It is not the place of a court to create a contract between the United States and a private party. However, after the finding of a Procurement Integrity Act (PIA or the “Act”) violation in a U.S. Department of State acquisition, that is exactly what the Court of Federal Claims (COFC) and the U.S. Court of Appeals for the Federal Circuit (CAFC) did by ignoring the phrase “[t]ake any other appropriate actions in the interests of the [g]overnment” (“Option Three”), in Federal Acquisition Regulation (FAR) subsection 3.104-7(d)(1)(iii). While this phrase was likely intended as a catch-all for what contracting officers (COs) and courts could do, the case SAGAM Sécurité Senegal v. United States demonstrated that it is so vague that neither the government litigators nor the courts addressed it for a possible remedy. This vagueness created a gap that put COFC and CAFC in a position to essentially create a contract between the U.S. government and a private party. While the proper end result was achieved in SAGAM Sécurité Senegal v. United States (SAGAM Matter), this Note aims to address the procedural contracting gap that the case identified by suggesting that the FAR Council make Option Three more prescriptive. With specific examples about what other actions are in the interest of the government, the procurement process’s integrity can be bolstered and the separation of powers maintained.
In Dakar, Senegal—a city of over 1.1 million people—stands a nearly 180,000 sq. ft. U.S. embassy that cost almost US$200 million to construct. With its surrounding walls, sensitive compartmented information facility (SCIF), Marine security guard residence, and recreational facilities, it is an impressive compound that aids the U.S. Department of State (“State Department” or “State”) in their mission to protect the United States and its democratic values worldwide. While the embassy is defended by U.S. military personnel, State has also relied upon contracted security forces to protect it. SAGAM Sécurité Senegal (SAGAM) is one such security firm that has provided protective services to the embassy since 1985. However, on April 19, 2019, a change of guard seemed possible.
In April 2019, “State issued Solicitation No. 19AqMM18R0332 (“the solicitation”) for the continuation of these local guard services in Senegal.” Three firms submitted proposals—SAGAM, Torres-SAS Security LLC Joint Venture (Torres), and SAKOM Services WI LLC (SAKOM)—with only SAKOM being eliminated from the competitive range. State Department believed that both SAGAM and Torres possessed the capabilities to satisfy the requirements, so discussions between the government and these remaining private parties began. When State engaged with the firms, the contracting officer (CO) improperly gave “information taken from charts and footnotes in SAGAM’s proposal, including proprietary information” to Torres. The CO, realizing that a violation of the Act may have occurred, informed State’s Head of Contracting Activity (HCA) of the situation. After receiving a memorandum discussing the matter, the HCA concluded that a PIA violation did impact the procurement and decided to cancel and reissue the solicitation. State invited both SAGAM and Torres to resubmit their proposals.
SAGAM filed a protest at the U.S. Court of Federal Claims (COFC) alleging that State’s action of just canceling the solicitation and reissuing a new one did nothing to address Torres’s competitive advantage; both COFC and the U.S. Court of Appeals for the Federal Circuit (CAFC) ruled in favor of SAGAM. The courts held that Torres should be disqualified and directed “State to proceed to award the contract to the remaining offeror in the competitive range if that offeror is determined to be responsible.” In essence—while both COFC and CAFC directly wrote that they have done no such thing—the courts created a contract between the United States and a private party, exercising a power reserved solely for COs.
This Note will look at the Act and its corresponding FAR part in a world of shrinking competition for government contracts. With it likely that situations similar to the SAGAM Matter will only become more commonplace, the FAR Council must make FAR 3.104-7(d)(1)(iii) more prescriptive to ensure the fairness of the procurement process and honor the structure of the U.S. Constitution. This goal can be accomplished by providing examples of definite alternatives on how to address an improper disclosure of proprietary information and, in doing so, aid in the efforts of avoiding a situation where a court—in practice—creates a contract between the United States and a private party. Therefore, Section II will provide background about the Act regarding its intended goal and why it was created, then shift to a discussion about the dwindling number of competitors in government procurement, before finally addressing the idea of separation of powers. Section III will then dive further into the SAGAM Matter and an analogous case to show why this problem demands the attention of lawmakers and lawyers alike. Finally, Sections IV and V will detail the solution and how it would be implemented in hypothetical scenarios, respectively.
Procurement law aims “to promote competition and secure the best deal for the Government while minimizing opportunities for corruption and favoritism.” The specific purpose of the PIA is
to prevent improper competitive practices in government procurement [by imposing] . . . four main types of restrictions: (1) disclosure of procurement information; (2) obtaining of procurement information; (3) actions required when procurement officers are contacted by offerors regarding nonfederal employment; and (4) former official’s acceptance of compensation from a contractor.
