The Procurement Integrity Act for Software Companies: What Your Sales Team Can and Cannot Know

Federal sales runs on information. Who the incumbent is, what the agency paid last time, what the evaluators thought of your demo. Most of that is fair game, and a good capture team collects all of it. A narrow band of information is not, and getting it before award can cost a company the contract, a suspension, or a criminal referral.

This guide covers the Procurement Integrity Act, 41 U.S.C. chapter 21, as implemented at FAR 3.104: what information it protects, the rules on job talks with federal officials, what happens when it is violated, and the habits that keep a software sales team on the right side of it. It is written for founders, sales leaders and capture teams, and it builds on our guides to organizational conflicts of interest and competitive range and discussions.

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The two kinds of protected information

The Act protects two categories of information before award. Both are defined in FAR 2.101.

Contractor bid or proposal information is what an offeror submits. It includes:

• cost or pricing data,
• indirect costs and direct labor rates,
• proprietary information about manufacturing processes, operations or techniques that the contractor has marked in line with applicable law or regulation,
• information the contractor has marked as “contractor bid or proposal information,” and
• information marked under the restrictive legend in FAR 52.215-1(e).

Source selection information is what the agency prepares to evaluate offers, if it has not been made public. It includes:

• bid prices in a sealed bid, or lists of them, before bid opening,
• proposed costs or prices, or lists of them,
• source selection plans and technical evaluation plans,
• technical evaluations and cost or price evaluations of proposals,
• competitive range determinations that identify the proposals with a reasonable chance of award,
• rankings of bids, proposals or competitors,
• reports and evaluations of source selection panels, boards or advisory councils, and
• other information the agency head or contracting officer marks “Source Selection Information — See FAR 2.101 and 3.104.”

For a software company, the practical translation is short. Your competitors’ prices and your evaluators’ opinions are off limits until award. So is anything marked as source selection information.

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The two prohibitions

FAR 3.104-3 sets out the core rules.

No knowing disclosure. A present or former official, or a person who is acting or has acted for or on behalf of, or advising, the United States on a procurement, who has or had access to protected information because of that role, shall not knowingly disclose contractor bid or proposal information or source selection information before award of the contract to which it relates.

No knowing obtaining. A person shall not, other than as provided by law, knowingly obtain contractor bid or proposal information or source selection information before award of the contract to which it relates.

The second rule is the one that reaches a vendor directly. It applies to any person, not just officials. A sales rep who asks an agency contact “where did our price land against the others?” before award is asking for source selection information. A reseller who forwards a competitor’s quote is handing over contractor bid or proposal information.

Both rules end at award. After award, the debriefing process discloses some evaluation results lawfully, and our guide to debriefings covers what you are entitled to. A competitor’s proposal stays protected after award under other laws, such as the Trade Secrets Act.

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What the Act does not restrict

41 U.S.C. 2107 lists what the Act leaves alone. Several of these matter for normal sales and capture work:

• Your own information. The Act does not restrict a contractor from disclosing its own bid or proposal information, or the recipient from receiving it. Sharing your pricing with a teaming partner or reseller is not a violation.
• Meetings. The Act does not prohibit individual meetings between an agency employee and an offeror or potential offeror, provided no unauthorized disclosure or receipt of protected information occurs. Demos, industry days and one-on-one sessions are allowed.
• Authorized recipients. It does not restrict disclosure to a person the agency has authorized to receive the information under its own procedures.
• Canceled procurements. It does not restrict information about a procurement the agency canceled before award, unless the agency plans to resume it.
• Oversight. It does not authorize withholding information from Congress, the Comptroller General, a federal agency or an inspector general, including in a protest.

The Act protects the information. It does not stop you from talking to the government. Our guide to sources sought notices and RFIs covers the many lawful ways to shape a requirement before the solicitation.

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Job talks with federal officials

Software companies hire people out of government: product managers who ran an agency’s platform, engineers who wrote its requirements, contracting staff who know how buying works. The Act puts rules on both sides of that conversation.

While the official is still in government. Under FAR 3.104-3(c), an agency official who is participating personally and substantially in a procurement above the simplified acquisition threshold, and who contacts or is contacted by an offeror in that procurement about non-federal employment, must promptly report the contact in writing to their supervisor and the agency ethics official. The official must then either reject the possibility of employment or disqualify themselves from further personal and substantial participation in the procurement until authorized to resume.

The vendor side has a rule too. An offeror that engages in employment discussions with such an official, knowing the official has not complied, is subject to the Act’s penalties.

After the official leaves. FAR 3.104-3(d) bars a former official from accepting compensation from a contractor, as an employee, officer, director or consultant, for one year after serving in certain roles on that contractor’s contracts above the dollar threshold in the rule. The roles include:

• procuring contracting officer, source selection authority, a member of the source selection evaluation board, or chief of a financial or technical evaluation team, in a procurement where that contractor was selected for award,
• program manager, deputy program manager or administrative contracting officer for a contract awarded to that contractor, and
• personally making certain decisions for the contractor, such as awarding a contract, subcontract, modification or order, establishing overhead rates, approving payments, or paying or settling a claim.

