It’s Time to Use the Legislative History of the Federal Acquisition Regulation

Although today few decisions re­sort to legis­la­tive his­tory to in­ter­pret the provi­sions of the Con­tract Dis­putes Act of 1979, 41 U.S.C. §§ 601-613, this is a mat­ter of hap­pen­stan­ce, and it oc­curs only be­cause case law has by now re­solved many con­cerns, in­clud­ing, for ex­ample, con­cerns ab­out claim cer­ti­fi­ca­tion, or ab­out just which claims are sub­ject to the Con­tract Dis­putes Act. In­deed, use of legis­la­tive his­tory to de­ter­mine con­gres­sion­al in­tent is an en­tire­ly fami­liar pro­cess—re­cent ex­amples in­clude Dalton v. South­west Ma­rine, Inc., 120 F.3d 1249, 1252 (Fed. Cir. 1997) (mari­time con­tract) and Boeing Petro­leum Serv­ices, Inc. v. Watkins, 935 F.2d 1260, 1261 (Fed. Cir. 1991) (party desig­na­tion). But the Fed­er­al Ac­qui­si­tion Reg­u­la­tion is no more clear than the pro­vis­ions of the Con­tract Dis­putes Act (in­deed, I ar­gue that be­cause the Fed­er­al Ac­qui­si­tion Reg­u­la­tion con­tains more de­tail­ed re­quire­ments, there is a great­er need for a thor­ough un­der­stand­ing of its pro­vis­ions), and yet there are on­ly a few cases in which tri­bun­als have thought to use the rich legis­la­tive his­tory of the Fed­er­al Ac­qui­si­tion Reg­u­la­tion that is pre­sent­ed in Fed­er­al Ac­qui­si­tion Cir­cu­lars. So here I argue for rou­tine use of this legis­la­tive his­tory, that is, the guid­ance al­ready pre­sent­ed in the Fed­er­al Ac­qui­si­tion Circulars.

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Where is this guid­ance, you ask? Just take a look at one of the Fed­er­al Ac­qui­si­tion Cir­cu­lars. For our an­aly­sis here, we’ll look at Fed­er­al Ac­qui­si­tion Cir­cu­lar 97-02, the “FAR Part 15 Re­write,” a fin­al rule that makes fun­da­men­tal changes in the com­pe­ti­tive ne­go­ti­ations pro­cess. Look­ing at Fed­er­al Ac­qui­si­tion Cir­cu­lar 97-02, you’ll find a pré­cis, fol­low­ed by a “Fi­nal Reg­u­la­tory Flex­i­bil­ity Act An­aly­sis.” While there is help­ful in­for­ma­tion in the pré­cis, it is the Fi­nal Reg­u­la­tory Flex­i­bil­ity Act An­aly­sis that is the most important.

Your understanding of this lat­er point re­quir­es a bit of a de­tour. First, re­call that one of the fun­da­men­tal prin­ci­ples of the Ad­mini­stra­tive Pro­ce­dure Act is the re­quire­ment that rules such as those con­tain­ed in the Fed­er­al Ac­qui­si­tion Reg­u­la­tion must be of­fer­ed for pub­lic com­ment, that pub­lic com­ments are to be con­sid­er­ed, and that only then are fin­al rules to be pub­lish­ed, pub­lish­ed to­get­her with a “a con­cise gen­er­al state­ment of their ba­sis and pur­pose.” 5 U.S.C. § 553(c). Next, look at the epony­mous Reg­u­la­tory Flex­i­bil­ity Act, 5 U.S.C. §§ 601-612. Here, at 5 U.S.C. § 604, is the stat­u­tory re­quire­ment for a Fi­nal Reg­u­la­tory Flex­i­bil­ity Act An­aly­sis. Turn to sub­para­graph (a) of this sec­tion, and you’ll see that there are five, de­tail­ed re­quire­ments for the con­tent of each Fi­nal Reg­u­la­tory Flex­i­bil­ity Analysis:

(1) a succinct statement of the need for, and ob­ject­ives of, the rule;

(2) a summary of the significant is­sues rais­ed by the pub­lic com­ments, of agen­cy assess­ment of these is­sues, and of any chang­es made as a result;

(3) a description of, and an estimate as to the number of, the small bus­i­nes­ses to which the rule will apply;

(4) a description of the pro­jec­ted com­pli­ance re­quire­ments of the rule, par­tic­u­lar­ly in­clud­ing com­pli­ance re­quire­ments for small busi­nes­ses; and

(5) a description of the steps taken to mini­mize any sig­ni­fi­cant econ­omic im­pact on small busi­nes­ses, in­clud­ing a state­ment of the rea­sons for se­lect­ing the al­ter­na­tive(s) adopted.

