New FAR Provision and Pending Supreme Court Case Highlight Lack of Clear Rules on Communications Between Government and Industry During Procurement Process | Venable LLP

Several years after initially proposing the rule and receiving feedback from federal contractors and a prominent government contracting scholar, the Federal Acquisition Regulatory Council recently released a final rule regarding “Effective Communication between Government and Industry.” See 87 Fed. Reg. 73902, 73902 (Dec. 1, 2022). While the final rule encouraged agency acquisition personnel to engage in responsible and constructive exchanges with industry, the Council declined to revise or amend existing regulations and procedures that discourage such communications. Commenters had informed the Council that federal officials often avoid frank discussion with contractors during the acquisition process for fear of violating opaque rules or drawing a bid protest. Moreover, a case pending before the United States Supreme Court shows that contractors, too, may risk running afoul of unclear laws (including criminal statutes) related to their communications with the government.

In the preamble to its new rule, the FAR Council promised to examine and address some of these issues in the future. In the meantime, contractors should review the guidance that is currently available and, when appropriate, alert federal acquisition officials to the new provision at Federal Acquisition Regulation (FAR) 1.102-2(a)(4). They should also be on the lookout for the Supreme Court’s coming decision in Ciminelli v. United States.

Congressional Action and the Proposed FAR Rule on Effective Communication

The President signed the National Defense Authorization Act (NDAA) for fiscal year 2016 on November 25, 2015. Section 887 of the FY16 NDAA required the FAR Council to issue a new rule encouraging communications between government and industry in the acquisition process:

Not later than 180 days after the date of the enactment of this Act, the Federal Acquisition Regulatory Council shall prescribe a regulation making clear that agency acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry, so long as those exchanges are consistent with existing law and regulation and do not promote an unfair competitive advantage to particular firms.

In May 2016, the House Committee on Armed Services confirmed that Section 887 showed the Committee was “supportive of improving discussions overall between government and industry” and directed the Secretary of Defense to provide a briefing on “any revisions or additions to the FAR based on the requirements of section 887 of Public Law 114-92.”

The FAR Council issued a proposed rule to implement this section of the FY16 NDAA in November 2016 and extended the deadline for public comment in January 2017. See 81 Fed. Reg. 85914, 85914 (Nov. 29, 2016); 82 Fed. Reg. 7770, 7770 (Jan. 23, 2017).

The proposed rule largely mirrored the text of the statute. But the FAR Council also acknowledged a broader goal than merely copying congressional text into the FAR. Specifically, the Council cited several “myth-busting” memoranda previously issued by the Office of Federal Procurement Policy (OFPP) “to address misconceptions commonly held by industry and Government regarding the role of communication during the acquisition process[.]” The FAR Council stated that it sought “to continue the conversation initiated by these memoranda and welcome[d] any suggestions from the public to further enhance open communication between industry and the Federal acquisition community” before requesting responses to three specific questions: First, which phase(s) of the acquisition process would benefit from more exchanges with industry, and what policies or procedures would enhance communication. Second, whether there was a FAR policy that might inhibit communication, and how might it be revised. Third, whether discussions after establishment of the competitive range should be required for high-value acquisitions.

Public Feedback on the Proposed Rule Emphasized the Need for Clearer Rules on Communication

Multiple organizations representing hundreds of federal contractors took the FAR Council up on its requests for information (see Many praised the FAR Council for taking the initiative, but also explained why inserting the FY16 NDAA’s language into the FAR would not achieve the statute’s or the FAR Council’s stated goals.

Concerns raised included the following:

  • Government “communications with industry has become a ‘check-the-box’ exercise,” including a request for information on a “265 page attachment” which “limited industry feedback to two responses of 250 words each,” (Coalition for Government Procurement);
  • Inspector General findings “that contracting officers are taking non acquisition-related courses to maintain their warrants,” (Coalition for Government Procurement);
  • “[T]here only appears to be one elective webinar on effective communication available through the FAI website,” and there is no “comprehensive and required training for acquisition personnel on communication between government and industry aimed at fostering allowable communications,” (IT Alliance for Public Sector);
  • Prior guidance has not gone “far enough in establishing mandatory minimum requirements for post-award debriefings to offerors, whether or not the offeror was successful,” (Professional Services Council);
  • “[T]he current acquisition workforce is constrained by a regulatory culture, training policies, and procedures that limit communications and flexibility” and “a rigid, new, rules-driven culture focused on oversight and not stakeholder value,” (IT Alliance for Public Sector); and
  • FAR 15.201 is “flawed because the regulation governs communications that occur both before and after a solicitation is issued” and should “include more examples of effective communications with industry,” (Coalition for Government Procurement).