It is also important to understand why the PIA exists. The PIA’s existence can be partially attributed to Congress’s learning of Operation Illwind. Operation Illwind was a joint investigation between the Naval Investigative Service (NIS) and the Federal Bureau of Investigation (FBI) after a defense contractor contacted NIS claiming that a consultant offered to sell “a competitor’s bid proposal information for a pending [government] contract.” When the FBI and NIS got the consultant to cooperate with their investigation, he “led them to ‘a netherworld of corrupt consultants’. . . which ultimately . . . resulted in more than ninety convictions and over $250 million in fines.” It became clear to Congress that the procurement process needed a more robust mechanism to protect against corruption and defend its fairness to ensure public faith in the government.
The FAR implements the PIA at section 3.104, and it describes what actions can be taken when a violation of the Act occurs. The FAR states that if there is a violation, “the HCA may direct the contracting officer to (1) if a contract has not been awarded– (i) [c]ancel the procurement; (ii) [d]isqualify an offeror; or (iii) [t]ake any other appropriate actions in the interests of the Government.” If the HCA “determines that urgent and compelling circumstances justify an award, or award is otherwise in the interest of the Government, the HCA, in accordance with agency procedures, may authorize the contracting officer to award the contract or execute the contract modification after notifying the agency head.” There is no mention of anyone else—such as a court—having the power to effectuate the awarding of a contract. Again, those three options mentioned above come into effect when a PIA violation has occurred, and such an occurrence can be the result of a disclosure or obtaining of procurement information.
The restrictions on disclosing and obtaining procurement information are easy enough to understand, and they are only being singled out as a reminder that the PIA violation that occurred in the SAGAM Matter was an improper disclosure, and not a purposeful obtainment on the part of Torres. However, these restrictions—while attempting to ensure the integrity of the government procurement process—may struggle in achieving that goal as competition dwindles.
Competition in federal government procurement has been dwindling, or was already limited, in some industries, such as defense and telecommunications/information technology (IT). Reports published by the U.S. Government Accountability Office (GAO), the Department of Defense (DoD), and academics show this outcome.
In a GAO report that analyzed DoD’s assessment of mergers and acquisitions (M&A) between government fiscal years 2018 to 2022, the GAO concluded that the DoD has limited insight on the M&As that are reviewed for antitrust concerns. Furthermore, the GAO wrote that “[w]hile M&A may create benefits, . . . they may also reduce competition.” A reduction in competition is exactly why the Chair of the White House Competition Council required the DoD to publish its own report. There, the DoD discussed, among other things, “where a lack of competition may be of concern.” Below are the findings of that report.
In the defense industry, the total number of U.S. suppliers for major weapon categories has decreased significantly since 1990. For instance, with surface ships, the total number of U.S. contractors that could compete for such contracts in 1990 was eight. At the time of the report, it is two. With expendable launch vehicles, the number of U.S. contractors was six, and again, there are two. With some weapons categories there were already a limited number of offerors, such as in torpedoes and strategic missiles, both with currently only two U.S. contractors. This situation of less competition will only continue to worsen across several different industries if they consolidate just like the defense industry.
There is also a lack of competition for government contracts in the telecommunications/IT space. In a study by Karam Kang and Robert Miller at the Tepper School of Business at Carnegie Mellon University, they found that, “based on the data from the Federal Procurement Data System (FPDS), [forty-four] percent of the procurement budget was paid to contracts only drawing a single bid during fiscal year 2015.” This is not a problem restricted to a single year either, as in fiscal years 2004–2015, the median number of bids for full and open competition for IT and telecommunication procurements, out of 5,030 contracts, was two. In that same span of time and in the same sectors, the median number of proposals/quotes, out of 4,395 contracts that used requests for proposals/quotes as the solicitation procedure, was also two. This lack of competition is especially concerning as it can create constitutional issues.
Finally, a constitutional component to the government procurement process must be discussed: the separation of powers. No matter how carefully one examines the U.S. Constitution, a separation of powers clause will not be found. While the concept was likely in the minds of the Framers, there was “no one baseline for inferring what a reasonable constitutionmaker would have understood ‘the separation of powers’ to mean.” As Harvard Law Professor John Manning wrote: “Rather, in the Constitution, the idea of separation of powers, properly understood, reflects many particular decisions about how to allocate and condition the exercise of federal power.” One of those decisions was who could bind the federal government to a contract.
