When does a bidder’s failure to acknowledge an amendment to an Invitation for Bids (IFB) render the bidder nonresponsive? Generally, the FAR requires bidders to acknowledge receipt of material amendments to an IFB, but permits agencies to either allow a bidder to cure its failure to acknowledge an amendment or waive the requirement entirely where the amendment is not material to the IFB.[1] An amendment is not material if it would only have a negligible effect on price, quantity, quality, or delivery of an item bid upon. But what is a “negligible effect”?
The Government Accountability Office (GAO) recently addressed this question in Morrish-Wallace Construction d/b/a Ryba Marine Construction Co., B-423796.2 and issued a cautionary tale for contractors who assume an amendment is immaterial to an IFB.
In short, GAO explained that an amendment is material if it adds requirements to contract performance that were not contained in the original IFB. Reaching this conclusion, GAO reasoned that price, while important, is not the only dispositive factor.
The Decision
The protest stemmed from an IFB issued by the Department of the Army, Corps of Engineers (Agency) for the construction of a steel pipe offloading platform. Bidders were required to submit documentation acknowledging receipt of any amendments and were warned that non-compliance could render them ineligible for award.
The Agency revised the IFB three times. The first amendment provided updated wage determinations and a site visit attendee list. The second amendment included additional wage determination updates, revised plan sheets, and specific section changes. The third amendment updated wage determinations again and revised plan sheets, notably increasing the size and weight of the sheet pile cap from a smaller channel to a larger one, a change estimated to cost at least $21,000 in extra materials.
The Agency received six bids. E.C. Korneffel Co. (Korneffel) submitted the lowest-priced bid and Ryba Marine Construction Co. (Ryba) submitted the second lowest-priced bid. However, the Agency determined that Korneffel failed to acknowledge the third amendment and deemed its bid non-responsive. Korneffel responded by submitting a signed copy of the amendment and argued that the failure was a minor informality because its wages exceeded the wage determination rates and the sheet pile cap change was insignificant.
The Agency initially rejected this argument but later reversed its position after Korneffel filed a protest with the GAO, concluding the wage determination affected only landscape laborers (inapplicable to this contract) and that the sheet pile cap cost increase was negligible at 1.1 percent of the contract value. The GAO dismissed Korneffel’s protest as academic after the Agency announced corrective action. Ryba subsequently filed this protest, arguing that the amendment was material and Korneffel’s bid should have been rejected.
The GAO discussed how to determine whether an amendment is material. While the FAR states an amendment is not material if it would only have a negligible effect on price, quantity, quality, or delivery of an item bid upon, no precise rule exists to determine whether a change is negligible. Instead, the GAO wrote, such a determination is based on the facts of each case. The GAO then walked through extensive case law analyzing the materiality of an amendment.
In this case, the GAO determined that the portion of the amendment related to the wage determination was immaterial as it did not increase a wage for a particular trade to be employed on the requirement. An amendment increasing a wage determination is only material where there exists a reasonable possibility that the trade’s services will be required in the performance of the contract.[2]
On the other hand, the GAO determined that Korneffel’s failure to acknowledge the revised sheet pile cap size was a material defect because the amendment changed the specifications of the product to be delivered, i.e., requiring a larger steel pile channel cap. The GAO explained that price, while important, is not the only dispositive factor in determining if an amendment is material. Instead, an amendment is deemed material to an IFB if the amendment adds requirements to contract performance that were not contained in the original IFB.
Based on this analysis, GAO sustained the protest and recommended the Agency terminate the contract with Korneffel for the convenience of the government and award the contract to Ryba as the second-low bidder.
Contractor Takeaways
The Morrish-Wallace decision provides important takeaways for contractors navigating the bid process.
- Consider whether an amendment to an IFB changes the requirements of the original IFB, regardless of the price impact. When reviewing an amendment, examine whether it increases or otherwise changes the obligations of the contractor. An amendment that trivially affects price may nevertheless be material if it changes the performance requirements of the IFB.
- An agency does not have the final say on whether an amendment to an IFB is material. Keep an eye out for protest opportunities where a competitor fails to acknowledge an amendment. Here, Ryba’s decision to protest the Agency’s determination of the materiality of the amendment bore fruit.
- When in doubt, acknowledge all amendments to an IFB. Because there is no precise rule, it is impossible to say for certain whether a bidder will be obligated to acknowledge any particular amendment. Contractors should be familiar with the general principles of materiality, helpfully laid out in this decision, but should always acknowledge an amendment if its materiality is in question.
Given the fact-specific and caselaw-driven analysis of an amendment’s materiality, we recommend engaging outside counsel promptly if a contractor has concerns about acknowledging an amendment.
[1] FAR 14.405(d)(2).
[2] See Promethean Constr. Co., B-255222, Feb. 7, 1994, 94-1 CPD ¶ 78 at 2.