Doubling Down on Bid Compliance

DOUBLING DOWN ON BID COMPLIANCE A Saudi Arabian Case Study

KSA Solar Industry Briefing and Networking 8 May 2018

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Bracewell and its practice groups have been recognised for excellence by a number of global legal and business publications and organisations.

Bracewell’s Dubai office has been named Infrastructure and Energy Projects Team of the Year for two consecutive years by The Middle East Legal Awards (2017, 2018).

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Adrian Creed Partner

Tracy London Partner

Robert J. Harker Partner

Dubai T: +971.4.350.6818 F: +971.4.350.6801 E: adrian.creed@bracewell.com

London T: +44.(0).207.448.4211 F: +44.(0).207.657.3124 E: tracy.london@bracewell.com

Dubai T: +971.4.350.6832 F: +971.4.350.6801 E: robert.harker@bracewell.com

Simon Stevens Senior Counsel

Laura Capelin Senior Associate

Tom Swarbrick Senior Associate

Houston T: +1.713.221.3394 F: +1.800.404.3970 E: simon.stevens@bracewell.com

Dubai T: +971.4.350.6848 F: +971.4.350.6801 E: laura.capelin@bracewell.com

London T: +44.(0).207.448.4248 F: +44.(0).207.657.3124 E: tom.swarbrick@bracewell.com

Suna J. Mirza Associate

Ade Mosuro Associate

Dubai T: +971.4.350.6813 F: +971.4.350.6801 E: suna.mirza@bracewell.com

Dubai T: +971.4.350.6865 F: +971.4.350.6801 E: ade.mosuro@bracewell.com

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COMPETITIVE TENDERING IS AN ORDERLY PROCESS

• Allow procurer to receive the project it wants • Maintain policy goals – including national priorities • Need a standard to compare like-with-like • Fairness and transparency • Encourage future participation

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TIMELINE

Shortlist Notification 4 January ‘18

RFP 17 April ‘17

Bid readout 4 October ‘17

Sakaka

Dumat Al Jandal

Addendum 13 4 April ‘18

Addendum 10 15 January ‘18

RFP 19 August ‘17

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SAKAKA - DEVIATIONS “DISCOURAGED” “ REPDO discourages deviations and modifications from the requirements of the RFP and the provisions of the Draft Agreements. . . REPDO will not consider any amendments to the Draft Agreements that do not reflect specific technical, financial or operational features of this Project. Significant or material deviations to the Draft Agreements are likely to render a Proposal to be deemed non-compliant .

REPDO reserves the right to reject any Proposal as non-compliant at its sole discretion .”

Sakaka RfP, 17 April 2017 (emphasis added)

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DUMAT AL JANDAL RFP INITIAL STANDARD DEVIATIONS “DISCOURAGED” (i.e., the same standard as before)

“ REPDO discourages deviations and modifications from the requirements of the RFP and the provisions of the Draft Agreements . . . . REPDO will not consider any amendments to the Draft Agreements that do not reflect specific technical, financial or operational features of this Project. Significant or material deviation to the Draft Agreements are likely to render a Proposal to be deemed non-compliant .

REPDO reserves the right to reject any Proposal as non-compliant at its sole discretion .”

Dumat Al Jandal RfP 29 August 2017 (note, this was prior to Sakaka’s Shortlisting notification)

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SAKAKA BID SHORTLISTED BIDDERS

“ All eight bids that were submitted have been subjected to a detailed evaluation of material compliance to RFP requirements, including the 30% local content component for Round 1 NREP projects.

All companies that have submitted bids for R1 Sakaka PV RFP are invited to participate in future projects of the NREP .”

– National Renewable Energy Program Shortlisting Notification 4 January 2018

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ADDENDUM 10

• Sakaka Shortlist Notification - 4 January 2018

• Dumat Al Jandal Addendum 10 – 14 January 2018

• Tightened standards and consequences for what is material non- compliance

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DUMAT AL JANDAL ADDENDUM 10 EXAMPLES OF MATERIAL NON-COMPLIANCE

• Refusal to bear important responsibilities set out in the RFP • Submitting a partial proposal • Submitting a delivery timetable differing substantially from RFP • Submitting LCOE not supported by existing contractual agreements or arrangements and seeking additional time to finalise. • Submitting a Proposal that includes any substantial change in the Project risk allocation