The power to contract on behalf of the U.S. government is reserved only to contracting officers/those with contracting authority, as the federal government is one of limited powers. The FAR explicitly states that agency heads “may establish contracting activities and delegate broad authority to manage the agency’s contracting functions . . . [and that] a relatively small number of high level officials are designated contracting officers solely by virtue of their position.” Further, there is regulation on how a CO is appointed. Therefore, unless a judge or justice is an agency head, has contracting power by the nature of their position, or has been appointed a CO in accordance with FAR 1.603-3(a), it is not permissible for a court to create a contract between the U.S. government and a private party.
Given the history of the PIA, evidence of dwindling competition, and the importance of separation between our government branches, an analysis of the SAGAM Matter and its significance are required to demonstrate the gap that exposes the integrity of the government procurement process. In Section III, there will be a discussion as to how COFC justified their remedy with a dissimilar case, followed by an application of an analogous GAO decision that will show why the aforementioned gap should not exist.
The SAGAM Matter is not exactly a new problem, but it is one that will likely reoccur as firms continue to merge, acquire one another, or are unable to enter the marketplace due to barriers of entry. To further understand why the lack of consideration for “[t]ak[ing] any other appropriate actions in the interests of the [g]overnment,” led to the improper remedy of a court creating a contract in the SAGAM Matter, the pertinent facts and final decision of the SAGAM Matter must be reiterated.
After a State Department CO improperly provided proprietary information to a competing offeror, the HCA decided to cancel the solicitation as permitted by FAR 3.104-7(d)(1)(i). State then invited both SAGAM and Torres to resubmit proposals, which SAGAM disliked as they claimed it did nothing to resolve Torres’s competitive advantage. Both the trial and appellate court agreed. That agreement led to the creation of a contract, which can be seen with the exact wording of the COFC ruling where the court stated:
Specifically, the court DIRECTS State to restore this competition to its status precancellation, ENJOINS State from cancelling Solicitation No. 19AQMM18R0332 and from resoliciting the contract requirement, DIRECTS State to disqualify Torres as the beneficiary of improperly disclosed information taken from SAGAM’s proposal, and DIRECTS State to proceed to award the contract to the remaining offeror in the competitive range if that offeror is determined to be responsible.
When the COFC decision was appealed, CAFC issued a “nonprecedential” opinion that affirmed the above. According to Federal Circuit Rule 32.1(b), a nonprecedential opinion or order “is one determined by the [presiding judicial] panel issuing it as not adding significantly to the body of law.” However, Rules 32.1(c) and (d) state respectively: “Parties are not prohibited or restricted from citing nonprecedential dispositions,” and “[t]he court may refer to a nonprecedential or unpublished disposition in an opinion or order and may look to a nonprecedential or unpublished disposition for guidance or persuasive reasoning.” As the courts recognized, this was a rare situation, so there is skepticism about seeing a similar situation again. Yet, when the first few similar cases arise, nothing prevents litigating contractors from relying on SAGAM Sécurité Senegal v. United States. Perhaps courts will not offer it much weight, even though they may look to a nonprecedential opinion “for guidance or persuasive reasoning.” However, what will COFC and CAFC turn to for help when deciding those cases? Such a question cannot go unanswered, as the implications will greatly affect contractors and the U.S. government.
This Note is in no way taking the position that COFC or CAFC made the wrong decision with the applicable law before them, or that award to SAGAM was improper. Rather, this Note argues that the process to get to award was incorrect due to a lack of meaningful guidance in the FAR. That defect going unaddressed may have adverse effects on government procurement, as will be discussed in Section V.
The SAGAM Matter arose because of State Department’s mistake. The improper disclosure was an unequivocal mistake on State’s part, and canceling the solicitation to only reissue it later without a plan on how to mitigate Torres’s competitive advantage is an arbitrary and capricious decision, since SAGAM was punished for an action that was taken by the government. State also made it clear that it would not disqualify Torres and provided no substantive example—either in their brief or at oral arguments—of what mitigation efforts it would take to cure the procurement. Thus, the courts were seemingly in a difficult position on what remedy could be given to SAGAM. As cancelation and resolicitation would do nothing to cure the wrong done to SAGAM, the courts chose to disqualify Torres, but, then, direct the award of the contract to the only other party remaining. However, there was another option.
When a PIA violation occurs, the “HCA may direct the contracting officer to- (1) if a contract has not been awarded- (i) [c]ancel the procurement; (ii) [d]isqualify an offeror; or (iii) [t]ake any other appropriate actions in the interests of the [g]overnment.” Neither COFC, CAFC, or the attorneys considered Option Three. While such an omission may seem inconsequential, that omission led to the courts creating a contract between the United States and a private party—a power that courts do not have. This is where a deep dive must be done into the COFC’s decision to explain what the gap is in the procurement process and analyze why it is an issue.
