This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its March 2005 decision in Northrop Grumman Information Technology, Inc., the U.S. Government Accountability Office (GAO) found that the Treasury Department changed key contract provisions after the submission of proposals. It ordered the Department to amend and reissue its tender call and to re-evaluate proposals based on those new submissions.
The case involved a Request for Proposals (RFP) for wide area network services linking thousands of Treasury Department locations across the United States, Guam, Bermuda, the Bahamas, and Europe. The RFP called for a fixed-price contract for a three-year term with seven option years.
After receiving the initial proposals, the Department faced considerable internal pressure from other parts of government for its decision to proceed with its own contract rather than procuring its requirements under a forthcoming government-wide contract. As the GAO noted, the Department faced “a great deal of consternation” from various sources, including Congress, due to concerns that the RFP was diluting the government’s pooled purchasing power and undercutting the forthcoming government-wide contract.
While the Department proceeded with its procurement process and awarded its own contract, it also introduced new provisions that were not part of the original RFP. Those provisions included restrictive criteria for exercising contract extensions that reduced the likelihood of the contract proceeding beyond its original three-year term. As the GAO concluded, the net effect of this change was to make it less likely that the Department would exercise its extension options under its Telecommunications Enterprise (referred to below as TCE) contract and more likely that it would migrate over to the government-wide GSA Networx contract:
Here, the MOU significantly changed the approach to determining whether to exercise the TCE options in ways that, in total, made it significantly less likely that the TCE options would be exercised. In fact, in light of all of the information in the record indicating that all of the other government entities that would be involved in the option exercise decision believed that Treasury’s requirement should transition to the GSA Networx contract, it appears that the MOU made it more likely that the options would not be exercised than that they would. This represented a material change to the basis upon which offerors prepared their proposals.
The GAO ordered the Department to amend and reissue its RFP because the contract that it awarded varied materially from the contract that was originally put to market in the RFP.
As this case demonstrates, a contract awarded pursuant to an open tendering process should be consistent with the contract that is initially put to tender. The failure to maintain alignment between the tender call and the contract award can seriously undermine the integrity of the bidding process.
