Chapter 1

The Contracting Officer as Judge

CONTENTS

A “Fair and Reasonable” Judge

Three Simple Rules for Always Being Fair and Reasonable

Being Fair and Reasonable in Awarding a Contract

Being Fair and Reasonable in Administering a Contract

An “Independent” Judge

According to FAR 1.602-2(b), a contracting officer is supposed to

“Ensure that contractors receive impartial, fair, and equitable treatment.”

This FAR provision adds black robes to the contracting officer’s wardrobe. It makes the contracting officer a judge. A judge’s decisions should be fair and reasonable, and they should be reached independently—without bias or pressure from someone else.

So in this role, the contracting officer is not supposed to narrowly advocate for the government: he should not be driven by saving the government time or money or by making the process easier on the government. All decisions a contracting officer makes—those in the solicitation process and those in the contract administration process—have to be, first, fair and reasonable. So in the first section of this chapter, we look at what this vague phrase means in day-to-day procurement.

We look at the contracting officer’s being fair and reasonable from three perspectives. First, we discuss general rules for how a contracting officer can be fair and reasonable. We next look specifically at what it means to be fair and reasonable in the solicitation process and, finally, in the contract administration process.

In addition to being fair and reasonable, a contracting officer should reach decisions independently. Just as judges should not be pressured into making decisions that are not truly their own, the decisions of a contracting officer should be his own opinions. So in the second section of this chapter, we look at what makes a contracting officer an independent decision-maker.

A “FAIR AND REASONABLE” JUDGE

The requirement in FAR 1.602-2(b) that a contracting officer must “ensure that contractors receive impartial, fair, and equitable treatment” is too vague to be of any real help in the day-to-day life of a contracting officer. So it’s not surprising that there is little law on what this FAR provision means.

Fortunately, laws passed by Congress (statutes) and decisions handed down by courts (case law) give the contracting officer a lot more guidance. One federal law gives the Government Accountability Office (GAO) the right to review decisions a contracting officer makes in the solicitation process.¹ GAO’s test of the contracting officer’s actions is rationality or reasonableness. Good examples of what fair and reasonable means come from GAO decisions.

Other federal laws make courts the judge of whether a contracting officer’s decision is reasonable.² In legalese, courts ask whether a contracting officer’s decision was “arbitrary and capricious.” So, good examples of what fair and reasonable means come from court decisions dealing with the “arbitrary and capricious” test. What does this almost-clichéd phrase “arbitrary and capricious” mean? It means that a contracting officer must use a reasonable way (process) to reach a reasonable decision (substance).

In determining whether a contracting officer’s decision is arbitrary and capricious, precedent says that the contracting officer must consider “relevant data and provide a coherent and reasonable explanation of” the decision.³

But when you think about it, making a contracting officer act reasonably can be both a blessing and a curse. It’s a blessing because it acknowledges that in procurement there is not only one decision that is the right decision. Courts use the phrase “zone of reasonableness” to show this.

For example, if you are buying a car to use in a carpool, buying an SUV, a minivan, or a six-passenger sedan would all be reasonable. It would be unreasonable to buy a sports car or a bus. If a contracting officer chose a six-passenger sedan for a carpool vehicle, a judge who herself would have chosen an SUV would have a hard time finding the contracting officer’s decision unreasonable. So, because a contracting officer simply has to make a reasonable decision to be right, the test of reasonableness is a blessing.

In a sense, the reasonableness test makes judges leave their personal preferences at home. That’s the way the founding fathers wanted it. Under the theory of separation of government power, Congress (the legislative branch of government) has told judges (the judicial branch) to let the procurement people (the executive branch) do their job. Courts generally defer to an executive branch decision, even if the particular judge might not agree with it and might prefer a different decision, as long as the contracting officer’s decision is “reasonable.”

“If the court finds a reasonable basis for the agency’s action, the court should stay its hand even though it might, as an original proposition, have reached a different conclusion as to the proper administration and application of the procurement regulations.”⁴

So it’s a blessing that a court won’t force a contracting officer to follow a judge’s personal belief. But “reasonable” is also a curse. First, it seems too vague to work with as a practical matter. Aren’t we all reasonable? Or at least, aren’t we reasonable? (It’s the other person who isn’t reasonable.) Isn’t it hard for everybody to agree on what is reasonable and what is not? Second, people always have a reason for doing something, so isn’t everything, therefore, automatically reasonable? It’s at this point that the apparently redundant word good has to be added to reason.

But although there might be gray areas allowing reasonable people to disagree, some decisions are clearly unreasonable, whether the decision is made in the solicitation process or in the administration process.

Three Simple Rules for Always Being Fair and Reasonable

Decisions of courts, boards, and GAO show three good rules for reasonable decisions:

Rule 1: To be reasonable, the contracting officer’s decision must be in writing.

