Rejecting an Award

Unless the quote has something specific in it or was already accepted (which it does not sound like), I do not see why they could not reject an award. I've seen primes "bid shop" after they get awards and have their subs back out and not want to do business with the prime. I don't have all the details or know what was included in the quote, but from a high level view, on the surface, it does not appear to be improper.

Contracts between a prime contractor and a subcontractor are largely governed by state law instead of the FAR or Federal law.  Therefore, the applicable state law should be consulted to get an answer.

Also recommend you read FAR Subpart 11.6 "Priorities and Allocations" and 15 CFR 700.13 "Acceptance and rejection of rated orders"  (https://www.law.cornell.edu/cfr/text/15/700.13)

Jetsterkitty said:

Can a Contractor reject or not accept the award of a Purchase Order from a Government Prime Contractor even if their quote is still valid?

I think that what you want to know is: Under the law, can a company in the United States refuse to accept a DPAS rated order from a government contractor?

Is that your question?

Vern Edwards said:

I think that what you want to know is: Under the law, can a company in the United States refuse to accept a DPAS rated order from a government contractor?

Is that your question?

Vern, YES!  That's exactly what I am wondering. Thanks!

It's complicated. Basically, under the law, a company must accept a rated order. But there are exceptions. Matthew has already referred you to 15 CFR 700.13, which states the rules in this regard.

Generally, the DPAS rules apply to:

Quote

Person. Any individual, corporation, partnership, association, or any other organized group of persons, or legal successor or representative thereof; or any authorized State or local government or agency thereof; and for purposes of administration of this part, includes the United States Government and any authorized foreign government or international organization or agency thereof, delegated authority as provided in this part.

According to the rules:

Quote

Mandatory acceptance. (1) Except as otherwise specified in this section, a person shall accept every rated order received and must fill such orders regardless of any other rated or unrated orders that have been accepted.

(2) A person shall not discriminate against rated orders in any manner such as by charging higher prices or by imposing different terms and conditions than for comparable unrated orders.

And:

Quote

(a) Willful violation of the provisions of Title I or Sections 705 or 707 of the Defense Production Act, the priorities provisions of the Selective Service Act and related statutes or this part is a crime and upon conviction, a person may be punished by fine or imprisonment, or both. The maximum penalty provided by the Defense Production Act is a $10,000 fine, or one year in prison, or both. The maximum penalty provided by the Selective Service Act is a $50,000 fine, or three years in prison, or both.

(b) The government may also seek an injunction from a court of appropriate jurisdiction to prohibit the continuance of any violation of, or to enforce compliance with, the Defense Production Act, this part, or an official action.

(c) In order to secure the effective enforcement of the Defense Production Act, this part, and official actions, the following are prohibited (see section 704 of the Defense Production Act; see also, for example, sections 2 and 371 of Title 18 United States Code):

(1) No person may solicit, influence or permit another person to perform any act prohibited by, or to omit any act required by, the Defense Production Act, this part, or an official action.

(2) No person may conspire or act in concert with any other person to perform any act prohibited by, or to omit any act required by, the Defense Production Act, this part, or an official action.

(3) No person shall deliver any item if the person knows or has reason to believe that the item will be accepted, redelivered, held, or used in violation of the Defense Production Act, this part, or an official action. In such instances, the person must immediately notify the Department of Commerce that, in accordance with this section, delivery has not been made.

Moreover:

Quote

Compliance actions may be taken for any reason necessary or appropriate to the enforcement or the administration of the Defense Production Act, the Selective Service Act and related statutes, this part, or an official action. Such actions include audits, investigations, or other inquiries.

However:

Quote

Optional rejection. Unless otherwise directed by Commerce, rated orders may be rejected in any of the following cases as long as a supplier does not discriminate among customers:

(1) If the person placing the order is unwilling or unable to meet regularly established terms of sale or payment;

(2) If the order is for an item not supplied or for a service not performed;

(3) If the order is for an item produced, acquired, or provided only for the supplier's own use for which no orders have been filled for two years prior to the date of receipt of the rated order. If, however, a supplier has sold some of these items, the supplier is obligated to accept rated orders up to that quantity or portion of production, whichever is greater, sold within the past two years;

(4) If the person placing the rated order, other than the U.S. Government, makes the item or performs the service being ordered;

(5) If acceptance of a rated order or performance against a rated order would violate any other regulation, official action, or order of the Department of Commerce issued under the authority of the Defense Production Act or the Selective Service Act and related statutes [See §700.75].

So my answer to your question, "Can a Contractor reject or not accept the award of a [rated] Purchase Order from a Government Prime Contractor even if their quote is still valid?" is, it depends.

I searched federal court decisions and could not find a case dealing with prosecution for refusal.

Vern, an aside to your last statement, when I worked for the Navy, I recall a situation where a shipbuilder refused to perform a rated order, although I do not recall the specifics.  However, the Navy requested DoJ to seek an injunction requiring performance and DoJ refused to do so.

I feel like there's more to this story. Companies just don't reject business for no good reason. From the subK's point of view, there is a reason why the PO is being rejected. The prime should seek to understand that reason and, perhaps, make changes as a result of what it learns.

This might help as well.....,

http://www.dcma.mil/DPAS/

here_2_help said:

I feel like there's more to this story. Companies just don't reject business for no good reason. From the subK's point of view, there is a reason why the PO is being rejected. The prime should seek to understand that reason and, perhaps, make changes as a result of what it learns.

I'm with you, H2H. If a "quote" is not an offer, it would seem that there may be room for negotiation if the supplier has a problem with its quote. This assumes that the OP is using the correct terminology.