§ 7.3 Contract Formation

• Library: Construction Law in Oregon (OSBar) (2019 Ed.)

§ 7.3 CONTRACT FORMATION

§ 7.3-1 Procurement Methods

§ 7.3-1(a) Invitation for Bids

Sealed bids are normally solicited through an invitation for bids, commonly referred to as IFBs. IFBs are issued using Standard Form 33 (Solicitation, Offer and Award). See FAR 53.300; see also < www.gsa.gov/reference/forms# >. The IFB is only an invitation to enter into a contract; it is not a formal offer. The contractor's bid is the offer. A contract is formed when the government contracting officer accepts the bid. Dana Corp. v. United States, 200 Ct Cl 200, 470 F2d 1032, 1042 (1972).

§ 7.3-1(b) Request for Proposals

A request for proposals (RFP) is a method for purchasing goods and services through negotiated procurement. It is not an offer, but invites the contractor to propose an offer that the government may accept. Space Research Corp. v. United States, 225 Ct Cl 721, 650 F2d 290 (1980) (unpublished opinion). RFPs are normally solicited using Optional Form 307 (Contract Award) or Standard Form 33 (Solicitation, Offer and Award). See FAR 53.300; see also < www.gsa.gov/reference/forms# >.

At a minimum, an RFP must describe (1) the government's requirement, (2) the anticipated terms and conditions that will apply to the contract, (3) the information that the offeror's proposals must include, and (4) factors that the contracting officer will use to evaluate the proposals and their relative importance. FAR 15.203(a).

If acceptance of a proposal without discussions is not possible, the government will engage in oral or written negotiations with all offerors. The offerors are then given another opportunity to submit a further offer, which is called a final proposal revision. FAR 15.307(b).

§ 7.3-1(c) Request for Quotations

A request for quotations (RFQ) is used when the government does not intend that formal offers will be submitted in response. It is used most often with sole-source procurements. A quotation received in response to an RFQ is not an offer to be accepted by the government. RFQs are normally solicited using Standard Form 18 (Request for Quotation). See FAR 53.300; see also < www.gsa.gov/reference/forms# >.

After receiving an RFQ, the government may follow any number of procedures. Sometimes the contractor's quotation becomes the basis for beginning negotiations, following which the government usually asks the contractor to submit an offer. In rare circumstances, the government submits the offer.

§ 7.3-1(d) Request for Information

A request for information (RFI) is used when the government is seeking information on prices, delivery, or other terms. It does not solicit a formal offer that can be accepted. FAR 15.201(e). One common practice with RFIs is for the contractor to submit pricing and the government to then submit purchase orders that the contractor may accept or reject. The government's purchase order is the offer, and a contract is established when the contractor accepts it. FAR 13.004(a). See Sunshine Cordage Corp., ASBCA No 38904, 90-1 BCA ¶ 22,382, on recons, 90-1 BCA ¶ 22,572 (the government's initial request for a price quote was not an offer, but the government's subsequent purchase order was). Purchase orders for simplified acquisitions may be made using Optional Form 347 (Order for Supplies or Services). See FAR 53.300; see also < www.gsa.gov/reference/forms# >.

§ 7.3-2 Bidding Process

§ 7.3-2(a) Invitations for Bids and Requests for Proposals

The large majority of government construction contracts are awarded through a bidding process that results in a fixed-price contract (see § 7.2-2). However, a fixed-price contract with "economic price adjustment clauses" may be used in certain circumstances. FAR 14.104. In unusual circumstances, the government issues a request for proposals (see § 7.3-1(b)) and seeks to award contracts through a negotiated bid process.

The bidding process involves preparing an invitation for bids (IFB), publicizing the IFB, submitting bids, evaluating the bids, and awarding the contract. FAR 14.101. The submission of the low bid does not automatically result in the award or formation of a contract, because bidding and contracting are separate procedures. See PCI/RCI v. United States, 36 Fed Cl 761, 769 (1996) (preaward bid protest).

The government has the right to modify the solicitation requirements by amending the solicitation, as long as the government provides proper notice of the change to affected parties. FAR 15.206(a)-(d); Prudential-Maryland Joint Venture Co. v. Lehman, 590 F Supp 1390, 1402 (DDC 1984); Candle Corp. v. United States, 40 Fed Cl 658, 663 (1998).

Contracting officers must promote bidding competition by publicizing contract actions, normally by transmitting a notice to the GPE ("governmentwide point of entry"; see < www.fbo.gov >), which is the U.S. government's electronic notification medium. FAR 5.101; FAR 5.201. In addition, the government often (1) issues periodic handouts listing proposed contracts; (2) disseminates information to trade associations; (3) publishes announcements in newspapers, magazines, and trade journals; and (4) places advertisements in various periodicals.

When adequate specifications are not available, the government may use a two-step bidding process...