Infotech and the Law: New provisions in agency solicitations rankle contractors

Eliza Nagle

It's no surprise that, since Sept. 11, 2001, demand for workers with security clearances has increased. Industry and government have tremendous need for cleared employees, but there are significant barriers to hiring them. The backlog in the government's clearance process only exacerbates the problem.

Both industry and government have tried to respond to these issues with various solutions. In 2004, a coalition of industry associations recommended that Congress implement reforms to the security clearance process. In response, Congress passed the Intelligence Reform and Terrorism Prevention Act of 2004, which, among other things, established procedures to reduce the time required to process security clearances.

Regrettably, reforms in the 2004 act have not been implemented as quickly as hoped or needed. It appears that agencies are scrambling to find their own solutions to these problems through new policies and requirements.

For example, as a recent Government Accountability Office decision reflects, the Defense Department issued a request for proposals requiring each offerer to hold an interim facility clearance before the RFP closing date. The agency or a cleared contractor must sponsor the company that seeks a facility clearance. But the wrinkle was that the agency refused to sponsor potential offerers for the security clearance.

A potential competitor protested this approach, arguing that the security clearance requirement, plus the agency's refusal to sponsor offerers, was overly restrictive. Any cleared contractor, the offerer argued, likely would be a competitor and would refuse to sponsor another offerer.

Consequently, the provision essentially eliminated all potential competitors that did not already hold a security facility clearance.

GAO resolved the issue in favor of the agency, finding that the requirement was acceptable and reasonably related to the Defense Department's needs.

In another case, an agency reportedly has tried to address the shortage of cleared personnel by developing a solicitation provision. It imposes a salary cap on former intelligence employees who have left the government to work for private contractors on security-restricted programs. For instance, the government would refuse to accept salaries proposed by contractors for these employees, if the salaries exceeded a ceiling amount.

This new provision appears to stem the tide of intelligence community employees going into industry. It is understandable that the government would want to minimize the exodus of these valuable employees; however, government must be careful in adopting such a solution.

First, the clause is legally questionable. Some may argue that the clause reflects an unconstitutional "taking" by government, as it may prevent agency employees from getting more lucrative positions in the private sector. Additionally, in some respects, the provision appears to impose after-the-fact non-compete restrictions, without the concurrence or awareness of the agency employee.

Finally, even if legally valid, such clauses reflect bad policy, as they exceed the statutory restrictions that Congress has seen fit to impose through revolving door laws. They try to solve the government's systemic clearance problems at the expense of its employees and contractors.

Industry and government face the same problem: a need for cleared employees to work on important programs. Agencies must resist the temptation to solve this problem by developing restrictive solicitation provisions.

Unfortunately, many of the solutions may unintentionally create bad, and potentially anti-competitive, policies. Instead, industry and government together should find middle ground ? consistent with the 2004 Act ? that fairly balances the interests of industry, government and government employees.

Eliza Nagle is an associate in the Government Contracts practice of DLA Piper Rudnick Gray Cary US LLP in Washington, D.C. Her e-mail address is

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