Small businesses will see several major multiple-award solicitations in 2021, including CIO-SP4 and Polaris. As contractors develop their capture strategies for important procurements like these, one frequently-asked question is, “can I be on multiple teams?”
While there is no simple one-size-fits-all, yes/no answer to the “multiple teams” question, an often-overlooked FAR provision provides some important guidance. Let’s take a look at five things you should know about the FAR’s Certificate of Independent Price Determination.
1. It’s Probably in Your Solicitation.
The FAR’s Certificate of Independent Price Determination clause, FAR 52.203-2, appears in most federal solicitations. According to FAR 3.103-1, the clause must be included unless the solicitation contemplates a simplified acquisition, is a request for proposals under two-step bidding procedures, or seeks utility services for which rates are set by law or regulation. Even if you’re bidding on a regular ol’ single-award contract instead of a massive multiple-award vehicle like CIO-SP4, you’re probably subject to the independent pricing requirements.
FAR 52.203-2 is one of those FAR clauses that is typically “incorporated by reference.” Instead of the full text, your solicitation may just contain the clause’s name and number. That doesn’t make the clause any less potent. Whether it’s incorporated by reference or full text, if it’s in the solicitation, you’re bound by it.
2. FAR 52.203-2 is a Certification–So Be Extra Careful.
It’s important to respect the “Certification” portion of the FAR’s Certification of Independent Price Determination. By submitting an offer in response to a solicitation containing FAR 52.203-2, you certify to the government that certain things are true. Certify incorrectly, and you could find yourself in some serious trouble.
For example, the government (or a so-called “qui tam” whistleblower) can use the False Claims Act to pursue civil and criminal penalties for almost any untrue certification, including under the Certificate of Independent Price Determination. In one notable case, a federal court imposed a $24 million penalty for a violation of the Certificate of Independent Price Determination.
The government is ramping up its efforts to identify and penalize contractors who violate FAR 52.203-2. The Department of Justice has established a “Procurement Collusion Strike Force,” intended to root out “bid-rigging conspiracies and related fraudulent schemes, which undermine competition in government procurement.” (No word yet on whether the “Strike Force” will send an elite SEAL team to raid the offices of suspected violators).
Offerors who inadvertently violate the Certificate of Independent Price Determination probably don’t think of their actions as collusive, but FAR 52.203-19 is rooted in the FAR’s anti-collusion provisions. Silly name aside, the establishment of the Strike Force shows that the government is taking enforcement of the clause seriously.
3. FAR 52.203-2 Requires Independent Development of Pricing.
Okay, so you’re probably bound by the FAR’s Certificate of Independent Price Determination and can get in serious hot water for violating it. But what, exactly, does the clause require?
FAR 52.203-2 first requires the offeror to certify that:
The prices in this offer have been arrived at independently, without, for the purpose of restricting competition, any consultation, communication, or agreement with any other offeror or competitor relating to –
(i) Those prices;
(ii) The intention to submit an offer; or
(iii) The methods or factors used to calculate the prices offered.
The clause essentially imposes a communication ban–no “consultation, communication or agreement” with another offeror regarding pricing or the intent to submit an offer. It’s easy to see how a contractor participating on multiple teams could inadvertently violate this requirement, or at least be in the uncomfortable position of trying to argue that a particular communication was not made “for the purpose of restricting competition.”
4. FAR 52.203-2 Prohibits Disclosure of Pricing.
The Certificate of Independent Price Determination doesn’t stop with the communication ban. It also requires the offeror to certify that:
The prices in this offer have not been and will not be knowingly disclosed by the offeror, directly or indirectly, to any other offeror before bid opening (in the case of a sealed bid solicitation) or contract award (in the case of a negotiated solicitation) unless otherwise required by law[.]
For contractors considering working on multiple teams, this may be the most difficult piece of FAR 52.203-2 to successfully address. Consider, for example, a company bidding on a contract in its own name, and also participating in a joint venture bidding the same contract. What are the chances that the company can avoid knowing the pricing of both bidders–its own pricing, and the joint venture’s? And unlike the communication ban, there is no requirement here that the purpose of the disclosure be to restrict competition.
Fortunately, there are a few commonsense exceptions to the disclosure limit. FAR 3.103-2(a)(1) says that none of the following, by themselves, constitute an impermissible disclosure:
(i) The fact that a firm has published price lists, rates or tariffs covering items being acquired by the Government.
(ii) The fact that a firm has informed prospective customers of proposed or pending publication of new or revised price lists for items being acquired by the Government.
(iii) The fact that a firm has sold the same items to commercial customers at the same prices being offered to the government.
5. FAR 52.203-2 Prohibits Inducements to Submit/Not Submit Offers.
We’re not quite done! The Certificate of Independent Price Determination requires one more certification. The offeror must certify that:
No attempt has been made or will be made by the offeror to induce any other concern to submit or not to submit an offer for the purpose of restricting competition.
Again, it’s easy to see how a contractor participating in multiple teams could violate this provision, or at least be put in the position of trying to explain why there is no intent to restrict competition. For instance, let’s say that a company wins a spot on an IDIQ under its own name, and also wins a spot with a joint venture. It would be natural for the company to decide to bid one order under its own name, and the next with the JV. (And, in a bit of a Catch-22, deciding to have both companies pursue the order could create a problem under the communication ban and/or pricing disclosure limit).
The Bottom Line: Tread Carefully.
So there you have it: five things you should know about FAR 52.203-2, the FAR’s Certificate of Independent Price Determination. Whether you’re bidding on a major multiple-award vehicle or a more traditional single-award contract, it is very important that your acquisition strategy take into account these important limits.
Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919.