The interpretation of federal contracts is generally governed by the plain language of the contract. This means that adjudicative forums assign meaning to federal contracts primarily by giving the contractual words their ordinary sense and without referring to extrinsic evidence. If the plain meaning of contractual words is unambiguous, that meaning generally controls for the purposes of contract interpretation. However, there may be situations where the contract terms are unclear or ambiguous permitting more than one reasonable interpretation. In such situations, adjudicative forums may rely on certain extrinsic evidence to resolve contract interpretation disputes.

• Extrinsic Evidence in the Solicitation Phase

In resolving the meaning of ambiguous terms in case of interpretive disputes in federal contracts, adjudicative forums often look to the discussions between the government and prospective contractors in the solicitation phase of the procurement. The solicitation provision contained in Federal Acquisition Regulation (FAR) 52.214-6 requires prospective contractors to request in writing clarifications concerning the interpretation of solicitation, drawings, and specifications. The provision also informs prospective contractors that any oral explanations or instructions given before the award of a contract will not bind the government. Prospective contractors are generally required to seek clarifications early in the procurement process to allow the government enough time to reply in a manner that conveys its answer to all interested contractors.

Statements made by government officials during their interactions with prospective contractors at pre-proposal conferences, industry days, or pre-award testing may be used as evidence in contract interpretations as long as such statements do not directly contradict the contract language. As with other extrinsic evidence in the context of contract interpretation, written communications, such as handouts and meeting minutes, generally hold much more weight than oral statements made by government officials. Therefore, early stage communications between the parties often determine whether they intend to assign specific meanings to any ambiguous terms at issue.

• Extrinsic Evidence in the Performance Phase

In disputes involving the interpretation of ambiguous terms in federal contracts, adjudicative forums also look to the parties’ actions during the performance phase of the contract to determine their intent. On follow-on contracts, materials documenting the parties’ previous performance trends, such as internal memorandums and progress reports, are seen as strong evidence for determining a reasonable interpretation of ambiguous terms. Pre-dispute performance phase actions of the government and the contractor are generally seen as demonstrating their respective subjective interpretations of how performance should be delivered on the contract.

In resolving ambiguous contract clauses, any government interpretations of similar clauses on other contracts may be viewed by adjudicative forums as the government’s reasonable understanding of how performance should be carried out under the clause at issue. Similarly, government interpretations may be contained in official pronouncements, such as agency policy letters, internal memorandums, and relevant laws and statutes. Such official pronouncements are considered communications and actions of a contracting party during the performance phase of the contract for the purposes of assigning reasonable meaning to ambiguous terms. Such official pronouncement may be viewed as communications clearly signaling the government’s intent or interpretation of specific clauses. Such extrinsic evidence may be strong enough to bind the parties contractually as to the meaning of the ambiguous terms as relevant to the performance phase of the contract.

• Limitations on Extrinsic Evidence

The parole evidence rule serves as the primary limitation on using extrinsic evidence in interpreting federal contracts. This common law principle states that a final integrated contract may not be modified by earlier or contemporaneous evidence that may contradict or alter the written terms of the contract. The parole evidence rule thus prevents parties from introducing pre-award evidence of negotiations during the pre-solicitation or solicitation phases that contradicts, adds to, or introduces ambiguity into an integrated contract. As an additional limitation on the use of extrinsic evidence in resolving contract interpretation disputes, the government will generally not be bound by any statements made by government officials that exceed their respective authority, regardless of the phase of the procurement lifecycle during which such statements are made.

Contractors should carefully collect and maintain information, materials, and communications received from the government during all procurement phases, as they may prove helpful extrinsic evidence during contract disputes involving ambiguous terms, provisions, or clauses. Furthermore, contractors should immediately request clarifications from the government of any ambiguous terms they identify in their solicitations or contracts and diligently pursue these clarifications if they do not receive an immediate response from the government. By doing this, contractors can preserve and support potential claims through favorable interpretations of ambiguous terms in case of contract interpretation disputes with the government.

This Federal Contract Claims Insight is provided as a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.