Ground Rules and Assumptions - Legally Binding

[Steveatus]

Assuming that the proposal is NOT incorporated by reference into the resultant contract, do proposal Ground Rules and Assumptions that are NOT contained in the contract, legally binding?

[here_2_help]

stevatus,

I don't really understand your question. Are you asking if the contractor has a valid basis for a Request for Equitable Adjustment if one or more of the bidding assumptions turns out not to be valid?

H2H

[ji20874]

or are you asking if one party has a right to expect performance of the other party, based on the other party's proposal?

or are you asking if one party can claim an excuse for performance based on an un-met proposal assumption?

The Air Force Materiel Command had an established provision to address incorporation of an offeror's proposal -- I share this only as fyi, not as an endorsement of the practice...

AFMCFARS 5352.215-9006 - Intent to Incorporate Contractor’s Technical Proposal (AUG 1998)

( a ) All or part of the successful offeror's technical proposal may be incorporated in any contract resulting from this solicitation. The successful offeror's technical proposal may be incorporated by reference. Nothing contained in the successful offeror's technical proposal shall constitute a waiver to any other requirement of the contract. In the event of any conflict between the successful offeror's technical proposal and any other requirement of the contract, the conflict shall be resolved in accordance with the Order of Precedence clause.

( b ) The successful offeror will provide an updated technical proposal which reflects the results/responses to all exchanges and/or Evaluation Notices (ENs) issued during the negotiation process for incorporation in the contract. If, after contract award, it is discovered that changes made during negotiations were not incorporated in the SOW and/or technical proposal, such changes to the Contractor's documents shall be considered administrative in nature and shall be made by unilateral modification to the contract, at no change in contract cost or price or other terms and conditions.

(End of Provision)

[Guest Seeker]

Under the parol evidence rule of contract interpretation, if the language of the contract you signed is clear and unambiguous and you bring up groundrules and assumptions in the proposal in an attempt to contradict or otherwise challenge the language of the contract, then you will be bound by the language of the contract, and the groundrules and assumptions in the proposal will not be binding.

[Retreadfed]

I also am confused by the OP's question. It could indicate that the ground rules and assumptions were contained in Section L of the solicitation. More clarity is in order.

[Guest Seeker]

If the ground rules and assumptions were in the solicitation, and if the contract was awarded under SF 26, then when interpreting the contract the parties must integrate the language of the solicitation and the language of the contract document. That's because SF 26 blocks 17 and 18 say that the parties are bound by the award/contract and the solicitation. The parties must integrate the language of the documents in order to arrive at the meaning of the contract. Similar language appears on SF 1442 for construction. Not so on SFs 33 and 1449.

Basically, if the document signed by the parties is stand-alone and represents the integrated (entire) agreement of the parties, then language that appeared in earlier documents is parol evidence that cannot be used to contradict the clear and unambiguous language of the contract document.

[here_2_help]

We are all just shooting in the dark until and unless Steveatus clarifies the original question.

[joel hoffman]

It is aggravating when someone asks a question that needs clarification then doesn't reply after having been asked by at least three respondents what they meant.

[Retreadfed]

Seeker, in regard to your post 6, per the FAR, Section L of an RFP does not become a part of the resultant contract.

[Guest Seeker]

There is no need for further clarification. Some of you seem to think that the inquiry could be interpreted to mean either that the ground rules and assumptions were in the proposal, but not in the contract, or were in the solicitation. Either way, the answer is based upon the parol evidence rule. This topic is discussed in Cibinic, Nash and Nagle, Administration of Government Contracts, 4th edition, Ch. 2, Contract Interpretation, Section IV. Extrinsic Evidence, Part A. Discussions and Concurrent Actions.

If the ground rules and assumptions were in a proposal that was not incorporated into the contract document, then neither party can use them to contradict the clear and unambiguous meaning of the contract document. If the contract is vague or ambiguous, then either party can try to use the stated ground rules and assumptions in the proposal to try to support its interpretation of the contract document.

If the ground rules and assumptions were in the solicitation instead of a proposal, then if the contract was awarded under SF 26 or SF 1442 the solicitation is part of the contract and the ground rules and assumptions must be taken into account in trying to ascertain the meaning of the contract. If the contract was awarded under a form that did not make the solicitation a part of the contract, then the parol evidence rule applies just as it would to a proposal.

[Guest Seeker]

Retreadfed,

SF 26, Block 17:

Contractor agrees to furnish and deliver all items or perform all the services set forth or otherwise identified above and on any continuation sheets for the consideration stated herein. The rights and obligations of the parties to this contract shall be subject to and governed by the following documents: (a) this award/contract, ( b ) the solicitation, if any, and ( c ) such provisions, representations, certifications, and specifications, as are attached or incorporated by reference herein.