One of the surest ways for a contracting officer to be found “unreasonable” is to make an important decision and have nothing in writing to explain it.

“[GAO] is able to assess the reasonableness of an agency’s source selection process only where adequate documentation of that process exists. Without such documentation, we cannot be certain that the agency action was not arbitrary.”⁵

The DLA sent out Requests for Quotations (RFQ) for sheet metal. The low bidder lost the best value award, protested, and won. There was no documentation showing that the contracting officer had performed any kind of analysis comparing the vendors with respect to which vendor was the best value.⁶

Without documentation, a contracting officer’s decision is unreasonable.

Rule 2: To be reasonable, the contracting officer’s written decision must show that the contracting officer actually thought about the decision instead of making a thought-less, knee-jerk decision.

One judge made this point nicely when he said, “Procurement officials must use judgment . . .; they cannot act as ‘automatons.”’⁷

A construction contractor asked the government to allow it to substitute “in the public interest,” as allowed by a contract clause, an item not in the specification. The contracting officer refused to even consider alternatives, insisting on the contractor’s following the specification. A court concluded that the contracting officer’s decision to reject the substitution without considering the alternatives the contractor had presented was arbitrary and capricious.⁸

Rule 3: To be reasonable, the contracting officer’s written, thoughtful decision must follow the rules for making a decision.

FAR often gives good advice here. For example, a contracting officer’s decision on who won a contract should follow the rules in FAR 15.308:

“The source selection decision shall be documented, and the documentation shall include the rationale for any business judgments and tradeoffs made or relied on by the SSA [Source Selection Authority], including benefits associated with additional costs.”

A contracting officer’s documentation on a contract award has to compare the pros and cons of the offers.

The Department of Veterans Affairs issued a best value solicitation for prescription glasses. Classic scored 180 and Opti-Lite scored 170. The award memorandum that the contracting officer prepared concluded that Classic should get the contract because it had the highest combined total score. GAO sustained Opti-Lite’s protest. The contracting officer’s documentation had to include the rationale for any trade-offs made, including the benefits associated with additional costs. “It is improper to rely, as the agency did here, on a purely mathematical price/technical trade-off methodology. Because there was no qualitative assessment of the technical differences between the two proposals, the award was improper. Without this assessment, there was no way to determine whether Classic’s technical superiority justified the cost premium involved.”⁹

In addition to these general rules, there are specific rules for being reasonable in each of the two phases of government contracting—the contract solicitation phase and the contract administration phase.

Being Fair and Reasonable in Awarding a Contract

The contracting officer must carry out every step in the solicitation process reasonably. So from the start of the solicitation process (drafting the solicitation, getting it out on the street, receiving bids or offers, evaluating them) to the end of the solicitation process (choosing the winner and deciding whether the winner is responsible), the contracting officer must be fair and reasonable.

For example, if a losing vendor challenges the contracting officer’s use of a firm fixed-price contract instead of a cost reimbursement contract, or the use of a negotiated procurement as opposed to a sealed bid process, the test of the contracting officer’s choice is “how reasonable was that choice?”

Although the solicitation process has many steps, four steps bring the most vendor complaints. One is competition—was it full and open? The second is discussions—were the discussions the contracting officer had with those in the competitive range of a negotiated procurement “meaningful”? The third is evaluation—did the contracting officer or evaluation panel fairly evaluate proposals? The fourth is the award—did the contracting officer fairly pick the winning contractor?

We will look more closely at these four problem areas in the solicitation process. In doing so, we will look at the decisions of GAO and the courts to determine whether the contracting officer’s decision was reasonable.

Competition

“Full and open competition” is the law, specifically, the Competition in Contracting Act (CICA).¹⁰ This law is carefully monitored by GAO and the Court of Federal Claims (CFC), which review how a contracting officer carries out CICA.

One of the most common examples of competitions not being fair and reasonable is a sole source procurement. In such a procurement, the contracting officer concludes that only one source can provide what the government needs, so the contracting officer does not do full and open competition.

To be fair and reasonable, a contracting officer’s sole-source justification must make sense and must have the proper paperwork behind it.

Bad documentation and bad logic can sink a contracting officer’s sole source justification.