Id.

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If you’ll look back at Fed­er­al Ac­qui­si­tion Cir­cu­lar 97-02, you’ll find an ex­ten­sive dis­cus­sion for each of these de­tail­ed con­tent re­quire­ments. The dis­cus­sions for items num­bers (1), (2), and (5) are here the most in­form­a­tive. Read on: read the Fed­er­al Cir­cuit’s de­cis­ion in Ramey v. Gober, 120 F.3d 1239, 1245-46 (Fed. Cir. 1997), which holds that this sort of ma­ter­ial is “pow­er­ful ex­trin­sic evi­dence,” “strong sup­­port” of the orig­in­al in­­tent of a reg­­u­la­tion.

Now to sum up: (a) I’ve shown you an ex­ample of the rich his­tory of the Fed­er­al Ac­qui­si­tion Reg­u­la­tion that is pre­sent­ed in the Fed­er­al Ac­quis­ition Cir­cu­lars, and (b) I’ve giv­en you a case, bind­ing prec­e­dent, which ex­plains that this rich his­tory must in­form any in­quiry in­to a par­tic­u­lar ap­pli­ca­tion of the Fed­er­al Ac­qui­si­tion Reg­u­la­tion. So, have I made my point?

Think about it. If I have your at­ten­tion, then let me ex­plain the prob­lem that stems from ig­nor­ing this legis­la­tive his­tory.

Con­sid­er Fed­er­al Ac­qui­si­tion Reg­u­la­tion 15.306(d)(1), new­ly is­sued with the FAR Part 15 Re­write, which re­quir­es that the con­trac­ting of­fi­cer con­duct dis­cus­sions with each of­fer­or with­in the com­pe­ti­tive range, if award will not be made on in­itial pro­po­sals, and here look at sub­sec­tion (d)­(3) of this reg­u­la­tion, as it was first issued:

The contracting officer shall . . . in­di­cate to, or dis­cuss with, each of­fer­or still being con­sid­er­ed for award, sig­ni­fi­cant weak­nes­ses, de­fi­cien­cies, and oth­er as­pects of its pro­po­sal (such as cost, price, tech­ni­cal ap­proach, past per­form­ance, and terms and con­di­tions) that could, in the opin­ion of the con­trac­ting offi­cer, be al­ter­ed or ex­plain­ed to en­hance ma­ter­ial­ly the pro­po­sal’s po­ten­tial for award.

Federal Acquisition Regulation 15.306(d)(3) (em­pha­sis added). What might this have meant to the fram­ers of the FAR Part 15 Re­write? (This lan­gu­age has since been changed, and now it is clear that con­trac­ting of­fi­cers are only “en­cour­aged” to dis­cuss oth­er as­pects of par­tic­u­lar com­pe­ti­tive pro­po­sals that could “be al­ter­ed or ex­plain­ed to en­hance ma­ter­ial­ly the pro­po­sal’s po­ten­tial for award.”)

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Had a tribunal con­cern­ed with the scope of the dis­cus­sion ob­li­ga­tion in the new­ly-mint­ed Fed­er­al Ac­qui­si­tion Reg­u­la­tion 15.306(d)(3) look­ed to the Fi­nal Reg­u­la­tory Flex­i­bil­ity Ana­ly­sis that is con­tain­ed in Fed­er­al Ac­qui­si­tion Cir­cu­lar 97-02, it would have learn­ed that the fram­ers of the FAR Part 15 re­write in­tend­ed to “in­fuse in­no­va­tive tech­ni­ques in­to the sour­ce se­lec­tion pro­cess” so as “fa­cil­i­ta­te the ac­qui­si­tion of best val­ue prod­ucts and serv­ices” (con­tent re­quire­ment (1)). Such a tri­bun­al would have learn­ed that one of the steps taken to min­i­mize sig­nif­i­cant eco­nom­ic im­pact on small busi­nes­ses (con­tent re­quire­ment (5)) was to en­large the scope of the dis­cus­sion obligation:

