causes, the outcome of which is undeterminable at the present time.”1
The Government Accountability Office (“GAO”) discussed contingent offers in its decision in the matter of: Sun Edison, LLC, File B.–298583, dated October 30, 2006.
The Air Force ("AF") issued a solicitation “for the construction and operation of a photovoltaic array to supply solar power to Nellis Air Force Base (“Nellis”) in Nevada.” The photovoltaic array would produce power for Nellis as well as "renewable energy credits" (“RECs”). The awardee was required to furnish their interconnect agreement with Nevada Power as part of their proposal. The Solicitation required a fixed unit price per kilowatt hour (“KWH”) based on monthly output of the array, operating and maintenance costs, and credits.
Sun Edison protested the award of the contract to Power Light Corp. on the grounds that the Source Selection Authority failed to consider that the awardees' price was “contingent upon successful completion of a renewable energy credit purchase agreement with Nevada Power.” 2
In an earlier case, the GAO decided that “where a solicitation requests offers on a fixed–price basis, an offer that is conditional and not firm cannot be considered for award.” (Emphasis added.)3 With respect to
PowerLight, the GAO stated that the offeror made "its offer conditional upon successful completion of an REC purchase agreement, but further it acknowledged the uncertainty of such an agreement being reached." The GAO continued that "the RFP here requested prices on a fixed-price basis, it was improper for the Air Force to make award to Power Light on the basis of its contingency priced offer."
The protester, Sun Edison, “did not make its pricing contingent on negotiation of an agreement with Nevada Power for sale of RECs at a price that it regarded as acceptable; to the contrary, Sun Edison expressly assumed the risk that the price negotiated with Nevada Power might differ from the price it had used [in the proposal] and guaranteed that the price that it had offered would not be affected by its deal with Nevada Power.
The moral of the story here is two-fold: (1) When an RFP requires the completion of a specified activity as a condition for receipt of a contract, either do what the RFP requires or no-bid; (2) Use your best efforts to not submit a contingent offer to the Government because (a) such an offer lacks “definitiveness” and may not be enforceable in a fixed price prime contract, and (b) the cost of the contingent offer must be excluded from cost estimates but should be disclosed separately to facilitate negotiation of appropriate contractual coverage and may
