February 14, 2019

What Happens If an Offer Expires But the Agency Doesn’t Cancel the Procurement?

When a contractor submits an offer (a bid or proposal, depending on the type of procurement) to the federal government, the solicitation normally specifies the period within which the government can accept the offer and form a legally binding contract.

The acceptance period is specified in one of two ways:

  1. On the cover of Standard Form 33, the Solicitation, Offer and Award document. See Block 12, which states that the contractor will be bound to the contract “if this offer is accepted within ___calendar days (60 days unless a different period is inserted by the offeror) from the date of receipt of offers….”
    A similar statement appears on Block 11 of Standard Form 1447, Solicitation/Contract. If the solicitation is for Commercial items, and Standard Form 1449 is used, there is no specific statement of the offer acceptance period. However, Federal Acquisition Regulation (“FAR”) 52.212-1(c), Instructions to Offerors-Commercial Items, which are generally incorporated in commercial item procurements, explicitly states that the period for acceptance of offers is 30 days from the date for receipt of offers.
  2. Through the use of language within the solicitation. In this case, the language states the minimum acceptance period that the solicitation will allow, frequently by including FAR 52.214-15, Period for Acceptance of Bids, or FAR 52.214-16, Minimum Bid Acceptance Periods. In both cases, the Contracting Officer should “fill in” the numbers of days for offer acceptance.

There is an acceptance period so the government has sufficient time to evaluate offers, determine the responsibility of the apparent awardee, take into consideration possible protests, and deal with other unanticipated problems that may arise. What happens if it takes longer than expected for the government to make the award? FAR 14.404-1(d) indicates agencies should generally seek extension of the acceptance period prior to expiration of the offers. Indeed, that is a frequent occurrence when there are delays. But what happens when an offers expires, but the agency doesn’t want to cancel the procurement?

The Government Accountability Office (“GAO”) has frequently ruled that there are circumstances where an expired bid or proposal may properly be revived by extending the acceptance period — as long as doing so does not compromise the integrity of the competitive bidding system. In order to revive a bid, however, the contractor must have offered an acceptance period no shorter than required in the solicitation. This is because bidders are subject to the risks associated with changing market conditions during the period that their bids are open. Also, accepting such a bid after it has expired would be fundamentally unfair because the bidder with the shorter-than-required acceptance period takes less risk of market fluctuation than those providing a longer acceptance period. That would compromise the competitive bidding system.

However, if an offeror agrees to hold its offer open for the minimum acceptance period required by the solicitation and complies with each agency request for an extension of its offer acceptance period, the bidder has obtained no advantage over the other bidders and the integrity of the bidding system is not compromised if the offeror is subsequently permitted to revive an expired offer. (See Carnes Constr., Inc., B-241778, 2/26/91, 91-1 CPD 215)

In one case, the GAO sustained a protest where an agency improperly refused to allow a contractor to revive its expired proposal, even though revival did not prejudice other offerors or the competitive system.

Facts of the case: Ocean Services LLC, of Seattle, Washington, protested the refusal of the Navy’s Military Sealift Command to consider its expired proposal. Ocean Services met the required acceptance period, but the procurement was delayed. Although Ocean Services’ acceptance period expired on a Saturday, at the Agency’s request, the contractor extended it on the following Monday morning. GAO noted that even though other bidders had extended their proposals on the preceding Friday, there was no prejudice to the competitive system or to the other offerors by allowing Ocean Services’ expired bid or proposal to be revived.

The GAO stated: “Reviving the proposal on the morning of the first business day following its expiration negates any argument that Ocean compromised the procurement process by avoiding market fluctuations to which other offerors were exposed.” (Ocean Services, LLC, B-404690, 4/6/11)

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