Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 3 of 3 | January 2019

Government–Industry Interactions Volume 3

Recommendation 84: Direct DoD to communicate with the marketplace 

concerning acquisition from development of the need/requirement through 

contract closeout, final payment, and disposal.

Problem

Despite attempts by governmentwide and DoD acquisition leaders since Congress passed the Federal 

Acquisition Streamlining Act of 1994 (FASA), DoD acquisition personnel and individuals in the 

marketplace have expressed concern about communicating with each other openly and frequently 

throughout the acquisition process, for fear of legal violations.

1 They report fear of being challenged by 

both oversight functions in government and through the protest processes, yet this fear is rooted in 

lore, rather than law. There are very few restrictions that apply to communication with the 

marketplace. 

Background

Congress has not explicitly directed the acquisition team to communicate with the marketplace but has 

encouraged and permitted communication with industry. 2 The difference between directing and 

encouraging and permitting is key in terms of DoD culture and behavior regarding communication with 

industry. Over time, the perceived risks that members of the acquisition team have attached to

communication between government and the marketplace have created a perception that such 

communication is risky and may even be prohibited. 

The Office of Federal Procurement Policy (OFPP), the FAR Council, the office of the Secretary of 

Defense, and the DAR Council have issued numerous policy documents directing and encouraging 

communications with the marketplace.3 In a March 2018 policy memorandum to secretaries of the 

Military Services, then-Deputy Secretary of Defense Patrick Shanahan encouraged communication with 

the marketplace. Shanahan noted although operating within required ethical guidelines is essential, 

 

1 Federal Acquisition Streamlining Act of 1994, Pub. L. No. 103–355 (1994). There are very few restrictions that apply to communications 

with the marketplace. This recommendation is needed to affirmatively debunk the “lore.”

2 FAR 1.102(c) states, “The Acquisition Team consists of all participants in Government acquisition including not only representatives of 

the technical, supply, and procurement communities but also the customers they serve, and the contractors who provide the products 

and services.”

3 OMB Memorandum, “Myth-Busting”: Addressing Misconceptions to Improve Communication with Industry during the Acquisition 

Process, February 2, 2011, accessed November 7, 2018, 

https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/procurement/memo/Myth-Busting.pdf. OMB Memorandum, “MythBusting 2”: Addressing Misconceptions and Further Improving Communication During the Acquisition Process, May 7, 2012, accessed 

November 7, 2018, https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/procurement/memo/myth-busting-2-addressingmisconceptions-and-further-improving-communication-during-the-acquisition-process.pdf. OMB Memorandum, “Myth-busting 3”: 

Further Improving Industry Communication with Effective Debriefings, January 5, 2017, accessed November 7, 2018, 

https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/procurement/memo/mythbusting_3_further_improving_industry_communications_with_effectiv....pdf. Market Research, FAR Part 10. OSD Memorandum, Better 

Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending, September 14, 2010, accessed 

November 7, 2018, https://www.acq.osd.mil/fo/docs/USD_ATL_Guidance_Memo_September_14_2010_FINAL.PDF. OSD Memorandum, 

Better Buying Power 2.0: Continuing the Pursuit for Greater Efficiency and Productivity in Defense Spending, November 13, 2012, accessed 

November 7, 2018,

https://www.acq.osd.mil/fo/docs/USD(ATL)%20Signed%20Memo%20to%20Workforce%20BBP%202%200%20(13%20Nov%2012)%20wit

h%20attachments.pdf. OSD Memorandum, Implementation Directive for Better Buying Power 3.0 – Achieving Dominant Capabilities 

through Technical Excellence and Innovation, April 9, 2015, accessed November 7, 2018, 

https://www.acq.osd.mil/fo/docs/betterBuyingPower3.0(9Apr15).pdf. Market Research, DFARS Part 210.
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doing so must not preclude frequent communication with industry at all points in the acquisition 

process. He emphasized, “Conducting effective, responsible, and efficient procurement of supplies and 

services while properly managing the resultant contracts requires Department personnel to engage in 

early, frequent, and clear communications with suppliers.”4 Even this clear direction from DoD 

leadership has not been sufficient to address the acquisition workforce’s reticence to communicate with 

industry, which leaves congressional direction as the only remaining avenue for promulgating this 

essential behavioral and cultural change.

