PROCESS TO ISSUE RFQS/RFPS, RECEIVE AND EVALUATE

PROPOSALS 4.1 Creation of Project Committee. Once the Authority intends to pursue a Project, which Project shall be consistent with the IRP as approved by the Energy Commission, and its goals and objectives, the Authority will create a Project Committee. The Project Committee may also be constituted in advance to determine whether or not to pursue a Project. 4.2 Notification and Approval of RFP content by the Energy Commission. Prior to launching any public procurement process, and after receiving the approval of the Board to proceed with the proposed Project and procurement process, the Executive Director will notify in writing to the Energy Commission the recommendation of the Project Committee with respect to (i) the proposed Project, including all associated documents that explain the Project, (ii) the -9- proposed parameters to determine such profit margin and price escalators, (iii) consistency with the IRP approved by the Energy Commission, and (iv) compliance with this Regulation, the Acts and other laws and regulations related to procurement processes by the Authority and the powers of the Energy Commission. The parameters related to the profit margin and price escalators shall be based on industry costs and profitability benchmarks in accordance with the anticipated nature of the Project. The recommendation to the Energy Commission will also provide a detailed narrative, with specific examples, regarding how the proposed project and the terms of the Contract, as described in the proposed RFP and approved by the Board, complies with the IRP. The Energy Commission shall, within ten (10) days from receipt of the notification from the Executive Director, identify any additional information it deems necessary to conduct its evaluation. Upon receipt of such information, the Energy Commission will review and approve, reject or propose modifications to the Project or the parameters within forty-five (45) days from receipt of the notice of the recommendation from the Executive Director or the date in which all additional information, if any, requested by the Energy Commission is provided, whichever occurs later. If the Energy Commission does not respond within the specified forty-five (45) day period, the proposed Project and parameters shall be deemed approved by it. When the Energy Commission proposes modifications to the proposed Project, the above-mentioned forty-five (45) day period for approval or rejection of the proposed Project will commence from the date the modified proposal is notified to the Energy Commission. These communications shall be maintained confidential while the administrative competitive procurement process is ongoing. 4.3 Qualification of Proponents. In anticipation of an RFP or as otherwise required by the Board, the Project Committee may, but shall not be obligated to, conduct an RFQ process (which, for all intents and purposes under this Regulation, may take the form of a request for -10- expressions of interest, provided it ascertains the necessary information regarding the qualifications of participants) to identify those prospective Proponents that satisfy minimum standards of: (a) financial and bonding condition; and/or (b) technical and professional capabilities. Any such minimum standards will be specified in the RFQ (or in the RFP if no previous RFQ is issued) and will be related and proportionate to the subject matter of the anticipated Project. At a minimum, however, participants interested in becoming Proponents must meet the following requirements and conditions, which may by no means impair fair competition and the public interest, to wit: (i) At the time of execution of the Contract, the Proponent shall be a Person authorized to do business in the Commonwealth of Puerto Rico; (ii) The Proponent shall have available such corporate or equity capital or securities or other financial resources (including the ability to draw upon committed lines of credit) that, in the judgment of the Authority are necessary for the proper execution of the Project; (iii) The Proponent shall have a good reputation and the managerial, organizational and technical capacities, as well as the experience, to develop and administer the Project; and (iv) The Proponent (or, in the case of a consortium, each consortium member on its own behalf) shall certify that neither he or she, and in the case of a legal entity, its directors or officers, and in the case of a private corporation, the shareholders (or their equivalent) with direct or substantial control over the corporate policy, and in the case of a partnership, its partners, and in the case of natural person or legal entity, any other natural person or legal entity that is the alter ego or the passive economic agent thereof, -11- have been formally convicted for acts of corruption, including any of the crimes listed in Act No. 458 of December 29, 2000, as amended, whether in Puerto Rico or in any jurisdiction of the United States of America or in any foreign country. Likewise, the Proponent (or, in the case of a consortium, each consortium member on its own behalf) shall certify that the latter complies