“Educating the Government Contracting Community”

Court Holds Agency Under No Obligation to Waive Defect or Allow Contractor to Correct Defect

The U.S. Court of Federal Claims recently affirmed the extent of an agency’s ability to waive defects or minor irregularities in proposals submitted to it.  In Business Integra, Inc. v. U.S., the agency eliminated the contractor’s proposal from consideration for award because the contractor’s proposal omitted what the agency considered to be “material” pricing information.  In addition to arguing that such omitted information was not material, the contractor argued that the omission was clearly erroneous and that the agency should have waived or corrected the defect.  Specifically, the contractor noted that its proposal contained information upon which the agency could have calculated the pricing information missing from contractor’s proposal.

The Court, however, disagreed with the contractor.  Instead, the Court’s decision places the responsibility for proposal defects and errors solely with the contractor.  The Court noted that although an agency may “seek an explanation from a bidder regarding an evident clerical error [under FAR 14.407-2]…failing to seek clarification in negotiated procurement is not unreasonable.”  Moreover, where such errors are considered “material,” the agency is under no obligation to waive the error or allow the contractor to correct the defect.  Instead, siding with the agency, the Court warned that by “requiring the agency to waive [a contractor’s] error could result in the disparate treatment among offerors and thus constitute an abuse of discretion.”

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