In our last post, we looked at the most common protest grounds related to discussions: lack of meaningful discussions, misleading discussions, and unequal discussions. Today we'll discuss how discussions differ from clarifications and pre-competitive range communications, as well as the Government's discretion to conduct (or not conduct) such exchanges.
Discussions, as we noted last time, are exchanges between the Government and offerors after a competitive range has been established and invite or permit offerors to revise their proposals. The underlying purpose of discussions is to allow offerors to strengthen their proposals and the procuring agency to get a better deal. The GAO has long held that the "acid test" for determining if a particular exchange constitutes discussions is "whether the agency has provided an opportunity for proposals to be revised or modified." Raytheon Co., B‑404998, July 25, 2011, 2011 CPD ¶ 232 at 5. This may be an actual pen-and-paper change to the proposal, or any other exchange that is necessary for the agency to determine the acceptability of a proposal. See Int'l Waste Indus., B-411338, July 7, 2015, 2015 CPD ¶ 196 at 5.
Clarifications, on the other hand, are "limited exchanges." FAR 15.306(a)(1). These exchanges do not allow offerors to revise their proposals, but may allow them to clarify certain aspects of their proposals or resolve minor clerical errors. FAR 15.306(a)(2). Clarifications may occur after a competitive range has been established, or even when discussions and proposal revisions are not contemplated at all. Clarifications "cannot be used to cure proposal deficiencies or material omissions, materially alter the technical or cost elements of the proposal, and/or otherwise revise the proposal." STG, Inc., B-411415; B-411415.2, July 22, 2015, 2015 CPD ¶ 240 at 9.
Communications are a third category of exchanges and occur before the competitive range has been established. See FAR 15.306(b). Like clarifications, they do not allow offerors "to cure proposal deficiencies or material omissions, materially alter the technical or cost elements of the proposal, and/or otherwise revise the proposal." FAR 15.503(b)(2). They are intended only to permit the Government to improve its understanding of proposals or past performance information, and address minor issues before a competitive range is established. When adverse past performance information to which the offeror has not yet had an opportunity to respond would be the "determining factor" in excluding the offeror from the competitive range, the agency must open communications with the offeror to address that information. FAR 15.306(b)(1)(i). For all other issues, the agency may hold communications if an offeror's "exclusion from, or inclusion in, the competitive range is uncertain." FAR 15.306(b)(1)(ii).
Protests concerning communications, in this technical sense of the term, are generally part of pre-award challenges to exclusion from the competitive range, so we'll address them more fully in a future post and focus on discussions and clarifications today. It's important to keep this third category in mind, however, as there may be times in a dispute about discussions vs. clarifications when the correct answer is actually communications.
Why the Distinction Matters: Unequal Discussions
Sometimes the difference between discussions and clarifications is fairly clear: "There seems to be a math error on page 126 of your price proposal. Please verify." – That's a clarification. "Your technical proposal is deficient with respect to X. Please correct that." – That's a discussion. Protests are often fought over exchanges that lie in the fuzzy grey areas between those two extremes.
Generally speaking, an agency can conduct clarifications with an individual offeror without having to conduct exchanges of any sort with the other offerors. However, as we noted last time, when an agency opens discussions with one offeror, it must treat the other offerors equally and open discussions with all offerors in the competitive range. And that is why the distinction between these two kinds of exchanges matters: Because the dividing line between clarifications and discussions isn't always obvious, it sometimes is possible to argue that an agency's borderline exchange with one offeror was actually a discussion, even though the agency may not have intended to conduct discussions at all. See, e.g., Standard Commc'ns, Inc., B-406021, Jan. 24, 2012, 2012 CPD ¶ 51 (because agency's exchanges with the awardee allowed it to materially revise its quote, discussions had been opened, thereby requiring agency to conduct discussions with protester). It does not matter how the agency characterizes the exchange; rather, the key question is whether an offeror was afforded the opportunity to revise its proposal. See, e.g., Cascadian Am. Enters., B-412208.3; B-412208.4, Feb. 5, 2016, 2016 CPD ¶ 29 at 5 (notwithstanding agency's use of the term "clarifications," discussions occurred when the agency's exchanges with the awardee "invited a response that was necessary to determine the acceptability of its proposal").
Having a protest sustained on this ground can result in an opening of discussions as corrective action, which may be all the protester needs to correct the weaknesses that prevented it from award the first time around and otherwise improve its competitive standing. An unfortunate side-effect of the risk of this sort of protest is that agencies sometimes are so afraid of accidentally triggering discussions that they refuse to engage in legitimate clarifications and end up making award to a much less advantageous offeror.
As a general rule, in negotiated procurements under FAR Part 15, agencies have nearly unfettered discretion to conduct or not conduct discussions and clarifications. Although the GAO has held that this discretion is not absolute, and therefore is subject to the rule of reason, we aren't aware of a single GAO decision that ever has sustained a protest on the grounds that the agency abused its discretion by not opening discussions or conducting clarifications in a Part 15 procurement. So, even if there's a glaringly obvious, easily corrected error in your otherwise fabulous proposal, and the error could be fixed with clarifications (without having to open discussions), the agency has the discretion not to seek clarification. ( We've previously discussed the more intense scrutiny that some judges on the Court of Federal Claims apply to that discretion, especially when the desired exchanges can be described as clarifications.)
That said, there are a couple of wrinkles in the rule. The first involves Department of Defense procurements valued at more than $100 million. The DFARS currently provides: "For acquisitions with an estimated value of $100 million or more, contracting officers should conduct discussions." DFARS 215.306(c)(1) (emphasis added). In a couple of recent decisions, the GAO has suggested that this fairly new regulation establishes a default expectation that discussions will occur on all Department of Defense procurements valued at more than $100 million, unless the procuring agency can explain why discussions should not be conducted. See McCann-Erickson USA, Inc., B‑414787, Sept. 18, 2017, 2017 CPD ¶ 300 at 9 n.10; Science Applications Int'l Corp., B‑413501, B-413501.2, Nov. 9, 2016, 2016 CPD ¶ 328 at 8-11. Although the GAO has not yet sustained a protest on this ground, it appears to be just a matter of time before it happens. Protesters will face interesting timeliness hurdles and can expect agencies (and awardees) to argue that any challenges based on this regulation should be raised as pre-award protests.
Whereas clarifications are always discretionary under FAR Part 15 negotiated procurements, they can be obligatory under a FAR Part 14 sealed-bid procurement. In a sealed-bid acquisition, contracting officers "shall" allow a bidder "an opportunity to cure any deficiency resulting from a minor informality or irregularity in a bid or waive the deficiency, whichever is to the advantage of the Government." FAR 14.405. The FAR provides a non-exclusive list of minor bid informalities and irregularities that may be rectified after bid opening. Id. None of these rules applies to negotiated procurements through competitive proposals, which most of our readers are more familiar with.
Finally, as noted above, agencies are required to conduct "communications" with an offeror prior to establishing the competitive range if there is adverse past performance information to which the offeror has not had the opportunity to respond (for example, in regular past performance reviews), and that information would be determinative in excluding the offeror from the competitive range. FAR 15.306(b)(1)(i).
Apart from these exceptions, the GAO shows great deference to an agency's discretion not to engage in discussions, clarifications, or communications.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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