In AT&T Government Solutions, Inc., B-400216, Aug. 28, 2008, the GAO sustained a protest on the grounds that the Navy improperly excluded the protestor from the competitive range based upon an appearance of an organizational conflict of interest (OCI). This case is significant because, among other things, it appears to be the first time the GAO has sustained a protest based on an agency's failure to consider a protestor's OCI mitigation plan prior to excluding that protestor from a procurement. The case also stands for the proposition that the appearance of an OCI, standing alone, does not constitute a valid basis for excluding an offeror from a procurement.

The solicitation at issue in AT&T Government Solutions was issued by the Navy for informational operations (IO) support services, including analysis of computer network security systems. The Navy eliminated the protestor from the competitive range based on a perceived risk that the protestor could be called upon to evaluate its own products under the contract. The protestor argued that the agency unreasonably ignored the protestor's OCI mitigation plan, unreasonably concluded that the contract would require the protestor to evaluate its own products or services, and unreasonably failed to provide the protestor with notice and an opportunity to respond to the agency's OCI concerns prior to disqualifying it from the procurement.

The GAO sustained the protest on the grounds that the Navy's exclusion of the protestor based on OCI concerns -- without evaluating the protestor's OCI mitigation plan -- was contrary to the terms of the solicitation. The GAO reasoned that the solicitation referenced several FAR subpart 9.5 provisions that permit a contractor to participate in a procurement where appropriate actions are taken, and safeguards are put in place, to resolve perceived OCIs. For example, the solicitation specifically provided that "a contract will not be awarded to a contractor that will evaluate its own offers for products or services, without proper safeguards to ensure objectivity," such as measures that would avoid, neutralize, or mitigate potential OCIs. It also contemplated the mitigation of unequal access to information OCIs through the use of nondisclosure agreements to protect the proprietary data of other contractors. The GAO concluded that the agency's failure to analyze the application of these mitigation techniques to the protestor's proposal was unreasonable and inconsistent with the requirements of the solicitation.

The GAO also found that the agency failed to provide any support for its conclusion that the protestor could be called upon to evaluate its own IO security products under the contract. In this regard, the GAO noted that AT&T's security products were not part of the Navy's IO system to be supported under the contract, and were only available to the protestor's network subscribers. Since the agency was not a subscriber, there was no reason to believe that an impaired objectivity OCI would arise.

Finally, the GAO held that the agency's failure to communicate its OCI concerns to the protestor and provide the protestor with an opportunity to respond was inconsistent with FAR 9.504(e), which expressly requires notice and an opportunity to respond prior to excluding a contractor from a procurement based upon a perceived OCI. The GAO also relied on FAR 9.506(d)(2), which requires contracting officers to consider additional information provided by prospective contractors in response to the solicitation or during negotiations in reviewing OCIs.

The GAO's decision in AT&T Government Solutions is noteworthy for three reasons.

First, the case makes it clear that an agency cannot exclude a contractor based on the appearance of OCIs without first evaluating that contractor's OCI mitigation plan. Interestingly, the GAO's conclusion in this regard relied primarily on the terms of the solicitation. However, since the relevant terms of the solicitation merely quoted and paraphrased the general principles articulated in FAR 9.505 -- which the Government has an independent obligation to follow -- we believe that the GAO could have reached the same conclusion had the solicitation been silent in this regard.

Second, AT&T Government Solutions affirms that the contracting officer's duties go beyond merely considering a contractor's OCI mitigation plan. Instead, the contracting officer must identify the perceived inadequacies in the plan, and provide the contractor with an opportunity to remedy those perceived inadequacies, before eliminating a contractor from the competitive range. In effect, this holding expands the scope of communications required prior to excluding a contractor from a competition.

Third, and perhaps most importantly, the case clearly signals to agencies that they cannot "play it safe" by automatically excluding a firm from a competition whenever there is any hint that an OCI could potentially arise. Prior to AT&T Government Solutions, the GAO had not sustained a protest based on a contracting officer's failure to evaluate the protestor's OCI mitigation plan. On the other hand, the GAO has sustained many cases involving allegations that an agency acted unreasonably by ignoring potential OCIs. This pattern presumably explains the recent trend toward overly broad OCI disqualification and preclusion clauses that we have seen. Following AT&T Government Solutions, however, agencies should be more sensitive to the need to conduct a case-by-case analysis of OCI issues, including proposed mitigation plans, and less inclined to default to overly broad OCI preclusions.