Due to the lack of any substantive guidance about what actions can be taken to satisfy Option Three, COFC relied on a dissimilar case to provide a remedy to an injured party. Judge Margaret M. Sweeney, in her Opinion and Order addressing a Motion for Stay of Judgment, stated: “The court does not thereby make a contract between State and SAGAM, it instead requires State to implement its only remaining lawful option in this procurement.” Judge Sweeney then cited Parcel 49C Ltd. Partnership v. United States, 31 F.3d 1147 (Fed. Cir. 1994) (“Parcel 49C”) where the trial court enjoined the U.S. General Services Administration (GSA) from illegally canceling a contract after the agency “announced the intended award to Parcel 49C.” Such a decision was intended to return the GSA contracting process back to the status quo ante to the cancelation, with the court writing: “The process will commence from where it left off with the contract award flowing from an orderly and lawful proceeding. The Court of Federal Claims’ injunction has the effect of returning [the solicitation] to its pre-cancellation posture and removing the illegal taint.”
However, one important fact in Parcel 49C is not present in the SAGAM Matter, which makes it materially dissimilar and therefore inapplicable. GSA announced an award to Parcel 49C prior to the illegal cancellation; State did no such thing for SAGAM. Therefore, the status quo ante to the disclosure for the SAGAM Matter was that SAGAM was in the competitive range, not that it was the de facto awardee. This distinction is material, and yet COFC and CAFC “direct[ed] State to proceed to award the contract to the remaining offeror in the competitive range if that offeror is determined to be responsible.” Importantly, it does seem possible that State could get out of the contract or award process for any legal reason, such as by terminating after the conclusion of the base year of the contract or by finding that SAGAM is not a responsible offeror. Yet, the courts directly ordered a federal agency to create a contract in the first place with a particular private party—a power that courts do not have—and justified that decision with a distinctly different case.
This decision would not be as much of an issue if more than two parties were in the competitive range, because there would be no order as to who should be awarded the contract. If this situation played out in the exact same way, but there were five offerors rather than two, it would surely be out of place for COFC to pick one of the remaining competitors as the awardee. Therefore, questions remain: why is it not out of place when there are only two offerors? Is the reasoning of a court awarding a contract to a private party still not an issue? In other words, COFC directing State to proceed with an award is the troubling part of this opinion. It revealed a gap in the government procurement process, specifically because Option Three existed, yet was seemingly deemed to be ineffectual.
Once again, COFC and CAFC did not make the wrong decision with the applicable law before them, which is why the catch-all needs to be reworked. Option Three could have been utilized, but, when looking at what “[t]ake any other appropriate actions in the interests of the [g]overnment” means, nothing of substance would help guide either a CO or a court about how to actually exercise this option. Even when looking back to the “Federal Acquisition Regulation; Procurement Integrity Rewrite” of 2002, there are no comments asking for any clarification on what Option Three could entail. This is not the fault of anyone; it is entirely possible that Option Three is meant to be a catch-all. However, it is currently too broad. The FAR Council surely had a rationale for implementing Option Three—again, possibly as a catch-all—but it is hard to imagine that a court creating a contract was the intention, as that is a power reserved to specifically delineated officials. Thus, two consequences flow from molding the dissimilar case of Parcel 49C to the SAGAM Matter and ignoring Option Three.
First, if a contractor disagrees with the decision of the HCA and decides to litigate, the contractor has a lesser burden than FAR 3.104-7(d) established. For example, if the HCA decides to cancel a procurement rather than disqualify an offeror, and the contractor wants the latter, the SAGAM Matter makes it seem that they only need to prove why the former was the wrong decision, rather than also explaining why Option Three should not be exercised.
Second, the government loses out on an action that was created specifically for the government to use. Option Three is not a suggestion or some informal rule; it is part of the FAR and therefore possesses the force of law. While no one involved in the SAGAM Matter gave Option Three more than a passing mention, the opinion is nonprecedential. So, it is entirely possible that when another situation like this arises in the future, the courts could disregard the case and this issue would be moot. However, it is also entirely possible that a court or contractor does not ignore it, and the judiciary adheres to this prior case law to create another contract, exercising a power that it does not have.
This may seem like a small, insignificant issue, but the process matters. It is exactly why numerous comments were included in the FAR Procurement Integrity Rewrite about providing a definition for the word “must,” and replacing “procurement” with “acquisition” in the Act. If such attention is focused on single words, why is a similar amount of attention not paid to an entire phrase? With this question in mind, the following subsection will address why the remedy of creating a contract should not have been considered.
As mentioned in a previous section, this improper disclosure of information is not new, and a 1982 GAO decision provides further evidence as to why COFC remedy was improper. After providing a summary of the case, this Note will apply its analysis to the SAGAM Matter.
