Common Constraints on Creativity

Commercial disputes between private sector parties often lead to creative deals that address past conflicts through future business arrangements.  Commercial parties use these deals to create value that mitigates past injury.  Agencies and their contracting partners, however, must understand that many creative options available in the private sector are not available to all agencies.  The table below, which is not exhaustive, gives several examples of constraints imposed on federal agencies.

Private Sector Methods

Federal Sector Limitations

Award future contract to solve current dispute. Variations include:

  • Greatly increasing the volume of existing work
  • Greatly changing an existing scope of work

Competition in Contracting Act (CICA): 

  • Civilian agencies must use “full and open competition,” 41 USC 3301.
  • DoD must use “full and open competition,” 10 USC 2304.
  • Implemented in FAR Part 6.
  • Limited exceptions found in FAR Subparts 6.2 (small businesses) and 6.3 (various).

Substantially shift financial risk to the purchaser, through an indemnity or similar agreement.

Without specific statutory authority, government officials cannot promise to indemnify another party “where the amount of possible liability is indefinite, indeterminate, or potentially unlimited.”  Principles of Federal Appropriations Law, Vol. II, 3rd ed., at 6-59 to 6-60 (Feb. 2006) (citing 31 USC 1341 (Antideficiency Act) and 41 USC 11 (Adequacy of Appropriations Act)).  The possibility of a “coercive deficiency” is also discouraged.  59 Comp. Gen. 369 (1980).

Exclusive dealing agreements

CICA, cited above, limits this possibility by requiring full and open competition.

Very long multi-year purchasing agreements

10 USC 2306b limits multi-year contracts to 5 years, and imposes other substantial limitations.

Future appropriations might not be made, reducing the value of deals to contractors.

Promises to use specified products

Brand name or equal rules found in FAR Subpart 11.1.

Exchanges of goods.

Significantly limited by 10 USC 2571.  Purpose generally must relate to a public good like historical collections, police, and firefighters. 

Mutual sale of goods.

The government does not make a lot of items.  But when it does, the government may only sell if the item is not available from a US commercial source.  10 USC 2563. 

Product endorsements

Office of Government Ethics regulations discouraging endorsements.  See 5 CFR 2635.702.