and shall continue to comply at all times with laws which prohibit corruption or regulate crimes against public functions or funds, as may apply to the Proponent, whether federal or State statutes, including the Foreign Corrupt Practices Act. For the avoidance of doubt, no member of a consortium shall be required to make certifications as to any other member of its consortium. The Project Committee may, in addition to such minimum standards, include other qualification requirements in the RFQ or RFP. The RFQ will be announced by means of a public notice in accordance with the procedures and standards for RFP set forth in Section 4.4 of this Regulation, to the extent applicable. The Project Committee, in making its evaluation of the qualifications of a prospective Proponent, may disqualify a prospective Proponent, thereby excluding such prospective Proponent from the RFP process, if the prospective Proponent fails to satisfy minimum standards of financial and bonding condition, or technical, professional ability, or such other criteria set forth in the RFQ or RFP. If the Project Committee elects not to issue an RFQ before publishing an RFP for any Project, the Project Committee will make its evaluation of the qualifications of the prospective Proponents as part of the RFP process in accordance with the qualifications requirements contained in the RFP and this Section 4.3. If an RFQ process that meets the requirements of this -12- Sections 4.3 has been carried out for a particular Project, the Project Committee may rely on the results of such prior RFQ process in lieu of launching a new RFQ. 4.4 Issuance of Request for Proposals. Except to the extent a prior RFQ process for the related Project had been effected by means of public notices providing the same or similar information to be provided in the RFP, the Project Committee will solicit proposals from prospective Proponents by means of a public notice of a Request for Proposal for each Project. The RFP will be published by the Authority in one newspaper of general circulation in the Commonwealth, in the Internet at the website of the Authority and the Energy Commission, and, in the discretion of the Project Committee, in one or more national or international journals. The Authority may also employ such other methods and processes, including other means of electronic communication or roadshows, as it deems advisable in order to disseminate the RFP. The publication and dissemination of an RFP in the above referenced fashion shall be considered to provide reasonable notice to the largest number of potential qualified Proponents that can be reasonably anticipated to submit qualified Proposals. The Project Committee may also solicit Proposals directly from prospective Proponents through a notice of Request for Proposal if it believes that such entities may be qualified to participate in a specific Project. When a prior RFQ shall have been conducted and qualified prospective Proponents selected, the Authority may determine in its discretion to distribute the RFP only to such qualified proponents. 4.5 Content of the Request for Proposals. The RFP will include the following items, without it being construed as a limitation or that their order defines their importance, unless otherwise approved by the Board and the Energy Commission, in its discretion: -13- (a) a description of the Project that would be developed and/or operated and its importance based on the IRP; (b) a description of the proposed schedule by which all steps of the procurement process, including an anticipated schedule for Individual Meetings and Pre- Proposal Conferences, are expected to be implemented and completed; (c) a due date, time and method for submission of (i) requests for clarification or information and (ii) the Proposals and the place where Proposals shall be submitted; (d) instructions as to the format in which to submit Proposals, to the extent different than those set forth in this Regulation, and the minimum information and materials that must be submitted in order for the Proposals to be considered complete; (e) any options or alternative proposals allowed as further described in this Regulation; (f) applicable minimum Proponent eligibility requirements, scoring criteria and minimum resource size solicited; (g) applicable minimum Proposal Evaluation Criteria that will be used in evaluating the Proposals and the Proponents, including any unique capabilities or qualifications which will be required of Proponents if a related RFQ has not been previously issued (or no prior unrelated RFQ is being relied on); (h) any applicable Proposal Security; (i) if applicable, a statement as to any funding contingencies or other conditions, contingencies, approvals, authorizations, or certifications which are required for award or execution of a Contract; -14- (j) a draft of the proposed Contract or summaries of its key terms and conditions, specifying the manner in which Proponents will be allowed to submit comments or suggestions to the draft Contract, provided that any revised draft of a Contract proposed by the Authority will be distributed to all Proponents; (k) the parameters approved by the Energy