In response to public comments, the second pro­pos­ed rule re­quires a more ro­bust ex­change of in­for­ma­tion dur­ing dis­cus­sions. The lan­gu­age re­quires the Gov­ern­ment to iden­tify, in ad­di­tion to sig­nif­i­cant weak­nes­ses and defi­cien­cies, oth­er as­pects of an of­fer­or’s pro­pos­al that could be en­hanc­ed ma­terial­ly to im­prove the of­fer­or’s po­ten­tial for award. This change should bene­fit all of­fer­ors, in­clud­ing small busi­nes­ses, be­cause it per­mits of­fer­ors to de­vel­op a bet­ter un­der­stand­ing of the Gov­ern­ment’s eval­u­ation of their pro­pos­al, and per­mits them to opti­mize their potential for award.

Fed­er­al Ac­qui­si­tion Cir­cu­lar 97-02, 62 Fed. Reg. 51229 (1997).

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But this didn’t happen. In­stead, in Du & As­so­ciates, Inc., B-280283.3, Dec. 22^nd, 1998, the Gen­er­al Ac­count­ing Of­fice ig­nored the legis­la­tive his­tory of the FAR Part 15 Re­write, and de­cid­ed that it was not “the in­ten­tion of the re­write to lim­it the con­trac­ting of­fi­cer’s dis­cret­ion in this man­ner.” Id., at 7. What? What about the ex­pli­cit, con­trary lan­gu­age in the Fin­al Reg­u­la­tory Flexibility Analysis?

Thus the problem: is it the FAR Coun­cil that sets the pol­icies ex­pres­sed in the Fed­er­al Ac­qui­si­tion Reg­u­la­tion, or is it the Gen­er­al Ac­count­ing Of­fice? I don’t think that the Gen­er­al Ac­count­ing Of­fice in­tends to set fed­er­al pro­cure­ment policy, but be­cause Du did not con­sider the legis­la­tive his­tory of Fed­er­al Ac­qui­si­tion Reg­u­la­tion 15.306­(d)(3) that is set out in Fed­er­al Ac­qui­si­tion Cir­cu­lar 97-02, it is not too much of a stretch to sup­pose that the Gen­er­al Ac­count­ing Of­fice, an arm of the Legis­la­tive Branch, is a de fac­to policy-mak­ing in­sti­tu­tion for the Executive Branch.

A better approach, when ap­ply­ing the Fed­er­al Ac­qui­si­tion Reg­u­la­tion to par­tic­u­lar mat­ters, is to look to its legis­la­tive his­tory, par­tic­u­lar­ly, as in Du, when deal­ing with sig­ni­fi­cant chan­ges to exist­ing policy. Just this hap­pen­ed in Man­Tech Tele­com­mu­ni­ca­tions and In­for­ma­tion Sys­tems Corp. v. United States and Lock­heed Mar­tin Serv­ices, Inc., 49 Fed. Cl. 57, 60-63 (2001). At is­sue there were re-open­ed dis­cus­sions as a re­sult of a prior, suc­ces­s­ful pro­test. The Army pro­pos­ed to con­vene an­other round of dis­cus­sions so as to en­able cor­rec­tion of demon­strat­ed weak­nes­ses un­re­veal­ed in a pre­vious tech­ni­cal evaluation.

The successful protester com­plain­ed to the Court that doing so would amount to “tech­ni­cal level­ing.” This is a shib­bo­leth pre­vious­ly con­tain­ed in the Fed­er­al Ac­qui­si­tion Reg­u­la­tion, but, try as you might, you’ll find noth­ing ab­out it in the FAR Part 15 Re­write. The Man­Tech court look­ed, how­ever, to the legis­la­tive his­tory, the Fi­nal Reg­u­la­tory Flex­i­bil­ity An­aly­sis con­tain­ed in Fed­er­al Ac­qui­si­tion Cir­cu­lar 97-02, and, doing so, found that the omis­sion of the con­cept of “tech­ni­cal level­ing” was pur­pose­ful, was part of an over­all scheme to en­hance best value through mul­ti­ple rounds of dis­cus­sions en­ab­ling pro­po­sal en­hance­ments. Man­Tech was re­cent­ly af­firm­ed by the United States Court of Ap­peals for the Fed­er­al Cir­cuit, without a published opinion.

