You're The Only Bidder? Oh,That's Good. No, That's Bad*

The Department of Defense published a final rule earlier this week regarding situations where they receive only one offer or proposal in response to a competitive solicitation. We don't know how often this happens but it must have occurred more than a few times for the Department to see the need for a regulation. You see, whenever the Government awards a contract, they need to ensure that the price is fair and reasonable. Its very difficult to make a fair and reasonable determination unless i) you have more than one qualified bidder or ii) you have other cost or pricing data, market analysis, or other types of evidence.

In the case of competitive awards, there is no requirement that offers submit cost or pricing data or certified cost or pricing data. Under the new regulation, if there is only one bidder, that bidder agrees to provide whatever cost or pricing data is requested by the contracting officer. If the sole bidder refuses to provide such data, the new regulation is clear that an award cannot be made to that bidder (unless the head of an agency determines that an award is in the best interest of the Government). That disqualification makes it unlikely that a contractor can adopt the "take it or leave it" position.

The new regulation has some exceptions for commercial items, prices set by law or regulation, items on a Federal Supply Schedule, and a few others.

Contractors (and prospective contractors) caught in this dilemma need to carefully consider whether they want to bear the added expense of providing certified cost or pricing data or are willing to have the Government poke around in their books and records, if they are not already accustomed to such oversight.

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* With apologies to Sam the Sham and the Pharaohs.