Commission before issuance of the RFP in connection with profit margins and pricing escalators that will be allowed under the Contract as provided in Section 4.2 of this Regulation. These pricing escalators and profit margins will be based on ranges of acceptable profitability for similar projects in the industry, taking into account approximate construction costs, required returns for third parties and PREPA, and factoring in potential risk premiums reflecting PREPA's unique credit situation. PREPA will make Proponent profitability estimates based on known contract terms, utilizing approximate project costs and escalations based on industry benchmarks and similar customary indicators. The parametric ranges for each specific RFP will be reviewed upfront by the Energy Commission and their approval is subject to the result of the evaluation conducted by the Energy Commission. (1) the Authorized Representative who will serve as single point of contact for communications during the RFP; (m) a policy statement encouraging the participation of local suppliers, contractors, advisors and investors as advisors or consortium members in potential Projects; and (n) any other applicable terms and conditions which may be useful to, or should be required from, the Proponents, as determined by the Board. Notwithstanding the foregoing, any requirements included in the RFP may be modified through the issuance of an Addendum by the Authority pursuant to Section 4.6 of this -15- Regulation, provided however that any Addendum that modifies the proposed Project or the parameters subject to the approval of the Energy Commission, specifically items (a) and (1), shall be subject to approval by the Energy Commission prior to the issuance of the Addendum. 4.6 Requests for Information or Clarification of an RFP. The prospective Proponents may seek clarification, explanation or interpretation of the RFP only as provided in this section. A prospective Proponent may request from the Authority a clarification, explanation or interpretation of any matter contained in the RFP up to fifteen (15) days (or such greater or lesser number of days as specified in the RFP) prior to the related due date for Proposals specified in the RFP. Any such request from prospective Proponents must be made in writing and must be specific and reasonable as to the information requested. The Project Committee shall have the discretion to abstain from addressing Requests for Information or Clarification that do not reference specific pieces of information or that are determined by the Project Committee to be too broad, vague, burdensome or irrelevant, or if a Request for Information solicits information that is subject to confidentiality obligations by the Authority. After issuance of the RFP, representatives from the Authority and the Project Committee may participate in one or more Individual Meetings and Pre-Proposal Conferences. Questions pertinent to the RFP that are presented at an Individual Meeting or Pre-Proposal Conference that the Project Committee consider may be of general interest to all prospective Proponents, the Authority's response thereto, and any other written response by the Project Committee to written requests from prospective Proponents will be compiled in one or more Addendum and circulated to all prospective Proponents that have registered for the process; provided that the Addendum shall not disclose the identity of the Proponents that have submitted Requests for Information or -16- Clarification. Only written responses provided by the Project Committee will be official. Any other type of communication with any officer, employee or agent of the Authority or the Project Committee, including any oral response during any Individual Meeting or any Pre-Proposal Conference, will not be considered an official response of the Authority or of such committee. A Proponent may be permitted under the terms of the RFP to request the confidential treatment of all or a portion of a Request for Information or Clarification to the extent such Request for Information or Clarification contains information identified by such Proponent to the Authority as proprietary or as a trade secret, and the Project Committee shall have the right to accept or reject in its reasonable discretion such request for confidential treatment. 4.7 Preparation of Proposals. Proposals should provide a straightforward and concise description of the Proponent's capabilities to complete or perform the proposed Project. Emphasis should be placed on completeness and clarity of content. In addition, unless otherwise specified in the RFP, Proposals submitted for consideration must comply with the following requirements, in addition to any other requirements specified in the RFP: (a) All information requested under the RFP must be submitted. Proponents failing to submit all information requested by the RFP may be given an opportunity to promptly submit missing information but shall be given a lowered evaluation of their Proposal. Proposals that lack critical required information may be rejected. (b) Proposals should include a comprehensive scope of work, schedule for completion of the Project and