BCBSAL’s Relationship with Prime Therapeutics LLC

AdvanceMed argues that the agency failed to reasonably evaluate an OCI arising from BCBSAL’s 17-percent ownership stake in Prime Therapeutics LLC, a pharmacy benefit management company. The protester contends that BCBSAL’s ownership of Prime Therapeutics creates an OCI in the event that Cahaba is issued a task order to conduct audits in connection with Medicare part D, which is for prescription drug benefits, and part C, which can include part D coverage.

As part of its corrective action in response to AdvanceMed’s and TrustSolution’s initial protests, CMS asked Cahaba to address the potential OCI arising from BCBSAL’s ownership stake in Prime Therapeutics. The CO noted that BCBSAL “acquired 16.78% investment interest in Prime Therapeutics LLC (Prime) in 2010,” and holds one of the 10 seats on Prime Therapeutics’ board of directors. AR, Tab 22a, Letter from CMS to Cahaba (June 28, 2011) at 2. The CO further noted that “Prime offers pharmacy services, Medicare Part D administration, and other consulting services” for customers of Blue Cross Blue Shield plans, and also provides services for four customers in Zone 3. Id. Based on these concerns, the CO stated that she determined that an unmitigated impaired objectivity OCI existed “because in the event that a Part D task order is issued, [Cahaba] may have to investigate/evaluate Prime in its role as a [pharmacy benefit management] company for possible fraud, waste and abuse.” Id. The CO requested that Cahaba provide a mitigation plan to address the concern.

In response to the request for a mitigation plan, Cahaba expressed its view that its ownership stake in Prime Therapeutics did not create an OCI because: (1) there are no direct contractual relationships between Prime Therapeutics and Cahaba; (2) Cahaba does not receive any direct financial benefit from Prime Therapeutics’ actions; (3) Cahaba’s management is independent of BCBSAL; and (4) in Cahaba’s view, BCBSAL’s “small ownership interest in Prime is too attenuated to create an OCI.” AR, Tab 22i, Letter from Cahaba to CMS (July 22, 2011), at 4-5. Nonetheless, Cahaba also proposed several mitigation strategies, including [deleted]. Id. at 16-17.

The CO advised Cahaba that the agency did not accept its views concerning BCBSAL’s ownership of Prime Therapeutics, and still viewed the relationship as creating a potentially disqualifying OCI for Cahaba. The CO also stated that the agency did not view the proposed mitigation strategies as acceptable, in part because of the additional administrative duties they would impose on the agency. The CO advised that Cahaba was required to provide an acceptable response to the agency’s concerns, and that “failure to avoid, neutralize or mitigate a conflict of interest may result in the award of this contract to another offeror.” AR, Tab 22b, Letter from CMS to Cahaba (Sept. 23, 2011), at 3.

Cahaba subsequently advised CMS that BCBSAL had agreed to divest itself of Cahaba upon notice that CMS intended to issue a task order for Medicare parts C or D. AR, Tab 22h, Letter from Cahaba to CMS, Sept. 29, 2011, at 1. Cahaba’s proposed mitigation approach provided a timeline with five milestones from the date of CMS’s announcement of its intent to issue a task order: (1) within [deleted]: establish the terms of sale, obtain approval from BCBSAL’s Board of Directors, and issue a formal announcement of the intent to sell Cahaba; (2) within [deleted]: identify and vet prospective buyers, conduct industry research of prospective buyers, and conduct OCI analyses; (3) within [deleted]: agree on terms of sale with buyer; (4) within [deleted]: execute the sale and complete all required corporate actions and approvals; and (5) within [deleted]: execute state corporate documents and novate required leases. Id. at 2-3. In addition, Cahaba provided the following “contingency plan” in the event that the milestones are not met:

If BCBSAL cannot identify a buyer within the timeline listed above, BCBSAL shall [deleted].

