Prospective Contractors Bear the Risk of Contingencies Included in Their Proposals

The Federal Bureau of Prisons issued a solicitation for residential community corrections center services in Michigan. Among the companies bidding on the project was Bannum, Inc. Among the evaluation factors, the Bureau of Prisons evaluated the location of the facility proposed  and the validity of the offeror's right to use it. The solicitation required offerors to provide documentation supporting their right to use the property but also permitted offerors one request ot change an initially proposed facility so long as the request was received with 60 days of initial proposal submission.

The property that Bannum proposed to purchase if it won the contract had a contingency clause that allowed the seller to continue to show the property but gave Bannum 10 days to remove the contingency. In January 2016, the Bureau of Prisons requested final proposal revisions. Given the passage of time however, and the contingencies in the protester's documentation regarding Bannum's proposed property, the contracting officer did a little research and found that the property had been sold to another entity the prior month..Bannum asked for additional time to find a replacement property but the contracting officer determined that the proposal was noncompliant and rejected it.

Bannum protested the rejection contending that the Bureau of Prisons delay in making award caused the protester to lose its rights under the contingent agreement. Bannum also challenged the Agency's refusal to provide additional time to find a replacement property noting that the Agency had previously issued interim contracts during the pendency of the current procurement and that issuing another interim award would allow it the time it needed to find a new property.

The GAO (Government Accountability Office) rejected Bannum's protest. GAO noted that Bannum continued to offer the property through discussions and final proposal revisions for approximately a year after it had been sold. GAO also rejected Bannum's argument that the Bureau of Prisons acted unreasonably by not allowing additional time to find a new location. There was nothing in the solicitation establishing that the agency would make an award by a certain date. Further, based on the express terms of the solicitation, an offeror could only request a site change within 60 days after initial proposals were submitted. Bannum's inability to provide a facility was a direct consequence of the particular deal Bannum struck with the property owner, which ultimately rendered the property unavailable to Bannum, and it was Bannum that bore the risks of the agreement.

You can read the entire decision here.