Overview
FAR 14.404 establishes the strict criteria and procedures for rejecting individual bids or canceling an entire Invitation for Bids (IFB) after bid opening. It is designed to protect the integrity of the sealed bidding system by ensuring awards are made to the lowest responsive and responsible bidder unless a "compelling reason" justifies cancellation.
Key Rules
- The "Compelling Reason" Standard: Once bids are opened, an IFB cannot be canceled unless the agency head provides a written determination that a compelling reason exists (e.g., ambiguous specifications, lack of funding, or unreasonable pricing).
- Mandatory Rejection: Bids must be rejected if they fail to conform to essential requirements, specifications, or delivery schedules, or if the bidder is deemed non-responsible (suspended, debarred, or lacking capacity).
- Prohibited Qualifications: Bids that attempt to limit the government's rights, limit the bidder's liability, or stipulate "price in effect at time of delivery" are nonresponsive and must be rejected.
- Substance vs. Form: A bidder may only be permitted to delete objectionable conditions if they relate to "form" rather than "substance." Substantive items include price, quantity, quality, or delivery.
- Conversion to Negotiation: If an IFB is canceled due to unreasonable prices, collusion, or lack of responsive bids, the agency may complete the acquisition via negotiation (FAR Part 15) with the original bidders rather than issuing a new solicitation.
- Unbalanced Pricing: The government may reject bids where line-item prices are materially unbalanced, posing an unacceptable risk to the agency.
Practical Implications
- Rigidity of Sealed Bidding: Unlike negotiated procurements where "deficiencies" can be corrected through discussions, a bid that fails to meet specifications at the time of opening is typically "dead on arrival" and cannot be fixed.
- Risk of Commercial Terms: Bidders often inadvertently trigger rejection by including standard commercial terms and conditions that conflict with the IFB, which the Contracting Officer must treat as an attempt to modify government requirements.
- High Bar for Cancellation: The requirement for a "compelling reason" prevents the government from canceling a solicitation simply to avoid making an award to a specific low bidder or because of minor administrative changes.