The GAO decided an issue similar to the SAGAM Matter in Decision B-206481 (WMC Matter). There, the Defense Logistics Agency (DLA) improperly provided White Machine Company’s (WMC) proprietary technical data to E.C. Campbell, Inc. (Campbell). In a subsequent invitation for bids (IFBs), where only WMC and Campbell put forth bids, WMC claimed that its competitor had an unfair advantage due to the government’s prior improper disclosure. The GAO did not grant relief because “the disclosure occurred in connection with an earlier procurement and we [the GAO] are not aware of any appropriate remedy which can be provided for future procurements.” However, the GAO also stated that, even if a remedy could be granted, it could not be the one that WMC wanted:
A sole source award is not an appropriate remedy to erase a competitive advantage allegedly given another bidder by an agency’s disclosure of proprietary information, where: (1) the agency only inadvertently disclosed the data and did not use it to define its requirements; (2) a sole source award would not place all parties in the same competitive position they occupied prior to the disclosure; and (3) a sole source award would not benefit the competitive process.
This reasoning can be directly applied to the SAGAM Matter.
First, CAFC explained that the CO in the SAGAM Matter improperly disclosed proprietary information to gain better clarification about Torres’s proposal, therefore not being used to define requirements. Second, the court disqualifying Torres essentially created a sole source award for SAGAM. This award was not the same competitive position prior to the disclosure as that position was two contractors being in the competitive range, which is similar to the WMC Matter. In the WMC Matter, GAO stated that
since there is no indication that White would have been in line for a sole source award prior to the disclosure, such an award clearly would place White in a more favorable competitive position than it occupied prior to the disclosure. We find no other extraordinary circumstances which would warrant the remedy of a sole source award here.
There was no indication that SAGAM was owed a sole source award, and, since it was not awarded the contract prior to cancellation, unlike in Parcel 49C, SAGAM has received a more favorable position. Third, it is hard to imagine that eliminating Torres and granting a sole source award to SAGAM would benefit the competitive process. As the GAO put it, “we fail to see how the procurement process could benefit from curing a possible competitive advantage by doing away with competition altogether.”
However, there are distinctions between the WMC and SAGAM matters. First, the SAGAM Matter did not deal with a disclosure from a past procurement impacting the competitiveness of a future one. Regardless, the GAO’s, COFC’s, and CAFC’s analyses were centered around the issue of how to address a procurement given the disclosure of proprietary information that impacted the procurement process. Second, the procurement in the WMC Matter was an IFB, whereas in the SAGAM Matter it was an RFP. This distinction has no effect on the analysis because the focus for both matters was on the fact that an improper disclosure of proprietary information occurred. Finally, the PIA did not exist at the time of the WMC Matter. If it did, the actions of DLA may have changed, but the GAO’s decision could stay the same and easily be classified as an “appropriate [action] in the interests of the [g]overnment.” The reason such actions could satisfy Option Three is because the rationale behind the GAO’s decision was to ensure the competitiveness of the government procurement process, which is important to the government, and in their interest.
The SAGAM Matter exposed a gap in the federal procurement process, and the WMC Matter explained why it is an issue: granting a sole source award to a contractor who was not in that position to begin with does not promote competition. In fact, the courts granting of a sole source award where one did not exist is an exercise of a power that is reserved to the Executive Branch. The next section will detail examples of what a prescriptive Option Three would look like and, subsequently, how it would be implemented.
The proposed solution of this Note is that the FAR Council should make Option Three more prescriptive and less of a catch-all. In effectuating this solution, the language of “[t]ake any other appropriate actions in the interests of the Government” should remain, and the FAR Council should provide actual examples of what actions satisfy that phrase. While a whole host of possible actions could be possible, this section will provide two examples, which include (1) the U.S. government should be able to cancel a solicitation, and then resolicit that contract with the advantaged contractor disqualified; and (2) allow for the procurement process to be handed over to another agency through a Buy/Sell (B/S) Intra-Governmental Transaction (IGT).
The first possible solution is a proscribed restart of a procurement. As seen in the SAGAM Matter, COFC ordered State Department to disqualify Torres and award the contract to SAGAM if found to be a responsible offeror. The rationale behind the decision was that it would put the solicitation back to its status quo ante precancellation. The issues with this reasoning, and a discussion as to why the court was not at fault for their decision, have been addressed in the previous section, so that will not be discussed here. To address the gap itself, the focus must be on the FAR and not on the courts. With that being said, SAGAM’s status quo ante precancellation was that it was a bidder in the competitive range, not the de facto awardee. To reiterate, the courts stated that this was a rare situation. However, consolidation in some industries may likely continue, making this situation more likely to occur again—a fact that cannot and should not be chalked up to the nature of reality. If that belief carries the day, the solutions that will address the problems to come will be like that of the SAGAM court, exercising a power they do not possess.
