Honeywell International, Inc.
ASBCA No. 57779
| A.S.B.C.A. | Aug 1, 2017Background
- The Army issued an ESPC delivery order to Honeywell (2008) covering energy conservation measures at Fort Dix, including two 700 kW solar arrays (Phase I roof-mounted; Phase II ground-mounted). Payments were scheduled over 21 years.
- The DO computed government savings by combining electricity value and Solar Renewable Energy Certificate (SREC) sale value; Honeywell could sell SRECs for the government and guaranteed annual savings.
- The Board previously held (2013) that SREC revenues could not be included as cognizable ESPC savings and invalidated the DO provisions permitting SREC sales; later (2015) the Board recognized Honeywell could seek quantum valebant/quantum meruit for benefits delivered.
- Honeywell completed Phase I (accepted 2009) and delivered Phase II (installed 2010) though the government did not connect or accept Phase II; the government later issued a final decision cancelling the solar portions of the DO (2011).
- The DO schedules listed implementation prices ($6,485,901 Phase I; $5,304,278 Phase II), financing rates (6.19% Phase I; 8.95% Phase II), and contained a cancellation ceiling/financing termination schedule (106.5% financing termination fee). Phase II SRECs were shown to have market value of $2,553,728 (unrefuted).
Issues
| Issue | Honeywell's Argument | Government's Argument | Held |
|---|---|---|---|
| 1) Whether SREC revenues could be counted as government "savings" under the DO | DO included SREC value; Honeywell relied on DO calculations | SREC sales not cognizable ESPC savings; contracting officers lacked authority | Board previously invalidated inclusion of SREC revenues in ESPC savings (SRECs excluded) |
| 2) Proper measure of quantum valebant/meruit for delivered arrays | The DO schedules fix the arrays' values (implementation prices), plus financing and termination fee — total recovery per schedules | Government expert valued Phase II far lower using different degradation, wholesale rate, and escalation assumptions | Board used DO implementation prices but subtracted SREC value and profit (7%) to arrive at baseline values for each phase ($3,656,921 Phase I; $2,558,011 Phase II) |
| 3) Whether Honeywell may recover financing interest and from which dates | Interest should accrue per DO financing rates from award/dates asserted by Honeywell | Government limits or disputes pre-delivery/early accrual and scope of financing benefit | Interest awarded at agreed DO rates: Phase I at 6.19% from 31 Jul 2009 to 21 Jun 2011; Phase II at 8.95% from 15 Apr 2010 to 21 Jun 2011; CDA interest thereafter until payment |
| 4) Recovery of contractual termination premium, monitoring panel, and prorated design costs | Recovery should include 6.5% financing termination fee, monitoring panel, prorated feasibility/design amounts | Termination schedule set maxima; actual termination/convenience costs must be negotiated; monitoring panel not in CO claim; insufficient proof on prorated design costs | Board denied entitlement to termination premium and monitoring panel; rejected prorated feasibility/design recovery for lack of proof and jurisdictional/claim limitations |
Key Cases Cited
- United States v. Amdahl Corp., 786 F.2d 387 (Fed. Cir. 1986) (quantum valebant/meruit limited to value of benefits conferred prior to rescission)
- Pacific Maritime Ass'n v. United States, 108 F. Supp. 603 (Ct. Cl. 1952) (contract price can guide measure of value conferred where government received benefit)
- Urban Data Sys., Inc. v. United States, 699 F.2d 1147 (Fed. Cir. 1983) (addresses reliance on agreed prices when no valid contract existed)