provide enough information about the Project to determine whether it satisfies the Evaluation Criteria. (c) All Proposals must be submitted in both electronic format and in the number of hardcopies requested in the RFP. -17- (d) Proposals must include an executive summary and use cross-references rather than repetition in addressing the items in the RFP. (e) The financial plan for the Project must contain enough detail SO that an analysis would reveal whether the proposed financing is feasible. The financial plan must disclose the full extent of any expected public sector financing and/or concession commitments, as well as sufficient information to verify compliance with, and compare with other Proposals, the profit margins and escalator parameters approved by the Energy Commission for the Project. 4.8 Submission of Proposals. Proposals, including any Alternative Proposals approved for submission, will be delivered to the Authority on or before the due date set in the RFP for receipt of Proposals in accordance with the instructions contained in the RFP and, unless otherwise specified in the RFP, must comply with the following requirements: (a) Proponents will be required to deliver such number of hard copies as specified in the RFP and one (1) electronic copy in searchable portable document format ("pdf") of their Proposal, unless otherwise noted by the Authority in the RFP. (b) The Authority will designate one contact on behalf of the Authority (which may be an individual, department, or electronic or physical address) to receive all Proposals and to act as the point of contact for each RFP process. In the absence of such a designation, Proposals will be delivered to the attention of the General Counsel of the Authority. (c) For purpose of this Regulation, a Proposal will be considered filed at the Authority on the hour and date it is stamped as received at the designated contact address. (d) The Proposal cover page must include the title of the Proposal, the name and address of the Proponent, the Person authorized to act on behalf of the Proponent and his or her email address and telephone and fax numbers. Unsealed envelopes or packages will not be -18- accepted. Each RFP will include more specific instructions and details about segregating envelopes and other submittal instructions. (e) Any Proposal submitted by mail or personally delivered by the Proponent or its representative which is received after the date specified in the RFP may be rejected and returned to the Proponent unopened. The Project Committee may, in its discretion, agree to grant an extension to the submission deadline if requested by a Proponent prior to the due date specified in the RFP. An extension of the submission deadline upon the request of a Proponent may only be granted for a reasonable excuse and must be offered to all Proponents without discrimination. (f) Proposals received on or before the due date set in the RFP will be stamped (date and time of receipt) and will be kept in the custody of the Authority. Such Proposals will not be opened until the date and time established in the RFP for the opening of the Proposals. (g) Proposals will not be read publicly. Copies of the Proposals will not be generated by the Authority. Only the members of the Project Committee, the Energy Commission and other persons designated by the Board or the Executive Director will have access to the Proposals during the selection and evaluation period, including profit margins and escalators included in the negotiated Contract. After the conclusion of an RFP process, the Authority will make Proposals and other elements of the administrative record available for review except for those portions that are confidential or have proprietary information or that would clearly and adversely affect the financial, competitive or bargaining position of the Authority and/or the Proponent as identified and requested by Proponents and determined by the Authority in accordance with applicable laws and regulation. -19- (h) Failure by a prospective Proponent to submit a compliant Proposal within the period specified in the RFP will preclude such Proposal from consideration by the Authority and the Project Committee. (i) Proponents who submit a Proposal may be required to give one or more oral presentations of their Proposal to the Project Committee. (j) As further provided under Section 4.14 of this Regulation, Proponents, other than members of a consortium, will not discuss or communicate, directly or indirectly, with any other Proponents(s) or any director, officer, employee, consultant, advisor, agent, representative or team member of any other Proponent regarding the preparation, content or representation of their statements of qualifications under an RFP or Proposals. Statements of qualifications and Proposals will be submitted without any connection, knowledge, comparison of information, or arrangement, with any other prospective Proponent or any director, officer, employee, consultant, advisor, agent, representative or team member of any other prospective Proponent. By submitting a response to an RFQ or RFP, a Proponent, on its own behalf and as authorized agent of each firm, corporation or individual member of a consortium or the Proponent, represents and confirms to the Authority, with the knowledge and intention that the Authority may rely on such representation and confirmation, that its response has been prepared without collusion or fraud, and in fair competition with responses from other Proponents. The Authority retains the absolute discretion of disqualifying any Proponent or Proposal in respect to which the Authority has reasons to believe that there has been any collusion or fraud involved. 