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Today, during a conversation with colleagues, a term was used that I had heard many times before -- gray areas. The statement was basically that federal contracting has a lot of gray areas. I asked what was meant by 'gray areas' and was told it means no right or wrong answer.

Initially, I disagreed and asked for examples, but the examples didn't support the assertion. I mentioned that I believe there are several acceptable, right, answers, but there are many clear unacceptable, wrong, answers to many issues as well. We ended the conversation, but I'm still not sure that there are as many gray areas as many practitioners portray.

In my experience, most people call things gray areas simply because they haven't researched -or been exposed to- a particular area (lack experience, training or education). It's often used lazily as a blanket waiver for not maintaining proficiency (lacking understanding of the rules or not knowing case law for example). 

I was left believing that federal contracting has a lot of fact dependent, professional, application of rules (laws, regulations, policies and procedures), but that should not be mischaracterized as gray areas.

Any thoughts?

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There are a lot of areas where contracting officers have discretion, where the FAR doesn't prescribe the step-by-step approach.  Calling these gray areas might not be the best terminology because it hints at good and bad, legal or illegal.  

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Sometimes, we have to call it a gray area.  If you're talking to an absolutist "I'm right and you're wrong" type of person, without regard to what the FAR says, and he or she is wrong in denying you your discretion, maybe the only way to reach compromise is to call it a gray area.  You shouldn't have to deal with this sort of people because they shouldn't exist in our career field, but we all know that they do exist -- and we have to work with and/or around them.  In this context, agreeing to say something is in a gray area might be the only way to move forward. 

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Gray areas are those where there is subjectivity in the decision-making. It doesn't mean a lack of training, knowledge or experience.

For example, selecting a contract type.  There is no "one right" answer for every situation; it's subjective. (Unless it's a commercial item.) The U.S. Navy’s A-12 aircraft contract is an infamous example of selecting the wrong contract type. In 1984, the navy awarded two teams fixed-price contracts for concept formulation and demonstration validation. Even though the initial contract results from the concept formulation phase indicated that the design was immature, the navy awarded McDonnell Douglas and General Dynamics a full-scale engineering and development contract to develop the A-12, a stealth aircraft.

Another gray area is best value/tradeoff source selection.  How much more are you willing to spend to get better quality? Do you have the budget for it?  The Govt can spend more for higher quality, but they need to justify and document that decision. No one right answer exists. You and I do this every day as consumers.  We spend more (or not) for quality and it's a subjective decision--a gray area.

Vague terms in a contract also lend themselves to being gray. What's an "acceptable manner?"  Who decides what's an acceptable manner? It's a subjective decision, but we see that phrase a lot in contracts.

Yes, there are laws, regulations and rules; but there is also subjectivity in the decision making process. That's why training, education, and experience are so important in contract management.

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4 hours ago, Jamaal Valentine said:

In my experience, most people call things gray areas simply because they haven't researched -or been exposed to- a particular area (lack experience, training or education). It's often used lazily as a blanket waiver for not maintaining proficiency (lacking understanding of the rules or not knowing case law for example).

That's been my experience, too. "It's all gray" is used more as an excuse than a conclusion based on a deep understanding of laws, regulations, etc.

Having said that, contracting does not have the precision of mathematics. I don't think there are many online discussion boards debating what a2 + b= c2 really means, or what Pythagoras's intent was when he devised his theorem. We have a lot of questions without definitive answers, so we should develop our most reasonable positions and stand ready to be corrected.

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Yes, "gray area" is imprecise (as is so much conversational language) and tends to be shorthand for other, longer, phraseology.

For example, I often say that the allowability of legal costs is a gray area as costs are incurred, because we won't know whether the costs are allowable, partially allowable, or unallowable until the matter is decided. Moreover, the allowability of legal settlement costs may be a gray area, because there is complex case law (including Tecom and Boeing North American) that can further complicate matters.

So I tell people it's a "gray area" but what I mean is that we'll have to decide how to claim the costs on a case-by-case basis, based on individual circumstances, including whether we want to be conservative or aggressive.

