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Trying To Negotiate A Non-Negotiable RFP in Pennsylvania - A Cautionary Tale

Posted by:  Sandy Feltes  (sfeltes@kaplaw.com)

Contractors may want to think twice before attempting to negotiate the terms of a Request for Proposal. You may face the risk of having your bid rejected in Pennsylvania.

A case just decided by the Pennsylvania Commonwealth Court provides a cautionary tale. In Pepco Energy Services, Inc. v. Department of General Services, the Pennsylvania Department of General Services issued a design build contractor RFP in connection with the expansion of the Graterford Correctional Facility. The RFP provided that the language of the Design Build Contact was not negotiable. Pepco submitted a proposal in response to the RFP; but its submission included a statement that the bid was based on the subsequent negotiation of certain contract requirements, including the collateralization requirement, provisions authorizing judgment by confession, consequential damages exclusions, and automatic default (no-cure) provisions. DGS rejected Pepco's bid on the basis that the bid contained 'conditional language" constituting an "alternate proposal" and therefore the bid was non-responsive.

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Pepco filed a bid protest with DGS and subsequently with the Commonwealth Court. It argued that contract negotiations are contemplated as part of the request for proposal process under Section 513 of the Commonwealth Procurement Code. That section of the Procurement Code allows parties to negotiate over contract terms.

The Commonwealth Court rejected Pepco's bid protest due to the timing of attempted negotiations rather than the right to negotiate. The Commonwealth Court found that Pepco did not have the right to engage in contract negotiations before DGS made a determination that Pepco was a responsible bidder (i.e. whether Pepco submitted a responsive or non-responsive bid). The Court found that had Pepco been declared a responsive bidder, it could then have attempted to negotiate the terms of the Design Build Contract. But, its attempt to negotiate the terms of the RFP and the contract at the bidding stage made its bid non-responsive and properly rejected.

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