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Declining contract award

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Wondering what happens if the government awards a contract but for whatever reason, the contractor no longer wants or can execute the contract.  In the event there was no bid bond, can the contractor decline award?  If yes, are there government remedies, or would they just re-award to the next-best offeror?

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It depends on whether the contract has been formed, using common law principles or offer-specific instructions.  

If a firm makes an offer (and does not withdraw the offer before acceptance), and the Government properly accepts the offer, then a contract is formed.  The firm's repudiation of the contract would be a basis for a default termination and/or other remedies.  

If the firm provides a quote, and the Government issues a purchase order (which really is an offer), then the firm generally has a choice of whether to accept the purchase order -- if it accepts, a contract is formed.

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FAR 15.208(e) says "Proposals may be withdrawn by written notice at any time before award."  Thus, the question is when is the contract awarded?  Does the contract require signatures by both parties,  or is signing by the government sufficient to constitute an award?

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Sometimes, a signing by the Government isn't needed -- a paper or electronic notice of award may be sufficient to form a contract.

There is no simple answer as there are many permutations and combinations, so to speak.  Sealed bid?  Negotiated procurement?  Simplified acquisition?  Did negotiations occur?  Other variables?

Sometimes, a prospective contractor makes an offer, and a contract is formed when the Government accepts.

Sometimes, the Government makes an offer, and a contract is formed when the contractor accepts.

Sometimes, an offer will include text specifying what constitutes acceptance as well as any notice requirements (for example, see para. (f)(10) of the solicitation provision at FAR 52.215-1).  If not, common law principles apply.

If an offeror wants out, it should withdraw its offer before Government acceptance occurs.  However, even this is not always possible (such as when the firm-bid rule applies).

 

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On 9/15/2019 at 5:19 PM, ji20874 said:

It depends on whether the contract has been formed, using common law principles or offer-specific instructions.  

If a firm makes an offer (and does not withdraw the offer before acceptance), and the Government properly accepts the offer, then a contract is formed.  The firm's repudiation of the contract would be a basis for a default termination and/or other remedies.  

If the firm provides a quote, and the Government issues a purchase order (which really is an offer), then the firm generally has a choice of whether to accept the purchase order -- if it accepts, a contract is formed.

How or where can I find out the applicable law of the solicitation - common law or offer-specific?

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On 9/15/2019 at 7:43 PM, ji20874 said:

Sometimes, a signing by the Government isn't needed -- a paper or electronic notice of award may be sufficient to form a contract.

There is no simple answer as there are many permutations and combinations, so to speak.  Sealed bid?  Negotiated procurement?  Simplified acquisition?  Did negotiations occur?  Other variables?

Sometimes, a prospective contractor makes an offer, and a contract is formed when the Government accepts.

Sometimes, the Government makes an offer, and a contract is formed when the contractor accepts.

Sometimes, an offer will include text specifying what constitutes acceptance as well as any notice requirements (for example, see para. (f)(10) of the solicitation provision at FAR 52.215-1).  If not, common law principles apply.

If an offeror wants out, it should withdraw its offer before Government acceptance occurs.  However, even this is not always possible (such as when the firm-bid rule applies).

 

It's a Negotiation Solicitation and my understanding is that as long as the government accepts your offer within 90 days, a contract has formed. 

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1 hour ago, California2012 said:

How or where can I find out the applicable law of the solicitation - common law or offer-specific?

Both.  If the solicitation contains the offer acceptance terms, then there you go (such as FAR 52.212-1 or 52.215-1).  If the solicitation does not contain the terms, then common law principles may apply if the matter has to be adjudicated.  

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1 hour ago, California2012 said:

It's a Negotiation Solicitation and my understanding is that as long as the government accepts your offer within 90 days, a contract has formed. 

I don’t know where 90 days comes from, unless it is in a specific solicitation — I am not aware of a general 90-day rule.  Both FAR 52.212-1 and 52.215-1 indicate different periods (30 and 60 days, respectively).

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13 minutes ago, ji20874 said:

If the solicitation does not contain the terms, then common law principles may apply if the matter has to be adjudicated.  

ji, what common law principle relates to withdrawal of a proposal for a negotiated contract?  I contend that acceptance and award are not necessarily the same thing.  For example, the government and contractor are negotiating on Fri. Sep 30 for an award of a contract to be funded with funds that expire for obligation on 9-30.  At 11:59 p.m., the contracting officer screams with glee "we have a deal" and shakes the contractor's hand.  On Monday Oct. 3, the contracting officer sends the contractor a draft copy of the contract and requests the contractor to sign it.  The contractor has changed its mind about doing the contract and refuses to sign it, stating it is withdrawing its proposal.  Can the contractor can do this under FAR 15.208?

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Retread,

You are conflating approaches.  It is one thing to submit an offer and await the other party’s acceptance — that is FAR 15.208 (and the rest of the FAR, too).  It is another thing to have exchanges and negotiations and counteroffers and all that — that’s your scenario.

If FAR 52.215-1 is used, that provision deals with acceptance in para. (f)(10).  That requires a written acceptance or notice of award, mailed or otherwise furnished.  So yes, in your scenario, the contractor could refuse the contract, as your scenario did not indicate any written acceptance or notice of award.

Acceptance and award can be separate.  For example, a notice of award may be sufficient.

 

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