The bar does not prohibit accepting compensation from a division or affiliate of the contractor that does not produce the same or similar products or services. A contractor shall not provide compensation to a former official knowing the official is barred from accepting it.

Under FAR 3.104-6, officials and former officials can request an advisory opinion from their agency ethics official before acting. Ask a candidate for that opinion before you make an offer. It protects the candidate and your company. Separate post-employment rules in 18 U.S.C. 207 limit what a former employee may do to represent your company back to their old agency, and they apply regardless of contract size.

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What happens when it is violated

Penalties. 41 U.S.C. 2105 and FAR 3.104-8 provide for:

• criminal penalties of up to five years in prison, a fine, or both, for a violation committed to exchange the information for anything of value or to gain a competitive advantage for anyone,
• civil penalties per violation, set separately for individuals and organizations, plus twice the compensation received or offered, and
• administrative actions, including canceling the procurement, rescinding the contract, suspension or debarment, and adverse personnel action against officials.

The contracting officer’s duty. Under FAR 3.104-7, a contracting officer who receives or obtains information about a violation or possible violation must decide whether it affects the pending award or source selection. If it does, the matter goes to the head of the contracting activity, who can direct the procurement to continue, or take actions such as disqualifying an offeror, canceling the procurement, or rescinding a contract already awarded.

Contract clauses. FAR 3.104-9 prescribes two clauses for solicitations and contracts above the simplified acquisition threshold. FAR 52.203-8 lets the Government cancel the solicitation, rescind the contract and recover amounts paid when there has been a conviction or an agency determination of a violation. FAR 52.203-10 lets the Government reduce the contract price or fee. Check whether your contract carries them.

Suspension and debarment. A violation is a cause the government can act on for every future contract, not just the one at hand. Our guide to suspension and debarment covers how exclusion works.

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Protests have a 14-day reporting rule

If you believe a competitor or official violated the Act on a procurement you lost, timing matters. Under 41 U.S.C. 2106, a person may not file a protest alleging a violation of the Act, and the Comptroller General may not consider the allegation, unless that person reported the information to the agency responsible for the procurement no later than 14 days after first discovering the possible violation.

Report first, then protest. Our guide to bid protests covers the protest deadlines that run alongside this one.

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What to do if you are offered information you should not have

It happens more than most companies expect. A former colleague at the agency, a reseller, or a teaming partner who also bid elsewhere sends something they should not. A practical response:

1. Stop reading. Do not open attachments further or pass the material to the capture team.
2. Do not use it. Do not adjust your price, approach or proposal in response.
3. Isolate it. Preserve it, restrict access, and record who saw it and when.
4. Call counsel. Decide with counsel whether and how to report it to the contracting officer. Reporting is also what preserves your protest rights under the 14-day rule.
5. Fix the source. If it came through a partner or employee, address it with them directly.

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A procurement integrity checklist for software sales teams

• Train sales and capture staff. Every rep who talks to federal buyers should know the two protected categories by name.
• Never ask where you stand before award. Questions about competitor prices, rankings or evaluations wait for the debriefing.
• Mark your own proposals. Use the restrictive legend in FAR 52.215-1(e) on negotiated proposals, and mark pricing as contractor bid or proposal information.
• Use NDAs with partners. The Act lets you share your own information but does not protect it once shared.
• Screen hires from government. Ask about prior roles on your contracts and request the candidate’s ethics advisory opinion before an offer.
• Have a written response plan. Decide in advance who handles information that arrives when it should not.
• Read the current rule text. The FAR is being rewritten under the Revolutionary FAR Overhaul, so section numbers and wording may move. Confirm the provisions in your solicitation and get advice from counsel on specific situations.

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The short version

• The Act protects two kinds of information before award: contractor bid or proposal information and source selection information.
• It bars knowing disclosure and knowing obtaining. The obtaining rule applies to anyone, including your sales team and your partners.
• Your own information is yours to share, and meetings with agency staff are allowed as long as protected information does not change hands.
• Hiring from government has rules. Officials must report and recuse on job contacts, and some former officials face a one-year compensation bar.
• Violations carry criminal, civil and administrative consequences, and a protest on these grounds needs a report to the agency within 14 days of discovery.

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Where this fits

Buyers look for vendors they can trust with a competition, and a clean record on integrity and ethics is part of that picture alongside security, registration and past performance. It helps to know how your company looks across the categories federal buyers review before you enter a source selection. Score your company’s federal readiness to see where you stand.

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Related reading

• Organizational Conflicts of Interest for Software Companies
• Competitive Range and Discussions for Software Companies
• Debriefings for Software Companies
• Bid Protests for Software Companies
• Suspension and Debarment for Software Companies