GAO: Extraneous Information Sinks Offeror’s Proposal

A recent GAO decision should serve to caution offerors to be careful what they include with their proposals. Any information that contradicts the proposal or otherwise does not conform to the terms of the solicitation could result in disqualification.

In Independent Systems, Inc., B-413246 (Comp. Gen. Sept. 15, 2016), GAO held that the agency could reasonably disqualify an offeror based on extraneous information the offeror included with the intent of providing the agency with more information, but not changing the terms of the offer.

The case involved a Bristow, Virginia, company called Independent Systems, Inc., that sought a Forest Service contract to provide two bulldozers for use at Coconino National Forest in Flagstaff, Arizona. The solicitation was available to holders of a BPA for heavy equipment. The solicitation required the bulldozers to be delivered F.O.B. to Coconino National Forest on or before August 31. (F.O.B. is a shipping method that stands for “Free On Board.”) The solicitation incorporated the terms of the underlying BPA, which included FAR 52.212-4 (Contract Terms and Conditions – Commercial Items). FAR 52.212-4 provides, among other things, that payment shall be made after delivery and acceptance; the clause does not provide for prepayment or contract financing.

Independent Systems, a BPA holder, submitted a proposal in response to the Forest Service solicitation. Like many contractors, Independent Systems did not simply have two spare bulldozers laying around. Rather, it proposed to buy them from a manufacturer should it be awarded the contract.

When Independent Systems submitted its proposal, it included the manufacturer’s brochures for each bulldozer and a two-page manufacturer’s “terms and warranty” document, which, according to Independent Systems, related to its contemplated purchase of the bulldozers. Independent Systems’ proposal quoted a price for each bulldozer, offered to deliver the goods F.O.B. within three months of the order, and asked the Contracting Officer to refer to the “attached file” for details of the proposed equipment and warranty.

The file, consisting of the manufacturer’s brochures and terms and warranty document, included three clauses that gave the Contracting Officer cause for concern. The first said that all prices were Ex-Factory or F.O.B. (Florida, Texas, or California). This contradicted the solicitation’s F.O.B. Arizona requirement. The second required all orders to be paid in full before shipping, which directly contradicted the BPA’s payment terms under FAR 52.212-4. The third said that prices and specifications were subject to change without notice. The contracting officer worried that meant that Independent Systems would not be bound to perform. The Contracting Officer therefore concluded that Independent Systems’ offer had taken exception the solicitation’s delivery and payment terms and eliminated the offer from the competition.

Independent Systems filed a GAO bid protest challenging its exclusion. Independent Systems argued, basically, that all three of the concerning terms would apply to it, but not to the government. As a practical matter, this argument would seem to make sense. Independent Systems’ plan was to buy the bulldozers under whatever conditions it could negotiate from the manufacturer, then turn around and sell the bulldozers to the government under the conditions the government required. Indeed, by the time the government got its hands on the bulldozers, Independent Systems would have concluded its transaction with the manufacturer. In fact, in its protest, Independent Systems characterized these documents as “an additional item for evaluation, even though it was not required [by] the BPA[.]”

Nevertheless, GAO held that the Forest Service did nothing wrong in rejecting the proposal. GAO wrote that “it was not at all clear from [Independent Systems]’s proposal which delivery and payment terms the firm was actually offering to the Forest Service.” GAO pointed out that various provisions of the manufacturer’s warranty pages “contained conditions expressly applicable to the ‘buyer’ and ‘user’ of the equipment,” which could mean the government. Said GAO: “[I]nstead of making its proposal more thorough by including the manufacturer’s terms and warranty document, as the protester urges, that document actually introduced ambiguities and inconsistencies into [Independent Systems]’s offer that the Forest Service was not required to reconcile.” GAO concluded:

[Independent Systems] concedes that there was no need to include the manufacturer’s warranty terms as part of [Independent System]’s proposal. Thus, as the contracting officer admonished [Independent Systems], if the manufacturer’s terms and conditions did not apply to the Forest Service, then [Independent Systems] should not have included those terms and conditions in its proposal.

In other words, GAO said any confusion was caused by Independent Systems’ decision to include the brochures and manufacturer warranties. Because Independent Systems was not required to include this information, it should have just left it out.

Years ago, when I was a small-town newspaper reporter, our newsroom mantra was “when in doubt, keep it out.” Apparently, those wise words would have also served this protester well. As the Independent Systems decision demonstrates, offerors should carefully review their proposals to ensure that any information that isn’t strictly required by the solicitation doesn’t undermine the proposal.