Contingent Offers:
In Bids and Responses to Government Solicitations
When a contractor offers a fixed price for a contract, there is an express (or implied) assumption that a defined quantity of a product with a defined delivery date is included in the price. Implicit within a fixed price contract is the control over production and delivery of the product or service by the contractor. The Government has the justified expectation that it will receive a specified product or service at the required date in the specified quantity while the contractor controls production. Consequently, in the resulting contract, the Government has justified expectations of exactly what it will obtain or receive from the contractor.
In other words, the offer by the contractor must be reasonably certain. If one or more terms of an offer–the contractor's proposal–are left open or are ambiguous, it is an indication that the offeror does not intend to be bound by their offer.
Generally, a fixed price contract resulting from a proposal should have an exact meaning and all performances to be rendered should be well–defined.
An essential term of a contract is the price to be paid for the products or services. If the parties are unable to manifest their intent to be bound to a contract because the price is not fixed or agreed, then there is no contract.
If an essential term to a contract is so ambiguous or uncertain that doubt is created as to whether such a term has been performed or broken, then there is no contract. When an offeror makes a “contingent” offer in a proposal for a fixed price contract, the final price for the delivered product or service is unknown or at least uncertain at the time of contract formation and, therefore, a defined contract is not created.
For purposes of this paper, a “contingency” is “a possible future event or condition arising from presently known or unknown...