Discussion

Every aspect of the acquisition process is adversely affected by acquisition team members’ 

apprehensiveness when communicating with the marketplace. This apprehension is reinforced by legal 

advice provided by the various offices of general counsel, staff judge advocate’s offices, and fear of 

protests. It discourages communication between government and the private sector even when the 

related fear is unfounded. The potential costs of failing to communicate adequately with the private 

sector include added time to already inherently lengthy acquisitions processes and lost opportunities to 

access the innovative solutions accessible to nonstate actors and the nation’s near-peer competitors. 

The acquisition team is defined in FAR Part 1 as “all participants in Government acquisition including 

not only representatives of the technical, supply, and procurement communities but also the customers 

they serve, and the contractors who provide the products and services.” The perceived limitations on 

communication hinder team members’ ability to work together to identify and deliver capability to 

warfighters.

This fear of communicating with the marketplace extends to the formulation of policy applicable to the 

acquisition system, despite permissive language in the Office of Federal Procurement Policy Act, the 

Administrative Procedures Act, and policy statements by every administration for at least the last 20 

years. The myriad rules that govern doing business with DoD present a great enough challenge. The 

fact that those rules often do not mirror how the private sector buys and sells further complicates the 

acquisition process. To foster successful procurement in the marketplace DoD must communicate with 

the private sector in the form of policy formulation and market research. 

Market research should not be limited to contracting officers. It should include communication among 

acquisition team members as they discern what products or services are available. It should also 

include communication with industry such as identifying potential suppliers’ respective capabilities,

considering the possible applications marketplace solutions might offer, and even exploring the

disposal side of acquisition. Applications of a solution may evolve over time, necessitating continued 

communication throughout the acquisition process. 

In 1994, Congress enacted FASA, which included landmark language in Title VIII regarding acquisition 

of commercial products and services, placing even greater emphasis on the need for and proper 

conduct of market research.5 Section 8104, Preference for Acquisition of Commercial Items, included a 

 

4 DoD Memorandum, Engaging with Industry, March 2, 2018, accessed October 23, 2108, http://www.ndia.org/-/media/sites/pressreleases/documents/dsd_letter_engaging_with_industry.ashx?la=en. 5 Federal Acquisition Streamlining Act of 1994, Pub. L. No. 103-355, 108 Stat. 3390 (1994).
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section on market research that was codified at 41 U.S.C. § 3307 and 10 U.S.C. § 2377 which state, in 

part, the following: 6

(d) MARKET RESEARCH. —

(1) WHEN TO BE USED. —The head of an executive agency shall conduct market research 

appropriate to the circumstances—

(A) before developing new specifications for a procurement by that executive agency; and

(B) before soliciting bids or proposals for a contract in excess of the simplified acquisition

threshold.

(2) USE OF RESULTS. —The head of an executive agency shall use the results of market 

research to determine whether commercial items or, to the extent that commercial items suitable 

to meet the executive agency's needs are not available, non-developmental items other than 

commercial items are available that—

(A) meet the executive agency's requirements;

(B) could be modified to meet the executive agency's requirements; or

(C) could meet the executive agency's requirements if those requirements were modified to a 

reasonable extent.

10 U.S.C. § 2377 includes a broad additional requirement for DoD personnel to receive training in 

conducting market research:

(e) MARKET RESEARCH TRAINING REQUIRED. —The Secretary of Defense shall provide 

mandatory training for members of the armed forces and employees of the Department of Defense 

responsible for the conduct of market research required under subsections (c) and (d). Such 

mandatory training shall, at a minimum—

(1) provide comprehensive information on the subject of market research and the function of 

market research in the acquisition of commercial items;

(2) teach best practices for conducting and documenting market research; and

(3) provide methodologies for establishing standard processes and reports for collecting and 

sharing market research across the Department. 

Market research serves as the foundation for learning about many important procuring-activity 

decisions such as availability of commercial products or services to meet agency needs, as well as 

nondevelopmental products or services, the appropriate procurement method, the likelihood of 

competition, appropriate terms and conditions, pricing, and more. 