Further, the main rationale behind this first solution is that combining the first two options of FAR 3.104-7(d)(1) requires little change to the FAR itself. Based off the use of “other appropriate actions” in Option Three, it can be understood that options one and two are actions that are also in the interest of the government. If this solution had existed, COFC could have made a judgment that disqualified Torres, directed State to resolicit the contract without changing anything in the statement of work, and SAGAM could resubmit its proposal and be ushered into the competitive range, which was the status quo ante prior to the illegal cancellation. This is but one example.
The second prescriptive solution relies on the use of IGTs. An IGT would be much more burdensome but could become the preferred option on how to deal with a PIA violation. An IGT could better ensure the integrity of the procurement—perceptually and actually—as any potential bad actors in the process would not be involved. Before addressing how it would be used, a background about IGTs may prove beneficial.
The U.S. Department of the Treasury (Treasury) states that IGTs result “from business activities conducted between two federal government entities.” There are several categories and subcategories of IGTs. Here, the focus is on the B/S category: a B/S IGT is a transaction that occurs between federal entities, such as agencies. Treasury describes how a B/S IGT is executed, noting that “[t]his arrangement is typically accomplished through the issuance of a reimbursable agreement between the two federal entities. Trading partners should have appropriate statutory authority, such as the Economy Act, prior to engaging in an agreement for Buy/Sell transactions.”
With the above quote, the elements of a B/S transaction are as follows: (1) the parties involved in such a transaction must be federal entities; (2) the federal entities must have statutory authority to engage in a B/S transaction; and (3) the entities need to have the appropriations available to properly effectuate the reimbursement. This transaction breakdown will prove useful when discussing hypothetical scenarios in the next section.
A B/S IGT should be implemented under Option Three because it is a perfect example of taking an action that is in the interest of the government. This claim is supported by the fact that after a determination and findings (D&F) report, as required by FAR 17.502-2(c) in conjunction with the Economy Act, the agency must “[s]tate that use of an interagency acquisition is in the best interest of the [g]overnment.” This is nearly identical as to what is required of a CO or a court to exercise Option Three.
Further, this solution is not as far-fetched as one may initially believe. In many ways, this is similar to the Federal Supply Schedule (FSS) program. The FSS program “provides Federal agencies with a simplified process of acquiring commercial supplies and commercial services.” Therefore, if a federal agency wishes to buy some sort of commercial good or service, the agency could do so through the GSA’s program. Here, in a B/S IGT, if a federal agency wants to buy a good or service of a contractor, it can do so with its appropriated funds through another agency. However, a few differences remain.
The first difference is that this proposed solution would not be limited to commercial supplies or services, and instead could adopt the B/S position of any good or service (e.g., private security). The second difference is that GSA would not be the only agency that has the authority to engage in this B/S contractual process. The policy rationale behind opening up this kind of B/S IGT to any agency is because (1) it may be overwhelming for one agency to have to deal with the responsibility of potentially serving all other agencies if there is a PIA violation, and (2) some agencies may be better equipped to handle certain contracts. For instance, if this solution existed for the SAGAM court to consider, State could have been directed to hand the contract over to the DoD—through agency heads as required by the Economy Act—and allow them to engage in a negotiation on behalf of State as a sophisticated buyer due to the DoD likely having knowledge of the private security market. Once the DoD and the private party come to an agreement, the DoD would buy the guard services and then sell that contract to State, which would then use appropriated funds to reimburse the Defense Department.
There is a rationale behind making Option Three more prescriptive. Some may read the previous section and believe that the catch-all path is better, as it can act as intended—it can catch all. However, there are two reasons for making FAR 3.104-7(d)(1)(iii) more prescriptive. First, and most importantly, a prescriptive Option Three can provide guidance on what the phrase “[t]ake any other appropriate actions in the interests of the [g]overnment” means. The above solutions are meticulous and could even be described as burdensome to enact, but they provide tangible options that could literally prevent courts from creating contracts between the U.S. government and private parties. Another reason for adopting a more prescriptive route is that it provides COs more creativity on how to rectify a PIA violation. The two proposed solutions are not meant to be comprehensive. In practice, the solutions would be listed as examples that a CO or court could exercise, but the phrase “[t]ake any other appropriate actions” would still exist. It is entirely possible that a CO could believe that none of the listed options would cure the PIA violation, so, in the vein of taking another appropriate action, the CO may fashion a hybridized solution of the above listed options. The goal of this more prescriptive route is to protect the procurement process and leave it in the hands of those with contracting authority. To do so, it would be beneficial to provide guidance.
