United States: Procurement Integrity Act Violations (Post-Award Protest Primer #15)

Last Updated: April 16 2018
Article by Daniel E. Chudd and James A. Tucker

Offerors should, and generally do, carefully guard the confidentiality of their bid and proposal information.  And agencies that receive that information generally are careful to prevent its improper release, much as they guard against release of other source selection sensitive information.  The Procurement Integrity Act (PIA) governs aspects of the protection of this information, and a PIA violation can form the basis of a bid protest.

What Is and Isn't Covered:  The PIA provides in pertinent part that a Federal government official "shall not knowingly disclose contractor bid or proposal information or source selection information before the award of a Federal agency procurement contract to which the information relates."  41 U.S.C. § 2102(a)(1); see also FAR 3.104-1, -4.  With respect to non-Government personnel, the PIA provides that "[e]xcept as provided by law, a person shall not knowingly obtain contractor bid or proposal information or source selection information before the award of a Federal agency procurement contract to which the information relates."  41 U.S.C. § 2102(b).  (The PIA also contains personal conflict of interest provisions that are outside the scope of this blog post.)

At first blush, a PIA violation may look like an unequal access to information Organizational Conflict of Interest (OCI).  To have an OCI, however, there is no requirement that a disclosure or receipt of information be knowing.  The information at issue in an OCI may be something other than bid or proposal information.  And a protester does not even have to show that the conflicted entity actually received or used the information at issue – so long as the entity had access to it.  The PIA thus covers a much narrower category of disclosure issues than the OCI regulations do.

There are exceptions to the PIA's restrictions on knowingly disclosing and obtaining bid or proposal information.  The most important exception is that the PIA does not "restrict a contractor from disclosing its own bid pro proposal information or the recipient from receiving that information."  41 U.S.C. § 423(h)(2).  The GAO's case law interprets this savings clause broadly:  if an offeror voluntarily provides covered information to another person, and that person misuses the information or fails to safeguard it properly, there is no PIA violation.  The offeror may have a private cause of action against the original recipient of the information (e.g., for breach of a nondisclosure agreement), but it does not have a PIA-based ground of protest.  See, e.g., GEO Grp., Inc., B-405012, July 26, 2011, 2011 CPD ¶ 153 at 4-5 ("Here, GEO voluntarily provided its confidential information to the CFS CEO in the course of his employment with GEO.  The CFS CEO's alleged misuse of that information in transferring it to CFS, breach of his fiduciary duties to GEO, or breach of GEO's corporate code of ethics, are matters of a private dispute not for resolution by our Office.").

Agency Obligations:  When an agency becomes aware that a PIA violation may have occurred, FAR 3.104-7 requires the contracting officer to "determine if the reported violation or possible violation has any impact on the pending award or selection of the contractor."  If the contracting officer determines that a violation or possible violation may have (or has had) an impact on a contract award, the Head of the Contracting Activity then must take appropriate action, which is within the agency's reasonable discretion.  Remedies may include disqualification of an offeror, cancelation of a procurement, voiding of an awarded contract, referral to the agency's Suspension and Debarment Official, or other appropriate action.  FAR 3.104-7.

If the contracting officer determines that a violation has not occurred, or that a violation will not have an impact on a pending award, the contracting officer forwards these findings to a designated agency official, who determines whether the procurement should proceed.  Id.

PIA-Based Protest:  To turn a potential PIA violation into a protest ground, the protester must allege that the agency failed to resolve the violation in a reasonable matter.  This may be because the agency unreasonably failed to recognize it was a violation at all.  Or it may be that, having recognized the violation, the agency took corrective action that was not reasonably adequate.  Even when a PIA violation has occurred, an agency is not required to take any particular action if it reasonably determines that there will be no adverse effect on the procurement.  See, e.g., Health Net Fed. Servs., LLC, B-401652, Oct. 13, 2009, 2009 CPD ¶ 213 at 5 ("Where an agency decides that no remedial steps are necessary, we will sustain a protest based on the improper disclosure only where the protester demonstrates that it was in some way competitively prejudiced by the disclosure.").  The GAO reviews the agency's determinations to ensure they are properly documented and not unreasonable.

Timeliness:  Special timeliness rules apply to PIA-based protests.  For a PIA violation to form the basis of a protest, a protester first must notify the agency of the suspected violation within 14 days of when it knew or should have known of the basis of the alleged violation.  4 C.F.R. § 21.5(d).  After the suspected violation is reported, the agency will conduct an investigation and determine whether action should be taken to address the alleged violation.  The violation cannot be protested until the pending investigation is completed.  Career Training Concepts, Inc.—Advisory Opinion, B-311429; B-311429.2, June 27, 2008, 2009 CPD ¶ 97 at 7 (protest ground asserting a PIA violation is premature where the agency has begun but not yet completed its investigation).  Once the investigation is complete, an interested party then has ten days to file a bid protest if it is not satisfied with the outcome of the investigation.

Thus, there are three timeliness hurdles:  (1) Did the protester report the violation to the contracting officer within 14 days?  If not, the protest ground is untimely.  (2) Has the agency concluded its investigation of the reported PIA violation?  If not, the protest ground is premature.  (3) Was the protest filed within ten days of the agency's announcement of the conclusion of the investigation?  If not, the protest is untimely.

Conclusion:  When sensitive bid or proposal information is improperly released or obtained during a pending competition, offerors not only should consider that the PIA may have been violated, but also should be conscious of the unique timeliness rules that a protester must satisfy to raise the violation as a ground of protest.

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.

© Morrison & Foerster LLP. All rights reserved

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Daniel E. Chudd
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