Don't Get Disqualified Because of Organizational Conflicts of Interest

June 18, 2018

By Timothy F. Valley
Practice Area: Government Contracts Law

A recent decision from the Government Accountability Office (“GAO”) reiterates two important principles concerning organizational conflicts of interest (“OCIs”). First, proactive measures may allow a contractor to effectively mitigate and avoid an OCI. Second, appearances, innuendo, and suspicion are insufficient to establish that a contractor has an OCI. Hard facts are required.

In Archimedes Global, Inc., B-415886.2 (June 1, 2018), the protester challenged the agency’s decision to exclude it from a competition because of an alleged OCI. By way of background, the agency was seeking a contractor to perform management and support services. The predecessor task order required the contractor to access competitively useful non-public information. Accordingly, the underlying contract and task order included a clause that permitted the agency to disqualify the incumbent contractor from competing for follow-on requirements because of the potential OCI.

The protester was not the incumbent contractor. However, the protester proposed to hire two employees whom were working for the incumbent contractor, and the agency disqualified the protester on that basis. The protester argued that there was no evidence that an actual OCI existed. GAO agreed and sustained the protest.

GAO explained that it was unreasonable of the agency to eliminate the protester based on an unequal access to information OCI when, at the time the proposal was drafted and submitted, the potential employees still worked for the incumbent and did not work for the protester. Furthermore, during the protest, the employees swore under oath that they never accessed competitively useful, non-public information because of a firewall that the incumbent contractor had put in place to prevent their accessing such information. Simply said, there was no evidence that the protester had an unfair competitive advantage. However, because the agency could not confirm from its own computer information whether the employees actually accessed the information, it found that an apparent OCI existed and disqualified the protester from consideration.

GAO found that the agency’s reliance upon innuendo and supposition, instead of hard facts, was unreasonable. GAO also noted that the contracting officer ignored the facts that the employees were not working for the protester at the time it drafted and submitted its proposal and that they swore under oath that they did not access any such information. In other words, the facts indicated that no unequal access to information OCI existed.

As this decision demonstrates, agencies take OCIs seriously, including the appearance of OCIs. As shown above, this can lead to disqualification from a procurement, regardless of whether such disqualification is reasonable. As this case illustrates, when it comes to OCIs, hard facts—not appearances—are what matters. And, with OCIs, the significance of an effective OCI mitigation plan cannot be overstated. Here, the incumbent contractor’s decision to proactively implement an OCI mitigation plan helped the protester to show that there was no OCI. This advance planning can be critical in preserving a company’s opportunity to compete in future procurements.

If you have any questions regarding OCIs or need assistance drafting an OCI mitigation plan, please contact PilieroMazza’s Government Contracts group for assistance.

About the Author: Michelle Litteken is an associate with PilieroMazza in the Government Contracts and Litigation law groups. She may be reached at mlitteken@pilieromazza.com. Timothy Valley is an associate with PilieroMazza in the Government Contracts and Litigation law groups. He may be reached at tvalley@pilieromazza.com.
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