Adventures in Proposal Preparation Part II–No Exceptions to a Fixed Price Contract

In Adventures in Proposal Prepartation Part I, we discussed potential problems that may arise when a proposal contains ambiguities.  Today, we raise the importance of not taking exception to a solicitation’s requirement that offerors propose on a fixed-price basis.

The requirement to propose fixed prices is a material term or condition of a solicitation requiring such pricing.  Where a solicitation requests proposals on a fixed-price basis, a price offer that is conditional and not firm cannot be considered for award.  SunEdison, LLC, B-298583, B-298583.2, Oct. 30, 2006, 2006 CPD para. 168 at 5.  In a recent case, Solers, Inc., B-404032.3; B-404032.4, April 6, 2011, 2011 CPD para.__, GAO concluded that an agency’s award was improper because the awardee’s proposal improperly took exception to the solicitation requirement to propose a fixed price. The solicitation required offerors to submit proposals on a fixed-price basis. In responding to the requirement, the awardee inserted language in its pricing proposal that GAO concluded conditioned the awardee’s offered price on a greater use of government facilities than contemplated or authorized by the solicitation, such that its offered price was conditional not firm.

GAO also noted that, at the very least, the proposal language created an ambiguity as to whether the awardee was proposing a fixed price, or whether it had identified conditions which would entitle the awardee to an adjustment of its price in the event that the conditions were not met.  In GAO’s view, such ambiguity rendered BAH’s proposal unacceptable with regard to the requirement to propose a fixed price.  See our previous post discussing ambiguity: Ambiguities Have Consequences.

GAO recommended, among other things, the possibility that the awardee’s contract be terminated for convenience.  The lesson here for an offeror is to ensure its proposal does not contain material exceptions to contract requirements and that it ensures its proposal is free from ambiguity.  An offeror must be meticulous in preparing its proposal or risk rejection of its proposal.

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