Hours before the midnight ET signing deadline across Major League Baseball, Friedman said in a conference call that the two sides could not come to an acceptable agreement with Washington and that Diekroeger has chosen to fulfill his commitment to Stanford University.
The Rays will receive equivalent compensatory picks in the 2010 First-Year Player Draft.
Ultimately, as the deadline loomed, Tampa Bay could not arrange a deal with Washington and bring him in for a physical check on his surgically-repaired shoulder in time.
"We put forth an offer that was consistent with late-round first-round picks and if the gap between us had been small I imagine there would've been more conversation this morning and this afternoon," Friedman said. "But we never really got to a point where that was relevant."
Washington, the No. 30 overall selection, an outfielder from Gainesville, Fla., is a client of agent Scott Boras, who also represents five other first-round picks in this year's Draft. Washington said initially he would be quick to sign with the Rays after being selected on June 9.
Friedman, however, said talks were relatively slow-going up until the last week or so and by then it was merely a matter of beating Monday's deadline.
"I think it's fairly standard with signings that go down to the last day," Friedman said. "We were hopeful we'd be able to avoid that scenario. We weren't able to."
Washington originally committed to the University of Florida but it appears he is academically ineligible. Friedman said he was unsure if Washington will attend Florida or not.
Diekroeger, a shortstop from Atherton, Calif., was a risky selection due to his strong commitment to attend Stanford, but Friedman and Rays Director of Scouting R.J. Harrison said he was worth the risk.
"In our mind, there was tremendous upside to drafting Kenny and signing him and adding what we felt like was a first-round talent," Friedman said. "In the worst-case scenario he remains steadfast in his desires to go to Stanford, and we get the same-slot compensation for next year. I'd say from the beginning we were not as optimistic about it. But as an organization, we were committed to trying."
Friedman said the talks never progressed to even a point where monetary figures for a deal were discussed. Talks focused solely on "a life choice" for Diekroeger, as he decided between Stanford and the Rays.
"We did a real sales job on Kenny," Harrison said. "Our relationship with that kid and that family is really very good and we knew that there was a real possibility we couldn't get this done. We just thought that the upside to take a swing at this was so good that we wanted to go ahead and do it."
Washington and Diekroeger are the only two of Tampa Bay's top five picks to decline to sign with the team. The Rays signed third-round selection Todd Glaesmann, fourth-round selection Luke Bailey and fifth-round selection Jeff Malm over the weekend. Fifteen of the team's top 20 overall selections have signed.
Boras' other clients in the first round include No. 13 pick Grant Green, No. 9 pick Jacob Turner, No. 3 pick Donovan Tate, No. 2 pick Dustin Ackley and No. 1 pick Steven Strasburg.
Washington hit .400 with seven home runs, 14 stolen bases and 32 runs scored for Buchholz High School in Gainesville this spring. He was rated the No. 2 "fastest runner" among high school players entering the Draft by Baseball America.
Zach Schonbrun is an associate reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.