What part of that says that Section L does not become a part of the resultant contract? Pretty much the same language is used in SF 1442.

[Don Mansfield]

Seeker,

The block you are quoting would incorporate section K, not section L (or M). See FAR 15.204-1( b ):

Solicitations using the uniform contract format shall include Parts I, II, III, and IV (see 15.204-2 through 15.204-5). Upon award, contracting officers shall not physically include Part IV in the resulting contract, but shall retain it in the contract file. Section K shall be incorporated by reference in the contract. (See 4.1201©.)

[Retreadfed]

Seeker, also see FAR 14.201-1.

[Guest Seeker]

Don Acquisition,

You quoted FAR 15.204-1, which is not incorporated into contracts and is not contractually binding. However, it does say that UCF Part IV, which includes Section L, is part of the solicitation. It then says only that Part IV shall not be "physically" incorporated into the contract.

Regardless of what FAR Part 15 says, SF 26, block 17, and SF 1442, expressly incorporates the solicitation into the contract by reference. That language is contractually binding by its express terms. It says "solicitation," without reference to the UCF or any particular section of it or to FAR 15.204-1. FAR 2.101, which is incorporated into contracts in excess of the Simplified Acquisition Threshold via the Definitions clause, FAR 52.202-1, defines solicitation as "any request to submit offers or quotations to the Government" without reference to the UCF or any particular section of it.

It appears to me that the form and the references in FAR to which you refer were written by different people at different times with no apparent effort to coordinate their meanings and intentions. Looking at it from the standpoint of a working level person, it doesn't seem to make much sense. But a judge trying to resolve an interpretational issue must go by the "plain language" of the contract. The language in SF 26, block 17, strikes me as clear and unambiguous on its face, and I doubt that any judge would have any difficulty finding a ground rule or interpretation in UCF Section L to be a part of the solicitation and, therefore, a part of the contract.

Retreadfed, thank you, but you've added nothing to Don's argument by referring to another text that is not incorporated into contracts and is thus not relevant to contract interpretation.

What I'm saying is not at all radical. It's not like I'm making anything up. I'm merely reading what the forms say in plain English.

[Don Mansfield]

Seeker,

This is what Block 17 of the SF 26 says:

The rights and obligations of the parties to this contract shall be subject to and governed by the following documents: ( a ) this award/contract, ( b ) the solicitation, if any, and ( c ) such provisions, representations, certifications, and specifications, as are attached or incorporated by reference herein.

We're saying two different things. You are saying that the contract is subject to and governed by documents ( a ),

(b ), and ( c ). Got it. True statement. I am saying that document ( a ) does not include Section L. Document ( b ) contains Section L. FAR 15.204-1( b ) instructs contracting officers not to physically incorporate Part IV (Sections K, L, and M) into document ( a ), but to incorporate Section K into document ( a ) by reference.

In light of FAR 15.204-1( b ), it makes no sense that the table of contents for the SF 26 would include a Part IV.

[Guest Seeker]

Who's talking about a table of contents? I've been trying to answer a question about ground rules and assumptions.

Let me explain once more. I am saying only what SF 26 block 17 says, which is that "the rights and obligations of the parties are governed by" (a), ( b ), and ( c ). Now, if the rights and obligations of the parties are governed by (a), ( b ), and ( c ), then, to my mind, those three things are "the contract," since contracts are what govern rights and obligations of contracting parties. In other words, "the contract," the integrated, binding agreement between the parties, consists of (a) SF 26 Award/Contract and any continuation sheets under it, ( b ) the solicitation, and ( c ), whatever those things may be. I say that SF 26 and its continuation sheets are only one of three parts of the contractual agreement, the other two being the ( b ) the solicitation and the items in ( c ). Where I think you and I (and Retreadfed) disagree is whether Section L is part of the contract. I say it is, because it is part of the solicitation, which is part of the contract by the express terms of SF 26, block 17.

The legal result is that when a contract is awarded under SF 26 the contents of Section L are not parol evidence and any proposal ground rules and assumptions that might be contained therein must be incorporated into any interpretation of the contract, because they are part of the contract.

I think that the persons who originated SF 26 intended the Award/Contract to include only the SF 26 that was on the solicitation, signed and fully completed, plus continuation sheets with line item pricing. The rest of the contract would be the solicitation with all of its amendments, and any attachments. But what COs seem to do now is prepare a completely new contract document under SF 26 and don't think of the solicitation and its amendments as being part of the contract. But the language in SF 26 block 17 is there, and it says that the rights and obligations of the parties are governed, in part, by "the solicitation," which, as I said, to my mind, make it a part of the contractual agreement.

