B-298583; B-298583.2, SunEdison, LLC, October 30, 2006

B-298583; B-298583.2, SunEdison, LLC, October 30, 2006 TITLE: B-298583; B-298583.2, SunEdison, LLC, October 30, 2006 BNUMBER: B-298583; B-298583.2 DATE: October 30, 2006 ****************************************************** B-298583; B-298583.2, SunEdison, LLC, October 30, 2006 DOCUMENT FOR PUBLIC RELEASE The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release. Decision Matter of: SunEdison, LLC File: B-298583; B-298583.2 Date: October 30, 2006 Gerald H. Werfel, Esq., Pompan, Murray & Werfel, PLC, for the protester. Gary R. Allen, Esq., Department of the Air Force, for the agency. Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Where solicitation required offerors to propose fixed prices and offeror proposed pricing contingent upon "successful completion" of an agreement with a third party, the offer was conditional and should not have been considered for award. DECISION SunEdison, LLC protests the award of a contract to PowerLight Corporation under request for proposals (RFP) No. FA4861-06-R-B501, issued by the Department of the Air Force for the construction and operation of a photovoltaic array to supply solar power to Nellis Air Force Base (AFB) in Nevada. The protester contends that the agency's evaluation of offerors' prices was flawed. We sustain the protest. BACKGROUND The RFP explained that the agency's goal in awarding a contract under the RFP was to reduce its unit cost for electrical service to Nellis AFB to below the rate it was paying the Nevada Power Company, and, thus, if all proposals received were for more than the cost of service from Nevada Power, the government might elect not to award a contract. RFP sect. B.2.3. The RFP also explained that a photovoltaic array produces both renewable energy (solar power) measured in kilowatt-hours (kWh) and renewable energy credits (REC), and that while the agency was aware that an offeror would need to sell both outputs to have a viable project, the government was interested in acquiring the kWh only.[1] The RFP further explained that the contractor was to operate its solar array, which was to be located on land leased to the contractor by Nellis, "in parallel" with the electricity supplied to Nellis by the Nevada Power Company from outside the base. RFP sections C.2.3.1, C.2.3.2. Accordingly, offerors were required to furnish all equipment (e.g., inverters and transformers) necessary to connect to the base electrical distribution system. Offerors were also required to submit evidence with their proposals that a request to Nevada Power for an interconnect agreement had been made, with no contract to be awarded until an interconnect agreement with Nevada Power had been secured. The RFP provided for award to the offeror whose technically acceptable proposal was determined to represent the lowest cost to the government. Proposals were to be evaluated on a pass/fail basis with regard to four "mission requirements" (performance plan, financial capability, implementation plan, and quality plan) and with regard to past performance. Price was to be the deciding factor in the selection of a proposal for award from among those determined to be technically acceptable. The RFP's price schedule asked each offeror to furnish a projection as to the monthly output (in kWh) of its proposed solar array and a fixed unit price per kWh. The schedule also asked offerors for an escalation factor to adjust subsequent year prices for inflation. The RFP explained that total evaluated price would be the net present value of the stream of monthly payments that the government would be expected to make to the contractor over a projected contract term of 20 years. RFP sections M.2.1.1, M.3.4. For purposes of the price evaluation, each monthly payment was to be calculated by multiplying the offeror's projection of the output of its proposed solar array in kWh by the offeror's proposed unit price per kWh. RFP sect. M.3.4. The solicitation further explained that the evaluated first year annual price would be the sum of the monthly payments and that subsequent year annual prices would be calculated by multiplying the previous year's annual price by the escalation factor proposed in the schedule. Id. Offerors were instructed to explain how they had derived their kWh price in their proposals. In particular, they were instructed to furnish information regarding "tax credits, other incentives, sale of RECs, [and expenses for] operation and maintenance." RFP sect.