When the federal government solicits proposals, there are conflict issues that may arise. However, federal government contractors often misunderstand both the FAR conflict of interest government contracts rules for challenging the conflict issue and how to draft a proper organizational conflict of interest mitigation plan, or OCI mitigation plan.
If you want to avoid disqualification from being awarded a government contract, then you should seriously consider minimizing the risk of a perceived or actual organizational conflict of interest (“OCI”). Bid protest cases give rise to adverse results that may preclude your company from being awarded the contract.
To avoid the chances of this happening, having legal guidance is also essential.
- You can mitigate an organizational conflicts of interests developing a mitigation plan early.
- You must be aware of common indicators that can create a perceived or actual OCI.
What are Indications that You Need an OCI Lawyer?
If you are a government contractor or individual that has access to another company’s sensitive information that can impact the outcome of a future award, then it may be time to hire and OCI mitigation attorney that can help you to create a plan.
Another situation that can cause concerns about an organizational conflict of interest can occur if your company is involved in the procurement process of an upcoming contract. A government contractor can be looked at for being biased.
GAO protest decisions show that there is an increase in bid protests regarding FAR organizational conflict of interests. The government only has a few choices when the OCI contract challenge arises under FAR 9.5 They are:
- Avoid or waive the OCI
- Mitigate the OCI
- Neutralize the problem
The general rules in FAR 9.505-1 through FAR 9.505-4 prescribe limitations on contracting as the means of avoiding, neutralizing, or mitigating organizational conflicts of interest that might otherwise exist in the stated situations.
Unless the contracting officer finds that there is a FAR conflict of interest that cannot be avoided or mitigated, then the agency will make the award to the responsible offeror. If the CO finds that there is an organizational conflict interest, he or she is required to provide you with notice and then give your company an opportunity to respond.
What is a FAR Organizational Conflict of Interest in Government Procurement?
An Organizational Conflict of Interest in government procurement (OCI) can occur when your company, participating in some form of a federal government contract can somehow compromise your ability to a future contract or to somehow develop an unfair advantage when you are bidding on a new federal contract.
Federal Acquisition Regulation (FAR 9.5) describes an OCI as a situation where “because of other activities or relationships with other persons, a person is unable or potentially unable to render impartial assistance or advice to the Government, or the person’s objectivity in performing the contract work is or might be otherwise impaired, or a person has an unfair competitive advantage.” See FAR 2.101.
Organizational Conflicts of Interest situations tend to involve the following categories:
Unequal Access to Information
This type of conflict happens when a government contractor has access to non-public and sensitive information that may create a competitive advantage in a competition for a different federal government contract. Sensitive information may include proprietary information and government source selection information. To constitute an OCI, you only have to have access to sensitive information. The usefulness of the information is also important and completely useful when considering the creation of an unfair advantage in an upcoming procurement. Unequal access to information becomes a contentious dispute in litigation. If you are an incumbent contractor, this alone will not be sufficient to prove an organizational conflict of interest.
As a government contractor, you should know that knowing about another contractor’s actions can potential create an OCI contract. For help with developing or drafting your OCI mitigation plan, let one of our government contract lawyers help.
An organizational conflict of interest can occur when the substance or type of a government contractor’s work in one contract can create an opportunity to benefit or have an unfair advantage in a future contract. Impaired objectivity in an OCI case usually occurs when the contractor is using its subjective judgment or giving advice, and its other business interests could be affected by the judgment or advice, its objectivity may be impaired. These are all fact-specific and should be approached with caution. See information about SBA affiliation.
Biased Ground Rules
Biased ground Rules OCI cases occur you’re performing a government contract and you have somehow helped lay the foundation or “ground rules” for an upcoming government procurement. The federal government uses third-party contractors to help write statements of work or develop performance work statements. This would create an organizational conflict of interest and could require an OCI Mitigation Plan
What are the Contracting Officer’s Responsibilities When There is an OCI? FAR 9.504
Organizational conflict of interest far clause FAR 9.504 requires that federal contracting officers analyze planned acquisitions in order to:
- Identify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and
- Avoid, neutralize, or mitigate significant potential conflicts before the contract award.
When there is an OCI government contracting problem or even the possibility of one, contracting officers should obtain the advice of legal counsel and the assistance of appropriate technical specialists in evaluating potential conflicts and in developing any necessary solicitation provisions and contract clauses See FAR 9.506
Before the government issues the solicitation for a federal contract that may involve a significant potential conflict, the contracting officer shall recommend to the head of the contracting activity a course of action for resolving the conflict. See FAR 9.506
In fulfilling their responsibilities for identifying and resolving potential conflicts, contracting officers should avoid creating unnecessary delays, burdensome information requirements, and excessive documentation. The contracting officer’s judgment needs to be formally documented only when a substantive issue concerning potential organizational conflict of interest exists. See information about SBA Identity of Interest.
This can be a problem if there is s high-stake government contract award and the agency cannot produce any such documentation.
Can the CO Issue the Contract Award Even if There is an Organizational Conflict of Interest?
FAR 9.503 is clear that the CO shall award a federal government contract to the apparent successful offeror unless a conflict of interest is determined to exist that cannot be avoided or mitigated.
- It would seem that the burden would be on the government to show that either an OCI did not exist or that it could not be avoided or mitigated.
- If you are filing a bid protest, it would seem viable to look at this level of argument. See also Reps and Certs.
FAR 9.5 Waiver
If the contracting agency decides that it is in the best interest of the government to make the award despite the OCI then the agency must apply for an OCI plan waiver and include the waiver request decision in the contracting file. If you cannot successfully mitigate an OCI, ask the contracting officer to consider granting a waiver. The federal government has the unilateral right to waive an OCI requirement if it determines that a waiver is in the government’s best interests. The government may grant the waiver if it has thoroughly investigated the conflict of interest and determined that the benefit to the government outweighs the risk of harm.
The real problem occurs when the agency reviews an OCI Plan. When contractors challenge the issue in a bid protest under FAR 9.5, the court will carefully scrutinize how the agency reviews the contractor’s organizational conflict of interest mitigation plan.
Acting in a timely manner is important. When government contractors are aware of an organizational conflict of interest before submission of bids, they must immediately notify the agency and then provide the agency with time to respond. If the agency takes no action, then the contractor should protest the issue before submitting its proposal. See Honeywell Tech. Solutions, Inc., B-400771, B-400771.2, Jan. 27, 2009, 2009 CPD ¶ 49. See information about hiring the right defense lawyer.
Tips for your FAR Organizational Conflict of Interest OCI Mitigation Plan
When you develop an OCI Mitigation Plan, the document should be very specific about your actions to mitigate. If you provide different options, then the agency must both analyze and find the options acceptable. Generalized contractor’s organizational conflict of interest government contracts mitigation plans will often be rejected.
- When your plan is rejected, unless waived, your company may be precluded from bidding.
For help assessing FAR 9.5 and drafting your organizational conflict of interest OCI mitigation plan, litigation at the Court of Federal Claims or other legal help, call our government contracts lawyers at 1-866-601-5518. Speak with OCI government contracting lawyer Jo Spence for more information.