Id. at 3-4. Cahaba’s response also included a letter from the BCBSAL Senior Vice President and Chief Financial Officer stating that the parent company “is in agreement with the mitigation plan proposed by Cahaba . . . related to any future Part C or D task order for the above mentioned solicitations [zones 3 and 6].” AR, Tab 22g, Letter from BCBSAL to CMS (Sept. 29, 2011), at 1.

The CO concluded that Cahaba’s proposed mitigation plan was acceptable. AR, Tab 22d, OCI Memorandum, at 6. The CO found that Cahaba’s proposed [deleted] schedule for divestiture was reasonable and realistic. In this regard, the CO noted that CMS expected that it could take between 7-8 months from announcement of the agency’s intent to issue a task order for part C or D to develop a statement of work, obtain funding approval, negotiate the task order with Cahaba, and complete the transition of the work from the incumbent. Id. at 5.

The CO also stated that, in the event the divestiture could not be achieved within the proposed [deleted] time frame, and CMS required the services from Cahaba at that time, the cognizant head of the CMS contracting activity (HCA) “will authorize a waiver of the Prime Therapeutics conflict during the time that the contingency plan is in place.” Id. at 6. The FAR provides that an HCA may “waive any general rule or procedure of this subpart by determining that its application in a particular situation would not be in the Government’s interest.” FAR § 9.503. Here, the OCI memorandum included a memorandum from the HCA, which stated as follows:

With regard to the mitigation strategy for the OCI caused by BCBSAL’s ownership in Prime Therapeutics, should it be necessary to afford [Cahaba] additional time, in excess of the [deleted] proposed, to finalize the sale of [Cahaba] and should CMS require [Cahaba] to begin work on a Part C and/or Part D task order, the HCA will authorize a waiver in accordance with FAR 9.503 while the contractor’s contingency plan is being finalized. The waiver would be in affect only until such time as the sale of [Cahaba] is completed. Once the sale of [Cahaba] is completed, the waiver would no longer be necessary and the conflict would be fully mitigated.

AR, Tab 22d, OCI Memorandum, at 11.

AdvanceMed argues that the CO unreasonably accepted the divestiture plan because it did not provide adequate details to address the OCI. In particular, AdvanceMed contends that the plan lacks specificity because it does not identify a potential buyer or sales terms. The protester cites two decisions in which our Office sustained protests of awards to AdvanceMed for ZPIC zones 1 and 2, based on what the protester contends were similar OCI concerns and divestiture plans to those at issue here. See C2C Solutions, Inc., B-401106.5, Jan. 25, 2010, 2010 CPD ¶ 38; Cahaba Safeguard Adm’rs, LLC, B-401842.2, Jan. 25, 2010, 2010 CPD ¶ 39. As relevant here, we concluded in both protests that the CO failed to evaluate AdvanceMed’s proposed mitigation approach of divestiture, in part because the proposed plans lacked any meaningful detail. In this regard, the record in the C2C Solutions and Cahaba decisions shows that the CO’s OCI analysis merely observed that “[t]he other mitigation strategy, total divestiture of AdvanceMed, includes some uncertainties as to the particulars of the divestiture that are and cannot be known at this time.” C2C Solutions, Inc., supra, at 5; Cahaba Safeguard Adm’rs, LLC, supra, at 6. In light of the lack of any meaningful details to support the divestiture plans, we sustained both protests.

In contrast to C2C Solutions and Cahaba, however, the awardee’s mitigation plan here provided specific details and milestones. As discussed above, the awardee stated that BCBSAL would, upon notice of the agency’s intent to begin the process of issuing a task order for Medicare parts C and D, commence the necessary steps to divest itself of Cahaba. The mitigation plan included five milestones, which the agency evaluated and concluded were reasonable. Additionally, as the intervenor notes, the lack of a specific price or buyer was not unreasonable, as there was no timeframe for a possible parts C and D task order at the time of the award.[6] On this record, we conclude that the CO acted within the reasonable exercise of her discretion in concluding that Cahaba’s proposed mitigation plan adequately addressed the OCI concerning BCBSAL’s ownership of Cahaba and its 17 percent stake in Prime Therapeutics.