One fundamental concern cited by multiple commenters was that acquisition officials frequently avoid communication with industry because of the risk that they might violate unclear rules related to exchanges with contractors, conflicts of interest, and/or procurement integrity.

For example, the Professional Services Council noted that “contracting officers may be concerned that if they engage some potential vendors but not others, some may view the vendors the contracting officer engaged with as having had an unfair competitive advantage in the procurement.” The IT Alliance for Public Sector stated that “communications generally are shunned by CO’s and others in the acquisition workforce for a multitude of reasons,” including because they “primarily learn the lessons about communications through the chain of command and through GAO bid protest decisions, which focus on missteps in communications at various points in the process” and “appear to discourage, if not prohibit, communications because of the fear of saying something inappropriate.” One contractor noted that FAR 15.201 “lacks specific guidance or examples” of “permissible interactions with industry after release of a solicitation,” which “means that Contracting Officers must consider the governing procurement laws and ethics rules and make individual judgment calls regarding these interactions” and that “some agencies purposefully limit permissible communications with Industry to infrequent and highly controlled engagements to avoid the appearance of favoritism, impropriety, and mitigate potential grounds for protest.”

Professor Ralph C. Nash, Jr. submitted comments identifying the same problem, and argued that the FAR Council was “Proposing the Wrong Fix” because “Band Aids Don’t Work.” His comments criticized the lack of clarity in both FAR 15.201 and FAR 15.406, including that the FAR contains:

[N]o clear distinction between clarifications and discussions which forces the CO to become familiar with a myriad of Government Accountability Office and Court of Federal Claims decisions providing murky guidance on this distinction. Faced with this dilemma, many, if not most, COs limit the communications in order to avoid losing a protest. This response to a badly written regulation is completely rational and fully understandable.

Commenters proposed numerous potential solutions, including revisions to the FAR to provide additional examples and guidance regarding permissible communications; a safe harbor provision for contracting officials if they follow a specified procedure; specific changes or additions to communications procedures currently in use (such as Q&As and debriefings); additional training for acquisition officials; and more opportunities for engagement between industry and the government, either in person or via remote technology.

The FAR Council’s Final Rule

Unfortunately, the federal contracting community will have to await a future rulemaking to see whether the FAR Council tackles these issues or adopts the solutions proposed. The final rule made minor revisions to the proposed text of FAR 1.102-2(a)(4), but declined to implement other significant changes at this time. The new rule included the following final language:

The Government must not hesitate to communicate with industry as early as possible in the acquisition cycle to help the Government determine the capabilities available in the marketplace. Government acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry (e.g., see 10.002 and 15.201), so long as those exchanges are consistent with existing laws and regulations, and do not promote an unfair competitive advantage to particular firms.

While the final rule largely reflects the language that already appeared in the FY16 NDAA, contractors should take note of the rule for at least two reasons.

First, the FAR Council included helpful language within the preamble to the final rule which confirms the intent of both Congress and the Council that agencies not avoid communications with industry unnecessarily.

For instance, the FAR Council confirmed its agreement that “wide-spread adoption of effective communication techniques is warranted” and that “Government acquisition personnel referenced in the rule includes key technical personnel,” and not just contracting officials. The FAR Council also stated that FAR 1.102-2(a)(4) should “assuage the concerns of fearful contracting officers” regarding their “fear” of “saying something inappropriate or drawing a protest because of their statements.” Similarly, the Council noted that “[a]gencies are encouraged, to the allowable extent, to share relevant procurement materials and information to support better industry engagement” and that “[a]gency acquisition personnel are encouraged, when appropriate, to use interactive web-based technology to expand the reach of the exchange, such as a live webinar with streaming video to immediately address questions” and to “combine such an approach with additional meetings available to all potential vendors to make solicitation engagements more useful[.]” With respect to discussions, the Council also stated that “[s]chedule pressures should generally not be the primary, or even a strong, driver in the contracting officer’s decision on whether or not to hold discussions.”

Contractors should consider citing these and other statements by the FAR Council if they encounter unreasonable resistance by government officials to engage in permissible communication.