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This affirmance is not an en­dorse­ment of look­ing to legis­la­tive his­tory, but nei­ther is there now a need to cor­rect an un­clear ac­qui­si­tion reg­u­la­tion as was clear­ly ne­ces­sary as a re­sult of Du. Had the Court not prop­er­ly re­gard­ed the legis­la­tive his­tory of the FAR Part 15 Re­write, Man­Tech could have re­sult­ed in the same sort of difficulty.

Whether or not the scope of the dis­cus­sion ob­li­ga­tion is en­larged is not the only prob­lem that stems from ig­nor­ing the legis­la­tive his­tory of the Fed­er­al Ac­qui­si­tion Reg­u­la­tion, par­tic­u­lar­ly, the legis­la­tive his­tory of the FAR Part 15 Re­write. Next, we’ll look at the abil­ity vel non of of­fer­ors to ad­dress ad­verse past per­form­ance in­for­ma­tion be­fore it can be used in a source selection.

It needs to be un­der­stood that I’m speak­ing here ab­out past per­form­ance in­for­ma­tion that is sub­mit­ted by of­fer­ors, and gath­er­ed by agen­cies, both on a one-time ba­sis, for sour­ce se­lec­tion pur­poses. Guid­ance for sys­te­mat­ic col­lec­tion and main­te­nance of past per­for­mance in­for­ma­tion (which in­clud­es an op­por­tun­ity to com­ment) is set out in Fed­er­al Ac­qui­si­tion Reg­u­la­tion Sub­part 42.15, “Con­trac­tor Per­form­ance In­for­ma­tion.” Guid­ance for the ad hoc past per­form­ance eval­u­ations that I’m con­cern­ed with here is set out in Fed­er­al Ac­qui­si­tion Reg­u­la­tion Sub­part 15.3, “Sour­ce Selection.”

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The only ex­pli­cit re­quire­ment to give of­fer­ors an op­por­tun­ity to ad­dress ad­verse past per­form­ance in­form­ation be­fore it can af­fect the out­come of a com­pe­ti­tion is in Fed­er­al Ac­qui­si­tion Re­gu­la­tion 15.306(b)­(1)(i), which pro­vides that if a com­pe­ti­tive range is to be es­tab­lish­ed, then “com­mu­ni­ca­tions shall ad­d­ress ad­verse past per­form­ance in­for­ma­tion to which an of­fer­or has not had a prior op­por­tun­ity to res­pond.” (Em­pha­sis added). But there is also a pos­si­bil­ity of con­fu­sion, since if a con­trac­ting of­fi­cer de­cid­es to make an award on ini­tial pro­pos­als, then there is not an ab­so­lute re­quire­ment to give of­fer­ors an op­por­tun­ity to ad­d­ress ad­ver­se past per­form­ance information:

If award will be made without conducting dis­cus­sions, of­fer­ors may be [not shall 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.

Federal Acquisition Regulation 15.306(a)(2) (emphasis added).

Only if a tri­bu­nal looks to the legis­la­tive his­tory of the FAR Part 15 Re­write will it be­come clear that the FAR Coun­cil must have in­tend­ed that in any event, e.g., whet­her an award is made on ini­tial pro­po­sals, or whet­her an award is made af­ter a com­pe­ti­tive range de­ter­mi­na­tion, fol­low­ed by dis­cus­sions, will of­fer­ors be giv­en an op­por­tun­ity to res­pond to ad­verse past per­form­ance in­for­ma­tion to which they have not had a pre­vious op­por­tun­ity to res­pond. Here again, this legis­la­tive his­tory is set out in a step tak­en to mini­mize sig­ni­fi­cant eco­nom­ic im­pact on small busi­nesses (con­tent re­quire­ment (5) of the five re­quire­ments for each Fi­nal Reg­u­la­tory Flex­i­bil­ity Analysis):

We revised the final rule to re­quire that of­fer­ors, in­clud­ing small en­ti­ties, shall be grant­ed the op­por­tun­ity to ex­plain sit­u­ations that con­trib­uted to an ad­verse past per­form­ance ra­ting to which they have not had a pre­vious op­por­tun­ity to res­pond be­fore such ra­tings can be the de­ter­min­ing fac­tor for ex­clu­sion from the com­pe­ti­tive range. These re­vis­ions, to­get­her with the re­quire­ment to dis­cuss all de­fi­cien­cies and sig­nif­i­cant weak­nes­ses with those of­fer­ors in the com­pe­ti­tive range, en­sure that past per­form­ance to which an of­fer­or has not had the op­por­tun­ity to res­pond will be ad­dres­sed any time it can af­fect the out­come of an acquisition.

