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Offer and Acceptance


Boogie_Down

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I'm a little confused on who makes the offer and who accepts.  Correct me if I'm wrong but there appears to be different times where the Government offers or the contractor makes an offer.  Can somebody clarify for me?  Also, is this also a situation where an invitation to make an offer is separated from the offer?

When a solicitation is posted, is that the offer?  Or is that the invitation to make an offer and the quote/proposal is the offer and the Government signature the acceptance?  Or is the Government issuing an offer with he contract and the contractor accepts with either performance or a signed contract?

Do these situations differ based on contract type or delivery vehicle like a BPA call vs. IDIQ task order vs. purchase order, etc.?

Thanks for any help or clarification.

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@Boogie_DownHave you tried to look up the definitions for the terms you're unsure of (e.g. "offer" & "solicitation")?

A piece of advice I provide to all beginners is rather than merely asking questions, try to answer the questions for yourself first and then provide the questions and the possible answer(s) along with the information informing that position for feedback. I think it is imperative to build good habits early and if the habit you form is to ask others for the answer each time you encounter a question, you'll have a hard time developing the research and thinking skills contracting professionals desperately need to succeed.

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I think the search function of this site is the reason it gets so many repeat questions.  Don't use it - outsource that function to Google.  Go to Google.com, and in the query bar, type exactly this:

site:wifcon.com

Then hit spacebar and put in quotation marks essential words that need to be included in whatever you want to know.  Mess around with what goes in the quotes and what doesn't a few times, and I guarantee you'll find the topic has been broached at least once on here.

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The WIFCON search hasn’t been functioning on my iPhone for at least a couple of years. 

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2 hours ago, Matthew Fleharty said:

@Boogie_DownHave you tried to look up the definitions for the terms you're unsure of (e.g. "offer" & "solicitation")?

A piece of advice I provide to all beginners is rather than merely asking questions, try to answer the questions for yourself first and then provide the questions and the possible answer(s) along with the information informing that position for feedback. I think it is imperative to build good habits early and if the habit you form is to ask others for the answer each time you encounter a question, you'll have a hard time developing the research and thinking skills contracting professionals desperately need to succeed.

This isn't helpful at all. If you don't know then don't answer.  I've already tried looking for the answer here and other places and have received mixed information and thought I would look here but it seems to be a waste of time.

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On 8/19/2022 at 1:57 PM, Boogie_Down said:

This isn't helpful at all. If you don't know then don't answer.  I've already tried looking for the answer here and other places and have received mixed information and thought I would look here but it seems to be a waste of time.

It's far more helpful than you give me credit for...how does the old adage go? "You can lead a horse to water, but you can't make it drink..."

Despite the rudeness in the remark ("If you don't know then don't answer") I'll continue to try to help - did you look up the definitions for those two words in the Federal Acquisition Regulation (FAR), specifically Part 2?

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17 hours ago, Boogie_Down said:

I'm a little confused on who makes the offer and who accepts.  Correct me if I'm wrong but there appears to be different times where the Government offers or the contractor makes an offer.  Can somebody clarify for me?  Also, is this also a situation where an invitation to make an offer is separated from the offer?

When a solicitation is posted, is that the offer?  Or is that the invitation to make an offer and the quote/proposal is the offer and the Government signature the acceptance?  Or is the Government issuing an offer with he contract and the contractor accepts with either performance or a signed contract?

Do these situations differ based on contract type or delivery vehicle like a BPA call vs. IDIQ task order vs. purchase order, etc.?

Thanks for any help or clarification.

When the Government posts a solicitation called an invitation for bids (IFB) or request for proposals (RFP), it is inviting or requesting offers. Companies can submit offers called “bids” or “proposals” in response. The Government accepts a company’s offer (bid or proposal) in order to make a contract.

A purchase order is a Government offer to buy, usually made in response to a quotation from a company. The company accepts the Government’s offer in order to make a contract.

A task order or delivery order issued under an IDIQ contract is not an offer, an invitation or request to submit an offer, or an acceptance. It is a command to deliver or perform in accordance with the terms of an existing contract. Refusal to deliver or perform would be a breach of contract.

A BPA (Blanket Purchase Agreement) is not a solicitation, an offer, a contract, or a contractual command. It is a noncontractual agreement under which the parties might do business in the future. BPA is a complicated idea with various meanings that I am not willing to spend time explaining in this forum. You can Google the term to get more information. Or maybe someone else will explain.

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I think it's useful to think about the plain language meaning of offer that you might use in your daily life and then apply that to the various contracting scenarios you describe. If you offer your friend some milk, "Would you like a glass of milk?" they can accept your offer, "Yes, please," at which time an agreement is formed. You made the offer and they accepted. But maybe they don't want milk, so they come back with a counter-offer "Could I have some water?" which you can now accept "yes you can have some water" or decline "no you can't have some water". They become the offeror and made the counter-offer and you accepted. You can see how the offer constitutes a promise to do something, if it is accepted: if after offering milk to your friend and them accepting you offer "Yes, please" you subsequently said "Too bad, we don't have any milk" that would be socially awkward. Once you have offered something the expectation is you will come through if the offer is accepted, which is the definition of an offer.

