Agencies must interpret the new language of FAR

Part 15 of the Federal Acquisition Regulation sets out the rules and procedures for
negotiated procurements.


The new version issued last year is streamlined—that is, shorter. The drafters had
to make trade-offs to achieve this brevity. The new regulation depends heavily on broad
and general statements instead of detailed, step-by-step guidance. This increases
flexibility, as intended, but at a price. Less detail means less certainty.


For instance, the old FAR prohibited technical leveling during negotiations and did so
in explicit text. The government is guilty of technical leveling in negotiations when it
makes proposals in which widely varying initial ratings are roughly equal.


The old language defined the problem as “helping an offerer to bring its proposal
up to the level of other proposals through successive rounds of discussion, such as by
pointing out weaknesses resulting from the offerer’s lack of diligence, competence or
inventiveness in preparing the proposal.”


The rewritten FAR drops this concept. Nowhere does the term technical leveling appear.
Does that mean that leveling is now an approved practice?


Maybe not. Technical leveling might still run afoul of some of the general statements
in the new FAR. One states that government must not “engage in conduct that …
favors one offerer over another.” Another requires that bidders be treated fairly,
but not necessarily the same.


One can argue that technical leveling is inconsistent with these parts of the new FAR
rules. Alternatively, you could presume that, when the drafters deleted such an explicit
prohibition they did so to make it permissible. It’ll take a court or administrative
decision to clarify this one.


In a recent decision, the General Accounting Office found the meaning of another
rewritten regulation in the accompanying statement of the drafters’ intents. It is
the first ruling to discuss the new rules for establishing a competitive range, which was
a controversial part of the new regulation.


That case concerned a competitive procurement of natural gas. The solicitation stated
that the evaluation criteria, listed in descending order of importance, were past
performance, evidence of ability to purchase and transport natural gas at favorable
prices, quality and price. The winning vendor received a perfect score of 90 points for
its proposal. In contrast, the proposal of SDS Petroleum Products Inc. of Denver received
a score of only 35. Apparently, the other bidders did even worse.


The agency kept SDS Petroleum in the competitive range through one round of technical
discussions and permitted it to submit revisions. Yet its proposal was dropped from the
competitive range, and only the ultimate awardee was invited to submit a best-and-final
offer. When it protested the award, SDS Petroleum objected not only to the technical
evaluation but also to being omitted from the competitive range.


The protest relied on the plain language of the new regulation. Under the prior version
of the regulation, the test was whether the proposal stood a reasonable chance for award;
doubts were to be resolved in favor of inclusion.


The new regulation changed the definition of the competitive range; it need only
include all of the most highly rated proposals. The only stated exception is when the
solicitation warned bidders that the competitive range could be limited for reasons of
efficiency. This was not the case in the protested procurement.


The protester’s case was simple. Because it was the second-highest ranked bidder,
it was entitled to be included in the competitive range under the most highly rated test.
It would not have qualified under the old reasonable-chance standard. SDS argued that the
new regulation effectively did away with the prospect of a competitive range of only one
bidder.


In resolving the protest, GAO tempered the literal words of the regulation by
considering its intent as stated in the explanatory preamble.


The preamble made clear that the new language was intended to permit a more limited
competitive range than the old test. Therefore, GAO denied the protest and stated that a
bidder without a reasonable chance of receiving an award didn’t have to be included
in the competitive range, even though the regulation, literally read, would require
inclusion.


The moral of the story is a familiar one. It isn’t enough to simply read the
regulations. One must know how they have been interpreted in order to truly understand how
they’re applied.  


Joseph J. Petrillo is an attorney with the Washington law firm of Petrillo &
Powell, PLLC. E-mail him at jpetrillo@counsel.com.
 

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