 

6 The Panel believes that this applies equally to its proposal on readily available and readily available with customization. See 

Recommendation 35 in Section 1 of this Volume 3 Report.
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Congress has continued to focus on market research though additional requirements in NDAAs. For 

example, the FY 2008 NDAA required DoD to develop market research training focused primarily on 

contracting officers and prime contractors.7 Section 855 of the FY 2016 NDAA addressed market 

research in a much more inclusive manner.8 It makes clear the importance Congress places on the 

proper conduct of market research:

(a) GUIDANCE REQUIRED. —Not later than 90 days after the date of the enactment of this Act, 

the Under Secretary of Defense for Acquisition, Technology, and Logistics shall issue guidance to 

ensure that acquisition officials of the Department of Defense fully comply with the requirements of 

section 2377 of title 10, United States Code, regarding market research and commercial items. The 

guidance issued pursuant to this subsection shall, at a minimum—

(1) provide that the head of an agency may not enter into a contract in excess of the simplified 

acquisition threshold for information technology products or services that are not commercial 

items unless the head of the agency determines in writing that no commercial items are suitable 

to meet the agency’s needs as provided in subsection (c)(2) of such section; and 

(2) ensure that market research conducted in accordance with subsection (c) of such section is 

used, where appropriate, to inform price reasonableness determinations. 

Section 855 included language that demonstrates Congress’s intent that market research be conducted

across the acquisition community and not solely by contracting officers:

(b) REVIEW REQUIRED.—Not later than 180 days after the date of the enactment of this Act, the 

Chairman and the Vice Chairman of the Joint Chiefs of Staff, in consultation with the Under 

Secretary of Defense for Acquisition, Technology, and Logistics, shall review Chairman of the Joint 

Chiefs of Staff Instruction 3170.01, the Manual for the Operation of the Joint Capabilities Integration 

and Development System, and other documents governing the requirements development process and 

revise these documents as necessary to ensure that the Department of Defense fully complies with the 

requirement in section 2377(c) of title 10, United States Code, and section 10.001 of the Federal 

Acquisition Regulation for Federal agencies to conduct appropriate market research before developing 

new requirements. 

Congress defined the term market research for purposes of Section 855 to include the exchange of 

information between “knowledgeable individuals in Government and industry.” Section 855 states the 

following:

(c) MARKET RESEARCH DEFINED. —For the purposes of this section, the term ‘‘market 

research’’ means a review of existing systems, subsystems, capabilities, and technologies that are 

available or could be made available to meet the needs of the Department of Defense in whole or in 

part. The review may include any of the techniques for conducting market research provided in 

section 10.002(b)(2) of the Federal Acquisition Regulation and shall include, at a minimum, 

 

7 FY 2008 NDAA, Pub. L. No. 110-181, div A, title VIII, § 826(b) (2008). 8 FY 2015 NDAA, Pub. L. No. 114-92, div. A, title VIII, § 855 (2015). 
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contacting knowledgeable individuals in Government and industry regarding existing market 

capabilities.

This definition of market research in Section 855 is more detailed than the very generic definition 

currently found in FAR 2.101, Definitions:

“Market research” means collecting and analyzing information about capabilities within the market to 

satisfy agency needs.

The 2016 NDAA was even more specific on this question of the exchanges between government and 

industry personnel as part of market research. Section 887 encourages “responsible and constructive 

exchanges with industry.”

Not later than 180 days after the date of the enactment of this Act, the Federal Acquisition Regulatory 

Council shall prescribe a regulation making clear that agency acquisition personnel are permitted and 

encouraged to engage in responsible and constructive exchanges with industry, so long as those 

exchanges are consistent with existing law and regulation and do not promote an unfair competitive 

advantage to particular firms. 

The new definition and the congressional direction have not yet been adopted in the FAR or DFARS. 

The difficulty with this language is that it is permissive and not directive in nature. To change the 

current culture of apprehension and fear the language must be directive. In the absence of clear 

direction, there will always be advice to the effect, “you may communicate with the marketplace, 

but...” The but, though not prohibitive, clearly creates a risk to be avoided.

Communication between members of the acquisition team and industry is essential so that DoD 

customers who determine the requirements, program managers, contracting officers, contract 

managers, and sustainers can ensure warfighters benefit from the most innovative solutions available.