4.9 Submission of Alternative Proposals. Prior to the deadline for submitting proposals under the RFP, Proponents may submit an alternative technical or design concept in response to the RFP (an "Alternative Proposal"), provided it clearly explains the justification -20- behind providing separate or Alternative Proposals. A Proponent submitting an Alternative Proposal must continue to comply with the RFP in all respects, including submitting a Proposal in accordance with the Project requirements specified therein. In order for an Alternative Proposal to be considered by the Authority, it must comply with the following eligibility requirements: (a) Alternative Proposal must integrate with, and must not conflict or be inconsistent with, the Project requirements outlined in the RFP. (b) Alternative Proposal must not change the nature or purpose of the Project and must achieve the goals desired from the RFP. (c) Alternative Proposal may not result in delays in the proposed Project timeline under the RFP. (d) Alternative Proposal must demonstrate, in quantifiable terms, the savings and gains to the Authority in terms of time, cost or the allocation of economic risks, rights and remedies that would result from adopting such Alternative Proposal. (e) Alternative Proposal must not require burdensome additional permits or authorizations that would not otherwise be required under the RFP. For the avoidance of doubt, the Authority retains the right to reject any Alternative Proposal and it may exclude such Alternative Proposal from being considered if it does not comply with the requirements of this Section 4.9 and any other specification provided in the RFP. 4.10 Bidding Fee. A bidding fee will be determined by the Authority on a case by case basis and will be included in the RFQ and/or RFP for the proposed Project. Failure to pay the bidding fee shall suspend consideration of a Proposal. All fees shall be paid in the form -21- established by the Authority in the RFP. Costs and expenses incurred by Proponents in connection with participating in any RFQ and RFP processes, including to prepare and present their Proposals, negotiate the Contract and execute it, shall be the sole responsibility of each Proponent. The Authority shall not be responsible to reimburse or in any way compensate Proponents for such costs and expenses. 4.11 Modification of Proposals. The Project Committee will only accept a modification to a previously submitted Proposal if the modification is received before the due date specified in the RFP for such Proposal. All modifications will be in writing and will be executed and submitted in the same form and manner as the original Proposal in accordance with the terms of the RFP. 4.12 Cancellation of RFP. The Board upon recommendation of the Executive Director and the Project Committee, may cancel an RFP process at any time. If the Executive Director and the Project Committee recommend that the RFP be cancelled, they shall indicate the reason or reasons for such recommendation. The Authority then may conduct a new RFP or take any other action the Board deems appropriate upon recommendation of the Executive Director. 4.13 Communications with the Authority. The Proponents or their representatives shall not contact or communicate with the Authority or its representatives during any stage of an RFP process, including during the evaluation or the negotiation process, other than those representatives of the Authority that have been designated as Authorized Representatives pursuant to Section 5.1(c) of this Regulation, and only under the circumstances permitted in the RFP. Any Proponent (including any member of a consortium) that wishes to communicate with the Authority in connection with other matters unrelated to the RFP process must first receive the consent of the Project Committee. Communications by Proponents with the Authority that -22- compromise the integrity of the RFP process shall not be allowed and shall result in disqualification of such Proponents from the RFP process. 4.14 Non-Collusion Obligation. As required under Section 4.09(j) of this Regulation, Proponents in an RFP are prohibited from undertaking any activities of a collusive nature. Collusive activities include any consultations, communications or agreements among Proponents that aim to restrict competition or impact the Project price during the process. Proponents participating in the RFP will be required to execute non-disclosure agreements with the Authority and shall not be permitted to discuss among themselves the nature or contents of their Proposals or their communications and meetings with the Authority.