Fed­er­al Ac­qui­si­tion Cir­cu­lar 97-02, 62 Fed. Reg. 51228 (1997) (emphasis added).

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Now does it come as a sur­prise that the Gen­er­al Ac­count­ing Of­fice ig­nor­es this legislative history as well?

In Roh­mann Serv­ices, Inc., B-280154.2, Nov. 16^th, 1998, at 8-9, per the Gen­er­al Ac­count­ing Of­fice, the of­fer­or was “aware of much of that in­for­ma­tion,” and the Gen­er­al Ac­count­ing Off­ice re­fus­ed to hold Fed­er­al Ac­qui­si­tion Regulation 15.306(a)(2) as a man­da­tory re­quire­ment, not­with­stand­ing the clear, con­trary lan­gu­age in Fed­er­al Ac­qui­si­tion Cir­cu­lar 97-02. See also In­land Serv­ice Corp., B-282272, June 21^st, 1999, at 4-5 (of­fer­or was aware of the spe­ci­fic de­fic­ien­cies claim­ed, had con­tes­ted them, and was pur­suing a contract claim).

The General Accounting Office la­ter elab­orated on this de­part­ure from the legis­la­tive his­tory, the guid­ance set out in Fed­er­al Ac­qui­si­tion Circular 97-02:

With regard specifically to clar­i­fi­ca­tions con­cern­ing ad­verse past per­form­ance in­for­ma­tion to which the of­fer­or has not pre­vious­ly had an op­por­tun­ity to res­pond, we think that, for the exer­cise of dis­cre­tion to be rea­son­able, the con­trac­ting of­fi­cer must give the of­fer­or an op­por­tun­ity to res­pond where there clear­ly is a rea­son to ques­tion the va­lid­ity of the past per­form­ance in­for­ma­tion, for ex­ample, where there are ob­vious in­con­sis­ten­cies be­twe­en a refer­en­ce’s nar­ra­tive com­ments and the ac­tual ra­tings the ref­er­ence gives the of­fer­or. In the ab­sence of such a clear ba­sis to ques­tion the past per­form­ance in­for­ma­tion, we think that, short of act­ing in bad faith, the con­trac­ting of­fi­cer rea­son­ably may de­cide not to ask for clarifications.

A. G. Cullen Construction, Inc., B-284049.2, Feb. 22^nd, 2000, at 5 (emphasis added).

So for those pro­tests that are ad­judi­cated in the Gen­er­al Ac­count­ing Of­fi­ce, we have the ipse dixit of that arm of Cong­ress, in­stead of guid­ance for the Exec­u­tive branch form­u­la­ted by the FAR Coun­cil.

This is not unlike the blind peo­ple sent to see an ele­phant—they were un­able to see the whole of it, that which ap­pears up­on an exam­i­na­tion of legis­la­tive his­tory, this the guid­ance is­sued by the FAR Coun­cil in the Fed­er­al Ac­qui­si­tion Cir­cu­lar, guid­ance is­sued in com­pli­ance with the dic­ta­tes of the Ad­mini­stra­tive Pro­ce­dure Act, 5 U.S.C. § 553(c), and guid­ance is­sued in com­pli­ance with a man­da­tory Fi­nal Reg­u­la­tory Flex­i­bil­ity Act Ana­ly­sis, 5 U.S.C. § 604.

It’s wrong. It’s time to use the legis­lat­ive his­tory of the Fed­er­al Ac­qui­si­tion Reg­u­la­tion, time to find answers in FAR Council guid­ance, not the ima­gin­ation of the Gen­er­al Ac­count­ing Of­fi­ce.

— Cy Phillips

Copyright © 2002 Cyrus E. Phillips, IV. All rights reserved.

Republished from Where in Federal Contracting?.

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