable maximum unit price. The PPA may have a term of up to 30 years after commercial operation and will set forth specific contract terms related to the task order. Because only qualifying offerors with ID/IQ contracts will be invited to bid for task orders, it is imperative that developers wishing to participate in this program submit a proposal to be a qualifying offeror no later than October 5, 2012.

Expected Projects

The Army is in the process of identifying suitable project sites to be put out for bid through various task orders, but officials have indicated that there is interest in building 20 MW solar plants at Ft. Irwin and Ft. Bliss in the Southwest, a 15 MW solar plant in Maryland at Ft. Detrick and a 50 MW biofuel plant at Schofield Barracks in Hawaii. Projects can be located on private land or on any federal property located within the U.S., and including Alaska, Hawaii, territories, provinces and other property that is to be under U.S. government control for the duration of the contract performance period. The Army expects that task orders for 100 MW or more will be put out for bid each year.

End-Product Sourcing and Other Certifications

Offerors will be required to make various certifications including certifications related to end-product sourcing. PV devices in particular are required to be sourced from the U.S. or certain countries designated in the RFP, and the offeror must make a certification with respect to the country of origin of such devices. Other provisions and certifications customarily included in government contracts, such as Davis-Bacon Act compliance, are included also.

Small Businesses

A portion of the task order awards will be reserved for small businesses, which are defined in the RFP as entities that, with their affiliates, are engaged primarily in the generation, transmission and/or distribution of electric energy for sale and with total electric output for the preceding year not exceeding 4 million MWh. Projects with a capacity of less than 4 MW will be reserved for small businesses and preference will be given to small businesses for projects between 4MW and 12MW. Projects of greater than 12 MW in capacity will not be restricted based on entity size. In addition to the special arrangements for small businesses, all offerors must submit a small business participation plan, which is to include the dollar value and percentage of contract value planned to go to small businesses, and large business offerors must submit a small business subcontracting plan. Because commitment to small business participation is one of the five evaluation factors used to determine qualification for the ID/IQ contract, large businesses may wish to consider teaming with small businesses in making proposals.

Bidders Conference

The Army will hold a pre-proposal conference on August 22, 2012, at the Redstone Arsenal Sparkman Center in Huntsville, Ala. Registration is on a first-come, first-serve basis and is restricted to two representatives per company. The conference has a maximum capacity of 650 participants. Registration closes when capacity has been reached or on August 17, 2012, at midnight — whichever comes first.

Click on the following links to view the conformed RFP, the first amendment, the second amendment, the Frequently Asked Questions and the pre-proposal conference information.

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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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