A quote has a different feel to it: Your friend might ask "Do you have milk", to which you respond "Yes I do", but no one has made any promises at this point, and if they subsequently ask if they can have some and you say "Sorry, it's only for my coffee" that would be OK, no promise should have been inferred by answering that you did in fact have milk.

So you can apply that same intuitive understanding of whether something constitutes a promise to do something if accepted to different contracting scenarios to figure out at what point an offer is being made and who is making it (although the milk analogy lacks consideration): 

Request for Quote: Gov: "How much do widgets cost?" Vendor: "$20 each" feels like a quote, the vendor hasn't promised anything, and if the government attempts to place an order and the vendor says "sorry, we don't have any in stock" no one would have broken any sort of agreement. But now if they government says "OK, I'd like to buy 10 widgets at $20 each please" you can see that that is a promise to buy them if accepted (an offer) and if the vendor builds them and hands them to the government they government won't be able to say "No thanks, I didn't really want them." In this scenario the government requested and received a quote, and then the government made an offer to buy at the quoted price, which the vendor accepted.

Invitation for Bid or Request for Proposal: Gov: "How much will you sell me 10 widgets for?" Vendor: "I will sell you 10 widgets for $20 each" feels like an offer, the vendor has promised that they will sell the government the widgets at that price, should the government accept. If the government accepted the offer to sell them the widgets for $20 each the vendor would not be able to suddenly increase the price. In this scenario the government asked the vendor to provide an offer and they did, which the government accepted.

For a task/delivery order it would depend on what the base contract says and what/whether the government asks for from the vendor. As stated in a previous comment, if the base contract requires the vendor to perform upon receipt of an order there is no quote/offer/acceptance involved in the order at all; all the agreements have already been made, the government orders and the vendor performs. In some multiple award scenarios the government might ask for offers from multiple contract holders, which they could then accept; or they may ask for a quotes, which they could then base an offer on. (I think the BPA scenario would be much the same: it depends on what was already agreed upon in the BPA, and what the calls themselves say).

Why does any of this matter? For one thing contracts are formalized human relationships, and I think these concepts stem from the way people have always interacted. More specifically, making promises costs something (e.g. it ties up resources because I have to be ready to deliver, it increases risk since I have to keep my promise) and so in cases where availability is high it is probably more efficient to minimize the number of promises (offers) required in a transaction and the time the promises are left open. In a request for proposals scenario the government might obtain offers (promises) from many different offerors and require them to remain available for acceptance for many months. In a request for quotes scenario the government will generally only make one offer, and it will only be available for acceptance by the vendor for a short period of time.

Edited by Witty_Username
*added note that milk analogy lacks consideration
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On 8/20/2022 at 2:45 AM, Vern Edwards said:

When the Government posts a solicitation called an invitation for bids (IFB) or request for proposals (RFP), it is inviting or requesting offers. Companies can submit offers called “bids” or “proposals” in response. The Government accepts a company’s offer (bid or proposal) in order to make a contract.

A purchase order is a Government offer to buy, usually made in response to a quotation from a company. The company accepts the Government’s offer in order to make a contract.

A task order or delivery order issued under an IDIQ contract is not an offer, an invitation or request to submit an offer, or an acceptance. It is a command to deliver or perform in accordance with the terms of an existing contract. Refusal to deliver or perform would be a breach of contract.

A BPA (Blanket Purchase Agreement) is not a solicitation, an offer, a contract, or a contractual command. It is a noncontractual agreement under which the parties might do business in the future. BPA is a complicated idea with various meanings that I am not willing to spend time explaining in this forum. You can Google the term to get more information. Or maybe someone else will explain.

Thank you for the help.

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12 minutes ago, Witty_Username said:

I think it's useful to think about the plain language meaning of offer that you might use in your daily life and then apply that to the various contracting scenarios you describe. If you offer your friend some milk, "Would you like a glass of milk?" they can accept your offer, "Yes, please," at which time an agreement is formed. You made the offer and they accepted. But maybe they don't want milk, so they come back with a counter-offer "Could I have some water?" which you can now accept "yes you can have some water" or decline "no you can't have some water". They become the offeror and made the counter-offer and you accepted. You can see how the offer constitutes a promise to do something, if it is accepted: if after offering milk to your friend and them accepting you offer "Yes, please" you subsequently said "Too bad, we don't have any milk" that would be socially awkward. Once you have offered something the expectation is you will come through if the offer is accepted, which is the definition of an offer.

A quote has a different feel to it: Your friend might ask "Do you have milk", to which you respond "Yes I do", but no one has made any promises at this point, and if they subsequently ask if they can have some and you say "Sorry, it's only for my coffee" that would be OK, no promise should have been inferred by answering that you did in fact have milk.