There are counterarguments that go against this prescriptive approach, and it would be a disservice to not address them. The first is that a prescriptive approach will lead to a whole host of new problems that a newly tailored Option Three might not be able to address. The proposed solution, however, does not suggest getting rid of the catch-all phrase. The proposed change is one that recommends that the regulation be amended by the FAR Council to provide examples as to what “[t]ake any other appropriate actions in the interests of the [g]overnment” means. Therefore, the catch-all phrase would still exist. The stronger counterargument is specifically related to the second proposed solution.
The use of a B/S IGT may undermine a CO. COs wield significant authority as they are able “to enter into, administer, or terminate contracts and make related determinations and findings.” They are not only doing this job with limited, legally obligated funds, but they are doing such a job in order to keep the government running efficiently. Thus, an argument may suggest that the B/S IGT solution would undermine a CO’s authority and create tension between federal entities as the CO of the reimbursed agency would be spending the funds of the CO of the reimbursing agency. However, since these types of transactions are not meant to occur frequently, many solicitations/contracts should remain in the “hands” of the “proper” CO. Furthermore, the “relocation” of one solicitation does not mean that the CO loses all his or her authority with other solicitations. This solution is only meant to be used when the integrity of a single procurement is at risk. In other words, only the affected solicitation would be relocated—not anything else that is subject to the authority of the CO.
The next section of this Note will utilize hypothetical scenarios leveraging these solutions to alleviate concerns about them.
This section of the Note will demonstrate how the above proposed solutions would ensure the integrity of the procurement process and prevent the judiciary from making a contract. The PIA, like any piece of legislation, is not perfect. Amending laws or reworking their corresponding regulations is not indicative of a law failing to achieve its goal. However, seeing it falter, and doing nothing to change it, are indicative of a failing lawmaking system. Below are two hypothetical scenarios where one is centered around an accidental improper disclosure, similar to the SAGAM Matter, while the other discusses how the proposed solutions could combat corruption.
This scenario begins in a similar way as the SAGAM Matter. A federal agency (Agency) puts out an RFP that garners three contractors. After the Agency reviews the initial proposals, it determines that only two contractors (“Contractor A and Contractor B”) have the capabilities to properly effectuate the contract, so they are moved into the competitive range. Negotiations begin with Contractors A and B. After a discussion with both, the CO wants to seek clarification from Contractor B about its proposal and uses proprietary information from Contractor A’s proposal to get that clarification. The CO’s actions were done without corrupt intent. Contractor B then revises its proposal, and the Agency intends to award the contract to Contractor B. After Contractor A files a protest at the GAO to prevent award, the Agency agrees to take corrective action. Here is the greatest diversion of the hypothetical from the reality on which it was based.
With the Agency conceding a PIA violation, and the options of just canceling the procurement or disqualifying an offeror not optimal for this two-firm competitive range, the CO decides to exercise Option Three’s more prescriptive examples. One possible choice is to cancel the solicitation, disqualify Contractor B given its competitive advantage, and resolicit with nothing about the statement of work changed. Doing this guarantees that Contractor A will be back in the competitive range—its status quo ante of the improper disclosure—and therefore not place Contractor A in a better position than it was in. It is possible that no other contractor submits a bid or proposal, and Contractor A essentially wins by default; if so, no issue arises with such a result as the process to reach that end was proper.
The other possible choice is to engage in a B/S IGT. Here, the Agency decides it would be best to hand over the solicitation to a sister agency with subject knowledge about the good/service that this contract wishes to acquire. Perhaps the sister agency can create mitigating efforts to allow Contractor B back into the procurement, but, if not, the sister agency would put out the solicitation. This would then be similar to the previous solution where Contractor A would be swiftly moved into the competitive range. Again, another contractor might not bid or submit a proposal, and Contractor A would win the contract. If so, that is a positive result for all parties involved as Contractor A helped identify a PIA violation, and the U.S. public is assured that its money was awarded through a proper process. Regardless of the CO’s choice, both aforementioned options ensure the integrity of the procurement process and the separation of powers. These solutions would also help address any attempts at corruption, which will be discussed in the forthcoming subsection.
Before addressing a corruption scenario, it is important to note that this is no way related to the SAGAM Matter. CAFC did not find any corrupt intent/bad faith with the involved parties. Furthermore, this section is in no way implying or stating that corruption is rampant in the government procurement process, either with the contractors or the COs. The only reason for walking through a hypothetical corruption scenario is to demonstrate the versatility of the above proposed solutions, and highlight the dangers that almost certainly could happen, as seen with Operation Illwind.
