A small business’s so-called “hardship request” to vary a solicitation’s payment scheme caused the procuring agency to reject its proposal.

In a recent bid protest decision, the GAO upheld the agency’s decision, holding that the small business’s proposal was, at best, ambiguous about whether the small business would comply with the solicitation.

The GAO’s decision in Emergency Vehicle Installations Corporation, B-408682 (Nov. 27, 2013) involved a National-Geospatial Intelligence Agency proposal for the modification of five police emergency vehicles.  The solicitation was issued as a simplified acquisition and required the services to be provided “in as rapid a time frame as possible” with a required delivery date of August 30, 2013.  The solicitation called for award to the lowest-priced, technically acceptable vendor.

Three vendors, including Emergency Vehicle Installations Corporation, submitted proposals.  In its proposal, EVI stated:

We understand and agree with the terms and conditions of the RFP.  We would like to ask that we be allowed to invoice NGA per vehicle.  Because we are a small woman owned company we have limited financial resources; we would find it difficult to wait for payment until the contract has been completed. A hardship letter in support of this request is attached.

The so-called “hardship letter” referenced in the proposal reiterated that EVI was a small business.  The hardship letter stated that per-vehicle payments were requested “to make payroll and pay vendors for the equipment needed for this contract.”

EVI’s proposal also included a price “estimate,” which included EVI’s unit price for each item, as well as its total price.  Each page of the estimate stated “Vehicle specific parts must be pre-paid.  Jobs invoiced as completed and made available for delivery.”

The NGA determined that EVI’s proposal was the lowest-priced.  However, it also determined that the proposal was contingent on receiving contract financing from the government.  The NGA rejected the proposal and awarded the contract to the next-lowest vendor.

EVI filed a bid protest with the GAO.  EVI contended, in part, that its proposal and hardship letter merely made a “request” for payment on a per-vehicle basis.  EVI also argued that the statement in its estimate was “informational only” and should not have led the agency to conclude that EVI’s price was contingent upon the agency making per-vehicle payments.

The GAO disagreed.  The GAO held that the language in EVI’s proposal “at a minimum created an ambiguity as to whether EVI took exception to the terms of the RFQ . . ..”  The GAO concluded, “where EVI’s quotation was ambiguous with respect to a material solicitation term, specifically the government’s contractual payment obligations, the agency reasonably rejected EVI’s quotation as unacceptable.”  The GAO denied the protest.

EVI is not the only small business to worry about potential cash flow problems created by taking on a new government contract.  In fact, such concerns are relatively commonplace.  However, the Emergency Vehicle Installations bid protest is an important warning that attempting to use the proposal to suggest a payment plan other than called for in the solicitation may backfire.