Making The Choice: When To Take An Exception

July 21, 2015 by Jennifer Woods
Whether it is the state, county, city, or school, the government's terms and conditions are designed to shift the entire risk of a project onto the supplier. The end result is a series of what many consider commercially unreasonable provisions – in other words, terms you would never agree to in the private sector.

Is it All or Nothing?

Panic typically ensues when faced with a decision of whether to take an exception to a term or condition. After all, the RFP usually states that taking an exception could cause the bidder to be deemed nonresponsive (read: eliminated from the competition).

However, the government does not uniformly disqualify bidders who disagree with the solicitation’s terms and conditions. Oftentimes it comes down to the scope of work and the number of competitors.

Increase in Importance = Increase in Possibilities

As you wrestle with what to do, first think about what you are selling. Is it a tractor? Or are you selling an enterprise software solution for a mission critical system? While the government may scare you by announcing a strict position on exceptions, procurement officers are often forced to negotiate as the complexity and importance of the procurement increases. The government realizes that it sometimes has to compromise in order to fulfill the project requirements.

Gauge your Competition

Next, think about how many suppliers are also likely to bid on the same project. Is this a popular multi-vendor contract, or is this a specialized product or service that will be awarded to a single vendor? If you don’t know, look at how the past contract was structured. You can also look to the solicitation to see if it mentions a multi- or single-award contract, and attend the pre-bid conference to gauge how many others may submit a response.

If you discover that the contract you want to win is a large, multi-vendor contract, be deliberate with your exceptions. I have heard procurement officers admit that they automatically disqualified any company that took exception to a term or condition because they already had enough bidders to satisfy the contract requirements. In fact, this happened with the Arizona IT consulting services contract in 2008 when 19 suppliers were immediately disqualified for taking exception.

Bottom line, there is no hard and fast rule on what the government will do. Your goal is to carefully examine the circumstances, as well as the terms and conditions to determine the nice-to-have versus the must-have modifications.

For those must-have exceptions, try to come up with a solid justification and offer a potential alternative.
If you are the only bidder taking an exception, it will be noticed. However, if your solution and overall approach is the best value, you may have the opportunity to negotiate and end up in the position you’ve been seeking all along.

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