In this particular case, "gray area" = "it's complicated and I don't want to take the time to explain it to you and then have you ask me questions that put me in a position of defending the cost principle and explaining judicial decisions"

H2H

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12 hours ago, MGRumbaugh said:

Gray areas are those where there is subjectivity in the decision-making. It doesn't mean a lack of training, knowledge or experience.

'Gray area' was defined differently for the conversation. I think a gray area is generally a thing that is not clearly one thing or some other thing, that is subject to interpretation. In our business, these areas usually come up when deciding whether something is allowable/unallowable or proper/improper. Lucky for us, many areas of our practice have already been interpreted, if not adjudicated. Everyone should pursue this basic knowledge. Few will go further to study and understand the history, concepts, and theories.

A part of our basic duties is to clarify gray areas and develop sound solutions. The questions you asked are fact dependent and contracting officer's are given incredible amounts of deference and discretion in making decisions.

Subjective decision making or the absence of bright line, standardized answers and solutions to topics in general doesn't mean a specific action is gray. For example, there is likely a contract type that is the best choice for any particular requirement. Similar goes for tradeoffs - it's all fact dependent, but a 'best value' decision will be made -within the rules- based on the source selection authority's judgement - removing the gray. My best value may or may not be your best value, but it doesn't have to be. It just has to comply with the rules of the game.

12 hours ago, MGRumbaugh said:

Vague terms in a contract also lend themselves to being gray. What's an "acceptable manner?"  Who decides what's an acceptable manner? It's a subjective decision, but we see that phrase a lot contracts.

Again, it's fact dependent, but there are rules for interpreting written contracts when there is a dispute among the parties (intent, ordinary meaning, trade usage, etc.).

12 hours ago, MGRumbaugh said:

Yes, there are laws, regulations and rules; but there is also subjectivity in the decision making process. That's why training, education, and experience are so important in contract management.

Seems you are saying training, education, and experience are tools to counter gray areas.

Maybe we mean the same or similar things using different words.

 

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Guest Vern Edwards

The term "gray area" is only as imprecise as you make it or allow it to be.

I define "gray area" as an issue domain in which there is more than one possible resolution but for which there is no mandated rule for choosing based on established facts and thus no "black or white" (right or wrong) choice. 

A "black or white" issue domain includes a mandated (handed-down and indisputable) rule for resolving the issue through deductive reasoning. The mandated rule is the major premise on which a deduction is to be based. The relevant facts are the minor premise.

  • Major premise: If the facts are x, then the resolution is y.
  • Minor premise: The facts are x.
  • Conclusion (resolution): Thus, the resolution is y.

Example of a "black or white" issue: Do we need a D&F in order to use a T&M contract? Mandated rule: FAR 12.207(b)(1)(ii)(A) or 16.601(d), as applicable. Issue resolution by right answer: Yes. Any other answer would be wrong.

Gray area issues must be resolved on the basis of professional judgment and sound exercise of discretion, because no rule is mandated. The decision maker must stipulate his or her own rule to use as a major premise. Different people might make different judgments about what the best rule might be. I believe that in most cases the rule is never consciously or fully articulated.

Example of a gray area issue: Should we use a firm-fixed-price contract, a fixed-price-incentive (firm target) contract, or a fixed-price-incentive (successive targets) contract for acquisition of initial production of a newly developed military aircraft? Since there is no mandated rule of choice, you might get different opinions on the best resolution of that issue (ask the Air Force and Senator McCain) no matter how many facts you have, and no choice could be said to be wrong.

Not only are there gray areas in acquisition, but they tend to be some of the most important issue domains: Is the price "fair and reasonable"? Gray area issues are resolved through argumentation and persuasion, which requires greater knowledge and skill than are required for simply following direction.

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Vern:

Your post reminded me of something I read on decision making by Harvard Business Review. It basically said the effective decision maker classifies issues in one of four categories - truly generic; unique to the individual, but actually generic; truly exceptional or unique; or the early manifestation of a new generic problem.

 The book indicated that all but the truly unique require a generic solution (rule, policy, or principle). Once the right principle has been developed, all manifestations of the same generic situation can be processed pragmatically by adapting the rules to the circumstances of the case.

It went on to say the most common mistake of decision makers is to treat generic situations as unique events when lacking understanding and the principles.

