FAR (.5 Organizational Conflict of Interest OCI Bid Protests

OCI Organizational Conflict of Interest FAR Guidance 

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 a FAR9.5 OCI Conflict of Interest  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 FAR conflict of interest exists rests with the procuring contracting officer. In making this determination, FAR 9.5 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 OCI exists. See FAR 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 Contractors 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 OCI 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.

Court’s Consideration in a FAR 9.5 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.

What are common mistakes made by government contractors when defending OCI conflict of interest bid protests?

Defending against Organizational Conflict of Interest (OCI) bid protests presents challenges for government contractors. Overlooking or mishandling OCIs can pose significant risks. Here are some common mistakes made by government contractors when defending such protests:

1. Underestimating the Impact: Some contractors underestimate the potential ramifications of an OCI. They might think that because they can manage a conflict, it’s not an issue. However, even perceived conflicts can lead to lost bids or legal disputes.

2. Inadequate OCI Mitigation Plans: An insufficient or poorly articulated OCI mitigation plan can be a downfall. Government agencies want assurance that conflicts won’t affect the performance of the contract. A weak OCI mitigation plan can be a red flag.

3. Over-reliance on Past Practices: Just because certain OCI conflict of interest defense strategies or mitigation efforts worked in the past doesn’t mean they will be effective in a different situation or under scrutiny from a different agency.

4. Failure to Promptly Disclose under FAR 9.5: Contractors might sometimes delay disclosing potential OCIs, thinking they can manage them internally or that they’re not significant. However, late disclosures can lead to mistrust and might exacerbate the issue.

5. Misunderstanding the Nature of the OCI: Not all OCIs are the same. Mistaking one type of conflict for another can lead to inappropriate mitigation strategies.

6. Assuming Contracting Officer Approval Equals Protection: Even if a contracting officer approves a contractor’s approach to managing an OCI, that doesn’t shield the contractor from bid protests by competitors.

7. Not Seeking Expert Advice: OCI rules and regulations can be complex. Trying to navigate them without legal or expert advice can result in oversights and mistakes.

8. Not Continuously Monitoring: OCIs aren’t always static. What might not be a conflict at the beginning of a contract could become one as circumstances change. Failing to continuously monitor and reassess is a common oversight.

9. Lack of Comprehensive Internal Policies: Companies without robust internal policies and training on OCI identification and management are more prone to missteps.

10. Not Considering Subcontractors’ OCIs: Focusing only on one’s own potential conflicts without considering those of subcontractors or partners can lead to missed OCI conflict of interest issues.

To defend against FAR 9.5 OCI bid protests successfully, government contractors should be proactive, understand the nature and implications of OCIs, and seek appropriate expert advice. Avoiding these common mistakes can better position a contractor in the competitive government marketplace.

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 OCI 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 organizational conflicts of interest mitigation plan under FAR 9.5 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. Speak to Theodore Watson.