BCBSAL’s Other Contractual Relationships

Next, AdvanceMed argues that Cahaba will be in a position to conduct audits of companies with whom BCBSAL has contracts, thereby creating an OCI. In this regard, AdvanceMed argues that those providers could threaten to sever their relationship with BCBSAL in the event of an audit or negative finding by Cahaba, and that the threat of such actions would impair Cahaba’s judgment.

During the corrective action, the CO asked Cahaba to address BCBSAL’s contractual relationships with healthcare facilities and providers who operate within zone 3. AR, Tab 22a, Letter from CMS to Cahaba (June 28, 2011), at 3-4. The CO requested that Cahaba address the “perception that [Cahaba’s] objectivity could be viewed as being impaired” when it investigates an entity that has a contractual relationship with BCBSAL. Id. at 4.

Cahaba stated that BCBSAL has a network of preferred provider relationships with national companies, or affiliates of national companies. Under this arrangement the healthcare provider agrees to participate in the BCBSAL network, and BCBSAL agrees to pay claims in accordance with a fee schedule. AR, Tab 22i, Letter from Cahaba to CMS (July 22, 2011), at 22. Cahaba acknowledged that BCBSAL has contractual relationships with entities, who, in turn, have affiliates that provide services within Zone 3. Id. at 21-22. Cahaba argued, however, that such BCBSAL relationships do not give rise to a disqualifying OCI for Cahaba because the relationship is too remote and attenuated to constitute a disqualifying OCI. Id. at 22.

With regard to scenarios where BCBSAL has a contract with an entity who is affiliated with a healthcare provider, who provides services in zone 3, the CO concluded that the possibility of a conflict was too remote and too far removed to constitute an OCI that requires mitigation. Id. at 10. In this regard, the CO stated that the possibility that the health care provider would complain to its affiliate in order to have the affiliate pressure BCBSAL to in turn pressure Cahaba was “too remote and too far removed to be considered an OCI that requires mitigation.” Id. Additionally, in response to the protest, the CO also noted Cahaba’s explanation that the relationships between BCBSAL and its contractual partners creates a “strong, pre-existing financial incentive not to terminate their relationship with BCBSAL” because of the benefit that the contractual partner enjoys from having access to the BCBSAL customer network. Supp. CO Statement (Dec. 13, 2011) at 6.

Our Office has recognized that an agency may reasonably find that certain relationships between companies or corporate affiliates are too remote or that the possibility of a conflict is too unlikely or speculative to conclude that there is a disqualifying OCI. See Valdez Int’l Corp., B-402256.3, Dec. 29, 2010, 2011 CPD ¶ 13 at 5-6; L-3 Servs., Inc., B-400134.11, B-400134.12, Sept. 3, 2009, 2009 CPD ¶ 171 at 15; American Mgmt. Sys., Inc., B-285645, Sept. 8, 2000, 2000 CPD ¶ 163 at 5. In such cases, we look for some indication that there is a direct financial benefit to the firm alleged to have the OCI. Here, the CO concluded that the relationship between Cahaba and the contractual partners of its parent company were too remote, and that there was no direct financial benefit to Cahaba. We conclude that the CO was within her discretion to draw these conclusions and therefore find no basis to sustain the protest.

Cahaba’s LASER SA²PHE² Service

Finally, AdvanceMed and TrustSolutions argue that Cahaba offers an auditing service, known as LASER SA2PHE2, which could create an OCI. This service is a data analysis tool offered by Cahaba to assist clients in the identification and prevention of healthcare fraud, waste, and abuse. Unlike the potential conflicts arising from Cahaba’s relationship with BCBSAL, the protesters argue that Cahaba’s offered services would create a direct OCI by creating the possibility that the awardee would audit companies for which the awardee had provided data analysis services.

