Can the CTR go ahead and propse on what they can support and take exception to the portion that they cannot. Or does the Government need to revise the requirement and re send the RFP before the CTR can propose?
The Government should revise the requirement and have the contractor propose to the revised requirement. It may seem like an unnecessary additional step in the process, but it's important that the contractor's proposal match up precisely with the work statement in order to avoid a potential misunderstanding later on during contract performance.
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In addition, the sole source justification required by FAR 6.3 must address the actual work scope that the contractor will be performing against. If the contractor receives the sole source award based on a different work scope than that reflected in the RFP, it may bring into question the validity of the sole source justification. Finally, making award based on a proposal that is, strictly speaking, not technically acceptable (based on the original RFP) could open the Government to a protest from a company that did not offer on the RFP.