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DUMAT AL JANDAL “ FOR THE AVOIDANCE OF DOUBT ” • Bidders failing to appoint an EPC Contractor on Bid Submission Date or to provide the requirements set out in this section 2.3.1 of the ITB on Bid Submission Date will be disqualified . • Proposals that are submitted based on the assumption that the EPC Contractor can be appointed or formed at a future date will be disqualified . • Proposals seeking to use references that do not meet the requirements set out in the sections titled “Structure of the EPC Contractor”, “Eligibility and qualifications criteria of EPC Contractor”, “Affiliate EPC References” and “Nominated Subcontractor(s) EPC References” will be disqualified . • Bidders failing to submit or comply with the requirements section titled “Mandatory Requirements” or provide the documents required under section 2.3.2 will be disqualified . • Bidders failing to prove the eligibility of the EPC Contractor in accordance with Form Sheets C.3. and C.4 and as required by Section 2.3.2 of this ITB will result in the disqualification of the Proposal .”

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FINANCING RESTRICTIONS • “ Apart from limited- or non-recourse Senior Debt facilities provided by Financing Parties, any other form of debt financing (other than working capital and VAT facilities) is prohibited and Bidders submitting such facilities will be disqualified .”

but contrast

• “[F]orms of balloon repayments will not be permitted and may result in the disqualification of the Proposal.”

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DISQUALIFICATION VERSUS DISBARRING • Disqualification (single bid)

“ Should it materialize that any Bidder, whose LCOE has been read out, has submitted a Materially Non-Compliant Proposal, then that Bidder will be disqualified and the Proposal will be rejected. ” • Potential Disbarring (future bids) “ REPDO also reserves the right to exclude such Bidder from the tendering process for future projects for a period of two (2) years from Bid Submission Date. ” “ This will occur prior to the shortlisting of Bidders for negotiations. ”

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FORFEITURE OF BID BOND - PRE ADDENDUM 10 • Not releasing lenders when not selected as the shortlisted bidder • Withdrawal of a Proposal after submission during the Validity Period (typically 1 year) • If selected as First Ranked Bidder it: o Refuses to or fails to negotiate the draft agreements or technical specifications o Refuses to sign project agreements in the form agreed o Breaches Project Development Agreement obligations (shareholder and other restrictions) o Refuses to provide PPA security

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FORFEITURE OF BID BOND – POST ADDENDUM 10 • Not releasing lenders when not selected as the shortlisted bidder • Withdrawal of a Proposal after submission during the Validity Period (typically 1 year) • If selected as First Ranked Bidder or if a First Ranked Bidder is not selected it: o Refuses to or fails to negotiate the draft agreements or technical specifications o Refuses to sign project agreements in the form agreed o Breaches Project Development Agreement obligations (shareholder and other restrictions) o Refuses to provide PPA security o Makes any attempt to influence o Is disqualified for material non-compliance after the LCOE is publicly read out

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FORFEITURE OF BID BOND – POST ADDENDUM 10 • Not releasing lenders when not selected as the shortlisted bidder • Withdrawal of a Proposal after submission during the Validity Period (typically 1 year) • If selected as First Ranked Bidder or if a First Ranked Bidder is not selected it: o Refuses to or fails to negotiate the draft agreements or technical specifications o Refuses to sign project agreements in the form agreed o Breaches Project Development Agreement obligations (shareholder and other restrictions)

o Refuses to provide PPA security o Makes any attempt to influence

o Is disqualified for material non-compliance after the LCOE is publicly read out o Post LCOE readout of an unsupported LCOE estimate, seeks or requires time to finalize aspects of Proposal to achieve the bid LCOE

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ATTEMPTS TO INFLUENCE Attempt at any time (before the award of the project) by Bidder, Affiliates, and local agent, representative or contractor to: ‒ “ Influence . . . REPDO, SEC, MEIM, ECRA, the Offtaker or any of its their stakeholders, officers, representatives, employees or adviser[s], including the Advisers ” ‒ “ attempts to 'influence' includes written or verbal correspondence, informal bid clarification discussions and the submission of additional Proposal documentation outside of the formal channels followed by REPDO .”

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In what direction will the next bid go?

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THANK YOU, AND WE WISH YOU ALL THE BEST ON YOUR NEXT BID!

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