I don't have anything more to add, unless you or Retreadfed have some new information. I don't see any point in arguing further based on the same facts. Do you?

[C Culham]

For what it is worth –

The SF-26 is an award document and not a solicitation document therefore when used as an award document the CO would mark only those Sections of the Parts that are included in the award document. As such the language of Block 17 “as attached or incorporated herein” is important. If I do not include, by indicating with an “X”, for example Parts II, III and IV then I have potentially awarded a contract without clauses, documents and reps and certs or it could be argued I have not because it would appear on face that Parts II, III and IV are not “as attached or incorporated herein” . I am not saying I recommend this but that is how the form operates. So with regard to the discussion in this thread if I award a contract (remember the SF-26 is simply an award form not a solicitation form) and mark all Sections of Parts I, II, III and NONE of the Sections in Part IV and also have no reference whatsoever of a Proposal in the marked Parts, then the proposal is not in the awarded contract.

As to the SF-26 as an award document ONLY see FAR 53.214 that leads to 14.408-1(d) and FAR 52.215-1 which leads to FAR 15.509.

Further the SF-1442 has been brought into this discussion as well. I suggest a read of the Blocks 28 and 29 of the form to note the difference and then compare this difference to the SF-26 and the instructions of FAR Part 53.214 and 53.215 noting that Block 18 can only be used in Sealed Bids. Why? BECAUSE THERE IS NO PROPOSAL.

Finally this all leads back to Seeker’s first post (#4) which I believe to be a true statement. Any discussion about the SF-26 and SF-1442 only confuses not only the matter of ground rules but the proper uses of the forms.

[Steveatus]

I'm sorry that I didn't give appropriate detail in my original posting. I realize that the devil is often in the detail.

I am seeking thoughts about the value of a contractor's ground rules and assumptions that might be included in a cover letter but not formally incorporated into the resultant contract. For the purposes of this discussion, lets assume that the contractor's proposal is not, in any way, incorporated by reference.

I would like thoughts on if these types of ground rules and assumptions have any legal standing as a basis for entitlement in a request for equitable adjustment.

[Guest Seeker]

You are asleep at the switch, Steveatus. Let me try again:

If the proposal was not incorporated into the contract, and if the language of the contract is clear and unambiguous, then ground rules and assumptions in the proposal cannot be used to support an interpretation that is contrary to the plain meaning of the contract language. They are "parol evidence" and will be given no "legal status." If the language of the contract is vague or ambiguous, then either party can point to such ground rules and assumptions in an attempt to persuade a judge that its interpretation of the contract language is more reasonable than the other's.

[joel hoffman]

Which leads to the root problem. That is awarding a contract to a firm that plainly explained in a cover letter whatever it's understandings and conditions for its proposal were based upon where such information conflicts with the solicitation. This should not happen. The awarding office should know what is in the solicitation . It should also know not to award a contract based upon a non conforming proposal and what to do to resolve known inconsistencies before awarding a contract.

[Guest Seeker]

Thankyou Mr. Culham, for correcting me about SF 26 as a solicitation document. Quite right. There goes my speculation about the intentions of the originators.

I brought SF 26 into the discussion only because some people weren't sure whether the first post was concerned with ground rules and assumptions in the proposal or ground rules and assumptions in the solicitation, and I wanted to show that the form makes the solicitation binding on the parties.

Anyone reading this should understand that in "real life" the matter can be very complicated. For that reason I urge a careful reading of those parts of Administration of Government Contracts that I referred to earlier.

[Guest Seeker]

And contractors should read the award documents carefully before signing them to see if they reflect their ground rules and assumptions.

[wvanpup]

_{As has been said before, the devil is in the details. One of the details may well be the specific ground rule or assumption that comes into question.}

_{As has been pointed out, the parol evidence rule prevents using outside information to contradict the terms of the contract. There is an exception for contract terms which are ambiguous. IIRC, there is another exception when the contract does not reflect the agreement the parties intended. Take this situation.}

_{The GR&A assume that GFP provided under a contract XYZ may be used in the performance of the contract (call the new contract ABC) and will be transferred to contract ABC when contract XYZ is completed. The PCO agrees and negotiates price on this assumption, but there is nothing in the contract specifically authorizing the use of the GFP or directing transfer of the GFP to the contract. Also, contract XYZ says that the GFP provided can be used in contract 123, but does not provide for use in any other contract. Assume (1) the ACO for contract XYZ prohibits use of the GFP even though it is not needed for contract XYZ, and (2) the ACO directs the contractor to return the GFP to the Government, which prevents its use in contract ABC. What happens if the proposal is not incorporated into the contract?}