Second, the FAR Council made clear that it will consider the public comments received and the potential need for future rulemakings based on them:

Within the context of this rulemaking, the reference to the memoranda in the preamble of the proposed rule served as an invitation for interested parties to share their assessment of the impediments to effective communication during the acquisition process. It was the intent of the Councils to obtain valuable insights from the community affected most by these challenges so as to develop innovative approaches for overcoming these obstacles in the future.

The public feedback will be valuable when developing further initiatives to address effective and efficient communications during the acquisition process. The Councils extend their appreciation for the input provided by the public regarding further enhancing open communication between industry and the Federal acquisition community.

OFPP, in consultation with the Councils, will continue to evaluate the relevant FAR sections to ensure clear and accurate information. The Councils will carefully consider whether another FAR case is necessary to expound on communication beyond what is included in this FAR case.

The Ciminelli Case Shows Legal Risks for Contractors from Unclear Rules on Communications

A case pending before the Supreme Court demonstrates that government officials are not the only stakeholders who would benefit from clearer rules and guidance surrounding permissible communications during the procurement process.

The case involves whether the insertion of requirements that favored an individual’s company into a state Request for Proposals (RFP) for economic development projects constituted wire fraud under 18 U.S.C. § 1343. A board member of the nonprofit entity running the procurement allegedly conspired with Mr. Ciminelli to insert into the RFP requirements—having headquarters in Buffalo and 50 years of experience—that favored Mr. Ciminelli’s development company. Mr. Ciminelli’s company was selected as a preferred developer under the RFP and went on to negotiate a construction contract worth $750 million.

Mr. Ciminelli appealed his conviction under the wire fraud statute on the basis that the prosecution had failed to show any scheme “for obtaining money or property by means of false or fraudulent pretenses” as required by 18 U.S.C. § 1343 (emphasis added). In his petition for a writ of certiorari, Mr. Ciminelli argued that depriving a victim of potentially valuable economic information that is necessary to make discretionary economic decisions—the so-called “right-to-control” theory—does not constitute “obtaining money or property.” He stated there was no evidence that the government “was deprived of a fair price, fair terms, or quality workmanship” or that it “could have obtained the same quality or a better price for the work from any other provider.” The United States’ brief, in contrast, argued that the “scheme” had “falsely represent[ed]” to the government “that the bidding processes” were “fair, open, and competitive, when, in truth,” they were “tailored so that … Mr. Ciminelli’s company … would be selected” as a preferred developer, causing “tangible economic harm to” the government—a property interest. Mr. Ciminelli’s brief argued that “[n]o property right exists to make informed economic decisions.”

An amicus brief filed by the Associated General Contractors of America, Inc. (AGC) summarized the case’s stark implications for government contractor communications with government officials:

The construction industry (“Industry”) has a profound interest in the case before the Court as it presents a real risk of broad-brush criminalization of the longstanding practice whereby government contracting officials (and those acting as their agents on prospective publicly-funded projects) routinely consult with members of the general contracting community prior to the issuance of a Request for Proposal (“RFP”) or formal bid processes.

Government contracting officials also recognize that pre-RFP interactions with Industry members are not for the purpose of obtaining “impartial advice.” Indeed, the government is specifically “looking for a variety of options from a variety of sources, each one understandably, and reasonably, attempting to demonstrate the value of its own approach.” [Citation to OFPP myth-busting memorandum omitted.]

This is common sense. How could any single potential vendor know from its own, unique standpoint and perspective the full range of what may or may not be valuable economic information for the public authority on an upcoming project? That is precisely what the public contracting officials are gathering and evaluating in the course of preparing their solicitation and evaluating the bidders.

(Emphasis added.)

Multiple Justices appeared skeptical of the right-to-control theory at the Supreme Court’s November 28, 2022 oral argument, so the AGC’s worst fears may not come to pass. Regardless of the outcome, the case confirms that both government and industry need greater clarity regarding permissible communications during the procurement process. The line between appropriate efforts to inform the government of a contractor’s offerings and perspectives on the procurement, and inappropriate tailoring of the requirements to steer the award, should not be a moving target.

Takeaways for Federal Contractors

Contractors should review the FAR Council’s preamble to its new rule on effective communication and be prepared to cite it if they experience unwarranted communication breakdowns with the government. They should also remain mindful, however, of the complex and sometimes indeterminate rules governing those communications (often contained only in various decisions from the Government Accountability Office or the Court of Federal Claims and the Court of Appeals for the Federal Circuit), and their impact on both federal acquisition officials and contractors themselves. If any doubt arises regarding the propriety of such communications, consult with counsel experienced in conflicts of interest, procurement integrity, and related laws and procedures.

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