CONTRACT AWARD

7.1 Approval of the Contract; Preparation of Report (a) Upon completion of the negotiation for the Contract, the Project Committee shall prepare a report, which shall include the reasons for entering into the Contract, the reasons for selecting the chosen Proponent, a description of the procedure followed, including comparisons between the favored Proponent and other proposals presented, an explanation of how the pricing terms included in the Contract comply with the parameters established in the RFP and previously approved by the Energy Commission, as well as all other information pertinent to the procedure followed and the evaluation conducted. The report should detail the evaluation by the Project Committee of each of the steps in the competitive procurement process, including Proponents qualifications, Proposals evaluations, and selection of a final shortlist, as well as, its assessment regarding whether the process was conducted fairly and transparently. (b) The report and the proposed Contract as negotiated shall be presented for the approval of the Executive Director and the Board not later than thirty (30) days after completion of the negotiation of the Contract, or such longer period approved by the Board. The Board shall have the option to reject or accept the proposed Contract or require it to be further negotiated with the Proponent. (c) Should the Board reject the Contract, the Authority may choose to continue negotiating with the favored Proponent if the Board reasonably determines that -34- continuing to negotiate with the Proponent may result in curing the grounds for rejecting the Contract. If an agreement cannot be reached within a reasonable period as determined by the Board, the Authority may begin negotiations with the second best and subsequent Proponent or Proponents from the list of evaluated Proposals, if the Project Committee, in its reasonable judgment, and as approved by the Board, determines that such second-best Proposal or Proposals, as they may be further improved through the negotiation process, present sufficient benefits to justify continuing with the negotiations under the RFP process at hand. (d) If the Board approves the proposed Contract, a copy of the report, along with the proposed Contract, shall be submitted to the Energy Commission for their evaluation. The Commission shall have the authority to review the terms of the Contract to ensure compliance with the previously approved terms of the RFP and the form of Contract that was included in such RFP. The Energy Commission will also confirm that changes in the scope of the Project, if any, do not render it inconsistent with the IRP. In order to help in the analysis to be conducted by the Energy Commission of the terms of the Contract, the Project Committee will prepare an analysis of its estimate of the potential range of Project profit margins and price escalators on the Proponent's project and compare it to industry benchmarks. The report submitted by the Project Committee shall include a detailed financial analysis which shall demonstrate the profitability ranges based on actual contractual terms and capital cost, operating cost, fuel, and other industry benchmarks. The Energy Commission may ask for additional supporting information to make its evaluation, which requested information shall be submitted to the Authority within ten (10) days from receipt of the request for approval of the Contract. The Energy Commission shall complete its evaluation process of such Contract in a period of not more than thirty (30) days, from the date in which the report and proposed Contract formally -35- submitted, or, if additional information is requested, from the date in which such information is provided. Should the Commission fail to issue a written response prior to said thirty (30) days, the proposed Contract shall be deemed to have been approved by the Commission. If after its evaluation, the Energy Commission rejects the changes made to the model Contract during the negotiation with the selected Proponent, or if it determines that the changes, if any, in the scope of the Project have rendered it inconsistent with the IRP, the Energy Commission will state the grounds for the rejection of the Contract and will provide opportunity to the Project Committee for further negotiation of the terms of said Contract in order for it to address the issues noted by the Energy Commission. Should the Energy Commission require the selected Proponent to submit actual costs and profitability information, it shall directly require such information from such Proponent on a confidential basis in accordance with the Acts and confidentiality processes and procedures established by the Energy Commission. Once PREPA has reached a new agreement, the process of approval of such Contract will begin as provided in this Section 7.1. (e) If each of the Board and the Energy Commission approve the Contract, the Authority shall give written notice of such approvals and a final award notification to the selected Proponent. The Authority shall also notify all other Proponents that their proposals have not been accepted, disclose the identity of the Proponent thus selected and indicate to the Proponents that they shall have access to the Authority record that pertains to the selection procedure and the Award of the Contract. 7.2 Award of Contract; Cancellation. (a) Once the Project Committee has selected a Proposal, the Project Committee and the Proponent have finalized the negotiation of the Contract, the Contract has been approved by the Board and the Energy Commission as provided in Section 7.1 above, and -36- notifications to all Proponents have been issued, the Contract may be executed as provided in