New FAR Rule Encourages “Constructive Exchanges” between Federal Agencies and Contractors
On November 29, 2016, the Department of Defense, General Services Administration, and the National Aeronautics and Space Administration proposed an amendment to the Federal Acquisition Regulation (“FAR”) aiming to encourage pre-acquisition communications between industry professionals and federal agencies. This amendment is part of a five-year long effort by the Obama Administration to clarify that communications between potential government contractors and federal agencies are not only allowed, but encouraged.
The proposed rule would amend FAR 1.102-2(a)(4), which currently states that “[t]he Government must not hesitate to communicate with the commercial sector as early as possible in the acquisition cycle to help the Government determine the capabilities available in the commercial marketplace. The Government will maximize its use of commercial products and services in meeting Government requirements.” In the revised version, the following language would be added: “Government acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry as part of market research . . . so long as those exchanges are consistent with existing laws, regulations, and promote a fair competitive environment.” There are a number of laws and regulations that may be come into play during pre-acquisition exchanges with government officials, including the Procurement Integrity Act, 41 U.S.C. § 423, Anti-Kickback Act, 41 U.S.C. § 51 et seq., restrictions on lobbying activity, regulations on collusive bidding, prohibition on contingent fee arrangements, and various laws prohibiting gifts and gratuities to and bribery of federal officials.
The proposed FAR amendment follows the publication of two “myth-busting” memoranda in 2011 and 2012, which were intended to “address misconceptions commonly held by industry and Government regarding the role of communications during the acquisition process.” The first memorandum, published in February 2011, targeted federal agencies, and commented that “agencies do not take full advantage of the existing flexibilities” when it comes to vendor communication, and that “agency officials may be reluctant to engage in these exchanges out of fear of protests or fear of binding the agency in an unauthorized manner.” The memorandum instructed agencies to “develop practices that will ensure early, frequent, and constructive communication during key phases of the process.” The second memorandum, published in May 2012, addressed “misconceptions that may be held by some in the vendor community.” It announced the launch of a new “vendor collaboration” feature on the homepage of the FedBizOpps website and emphasized that “[m]ore effective vendor engagement” would require “a change in culture in both government and industry organizations.” Among other things, this memorandum suggested that vendors “take advantage of the various outreach sessions that agencies hold,” and that vendors should provide agencies with “[e]arly and specific industry input” in order to effect a “better solution to [the agency’s] requirements.”
Contractors will want to play an active role in the comment process for this proposed regulation to ensure that it guarantees fair and effective pre-acquisition communications with federal agencies. In publishing this Rule, the FAR Council sought to “continue the conversation” begun by the 2011 and 2012 memoranda. To that end, the Council requested public feedback on several subjects, including determining which phase(s) of the acquisition process would benefit from more exchanges with industry members; whether there is a “current FAR policy that may inhibit communication”; and whether it might be “beneficial to encourage, or require, contracting officers to conduct discussions with offerors after establishing the competitive range for contracts of a high dollar threshold.” Comments in response to this proposed rule are due on or before January 30, 2017.