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“Quotes” vs. “Offers” – It Pays to Know the Difference!

On Behalf of | Sep 18, 2017 | Government Contracts

Although a government solicitation might incorrectly use the terms “quote” and “offer” interchangeably, vendors must know the difference between these two distinct terms. It can be the difference between getting the work and losing it.

A situation demonstrating the importance of this difference is discussed in a GAO decision of a protest of a Department of Agriculture software buy. Although there is no date “June 31,” a Federal Supply Schedule vendor, Serena Software, Inc. (SSI), told the agency in its quote that, “This offer is valid through June 31, 2003.” On September 5, 2003, the Department of Agriculture issued SSI an offer that the vendor accepted. A competitor protested, arguing that the SSI’s price had expired prior to the award.

The GAO denied the protest. Despite the vendor’s characterization of its bid as an “offer,” GAO correctly called it a quote that did not have to meet the typical, more rigid rules for offers responding to a Request for Proposal (RFP). GAO distinguished quotes or quotations under a Request for Quotations from offers under a Request for Proposals:

“The submission of a proposal constitutes, by its very nature, an offer by a contractor that, if accepted, creates a binding legal obligation on both parties. Because of the binding nature of bids and offers, they are held open for acceptance within a specified or reasonable period of time, and our case law has necessarily developed rules regarding the government’s acceptance of expired bids or proposals.”

That was not the situation here. The agency had not used the RFP process—it had used the RFQ process. A quotation or quote “is not a submission for acceptance by the government to form a binding contract; rather, vendor quotations are purely informational. In the RFQ context, it is the government that makes the offer.” Because vendors in the RFQ context can accept or reject the ensuing government offer, “there is nothing for vendors to hold open; thus, it simply does not make sense to apply the acceptance period concept or the attendant rules regarding expiration of bids or offers to RFQs.” Computer Assocs. Int’l, Inc.-Reconsideration, B-292077.6 (May 5, 2004). GAO’s distinction is also found in FAR 13.004 Legal Effect of Quotations.

Because the RFQ process and its more relaxed rules can be used in FAR Part 8 Federal Supply Schedule buys, FAR Part 13 simplified acquisitions, and FAR Part 16 task order solicitations, vendors should not assume that the rigid FAR Part 15 rules apply to all government procurements. The rules for an RFQ solicitation are different.

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Terry O’Connor is a Partner at Berenzweig Leonard, LLPHe and Stephanie Wilson lead the firm’s Government Contracts practice. Terry can be reached at [email protected].