The Defense Supply Center Columbus (DSCC) announced that it intended to buy metal tubing on the sole-source basis from the original equipment manufacturer (OEM), Specialized Metals, because that company was the only responsible source for the tubing. But the user agency had trouble establishing exactly what the piping was used for. DSCC said the piping was used for “certifying welders” and for other purposes, but the user agency didn’t know what those uses might be. There were also problems with the paperwork backing up the sole-source decision. The contracting officer used a justification and approval (J&A) form that was pre-printed, so all the contracting officer could do was to check various boxes. GAO said the contracting officer’s documentation was unreasonable: the J&A was “inadequate consisting of only a check mark entered on statements on a pre-existing form. There is no explanation or justification to support the check mark entered. . . . DSCC is essentially accepting at face value the requiring activity’s assertion that this particular product is the only one that will meet their needs. . . . there also appears to be unquestioning acceptance by DSCC, the requiring activities, or both, of the OEM’s apparent insistence that its product is unique in ways that are essential to its function but cannot be revealed.” GAO sustained the protest.¹¹

Perhaps the most important part of the decision is the criticism that GAO had for the contracting officer in this case. GAO said there was no indication that the “contracting officer ever questioned why the item was needed or when information could be obtained from the OEM.” As GAO put it not too subtly:

“The DSCC is requiring absolute adherence to unknown parameters which may or may not be necessary to satisfy the government’s actual need.” It concluded that contracting officers “cannot take a docile approach and remain in the sole source situation when they could reasonably take steps to enhance competition. The agency cannot blindly rely on statements to justify a blanket rejection of any alternative part submitted without the OEM’s technical data.”¹²

Fair Discussions, Meaningful Discussions

One of the more difficult, and protestable, jobs a contracting officer has in the solicitation process is making sure that the discussions with vendors in the competitive range are fair and reasonable. In other words, are these discussions “meaningful”?

In plain English, FAR says a contracting officer’s job here has a “must,” a “must not,” and a “maybe.”

FAR 15.306(d)(3) gives the legalese for the “must” and the “maybe.”

“At a minimum, the contracting officer must . . . indicate to, or discuss with, each offeror still being considered for award, deficiencies, significant weaknesses, and adverse past performance information to which the offeror has not yet had an opportunity to respond. The contracting officer also is encouraged to discuss other aspects of the offeror’s proposal that could, in the opinion of the contracting officer, be altered or explained to enhance materially the proposal’s potential for award. However, the contracting officer is not required to discuss every area where the proposal could be improved. The scope and extent of discussions are a matter of contracting officer judgment.”

The “must.” At a minimum, a contracting officer must discuss “deficiencies, significant weaknesses, and adverse past performance information to which the offeror has not yet had an opportunity to respond.”

The “maybe.” The contracting officer “is encouraged to discuss other aspects of the offeror’s proposal that could, in the opinion of the contracting officer, be altered or explained to enhance materially the proposal’s potential for award. However, the contracting officer is not required to discuss every area where the proposal could be improved. The scope and extent of discussions are a matter of contracting officer judgment.”

The “must not.” FAR 15.306(e) describes what a contracting officer can’t do. A contracting officer must not, for example, favor one offeror over another, reveal “an offeror’s technical solution, including unique technology, innovative and unique uses of commercial items, or any information that would compromise an offeror’s intellectual property to another offeror;” or reveal “an offeror’s price without that offeror’s permission.”

It’s the “maybe” that gives a contracting officer the most problems. FAR gives contracting officers a lot of discretion or freedom in deciding how to carry out discussions with those in the competitive range. But this broad discretion is not unlimited. At some point, a contracting officer can abuse this discretion.

Good examples of a contracting officer’s not having meaningful discussions with offerors come from GAO decisions. GAO sees “meaningful discussions” as being slightly different from the FAR requirement but certainly consistent with FAR’s emphasis on fairness: discussions can’t be misleading or inadequate:

“It is a fundamental precept of negotiated procurements that discussions, when conducted, must be meaningful; that is, discussions may not mislead offerors and must identify deficiencies and significant weaknesses in each offeror’s proposal that could reasonably be addressed in a manner to materially enhance the offeror’s potential for receiving award.”¹³

So, in GAO terms, misleading discussions or inadequate discussions violate the requirement that the contracting officer have “meaningful discussions” with offerors in the competitive range of a negotiated procurement. By conducting misleading or inadequate discussions, a contracting officer would be unreasonable.

Before looking more closely at what makes discussions misleading or inadequate, some general rules apply.

According to GAO, a contracting officer is not required:

• To advise an offeror of a minor weakness that is not considered significant, even where the weakness subsequently becomes a determinative factor in choosing between two closely ranked proposals.¹⁴

• To disclose deficiencies still remaining in the offeror’s proposals or to conduct successive rounds of discussions until omissions are corrected.¹⁵

But a contracting officer is required:

• To tell an offeror that its proposal would have to be fundamentally altered to be acceptable.¹⁶

• To say more than simply that an offeror has to “review [proposed labor hours] and revise if necessary” when those hours were substantially less than the government estimate and to discuss disparity of prices from the undisclosed government estimate.¹⁷