The GAO published a decision today in the Matter of SunEdison, LLC, B-298583; B-298583.2, dated October 30, 2006, involving SunEdison’s protest of an award 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 contended that the agency’s evaluation of offerors’ prices was flawed and the GAO sustained the protest. 

The protester argued that the agency’s evaluation of the offerors’ prices was flawed in that it failed to take into consideration that PowerLight’s price was offered contingent upon “successful completion of an REC purchase agreement with Nevada Power,” whereas its own price was offered on an unconditional basis.  The GAO agreed that the agency’s price evaluation was flawed and found hat PowerLight’s inclusion of a contingency in its pricing rendered the proposal ineligible for award.  Where a solicitation requests offers on a fixed-price basis, an offer that is conditional and not firm cannot be considered for award.  Omega World Travel, Inc.; Sato/Travel, Inc., B-288861.5 et al., Aug. 21, 2002, 2002 CPD para. 149 at 6.  Here, not only did PowerLight make its offer conditional upon successful completion of an REC purchase agreement, but further, it acknowledged the uncertainty of such an agreement being reached.

Government contractors need to keep in mind, when responding to a sealed bid invitation or to a request for proposals, that conditional pricing is an almost certain way to have your bid, or offer, rejected.  Of course, this procurement seems to have been yet another of those all too frequent “negotiated” procurements were actual discussions, or negotiations, did not occur. The Contracting Officer simply furnished each of the offerors with “evaluation notices” describing required information that had not been fully addressed in the proposal or that required clarification.  Apparently the uncertainty in PowerLight’s proposal was not addressed, and there were no discussions during which additional issues could have been raised. (Unlike sealed bidding, where a bid cannot be revised after bid opening, offers submitted in response to a Request for Proposals can be revised after offers are submitted if the government conducts discussions, or negotiations, and gives the offerors in the competitive range an opportunity to submit best and final offers. The regulations regarding Contracting by Negotiation are found in FAR, Part 15).

In sustaining the protest, the GAO recommended that the agency either reopen negotiations with the offerors to determine whether the pricing contingencies could be eliminated, or that it terminate the contract awarded to PowerLight and, if otherwise appropriate, proceed with award to SunEdison as the only offeror to propose fixed prices. It is possible, therefore, that the clarification of PowerLight’s pricing that could have occurred before award, may nevertheless occur during reopened negotiations.