Afterthoughts: Discussions versus Clarifications

By Nicole R. Best

On March 30, 2017, Professor Ralph Nash and Tim Sullivan hosted a virtual classroom on the topic of Clarifications versus Discussions during negotiated procurements. Following the virtual classroom, I interviewed Professor Nash to ask questions related to the discussion during the training.

To some extent a theme of the webinar was a discussion of the narrowing scope of what constitutes a clarification during the negotiated procurement source selection process. What exchange currently constitutes a clarification and, as a practical matter, do you think clarifications still have a significant and useful role in the negotiated procurement process?

First, the narrowness of the definition is to some extent in the vagueness of the language. If you look at FAR 15.306(a) it says “Clarifications are limited exchanges, between the Government and offerors, that may occur when award without discussions is contemplated.” Which tells you virtually nothing.

In the second paragraph it says offerors may be given the “opportunity to clarify certain aspects of proposals (e.g., the relevance of an offeror’s past performance information and adverse past performance information to which the offeror has not previously had an opportunity to respond) or to resolve minor or clerical errors.” The parenthetical in that paragraph provides two examples of things the regulation writers thought were clarifications and from a lawyer’s point of view the question is are those the only two things? Presumably there must be other things but we don’t know what they are. We speculated, when the regulation was first issued, that maybe the other things were issues concerning qualifications of the offeror. But that was wrong. Then we are left with “resolving minor or clerical error” are clarifications, which is restrictive because it means you can’t clarify other kinds of errors. So the FAR gives very little guidance and the guidance it gives is very narrow.

A long line of decisions from GAO seems to hold that if you obtain information to make a proposal acceptable that is not a clarification but a discussion. So if you are living under GAO law, you have to figure out what that “acceptable” test means and that is pretty hard to figure out as well.

It is all so sad because the purpose of this entire rule, when they wrote it, was to allow contracting officers to enhance their understanding of the proposal before they decided whether to award without discussions or whether they needed to establish a competitive range and go into discussions. But the end result is that the normal contracting officer reading the regulations and being aware of GAO decisions is going to be very circumspect about how much they do during the clarification process. And I think that is rational.

The scope and content of discussions are largely within the contracting officer’s discretion. Where are the limits of that discretion? Are there any bright line constraints on the contracting officer’s discretion?

There is a disconnect between the regulations and GAO. The regulations, at FAR 15.306(d), has mandatory language. The mandatory language says that you must discuss deficiencies and significant weaknesses and any negative past performance information that the offeror has not had a chance to comment on. Under the regulation, that is all you have to discuss and then you can’t lose a protest, in theory, where you discuss that. The GAO rule says that discussions have to be meaningful. There are one hundred or more decisions on what are meaningful discussions, and they don’t necessarily follow the FAR rule.

My statement to contracting officers has always been that anybody that tries to limit discussions as far as they can possibly be limited deserves what happens to them. That being that in a protest your discussions may be found to not be meaningful.

Once you’ve decided that a company is in the competitive range you’ve made the decision it is possible for that company to win contract award. And if that is the determination you have made, you ought to tell them your analysis of their proposal and let them know what needs fixing. But if you follow that, you have to effectively allow all offerors to rewrite their proposal which creates a new round of competition with added expense. And agencies don’t want to do that. Which is why agencies have a tendency to want to avoid discussions and shorten the process.

What role do discussions and clarifications play in the evaluation of past performance? Would you like to see them used differently in this context?

You are essentially dealing with two different bodies of data. You are dealing with performance system data plus all the stuff in FAPIIS where the contractor, in theory, has already had a chance to comment. For this body of data, there is not much to discuss. Second, you are dealing with going to references and getting additional data. An offeror may not have had opportunity to comment on that data.

If the contracting officer is in discussions or in process of establishing a competitive range, the regulation requires that the offeror have the opportunity to comment on negative data where it has not already had the opportunity to do so. In the clarification process, the regulation says you may allow an offeror to comment on negative data. I have always believed that that was a glitch of the regulations and have advised contracting officers that they shouldn’t follow the may and should allow contractors to comment on negative data in clarifications. If you look at the FAR rewrite process, the FAR Council essentially promised industry that the regulations would allow offerors to comment on adverse past performance data in the clarification process. The “may” in the regulation breaks that promise. So I say contracting officers should follow fair practice and allow offerors to comment on adverse past performance data. However, it doesn’t strike me that past performance is playing a critical role in these source selections.

The webinar discussed that prior to 1998, GAO decisions really focused on if the contracting officer had negotiated the best deal for the government, but now GAO focuses on refereeing the rules of the source selections. Under the current body of regulations is there room for that type of best deal analysis by GAO?

The Level 3 case, used as case study in the virtual class, is an outlier that happens to illustrate this strange principle. Tim said pretty directly that in the old days, GAO seemed to be pretty moved by disparities in price. If they saw the government giving away lots of money they would scrutinize strictly the contracting officer’s decision. In Level 3, you an offer for $98 million where the offeror submitted a perfect LPTA proposal. And then you had the incumbent contractor, who had a few glitches in his proposal but submitted a price $38.5 million lower. The main glitch in the lower priced proposal was that he was supposed to submit a map in a certain format and show that his communications line did not touch certain countries, including Iran. Now the incumbent’s offer said that he was going to use the same line that he had used on the previous contract, which the government knew wasn’t a problem. But the line on the map touched the Iranian border, so they threw him out of the competition. GAO said you followed the rules, therefore, that was ok. [Level 3 Communications LLC, Comp. Gen. Dec. B-412854, 2016 CPD ¶ 171.] I called the contracting officer’s decision to award at such a higher price an egregious decision. But GAO’s denial of the protest illustrates that the way GAO is deciding is a strict focus on whether the agency followed the rules. If you follow the rule, we don’t care about the outcome. But I think you should care. Now the Court of Federal Claims agreed with me. It granted the protest saying it was arbitrary and capricious to throw the offer out without seeking clarifications to resolve the ambiguity in the offer. [Level 3 Communications LLC v. U.S., 129 Fed. Cl. 487 (2016).]

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