It is apparent that a congressional mandate is the only condition that will convince government

acquisition team members that they really are empowered to search the marketplace, ask questions 

about the products or services they believe meet their needs, negotiate for the purchase of that product 

or service, and continue a dialogue with the seller as they put the product in service or the seller 

performs the service.

There will be those who criticize the potential for corruption created by a direction to communicate 

with the marketplace without a caveat about various forms of prohibited activity from lack of 

competition to criminal conduct. Such critics should note the host of specific rules that already exist 

governing behavior set out in detail in the federal standards of conduct at 5 CFR 2635.101. Those 

standards provide that federal government employees must abide by a series of independent duties 

that make up the basic tenets of public service, including the duties of providing an honest effort in 

performing their functions and a duty to act impartially in dealing with nongovernmental entities. 

Federal agencies place additional obligations for fairness and honesty in supplemental agency ethics 

guidance. 
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Although there have been some isolated standards of conduct breaches, they are rare. Considering the 

huge number of interactions between federal employees and the public every year, the standards have 

proven to be an effective method of ensuring that fraud, waste, and abuse of the public trust rarely 

occur. Just in case those standards are not inherently enough to control bad behavior, Congress has 

enacted protections for whistleblowers embedded throughout the standards, such that if a breach occurs, 

institutional incentives support identifying and sanctioning those behaviors

Fundamentally, the cultural fear of ethics breaches, illegal, or bad behavior that has taken hold in 

agencies for the past 20 years has led to generalized fear of open communication. This fear is an

irrational response to a disproportionately small number of standards breaches or abuses of the duty of 

fair dealings. It should not be a reason to limit communications related to acquisition on either 

procedural or substantive reasons.

In Recommendations 59-61, the Section 809 Panel addresses both the training and education members 

of the acquisition team require before they are authorized to act on behalf of warfighters and taxpayers.

Private-sector firms also train their acquisition team members on the various requirements for doing 

business with the government. The vast majority have their own codes of conduct and educate their 

employees on the consequences of violating those codes.

Current law does not specifically clarify that communications with the marketplace are not only 

permitted, but most importantly, directed throughout the acquisition process. The current statutory 

construct does not make it clear that when there is a question about whether there should be a 

communication with the marketplace, members of the acquisition team should err in favor of that

communication.

Conclusions

To overcome the current cultural fear within DoD’s acquisition team of communicating with the 

marketplace, Congress must direct that communications with the marketplace, at all stages of the 

procurement process, including policy making, sustainment, and disposal, are required.

Providing acquisition team members appropriate training and education before authorizing them to act 

on behalf of warfighters and taxpayers is key to supporting ethical behavior. It is important that 

Congress not caveat its direction to communicate with the marketplace with warnings about various 

forms of prohibited activity. This sort of qualified mandate will obscure the clear-cut break with 

current practice that is recommendation is intended to create.

Congress should express the sense that communications with the marketplace are not only authorized 

but encouraged throughout the acquisition process, to include policy development, facilitating an 

approach of when in doubt, authorize communication. Congress should also direct DoD, by statute, to 

communicate with the marketplace concerning acquisition from development of the need/requirement 

through contract closeout, final payment and disposal and submit an annual report for the 5 years

following enactment of this statute articulating DoD’s plans for communicating with industry and its

accomplishments in implementing the direction to communicate with industry. Nothing in these 

recommendations eliminates the requirements governing ethical behavior by the acquisition team.
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Implementation

Legislative Branch

§ Express the sense of Congress that communications with the marketplace are not only 

authorized but encouraged during every step of the process from development of the

requirement through disposal. This communication specifically includes policy development

and makes clear that when in doubt, DoD should authorize communication.

§ Direct DoD, by statute, to communicate with the marketplace concerning acquisition from 

development of the need/requirement through contract closeout, final payment, and disposal. 

§ Direct DoD to submit an action plan to the congressional defense committees within 30 days of 

enactment that identifies barriers and restrictions and steps to remove them. Require DoD to 

submit annual updates. 

Executive Branch

- There are no regulatory changes required for this recommendation.

Implications for Other Agencies

§ These recommendations will affect all contracting agencies within the government if adopted as 

governmentwide policy. The FAR, as well as agency supplements, will require changes.