[Don Mansfield]

Let me explain once more. I am saying only what SF 26 block 17 says, which is that "the rights and obligations of the parties are governed by" (a), ( b ), and ( c ). Now, if the rights and obligations of the parties are governed by (a), ( b ), and ( c ), then, to my mind, those three things are "the contract," since contracts are what govern rights and obligations of contracting parties. In other words, "the contract," the integrated, binding agreement between the parties, consists of (a) SF 26 Award/Contract and any continuation sheets under it, ( b ) the solicitation, and ( c ), whatever those things may be. I say that SF 26 and its continuation sheets are only one of three parts of the contractual agreement, the other two being the ( b ) the solicitation and the items in ( c ). Where I think you and I (and Retreadfed) disagree is whether Section L is part of the contract. I say it is, because it is part of the solicitation, which is part of the contract by the express terms of SF 26, block 17.

The legal result is that when a contract is awarded under SF 26 the contents of Section L are not parol evidence and any proposal ground rules and assumptions that might be contained therein must be incorporated into any interpretation of the contract, because they are part of the contract.

I think that the persons who originated SF 26 intended the Award/Contract to include only the SF 26 that was on the solicitation, signed and fully completed, plus continuation sheets with line item pricing. The rest of the contract would be the solicitation with all of its amendments, and any attachments. But what COs seem to do now is prepare a completely new contract document under SF 26 and don't think of the solicitation and its amendments as being part of the contract. But the language in SF 26 block 17 is there, and it says that the rights and obligations of the parties are governed, in part, by "the solicitation," which, as I said, to my mind, make it a part of the contractual agreement.

I don't have anything more to add, unless you or Retreadfed have some new information. I don't see any point in arguing further based on the same facts. Do you?

Seeker,

I fully understand your position. You explained yourself well, no need to explain further.

The problem is that what in your mind is the "contract" (documents (a), ( b ), and ( c )) is more than just document (a), which the form refers to as "this award/contract." As such, it's confusing when you say that Section L is part of the contract because it's not clear that you mean something broader than just document (a).

Also, I don't agree with your assessment of the contents of document (a) (i.e., including only the completed SF 26 and continuation sheets with line item pricing). In light of Carl's post, maybe you have changed your mind. First, the form contains a table of contents that lists Sections A-M. The SF 26 and continuation sheets would only constitute Section A. Second, the contents of Sections B through J in the contract may be different than what was included in the solicitation. For example, a solicitation would not contain CAS clauses, but depending on the offeror's response to FAR 52.230-1, the contract may. A DoD solicitation would not include DFARS 252.247-7024, but depending on the offeror's response to DFARS 252.247-7022, the contract may. A solicitation that included FAR 52.219-4 would not show whether a HUBZone SB offer waived the price evaluation preference, but the contract would. The parties may negotiate special terms and conditions (e.g., advance agreements on the treatment of costs, OCI mitigation measures, etc.), that were not part of the solicitation, but will be part of the contract. If we interpret document (a) to mean just the SF 26 and continuation sheets, then none of the foregoing would be included in what your mind is the contract.

[Guest Seeker]

Don,

The form does not explain what "award/contract" refers to. The first sentence in block 17 refers to what is identified "above and on any continuation sheets." The next sentence enumerates the items that bind the parties, (a) the "award/contract," which to me refers to SF 26 and the continuation sheets, ( b ) the solicitation, and ( c ) attachments.

Part of the problem I think is that you are trying to make sense of a regulation and a form, and as you have pointed out here many times, those things do not always make sense on their own. We have to make sense of them. As Mr. Culham has pointed out, SF 26 is not a solicitation document. That being the case, why does its table of contents make room for Sections K, L. and M?

My point is simple and I'll make it one last time: SF 26 block 17 says that the "solicitation," which includes Sections K, L, and M, is one of the things that binds the parties. Game over. End of story. All of the rest of your argument appears to be grasping at straws to get Section L out of it. Well, be my guest. But my guess is that you are going to have a hard time making that case. You cannot make it al all on the basis of FAR 15.204-1, since it doesn't resolve the issue, neither does your talk about award processes. The form says what it says, and I rely on that.

I found your last post to be very complex and, if you'll excuse my saying so, convoluted. I read it a couple of times and gave up trying to understand it. I just don't have time to devote to that kind of thing. All I wanted to do was answer a question, and I did it, and I'm satisfied with my answer, and I'm done.

I've enjoyed communicating with you after reading so much of your stuff here, which I think is very good, even when I have disagreed. It's been an honor.

Take care.