Is Your Federal Proposal Really a Binding Contract?
Tuesday, April 30, 2019
The Pulse comes from a Bid & Proposal (B&P) world, and Federal proposal management will always be our first GovCon love. As (former) Federal Proposal Managers, we’ve heard the same sinister warning for our whole careers:
“Anything you put in a proposal is binding because at its core your proposal response is the final contract.”
However, Legal and Federal Contracts Professionals – who specialize in Federal Government Contracting – say this isn’t entirely the case.
Leading us to ask the question: Is your submitted proposal really a binding contract, or is that an old GovCon wives’ tale?
Your Pulse gals sat down with Ryan C. Bradel, an experienced Federal GovCon Lawyer with Ward & Berry, PLLC, to find out the answers to the GovCon legal questions you’ve been too afraid to ask.
Pulse Question: We know Federal Request for Proposal (RFP) documents are legal contracts, but is an Offeror’s final proposal submission (i.e. Technical, Management, etc.) an actual binding contract?
Yes. In almost every case, every document that an Offeror submits with the proposal (including the narrative) is incorporated into the contract and becomes part of the contract.
A full official contract (post-award) is made up of multiple discrete documents, for example the schedule (normally RFP Sections A and B), the Federal Acquisition Regulation (FAR) clauses, the Statement of Work (SOW), and the Offeror’s proposal response, etc. There is usually an order of precedence provision that dictates which of these documents takes precedence over the other in the event of a conflict between the terms. Typically, the Offeror’s submitted proposal narrative is lowest in the order of precedence, meaning that in any conflict the other terms of the contract will prevail over what’s in the narrative. That being said, I have litigated many cases where language in the Offeror’s submitted proposal narrative was at issue in the litigation and the outcome of the case turned on the judge’s interpretation of language in the proposal narrative.
Bottom line: When preparing a proposal the Offeror needs to do so with the expectation that it will be held to the language in their submitted documents.
Pulse Question: Is there always room post-proposal submission for negotiations and contract review with your Federal Government customer?
Often, but not always. It depends on the type of contract and whether the Federal Government states in the formal solicitation that it will engage in negotiations post-award notification. This can normally be found in Section M of the RFP.
The Federal Government is almost always the initiator of the negotiations. That is, the Federal Government will ask the Offeror for clarification regarding a portion of the proposal – point out where the proposal doesn’t make sense – or has a perceived error or weakness – and will invite the Offeror to provide clarification or fix the proposal. Or the Federal Government will ask the Offeror to refine the price proposal and lower the price. An Offeror should always be prepared for the Federal Government to accept their initial proposal without negotiations. The government has the option to avoid negotiations on GSA schedule contracts, IDIQ task order competitions, and LPTA contracts, but that is a topic for another day.
Bottom line: It would be unwise for an Offeror to submit a proposal while saying “well, this part or that part doesn’t need to be perfect, we can always fix it negotiations with the government.” Every proposal submission should be a contractor’s best effort – the first time.
Pulse Question: A common Federal proposal practice is to mold your “square” capabilities into a “round” hole of requirements. Are there legal ramifications of “Proposal Truths”?
Yes. A little bit of puffery (that’s an actual legal term) is to be expected – but an Offeror has to be careful that it will be able to follow through on whatever it represents as a capability to the Federal Government.
If an Offeror is unable to do what it has represented in writing, then it may face a termination for default, or at least suffer a bad performance rating input in the Contract Performance Assessment Reporting System (CPARS). I once had a client who relayed to me that often during their federal proposal development process, an operations person would be reviewing the proposal and come across some “proposal truths” and would ask “Can we really do that?” and the business development person would respond, “We’ll worry about that when we get the contract.” That seems to be a common theme. This particular example had the capacity to go out and find the missing capabilities once they won the contract, but it wasn’t without pain and suffering on their part – and legal wrangling by your truly.
Bottom line: Would not recommend this approach.
Pulse Question: Loads of paranoid Legal Federal Contract Specialists have lists of words that need to be excluded from an Offeror’s bids such as all, ensure, and any. Do these words actually matter? If so, what other words should be added to the “no-no” list?
Yes, these words matter. The Federal Government very well may take them at face value and hold the Offeror to the full extent of their meaning.
Generally, I would suggest avoiding words that are absolute and don’t allow for wriggle room — words like never and always — but so much depends on context.
Bottom line: Instead of approaching technical writing with a blacklist, take a more holistic approach by thinking through the possible real-world consequences of your words.
Pulse Question: Is there a difference between a Contracts Manager and Government Contract Lawyer?
Yes. I would say there is a big difference, although both functions need to be able to communicate well and integrate with one another.
A Federal Contracts Manager must be super detail oriented. They generally focus on managing the work flow or the process by which all of the documents that make up a government contract are developed, managed, and maintained. During the proposal process, a Federal Contracts Manager ensures that the contract documents align with each other and that they are consistent with the Offeror’s capabilities and goals. It is an exacting job and I would not be very good at it. Government Contract Lawyers, on the other hand, are focused more on the big picture. Painting in broad strokes, we advise the Offeror on compliance with the law and more specifically the FAR. We look out for legal risks and advise on how to avoid them, and Federal Contracts Managers handle disputes that often arise between the Offeror/Government Contractor and the Federal Government, or between two Government Contractors (i.e. Prime vs. Subcontractor, or Joint Venture Partner).
Bottom line: While there is some overlap – the functions are quite different.
Pulse Question: Forget what is written in a Technical or Management narrative for a moment – do the Contract Data Requirements List (CDRL) or another internal plans hold any legal weight?
Yes. Plain and simple.
Bottom line: Even your CDRL Project Management Plans (PMPs), Subcontractor Management Plans, etc. become part of the contract.
We wouldn’t be The Pulse if we didn’t get a little off topic so here are a few more questions we were able to sneak in!
Pulse Question: Is the Federal Government legally obligated to answer industry questions in Q&A? If they don’t, is that protestable?
Yes, the Federal Government must answer the questions. If they don’t, or if the answers they give don’t make sense, the Offeror could file a pre-award protest.
Bottom Line: Yes, or the Federal Government is open to a protest.
Pulse Question: Unfortunately in GovCon, some organizations protest to mess with the Federal Government’s timeline in order to continue their incumbent cash flow. Are there any repercussions for unsubstantiated contract protests?
No, there really aren’t. Honestly, it would be really difficult to determine that an Offeror is filing a protest for the wrong reasons. It’s not hard to write a protest that passes the smell test — even if your intentions aren’t pure. The U.S. Government Accountability Office (GAO) can dismiss a clearly frivolous protest without having to litigate it, but this is rare since it’s hard to determine ulterior motives.
Bottom Line: Even if GAO dismisses a protest, there is no penalty.
Pulse Question: If you could give one piece of free legal advice to GovCons, what would it be?
Good legal advice is expensive…but not as expensive as bad (or no) legal advice.
If you have clarification or additional questions pertaining to this article, please contact Ryan Bradel at rbradel@wardberry.com.
