As we previously reported to you, the United States Army has established the Energy Initiatives Task Force to plan and execute large-scale renewable energy projects, with the stated goal of attracting over $7 billion in investment in renewable energy projects over a period of 10 years. For further background, please see our prior client update here.
On August 7, 2012 the United States Army Corps of Engineers issued the Multiple Award Task Order Contract (RFP) under which a number of applicants will be selected as Contractors based on a submission of qualifications and then, from time to time in the future, will receive specific “task orders” inviting bids on identified project opportunities. Only Contractors who have been selected through the initial RFP process will be permitted to submit proposals in respect of task orders.
The RFP, as well as answers to Frequently Asked Questions, can be found here. The response deadline is 2 p.m. central time on October 5, 2012. A pre-proposal conference will be held on August 22, 2012 in Huntsville, Alabama. In addition, questions regarding the RFP “are to be submitted by firms via the ProjNet website” here no later than August 24, 2012. Any firms desiring to submit questions must register on the projnet system (see A.10 of the RFP for further details).
We encourage interested industry participants to respond to the RFP, and we would be pleased to assist with the preparation of your responses. In the meantime, you should be aware of the following developments reflected in the final RFP and Frequently Asked Questions since our prior client update:
- the Government will determine on a case-by-case basis for each task order whether to retain all or a portion of the Renewable Energy Credits (RECs) associated with (or offered as a replacement in respect of the RECs associated with) a generation facility (see A.8 of the RFP)
- each task order will specify what is to become of the contractor-owned energy plant and associated equipment at the end of the contract term if there is no follow-on PPA or lease agreement extension; the Government intends to retain the option to require the removal of the facility and the restoration of the property to its original condition, to purchase the facility at fair market value or to renew the real estate access agreement if a follow-on contract is awarded (see A.8 of the RFP)
- the Government has clarified that projects may be located on private land (see A.1, C.1 and C.6 of the RFP); for more information on locating projects on public land, see information on the MoU between the Department of Defense (DoD) and the Department of the Interior (DOI) below
- the Government has adopted a broad definition of “alternative energy technologies” and “renewable energy” (see C.4.k and C.4.l of the RFP) but has not relaxed the requirement that it be commercially ready technology (see C.34.b of the RFP)
- a termination for convenience value schedule for each year of the contract may be included in a task order and may include mutually agreeable floor and ceiling amounts as well as some negotiable elements (see A.8 of the RFP and FAQ 7)
- the DoD is permitted to pay a fair and reasonable premium for renewable energy and therefore the price of renewable energy will not necessarily be required to match local utility energy prices (see FAQ 10)
- the Government is willing to enter into a tri-party agreement to facilitate third party financing provided that it is needed to obtain a viable financing arrangement and it is not detrimental to the Government’s contractual interests (see FAQ 11)
- a proposal (in response to an individual task order) for a project larger than that contemplated in the task order, under which excess energy will be sold by the contractor to a third party, will be considered if it fits within the original project concept and generates better pricing for the Government (see FAQ 22)
- bidders will have a minimum of 30 days to prepare responses to task order RFPs; the exact timing may vary by task order (see FAQ 40c)
- the Army will provide all known, non-confidential, site-specific information on each opportunity in the relevant task order RFP as well as initial system and interconnection specifications that the developer may use or modify (see FAQ 42d)
- there may be a pre-proposal conference held for each opportunity including a site visit in which bidders will be able to raise any site-specific questions (see FAQ 42d)
- there is no limit to the number of task orders a bidder can win although the Government may require companies to demonstrate their capacity to successfully complete multiple simultaneous, geographically separated projects (see FAQ 42b)
In another recent development, the day before the official RFP was announced, the DoD and the DOI released a Memorandum of Understanding on Renewable Energy and a Renewable Energy Partnership Plan (DoD-DOI MoU) pursuant to which the DoD and DOI have agreed to work cooperatively to facilitate renewable energy development on public lands withdrawn for defense-related purposes and in other onshore and offshore areas near or adjacent to DoD military installations. A copy of the DoD-DOI MoU can be found here.