Compliance

The draft RFP issued by the Army Energy Initiatives Task Force is a significant step in the Army’s plan to develop large-scale renewable energy projects. It presents as much as $7 billion in new opportunities to the alternative energy market and reflects a growing synergy between the defense and energy industries. Here we highlight some of the key provisions in the draft RFP, including some that are unique to contracts with the federal government.

The Draft RFP

The draft RFP was issued by the Army Energy Initiatives Task Force. It contemplates a multiple-award indefinite delivery-indefinite quantity contract under which the Army could purchase up to $7 billion worth of renewable and alternative energy over 10 years—a base period of 3 years with 7 option years. Through competition with the IDIQ contract holders, the Army would issue individual firm-fixed-price task orders to purchase electricity through Power Purchase Agreements based on a fixed rate per unit of energy (e.g. $/kWh). The PPAs would be allocated across four renewable technologies:  solar (1.5 billion kWh); wind (9 billion kWh); biomass (19 billion kWh); and geothermal (8 billion kWh).

Depending on the requirements of a particular task order, bidders could be responsible for constructing the energy generating systems and guaranteeing a certain level of renewable energy output by a specific date. Failing to meet the specified date could subject the contractor to liquidated damages for the output shortfall on a price-per-MWh basis.

Maintenance of the energy generation systems would be the contractor’s responsibility, as would achieving certain output performance levels over the course of the PPA. For variable energy production technologies (i.e. solar and wind), contractors would have to maintain performance levels that are in the top 25 percent of the industry in the United States. For continuous energy production technologies (i.e. geothermal and biomass), contractors would be required to provide replacement energy at no cost when their systems fail to meet the minimum production requirements.

To offset the construction and maintenance costs, bidders would be required to take advantage of all available utility incentive programs.  The government would retain ownership of any renewable energy credits associated with the energy generated under the task order.

Just one month after its decision in United Space Alliance, the District Court for the District of Columbia has again addressed the question of limits on OFCCP’s audit rights. In Bank of America N.A. v. Solis, No. 09-2009 (D.D.C. Dec. 13, 2011) [pdf], United States Magistrate Judge Deborah A. Robinson issued a report and recommendation adopting the Fourth Amendment’s prohibition against unreasonable search and seizure as a limit on OFCCP’s ability to select contractors for audit.

The National Defense Authorization Act for Fiscal Year 2012 [pdf] puts an end to OFCCP’s effort to impose subcontractor status on retail pharmacies and health care providers serving TRICARE beneficiaries. The controversy had been brewing for some time. As we discussed in an earlier client alert, the October 2010 decision in OFCCP v. Florida Hospital, …

Since the Federal Awardee Performance and Integrity Information System opened to the public on April 15, 2011, contractors have been concerned that their trade secrets and other proprietary information might also become accessible. With good reason—the interim version of FAR 52.209-9 provided for the public availability of all newly submitted information other than “past performance reviews.”

The final rule on public access to FAPIIS specifically addresses the problem. Rather than simply ignoring Freedom of Information Act exemptions entirely as the interim rule did, the final form of FAR 52.209-9 (Jan. 3, 2012) [pdf] includes a mechanism that allows the contractor to identify information covered by a FOIA exemption.

The FAR Councils have issued a final rule addressing the prevention of personal conflicts of interest (PCOIs) for contractor employees performing acquisition functions closely associated with inherently governmental functions. 76 Fed. Reg. 68,017 (Nov. 2, 2011). The final rule amends the FAR to add Subpart 3.11 and a corresponding contract clause (FAR 52.203-16) requiring contractors to identify and prevent PCOIs of their covered employees and prohibiting covered employees who have access to non-public information gained by performance of a government contract from using it for personal gain. This Subpart implements the requirement set out in section 841(a) of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009.

The Department of Labor has announced its final rule [pdf] implementing Executive Order 13495 [pdf], which addresses nondisplacement of qualified workers under federal service contracts. Under the DOL rule, federal contractors and subcontractors on service contracts over the $150,000 simplified acquisition threshold will be required to offer employment to non-managerial employees whose employment would otherwise end at the close of the predecessor contract.