During corrective action, the CO asked Cahaba to identify the clients for whom it has provided services though its LASER SA2PHE2 solution, and to propose a mitigation strategy to address any conflicts that could arise from its provision of these services. AR, Tab 22a, Letter from CMS to Cahaba (June 28, 2011), at 3.

Cahaba responded that it had used LASER SA2PHE2 for its contracts with CMS and the TRICARE Management Activity, and also has a master services agreement which allows [deleted] to place task orders with Cahaba for data analytics services (such as LASER SA2PHE2). AR, Tab 22i, Letter from Cahaba to CMS (July 22, 2011), at 18-19. The awardee stated that it currently “does not have active task orders with [deleted] and has no other commercial clients,” and further stated that the company [deleted]. Id. at 19. Cahaba also stated that it would advise the CO of any requests for work concerning LASER SA2PHE2 from [deleted], and “will not contest any Contracting Officer determination that the task order gives rise to a [conflict of interest] and will refuse any task order as to which the Contracting Officer has made such a determination.” Id.

The CO concluded that Cahaba’s use of the LASER SA2PHE2 solution for contracts performed for the government did not give rise to any OCIs. AR, Tab 22d, OCI Memorandum, at 7. The CO also concluded that because Cahaba did not have existing commercial clients and [deleted] there were no potential OCIs. Id.

The protesters argue that the CO’s conclusion was unreasonable because it relied on Cahaba’s statement that [deleted] for its LASER SA2PHE2 service. In this regard, the protesters contend that Cahaba could, in effect, change its mind and [deleted] and thereby create an OCI. We think that the CO was within her discretion to conclude that there was no OCI, based on her acceptance of Cahaba’s statements regarding its LASER SA2PHE2 solution.

On this record, we find no basis to sustain any of the protesters’ arguments regarding the CO’s OCI analysis.  (AdvanceMed Corporation; TrustSolutions, LLC, B-404910.4,B-404910.5,B-404910.6,B-404910.9, B-404910.10, Jan 17, 2012)  (pdf)

[Satellite Communications program] SATCOM [Special Interest Program Manager] PM's Activities at the Agency

TCS argues that the SATCOM PM's participation in this procurement was very limited and did not warrant the disqualification of TCS from the competition. The record shows that the SATCOM PM continued in his position until he decided to retire from Government service in June 2009. On November 2, 2009, the SATCOM PM signed a memorandum addressed to his supervisor, which stated that the SATCOM PM was seeking employment outside of the Government and that he would disqualify himself from any involvement in matters (including this RFP) that would have a direct and predictable effect on any potential private sector firm with whom he was seeking employment. AR, attach. 4, Tab 19, SATCOM PM Memorandum, Nov. 2, 2009. TCS asserts that, prior to November 2, the SATCOM PM's participation in this procurement was "limited to summary information only" and "early market research activities aimed at exploring industry capabilities and abilities to meet the Satellite Communication program objectives." Protest at 10. TCS further claims that, after November 2, the SATCOM PM did not participate in any non-written communications concerning the RFP. Id. The protest states that the SATCOM PM does not recall being copied on any acquisition sensitive information, but, if he was, he did not solicit such information, and did not provide such information to TCS. Id. at 11. The SATCOM PM began his employment discussions with TCS [deleted], TCS submitted its proposal on April 24, 2010, and the former SATCOM PM began working for TCS on May 17, 2010. Id.

The contracting officer determined that the documentary evidence he compiled indicated that the SATCOM PM's participation in the procurement was more involved than being "limited to summary information only" and "early market research exploring industry capabilities," and that the SATCOM PM did, in fact, have access to, and receive, acquisition sensitive information. Contracting Officer's Investigation Report at 22.

For example, the contracting officer found that numerous industry responses (marked proprietary) to the request for information (RFI), including those from Stratos and TCS, received in March 2009, were provided to an individual supervised by the SATCOM PM. Id. at 3. The contracting officer found that although "[i]t is not clear in the record whether [the SATCOM PM] received and reviewed the individual responses," they were provided to an individual supervised by him and were used for "one on one meetings with contractors during Industry Days held in April 2009." Id. at 14, 22.

