My Dilemma. Can it be a Marketing Device?

I was called in to provide a bid for an addition for a man with a LE amputation that is wheelchair bound.  The case manager and insurance company want our company to provide a bid for modifying a house for accessibility and a bid for building an addition.  We are competing against other construction companies for this project.   Putting together a good design for this project will take several hours of our design team.  If the client chooses our design and a different builder to do the work than that is several 'donated' hours by us.

I have done designs and construction for this case manager/insurance adjustor team before with very good results.  In fact the case manager was showcasing an addition we built to many of his other clients.

We typically get paid for our designs and provide a bid for free based on the construction specifications and the designs, that is how it has worked in the past with this case manager/insurance adjustor (on several jobs) until we had a job that went bad.

Job that went bad:  

They called us in to develop a design and provide a bid for an addition for a man with paraplegia.  The man with paraplegia had another builder come in and develop a design that would cost $425,000 to build.  Enter Functional Homes, Inc.  We came with the case manager, interviewed the family then worked with the family to create a design they liked better than the other design. The work with the family included many meetings and emails and we got paid for our work.  The design we came up with that the family really liked was estimated to cost $300,000 to build.

The family knew we were sent to work with them from the insurance company/case manager, the case manager was with us on our first visit and copied on emails.  After we finished our designs I called the family to set up a time for our builder to come out and put some actual numbers together for our bid.  The family then explained to me they wanted to go with our design but they were going for a settlement from the insurance company so they didn't want our design submitted that as far as the insurance company goes they only wanted the $425,000 design bid on.  (That way they could get the $425K settlement, have us build for $300K and keep the difference.)

I then explained to the family that as they know we were hired by the insurance company and all designs had already been submitted to the insurance company along with estimated costs which we do so we can get paid.  The family got really mad and said no one from Functional Homes would ever set foot on their property again, insults, threats (shoot us if we come back on the property), etc.

So a long story short, we bowed out of the project (this would've been nothing but trouble for us) but did give the insurance company the designs with estimated costs.  The adjustor insisted that we go to the house and put together an official bid.  I explained I could not send anyone out to the property after such a severe reaction from the family, the adjustor told me if I wanted to keep a good relationship with the insurance company I would send someone out.  I apologized and bowed out.  The case manager said he understood our decision.  That was 4 years ago, we were working with them consistently then no work whatsoever until now.

So now we're being called in to do the design and submit a bid for free.  What do we do?  The case manager met another builder at the property they want the bid/design for but did not have 'time' to meet with our team.  They have asked for a design and a bid but have made it clear they will not pay for our design and the other builder is not sharing their design which means they probably aren't paying for his design either.  

So where do we go from here?  

I want these clients back but I can't work this job and not get paid which will lead to other jobs of not being paid, so what to do?  

Options:

• Bow out again- we'll never get these clients back.
• Provide a design and bid for free.  This sets an expectation that we will always work for free.
• Provide the bids, a basic design, and a report.  This would mean working with the family and spending some time on the designs.  At the end of the report provide a cost sheet stating that we were happy to have the opportunity to work on their project and hope that they found our report satisfactory and that the family is happy with the design.  The report and the services we provided this time were without charge but in the future our design/build packages are as follow:  bids that don't require a design are free, designs fees are based on per hour time spent by our design team that includes designers, builders, OTs, draftsman and architects or something to that effect.

Anyone else have any ideas?  This feels like a chess game to me, how can we create a win/win situation for both the insurance adjustor/case manager and Functional Homes, Inc?