Organizational Conflicts of Interest (I): The GAO sustained two bid protests challenging the award of a U.S. Army Corps of Engineers contract for the design and construction of a hospital because the Army unreasonably determined that the awardee did not have Organizational Conflicts of Interest (OCIs) arising through its design subcontractor. McCarthy/Hunt, JV, B-402229.2, Feb. 16, 2010; B.L. Harbert-Brasfield & Gorrie, JV, B-402229, Feb. 16, 2010. The OCIs arose because, while the procurement was ongoing, the awardee’s design subcontractor was engaged in negotiations to be acquired by a company which had a subsidiary that was assisting the Army with the design concept for the hospital as well as with a technical review of the proposals submitted by the offerors. As a result, the awardee had both an “unequal access to information” OCI (because the acquiring company’s subsidiary had access to competitively useful, non-public information regarding the Army’s priorities, preferences, and dislikes for the project) and a “biased ground rules” OCI (because the subsidiary’s assistance to the Army also placed it in a position to skew the competition in favor of the awardee’s design subcontractor). Because the ordinary remedy for an unmitigated biased ground rules OCI is the elimination of that contractor from the competition, the GAO recommended that the Army eliminate the awardee from the procurement and make a new award determination.

Organizational Conflicts of Interest (II): The GAO also sustained two bid protests challenging the award of a Department of Health and Human Services (HHS) contract for the support of Medicare and Medicaid audit, oversight, and anti-fraud, waste, and abuse efforts because the HHS unreasonably found acceptable the awardee’s amended plan for mitigating potential OCIs. C2C Solutions, Inc., B-401106.5, Jan. 25, 2010; Cahaba Safeguard Administrators, LLC, B-401842.2, Jan. 25, 2010. The awardee had an undisputed potential “impaired objectivity” OCI because its performance of the solicited work could place it in the position of evaluating its parent corporation in connection with the parent’s Medicare Part D work. The Contracting Officer initially determined that the awardee was ineligible for award because its proposed OCI mitigation strategies were inadequate. In response, the awardee’s parent corporation submitted a letter that, in a single sentence, purported to amend the proposed OCI mitigation plan by stating that the parent, “at its discretion,” would divest the awardee, terminate its Part D contracts, or retain its Part D contracts and subcontract out the functions that pose an OCI with the work to be performed by the awardee. The GAO concluded that the Contracting Officer’s immediate acceptance of this revised OCI mitigation approach was defective because the amended plan lacked the necessary level of detail to reasonably assess the viability of the awardee’s mitigation strategy. While the amended OCI plan identified three potential approaches to mitigate the identified conflicts, there were “no details explaining how any of the plans would work or when they would, or could, be implemented.” In addition to the lack of detail, the GAO also found various aspects of the amended OCI mitigation plan “fundamentally problematic.” For example, regarding the proposed strategy of the parent corporation retaining its Part D contracts and subcontracting out the functions that pose an OCI with the work to be performed by the awardee, the GAO stated that it was not apparent how such an option would be feasible or effectively mitigate the conflict. Because the parent corporation would remain contractually responsible for the subcontracted functions, the awardee could be viewed as being in the position of evaluating its parent, notwithstanding its parent’s use of an intervening layer of subcontractors. The GAO therefore recommended that the HHS reconsider its determination that the awardee was eligible for award based on the amended OCI mitigation plan.

FSS Contracts: The GAO sustained a bid protest regarding the award of a Federal Supply Schedule (FSS) task order for construction site security services for the General Services Administration (GSA) because certain required services were outside the scope of the awardee’s FSS contract and, therefore, the awardee was ineligible for award. American Security Programs, Inc., B-402069 et al., Jan. 15, 2010. While the awardee’s FSS contract contained a “Protective Service Occupations” category that included Security Guards and other similar types of personnel necessary to staff security operations and to support those personnel, this category did not reasonably include the personnel necessary to perform the Construction Site Security Program Management services required by the solicitation. In that regard, the solicitation required the awardee to develop a Construction Security Plan for the purposes of obtaining Sensitive Compartmented Information Facility accreditation from the Defense Intelligence Agency. The GAO therefore recommended that the GSA instead issue the task order to the vendor next in line for award under the terms of the solicitation. (Similarly, the GAO also recently sustained a protest regarding the Department of State’s award of an FSS order for vehicle and cargo inspection systems because the price of a non-FSS item allegedly was included in the price of an FSS item. Rapiscan Systems, Inc., B-401773.2 et al., Mar. 15, 2010.)  

IDIQ Contracts (I): The GAO sustained a bid protest challenging the U.S. Army’s issuance of two task order requests for proposals because the solicited work was outside the scope of the underlying multiple-award indefinite delivery/indefinite quantity (IDIQ) contracts. DynCorp International LLC, B-402349, Mar. 15, 2010. The IDIQ contracts, which the Army awarded in 2007, had a scope of work that was limited to providing counter-narcoterrorism support services worldwide. The two task order requests for proposals, however, sought mentoring, training, facilities, and logistics support services for general law enforcement and counter-insurgency activities in Afghanistan. The GAO agreed with the protester – who did not hold one of the five IDIQ contracts – that the solicited work was outside the scope of the IDIQ contracts because it was unrelated to counter-narcoterrorism. Although there may have been some “small overlap” between the solicited work and the services required under the IDIQ contracts, the GAO stated that this did not permit the Army to purchase other services under the IDIQ contracts that were not reasonably contemplated when the contracts were issued. The GAO therefore recommended that the Army cancel the task order requests for proposals and either conduct a full and open competition for the solicited work or prepare the appropriate justification to limit the competition.

IDIQ Contracts (II): The Armed Services Board of Contract Appeals (ASBCA), in response to an appeal brought under the Contract Disputes Act by the holder of a multiple-award IDIQ contract for professional services, held that the Air Force improperly excluded the contractor from eligibility to compete for additional task or delivery order awards. HMRTECH2, LLC, ASBCA No. 56829, Mar. 12, 2010. The Air Force, which awarded the five-year IDIQ contracts as small business set asides in April 2006, excluded the contractor from consideration for further orders after it graduated from the SBA’s Section 8(a) Business Development program one year after award. The ASBCA, however, concluded that the contract did not provide a basis for excluding the contractor from receiving further orders. In that regard, the ASBCA noted that SBA regulations state that a concern that qualifies as a small business at the time it receives a contract is generally considered a small business throughout the life of that contract. The ASBCA further observed that task or delivery orders represent the Government’s exercise of existing contractual rights, and are not considered separate, individual contracts.

Past Performance Evaluations: The GAO sustained a bid protest regarding the award of four Federal Emergency Management Agency (FEMA) contracts for architect/engineering services because FEMA failed to consider any of the Past Performance Questionnaires it requested and received from references for the offerors. Shaw-Parsons Infrastructure Recovery Consultants, LLC et al., B-401679.4 et al., Mar. 10, 2010. The GAO considered the questionnaires to be past performance information “too close at hand to ignore.” The GAO also noted that consideration of the questionnaires was “particularly material” in this case because FEMA did not obtain any other third-party assessments of the offerors’ past performance, and instead relied solely upon information contained in offeror self-assessments.