A somewhat lively discussion recently took place in the contracting office. Here is what happened:

The agency was operating in a sole source environment with a contractor (as authorized by statute). The agency had a contract for commercial services that was terminating at the end of the month. The agency issued an RFP to the contractor for an additional six months of services. At month’s end, the contractor (and now the offeror) submitted its proposal to the agency. The offer contained proposed changes to the RFP's terms. Discussions were held with the offeror, and revised terms were agreed upon. However, there was no time for the offeror to submit a final proposal revision, and the Contracting Officer could not sign the original offer (due to the proposed changes in terms that were unacceptable to the government).

The Contracting Officer then issued a unilateral purchase order to the offeror, in the amount of $450,000.00. This purchase order incorporated the previously agreed upon changes in terms. The Contracting Officer’s decision came under fire immediately, and he was told that he could not simply send out a unilateral purchase order; he had to send out an unsigned contract (forgive the oxymoron), and allow the offeror to sign first. The Contracting Officer countered, stating that regardless of the issuance of the prior sole source RFP and any discussions held with the offeror, he was not prohibited from issuing a unilateral purchase order. He acknowledged that the incumbent contractor was free to reject the purchase order (i.e. the government’s offer to buy future services), but reasserted that there was no prohibition on the issuance of the order. He further stated that performance by the contractor (at the start of the next month) would constitute acceptance, and that a bi-laterally signed SF1449 was desirable, but not required to form a contract.

Was this Contracting Officer in the wrong?

There is no question that a contracting officer may issue a unilateral purchase order. However, it is important to remember that the issuance of the unilateral purchase order does not create a contract. The contract embodied in the purchase order comes into effect when the contractor either countersigns the purchase order or commences its performance.

See the definition of “Contract” in FAR 2.101:

“Contract” means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C.6301, et seq. For discussion of various types of contracts, see Part 16.

Quote

I do't like this sort of question -- once someone starts answering, more information comes out. Oh, well...

Was the purchase order was issued under FAR Subpart 13.5?

If YES, did the contracting officer prepare a sole source justification amenable to FAR 13.501( a )( ii ) and make the justification available to the public amenable to FAR 13.501( a )( iii )?

To add to ji's note and while napolik’s response would generally be correct the specifics of the RFP need to be known.

I say this from the view that you have stated a RFP was used which suggests a concept of seeking a firm offer from the contractor rather than simply a quote (RFQ). The wording of RFP would be important to clearing this up.

The RFP versus RFQ is confused as well as it is noted that the value of the procurement is over the SAT. So when using FAR Part 12 what other FAR Parts were utilized? FAR Part 13? FAR Part 15?

The RFP versus RFQ issue also makes me wonder what block of the SF-1449 was checked by the CO when signing. Block 28 or 29? And was the block that was checked supported by the RFP terminology as firm offer versus just a quote?