So you can apply that same intuitive understanding of whether something constitutes a promise to do something if accepted to different contracting scenarios to figure out at what point an offer is being made and who is making it: 

Request for Quote: Gov: "How much do widgets cost?" Vendor: "$20 each" feels like a quote, the vendor hasn't promised anything, and if the government attempts to place an order and the vendor says "sorry, we don't have any in stock" no one would have broken any sort of agreement. But now if they government says "OK, I'd like to buy 10 widgets at $20 each please" you can see that that is a promise to buy them if accepted (an offer) and if the vendor builds them and hands them to the government they government won't be able to say "No thanks, I didn't really want them." In this scenario the government requested and received a quote, and then the government made an offer to buy at the quoted price, which the vendor accepted.

Invitation for Bid or Request for Proposal: Gov: "How much will you sell me 10 widgets for?" Vendor: "I will sell you 10 widgets for $20 each" feels like an offer, the vendor has promised that they will sell the government the widgets at that price, should the government accept. If the government accepted the offer to sell them the widgets for $20 each the vendor would not be able to suddenly increase the price. In this scenario the government asked the vendor to provide an offer and they did, which the government accepted.

For a task/delivery order it would depend on what the base contract says and what/whether the government asks for from the vendor. As stated in a previous comment, if the base contract requires the vendor to perform upon receipt of an order there is no quote/offer/acceptance involved in the order at all; all the agreements have already been made, the government orders and the vendor performs. In some multiple award scenarios the government might ask for offers from multiple contract holders, which they could then accept; or they may ask for a quotes, which they could then base an offer on. (I think the BPA scenario would be much the same: it depends on what was already agreed upon in the BPA, and what the calls themselves say).

Why does any of this matter? For one thing contracts are formalized human relationships, and I think these concepts stem from the way people have always interacted. More specifically, making promises costs something (e.g. it ties up resources because I have to be ready to deliver, it increases risk since I have to keep my promise) and so in cases where availability is high it is probably more efficient to minimize the number of promises (offers) required in a transaction and the time the promises are left open. In a request for proposals scenario the government might obtain offers (promises) from many different offerors and require them to remain available for acceptance for many months. In a request for quotes scenario the government will generally only make one offer, and it will only be available for acceptance by the vendor for a short period of time.

Thank you so much for this.  I think my confusion comes from how my office appears to only use RFQs as an offer and not as an inquiry so when I see it talked about as not being an offer it confuses me.  My office uses RFPs only when negotiating in FAR 15.  When we purchase a supply we use the term RFQ because we are in FAR 13 and my COs explain that FAR 13 is an RFQ, FAR 15 is an RFP, FAR 14 is an IFB.  So practically speaking in my office all three RFQ, RFP, and IFB are offers even though an RFQ doesn't always have to be an offer but can be.  Am I understanding that correctly?

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46 minutes ago, Boogie_Down said:

 So practically speaking in my office all three RFQ, RFP, and IFB are offers even though an RFQ doesn't always have to be an offer but can be.  Am I understanding that correctly?

Contract formation via RFP, IFB, RFQ and any other method will all eventually involve an offer and acceptance at some point, however neither RFQs, RFPs, nor IFBs (requests or invitations) are offers themselves. I found this recent thread on the subject of using a request for proposal (i.e. a request for offers) under Simplified Acquisition Procedures informative:

 

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On 8/22/2022 at 6:30 AM, Witty_Username said:

or they may ask for a quotes,

I would suggest this is not in accord with regulation unless the IDIQ was issued under a deviation to the FAR.  

FAR 16.504(a)(1)  "...The contract must require the Government to order and the contractor to furnish at least a stated minimum quantity of supplies or services. In addition, if ordered, the contractor must furnish any additional quantities, not to exceed the stated maximum.)... 

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On 8/23/2022 at 10:26 AM, C Culham said:

I would suggest this is not in accord with regulation unless the IDIQ was issued under a deviation to the FAR.

Interesting, I had not thought enough about this.
Sure enough, FAR 16.505(b)(1)(iii)(B)(2) says "[The contracting officer shall] Afford all contractors responding to the notice a fair opportunity to submit an offer and have that offer fairly considered" which certainly strongly implies that offers should be obtained under fair opportunity procedures for multiple award contracts. However this doesn't appear to be the interpretation of at least NIH NITAAC and NASA SEWP multiple award IDIQs, both of whose ordering guides explicitly allow for the use of quotes. I'll have to do some more research...

Edited by Witty_Username
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34 minutes ago, Witty_Username said:

Interesting, I had not thought enough about this.
Sure enough, FAR 16.505(b)(1)(iii)(B)(2) says "[The contracting officer shall] Afford all contractors responding to the notice a fair opportunity to submit an offer and have that offer fairly considered" which certainly strongly implies that offers should be obtained under fair opportunity procedures for multiple award contracts. However this doesn't appear to be the interpretation of at least NIH NITAAC and NASA SEWP multiple award IDIQs, both of whose ordering guides explicitly allow for the use of quotes. I'll have to do some more research...

Do not research too hard.   In the end the contract language probably rules and as acknowledged in Forum in many posts the concept of IDIQ has been distorted beyond its original intent.    My contention probably would not get much traction in some kind of administrative protest or dispute.  I just raised the idea for the heck of it.

It is interesting to me that as one member of the Indefinite Delivery Contract family, the IDIQ gets to have orders, quotes and even probably proposals but the other two do not.   They allow a Government unilateral right to "order" and that is it.    

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