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Jamaal,

That sounds interesting and the insight can probably be a personal help to me.

The Philosopher-Logician in me, however is wondering if there is an irony here...how can an argument generally favoring experience over novelty really be so new? Or does the author know that there is a well established framework in statistics (which is decision science) that parallels or perhaps even suggests the author's case?  

The example of the "most common mistake" of decision makers reminds me of the well trod ground that we cover when examining the prospect of a false positive in a statistical test.  Consider the prospect of a type 1 error (false positive) on a test for a rare disease; it seems that people naturally have a hard time understanding how a single false positive can be a much more common event (suppose a false positive happens 2% of the time) than the rare disease in question (say 1 in 20,000 cases).  A single positive test is still much more likely to be a false positive (with our simplified case, 400 times more likely) than to be a true indication of the rare condition. Re-running the test in this instance is analogous to what I take away from the author's observations: think twice before concluding you are observing a rare result.  

 

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As others have already said, there are legitimate gray areas within contracting laws/regulations/policies.  It is in those areas where sound judgment is needed based on supporting (fact based) rationale.  That is why contracting folks are paid so handsomely.  :lol:

However, in my experience, too often times the "gray area" defense is used because someone does not want to get into a discussion on the merits (or lack thereof) of their argument, probably because they lack the ability to.  Most of the time when someone has made that comment to me, it was clear they did not have an understanding of the law/regulation/policy on a non-discretionary matter.  The would say things like "like, that is your opinion, man" (channeling their inner Lebowski), "that is they way I interpret it", "it is a gray area", or "I'm the one signing it so my interpretation is what matters".  The more I try to help such folks understand the proper interpretation or application of principles by providing supporting rationale, the more they usually dig their heels in.  As General Honore has said some folks "are stuck on stupid".  I've always felt that my time is better spend on folks who are eager to learn and admit they are wrong, regardless of how many years of experience they have.  I've been doing this work for over 20 years (since I was a teenager - 19) and I continue to learn often and readily admit when I'm wrong on something.

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Guest PepeTheFrog
On 3/24/2016 at 6:56 AM, Jamaal Valentine said:

In my experience, most people call things gray areas simply because they haven't researched -or been exposed to- a particular area (lack experience, training or education). It's often used lazily as a blanket waiver for not maintaining proficiency (lacking understanding of the rules or not knowing case law for example). 

 

On 3/28/2016 at 11:58 AM, Todd Davis said:

However, in my experience, too often times the "gray area" defense is used because someone does not want to get into a discussion on the merits (or lack thereof) of their argument, probably because they lack the ability to.  Most of the time when someone has made that comment to me, it was clear they did not have an understanding of the law/regulation/policy on a non-discretionary matter.  The would say things like "like, that is your opinion, man" (channeling their inner Lebowski), "that is they way I interpret it", "it is a gray area", or "I'm the one signing it so my interpretation is what matters".

 

On 3/24/2016 at 11:44 AM, Don Mansfield said:

That's been my experience, too. "It's all gray" is used more as an excuse than a conclusion based on a deep understanding of laws, regulations, etc.

PepeTheFrog agrees, and here's another similar phrase: "well, there are two ways of looking at it...[but I can't provide any analysis or citation for or against either position]"

 

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  • 2 weeks later...

I was just watching one of my favorite shows, Brain Games, and they mentioned something interesting - "When you stop and think about it, you're probably not that aware of all of the things you don't understand. The fact is we go through our daily lives feeling pretty confident in our knowledge and understanding of the world, but that confidence is mostly an illusion. In this episode of Brain Games, we'll show you firsthand just how the "illusion of knowledge" plagues the human brain and why we fall victim, again and again, to the notion that we understand more than we actually do."

It was on Season 2 Episode 6.

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Makes me think of Donald Rumsfeld's most famous quote, "As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know."

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Hi, Lionel,

I always thought that was an exhaustive list of knowable and unknowable things.  Until I came up with unknown knowns.  These are the ones that really make your organization look bad.  Like when you administrator does something stupid, something that everyone three levels down knows was a mistake in advance, but the information never got up the chain.

I have also been thinking about known unknown unknowns . . .

 

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