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Use of Extrinsic Evidence in Interpreting U.S. Government Contracts

The interpretation of U.S. 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 permitting more than one reasonable interpretation. In such situations, adjudicative forums may rely on certain extrinsic evidence to resolve contract interpretation issues.

· Extrinsic Evidence in the Solicitation Phase

In interpreting the meaning of ambiguous terms in case of disputes arising in connection with 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 Regulations (FAR) 52.214-6 requires prospective contractors to request in writing clarifications concerning the interpretation of solicitation, drawings, and specifications early in the procurement process to allow the Government enough time to reply in a manner that conveys the clarification to all interested contractors. The provision also informs contractors that any oral explanations or instructions given before the award of a contract will not bind the Government. Therefore, communications between the parties at this early stage of the procurement often determines whether they intended to assign specific meanings to any ambiguous terms at issue.

Additionally, 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.

· 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 provisions, any Government interpretations of similar provisions on other contracts may be viewed by adjudicative forums as Government’s reasonable understanding of how performance should be carried out under the provisions 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 as clearly signaling the Government’s intent or interpretation. Such extrinsic evidence tends to bind the parties contractually as to the meaning of the ambiguous terms.

· 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. Finally, 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 these 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 or provisions. 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 potential claims and adequately support interpretations of ambiguous terms favorable to them in any contract interpretation disputes with the Government.

This U.S. 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.