ASBCA 57779

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of -- ) ) Honeywell International, Inc. ) ASBCA No. 57779 ) Under Contract No. W911Sl-08-F-013 l ) APPEARANCES FOR THE APPELLANT: Terry L. Albertson, Esq. Robert J. Sneckenberg, Esq. Crowell & Moring, LLP Washington, DC APPEARANCES FOR THE GOVERNMENT: Jeffrey P. Hildebrant, Esq. Air Force Deputy Chief Trial Attorney Marvin Kent Gibbs, Esq. Senior Trial Attorney OPINION BY ADMINISTRATIVE JUDGE MELNICK This is the quantum phase of this appeal involving a delivery order (DO) issued to Honeywell International, Inc. (Honeywell) under an Energy Savings Performance Contract (ESPC). Among other things, the DO required the delivery of two solar arrays. In prior summary judgment decisions the Board invalidated the portions of the DO that had recognized the value of Solar Renewable Energy Certificates (SRECs) associated with the arrays' generation. SRECs could not be included among government cost savings that would justify payment under the contract. Honeywell Int'!, Inc., ASBCA No. 57779, 13 BCA ,-i 35,380. Nevertheless, because Honeywell delivered the arrays to the government, the Board recognized Honeywell was entitled to a quantum valebant or quantum meruit recovery for the goods and services received by the government. Honeywell Int'!, Inc., ASBCA No. 57779, 15-1BCA~36,121. The Board has since held a hearing to address quantum and awards it as discussed in the following decision. BACKGROUND AND FINDINGS OF FACT 1 1. On 9 July 2008 the United States Army issued the DO identified above under ESPC No. DE-AM01-99EE73683 (later renumbered DE-AM36-99EE73683) (the Super ESPC) awarded by the Department of Energy to Honeywell. 15-1 BCA i-1 36, 121 at 176,338; 13 BCA ,-i 35,380 at 173,607. Through ESPCs, contractors provide the 1 Some of the citations are to the portions of prior summary judgment decisions finding that the matter is not in dispute. government with energy conservation measures (ECMs) in exchange for a share of the government's energy savings. 42 U.S.C. § 8287. ESPCs guarantee savings to agencies and dictate payment schedules based upon them. 42 U.S.C. § 8287(a). ESPCs may last for a period of up to 25 years, and a multiyear ESPC is governed by FAR Part 17 .1. 42 U.S.C. § 8287(a)(l ), (a)(2)(D)(iii). 2. This DO acquired services for Fort Dix, New Jersey, with payments eventually scheduled over 21 years (app. supp. R4, tab 2 at 9, tab 10 at 9.) 2 13 BCA ~ 35,380 at 173,607. Relevant here are two solar arrays. The original DO's requirements have been designated Phase I and included a roof mounted unit. The second solar array, Phase II, was added through a modification. 15-1 BCA ~ 36, 121 at 176,338. Phase II was approximately the same size as the Phase I unit and was to be ground mounted adjacent to a controlled humidity warehouse building (R4, tab 16 at 4; tr. 177). Each array would produce 700 kW DC peak production (R4, tab 16 at 3-4). All of the electricity was to be used by Fort Dix, eliminating any need for net metering in support of its sale outside that grid (id. at 4 ). 3. The DO calculated the annual energy savings to the government resulting from the arrays by adding the value of the electricity produced by them to the sales value of the SRECs they generated. SRECs are transferable certificates (here issued by New Jersey) representing the environmental benefits or attributes of one megawatt-hour of solar energy produced by a generator connected to the state's electrical grid. Using contractually specified values for electricity and SRECs over time, Honeywell guaranteed certain annual savings from the ECMs. The DO then scheduled annual payments to Honeywell from the government based upon those savings. The DO provided that Honeywell could sell the SRECs for the government. 15-1BCA~36,121at176,338. Honeywell understood that if the government's savings in any years were lower than Honeywell's guarantee, Honeywell would bear the cost (tr. 30-31). 4. The Super ESPC required five previously formatted schedules to be submitted by Honeywell for inclusion in the DO, identified as D0-1 through D0-5 (ex. B-1, tab 12 at 80-82). D0-1 lists Honeywell's Estimated Annual Cost Savings for each year, followed by its Proposed Guaranteed Annual Cost Savings for each year and Annual Contractor Payments.