In an effort to ensure there is no OCI or that your mitigation plan is effective and timely implemented, government contractors must be proactive when reviewing the agency’s needs in light of its mission, the solicitation, and the contractor’s establishment of its team.
Integrity is crucial in the field of government procurement. Indeed, “[o]ne of the guiding principles recognized by [the U.S. Government Accountability Office (GAO)] is the obligation of contracting agencies to avoid even the appearance of impropriety in government procurements.” Int’l Bus. Machines Corp., B-410639; B-410639.2, Jan. 15, 2015, 2015 CPD ¶ 41 at 5. Consistent with these principles, the Federal Acquisition Regulation (FAR) requires that contracting officers avoid, neutralize or mitigate organizational conflicts of interest (OCIs) that have the potential to impair a government contractor’s objectivity or that otherwise may result in an unfair competitive advantage.1 FAR §§ 9.504(a), 9.505. There are a number of agencies that have advised that their preference is to avoid actual or potential OCIs. Some have even gone as far as to require a contractor to describe the measures taken to prevent instances of an OCI. Nonetheless, there will be situations where neutralizing or mitigating an OCI will protect the integrity of the acquisition decision-making process, allowing the agency to increase the contractor base with respect to a specific acquisition.
Broadly speaking, there are three types of OCIs:
biased ground rules, where a company sets the ground rules for a future competition (for example, writing the specifications that competitors must meet);
unequal access to information, where a company has access to nonpublic information (typically through performance of a contract) that gives it an unfair advantage in the competition for a later contract; and
impaired objectivity, where a company is asked to perform tasks that require objectivity, but another role the company plays casts doubt on its ability to be truly objective.
Generally, the existence of an OCI renders an offeror ineligible for an award. See, e.g., NCI Information Systems, Inc., B-412870, Oct. 14, 2016, 2016 CPD ¶ 310. Thus, in order to avoid being disqualified, it is incumbent upon government contractors to do their due diligence, attempt to avoid OCIs or identify potential OCIs, and neutralize or mitigate their effect.
Two recent cases before the GAO demonstrate the myriad ways that OCIs can affect the procurement process. In International Business Machines Corp., the protester, IBM, was eliminated from competition prior to the award due to a perceived “biased ground rules” OCI. In particular, certain personnel employed by IBM’s proposed subcontractor were “closely involved in developing the ground rules” for the procurement. After IBM submitted its proposal, the agency identified the perceived OCI and required IBM to submit an updated plan to mitigate its effect on the competition. In an effort to mitigate the effect of the OCI, IBM offered to firewall or terminate the subcontractor employee. Ultimately, however, the agency determined, and the GAO agreed, that this action was too little, and too late to mitigate the OCI: “the employee had already influenced the specifications, the harm has already been done.”
In NCI Information Systems, Inc., on the other hand, the protester raised an apparent OCI concerning the awardee’s impaired objectivity. There, the Department of the Interior issued a solicitation for information technology services, which would entail managing existing IT infrastructure and systems, and allow the awardee to use subjective judgment to provide technical expertise to the government concerning new IT and telecommunication equipment and system selection, and technology refresh activities. During the solicitation planning phase, the agency recognized that a significant conflict of interest existed and established a general mitigation plan to substantially reduce potential conflicts of interest. HP Enterprise Services, LLC (HPES) submitted a proposal for the contract that identified the potential conflict, and established a firewall and other procedures to mitigate the OCI. The agency awarded the contract to HPES, but NCI Information Systems protested to the GAO, arguing that HPES had an unmitigated OCI because its responsibilities under the contract allow it to recommend products manufactured by its parent company. The GAO agreed, sustaining the protest on the basis that although the agency had developed generalized mitigation measures during the solicitation planning stage, there was nothing in the agency record with respect to HPES’ OCI, and therefore no way to establish that the agency meaningfully considered HPES’ OCI.
As these cases demonstrate, and as with most issues affecting government contractors, there are many ways that OCIs can affect the procurement process. Contractors must be prepared to avoid and/or deal with OCI issues from both an offensive and defensive perspective and must also be able to identify and mitigate OCIs not only within their own organization, but also within their subcontractors’ and consultants’ organizations, and assist agency counsel to ensure the agency’s mitigation plan adequately considers the contractor’s conflict. In an effort to ensure there is no OCI or that your mitigation plan is effective and timely implemented, government contractors must be proactive when reviewing the agency’s needs in light of its mission, the solicitation, and the contractor’s establishment of its team. This will be helpful with respect to the company’s proposal and in determining whether, based on its understanding of the current procurement environment, there is an OCI concerning a potential competitor.