A FAR organizational conflict of interest (OCI) occurs when a situation in the procurement process develops an unfair competitive advantage. Even the appearance of impropriety in government procurements can create a conflict. When companies fail to establish an OCI mitigation plan, the possibilities of a violation are increased.
Hiring of Former Government Officials: If your company hires a former government official, it can be disqualified from a competition based upon the appearance of impropriety which is created by the hire. There is no requirement for an actual impropriety to be shown in an OCI bid protest.
If for some reason a former government official hire results in the termination of your contract, there could be a case to be made due to lack of hard facts or mere suspicion. Each case must be looked at individually.
FAR 9.504 Contracting Officer Responsibility and Mandates: The responsibility for determining whether a conflict interest exists rests with the procuring contracting officer. In making this determination, the FAR expressly directs contracting officers to look at the particular facts associated with each situation.
Paying consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of their attorneys and appropriate technical specialists before exercising their own sound discretion in determining whether a FAR organizational conflict of interest exists. See FAR Part 9.504, 9.505.
In a bid protest, GAO will review the reasonableness of a contracting officer’s organizational investigation and, where an agency has given meaningful consideration to whether a significant conflict exists, it will not substitute its judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. (See also information about responsibility determinations.)
Should Incumbent Contractor Fear OCIs in Bid Protests? As an incumbent contractor, you may possess unique information, advantages, and capabilities due to your prior experience under a government contract–either as an incumbent contractor or otherwise; further, the government is not necessarily required to equalize competition to compensate for such an advantage, unless there is evidence of preferential treatment or other improper action .
The existence of an advantage in and of itself does not constitute preferential treatment by the agency, nor is such a normally occurring advantage necessarily unfair or warrants a FAR organizational conflict of interest violation. See GAO Protest decision in Council for Adult & Experiential Learning, B-299798.2, Aug. 28, 2007, 2007 CPD ¶ 151 at 6.
Factors for Court’s Consideration in a Bid Protest
In GAO bid protests, when determining whether a bidder obtained an unfair competitive advantage in hiring a former government official based on the individual’s knowledge of non-public information, GAO considers certain factors such as:
- Whether the individual had access to non-public information that was not otherwise available to the protester, or non-public proprietary information of the protester, and
- Whether the non-public information was competitively useful.
Required Legal Standard: When you file a GAO bid protest that challenges a government contracting agency’s determinations, the Court of Appeals for the Federal Circuit uses the “arbitrary and capricious standard” established under the Administrative Procedures Act. See Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009).
In order to file a GAO bid protest that challenges the agency’s disqualifying of an organizational conflict of interest, a protester must show that the agency’s determination did not rely on hard facts, but was instead based on mere inference or suspicion of an actual or potential conflict, or is otherwise unreasonable. See Turner Constr. Co., Inc. v. United States, 645 F.3d 1377, 1387 (Fed. Cir. 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010). In Axiom, the Court of Appeals.
GAO FAR Organizational Conflict Of Interest Analysis for Unfair Competitive Advantage
GAO recognizes the underlying principle of avoiding even the appearance of a conflict. See FAR Part 3.101; Celeris Sys., Inc., B-404651, Mar. 24, 2011, 2011 CPD ¶ 72 at 7; Guardian Techs. Int’l, B-270213 et al., Feb. 20, 1996, 96-1 CPD ¶ 104 at 5. See also Code of Ethics for Contractors.
Your bid protest lawyer must present the determination of an unfair competitive advantage that is based on hard facts and not on mere innuendo or suspicion. GAO has addressed this issue in Health Net Fed. Servs., LLC, B-401652.3, B-401652.5, Nov. 4, 2009, 2009 CPD ¶ 220 at 28; see NKF Eng’g, Inc. v. U.S., 805 F.2d 372 (Fed. Cir. 1986).4
GAO has also ruled that in a FAR organizational conflict of interest scenario exists when the unfair competitive advantage analysis stemming from a firm’s hiring of a former government employee is virtually indistinguishable from the concerns and considerations that arise in protests alleging that a firm has gained an unfair competitive advantage arising from its unequal access to information as a result of an OCI. See Health Net Fed. Servs., LLC, supra, at 28 n.15. , B-235906; B-235906.2, Oct. 26, 1989, 89-2 CPD ¶ 379 at 7-8.
GAO has also stated that an unfair competitive advantage is presumed to arise where an offeror possesses competitively useful non-public information that would assist that offeror in obtaining the contract, without the need for an inquiry as to whether that information was actually used by the awardee in the preparation of its proposal. Health Net Fed. Servs., LLC, supra., 2009 CPD ¶ 220 at 28 n.15; Aetna Gov’t. Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al.
Takeaway: When filing a GAO protest, bid protest lawyers and contractors must be able to show that the agency’s determination was unreasonable or reflected an abuse of discretion. Contractors should also make sure that they have an OCI mitigation plan in place.
Make sure that when you file a protest challenging the agency’s decision on an OCI, you must present hard facts that the agency simply disregarded and that there was a competitive advantage in the bidding process.
For additional help with a GAO protest or Court of Federal Claims protest alleging a FAR organizational conflict of interest under FAR 9.504, call our Washington DC bid protest attorneys at 1-866-601-5518.