This hypothetical corruption scenario exists in two different realities. The first reality is post-SAGAM Matter where nothing has been done to address Option Three. Here, the scenario presents two contractors who submit proposals, and Contractor A believes it is going to lose much needed business to Contractor B. In a desperate attempt to be the awardee, Contractor A bribes the CO to disclose a minimal amount of their relatively “insignificant” proprietary information to Contractor B during negotiations, and then alert the HCA that there has been an “accidental” PIA violation.
Without addressing the gap in the Act, and the SAGAM Matter remaining good law, Contractor A may end up winning the contract. As CAFC affirmed, when a competing contractor receives proprietary information about the other contractor, and the agency involved in the solicitation has done nothing to mitigate that damage, the only possible option is to disqualify the receiver of the information and award the contract to the remaining bidder in the competitive range. While the SAGAM Matter was a nonprecedential case, meaning one that does not significantly add to the body of law, nothing precludes a court from relying on it. It may be possible that the court disregards it, but why leave integrity to possibility?
Below is the second reality where prescriptive solutions have been made to address the Option Three gap. Each solution will be discussed at length to address this undiscovered corruption scenario.
Disqualification and resolicitation (DQ&RE) is unlikely to properly address an undiscovered corruption scenario. As mentioned previously, the point for this solution, and the B/S IGT solution, are to put the injured party in the status quo ante to the illegal disclosure. That status quo, in a case similar to the SAGAM Matter, is that a contractor was in the competitive range.
In this situation, disqualifying Contractor B from being able to bid for the resolicited contract does nothing to address Contractor A’s or the CO’s corruption. Instead, this solution aids in their ill-gotten gains as they successfully eliminated a competitor, which would only harm the procurement process. Even if a new competitor puts forth a bid or proposal, that still may have little impact on who the awardee will be. If the corruption was discovered, DQ&RE may work perfectly as the corrupt parties would certainly be removed from the process. In an undiscovered scandal though, DQ&RE may not be the best vehicle to achieve fairness within the procurement process. A B/S IGT would likely fare better.
A B/S IGT would likely be the best solution here. If there is a corrupt CO who alerts the HCA of a PIA violation, that HCA can come to the decision that this procurement should be handed off to another agency. This process would then require the steps mentioned in Section IV of exercising the Economy Act and satisfying the elements of a D&F report. Assuming all of that has been accomplished, the following explanation will show why this solution is effective.
By moving the procurement away from the agency, a link in this corrupt chain has been broken. When the solicitation is resolicited by the servicing agency, Contractor A may be the only one who bids and therefore ends up getting the contract anyway. However, there is greater risk that that may not happen. Perhaps a new contractor, who either did not have the capabilities at the time of the original solicitation or just did not see it, decides to throw their hat into the ring. Unlike with the DQ&RE solution, Contractor A cannot rely on their relationship with the corrupt CO to circumvent another competitor and be awarded the contract. Further, the servicing agency may be able to create satisfactory mitigation efforts that would allow Contractor B to come back into the bidding/proposal stage. There is no guarantee that any of that happens, but the risk that it does may be enough to deter corruption, as the PIA is meant to achieve.
Admittedly, these scenarios of corruption are quite unlikely to occur. Many of the steps mentioned above for Contractor A to effectively cheat the system and be awarded that contract relied heavily on assumptions of success and that the existing risk was not enough to dissuade the contractor. Yet, while these scenarios may not occur in the real world in the exact manner described, they may appear in some shape or form. Corruption will never be eliminated, and those who are committed to cheating will likely try to find a way to do so. However, that does not prevent the rationale for punishing such behavior, as punishment can act as a deterrent. A prescriptive solution attempts to achieve the same result by creating more risk, which is more likely to lead to one being caught in punishable behavior.
SAGAM Sécurité Senegal v. United States shined a light on an issue within the procurement process. As the law stands today, courts and lawyers can disregard an actual solution to PIA violations without providing a reason. It cannot be said with certainty why COFC, CAFC, or the government litigators in the SAGAM Matter mentioned Option Three in their decisions, briefs, and oral arguments, but did nothing with it. It is the position of this Note that that may have happened, in part, because “[taking] any other appropriate actions in the interests of the [g]overnment” is just so vague that there is no way to properly exercise Option Three. Due to such vagueness, the courts created a contract; not because it was their intention to violate the principle of separation of powers, but because the applicable law before them is lacking and needs further clarification. That clarification can happen if the FAR Council provides more prescriptive solutions, which enhance the fairness of the procurement process, that COs, lawyers, and courts can use for their benefit, and that of the American public.