The contracting officer further notes that in October 2009 the SATCOM PM took part in at least one meeting concerning "critical decisions" about the procurement—i.e., the source selection strategy and process, the requirements for a statement of work or performance work statement, the desired selection team skill mix, and whether alternate proposals would be allowed. Id. at 4, 15; see AR, attach. 4, Tabs 13 and 17, E-mails and Attachments. At around the same time, the SATCOM PM was a recipient of a 75‑page e-mail attachment containing a cost/benefit analysis, prepared by his office; this document was marked "FOUO [For Official Use Only], close hold, pre‑decisional, not releasable under [Freedom of Information Act]," and included a detailed discussion of technical alternatives, their potential costs, and associated risks. Contracting Officer's Investigation Report at 4, 15; see AR, attach. 4, Tab 16, E‑mail, Oct. 20, 2009; Cost/Benefit Analysis, May 20, 2009.

The contracting officer also considered documentary evidence that, after November 2, the SATCOM PM received a consolidated list of comments to a draft RFP, which identified vendors by name, in preparation for a teleconference meeting in November 2009 to discuss certain elements of the RFP. Contracting Officer's Investigation Report at 4-5, 16-17, 22; AR, attach. 4, Tab 18, E-mail, Oct. 30, 2009; Tab 23, Meeting Minutes, Nov. 19, 2009. The contracting officer noted that issues discussed at the meeting (attended by the SATCOM PM) included market research, industry responses, and a risk assessment of the acquisition. Also discussed were the composition of the technical evaluation team, the requirement of a statement of objectives or a statement of work in the solicitation, and the possible use of operational capability demonstrations during the evaluation. Contracting Officer's Investigation Report at 6; AR, attach. 4, Tab 23, Meeting Minutes, Nov. 19, 2009.

The contracting officer also found that the SATCOM PM participated in another meeting 4 days later, where the topics again included specific issues for this procurement, including acquisition and source selection plans, peer review, dedicated source selection team members, and the use of operational capability demonstrations in the evaluation. Contracting Officer's Investigation Report at 6, 17, 22; AR, attach. 4, Tab 24, Meeting Minutes, Nov. 23, 2009. The contracting officer further determined that in December, the SATCOM PM was included among the addressees on an e-mail that discussed various cost estimates and identified the current independent government cost estimate for this acquisition. Contracting Officer's Investigation Report at 6; AR, attach. 4, Tab 25, E-Mail, Dec. 11, 2009.

Based on his review of the record, the contracting officer found that prior to his employment with TCS, the SATCOM PM had access to non-public procurement sensitive information, and possibly had access to the proprietary information of potential offerors. Contracting Officer's Investigation Report at 22. The contracting officer found that this access continued even after the SATCOM PM promised to disqualify himself from any involvement in this procurement because the SATCOM PM "failed to properly remove himself from the . . . procurement." Id. at 23. We find that that the contracting officer's judgments were reasonable and consistent with the record.

SATCOM PM's Employment With TCS

TCS also claims that the former SATCOM PM was "walled off" after he was employed by TCS and that he had nothing to do with this procurement. TCS first notes here that it submitted its proposal prior to hiring the SATCOM PM. Protest at 11. TCS further states that "[u]pon his employment [with TCS], [the former SATCOM PM] was 'walled off' from all activities related to this procurement;" that he "has not had any discussions with TCS personnel regarding its proposal, the relevant RFP, or the procurement generally;" and that TCS took "extraordinary measures to be certain that [the former SATCOM PM's] employment with TCS was in no way related to this procurement." AR, attach. 4, Tab 79, TCS Responses to Agency Questions, Feb. 4, 2011, at 1. TCS stated in a later response that it "took appropriate steps to "wall [the former SATCOM PM] off completely from the proposal and the proposal effort." AR, attach. 4, Tab 81, TCS Responses to Agency Questions, Feb. 11, 2011, at 3. TCS also stated:

In fact, TCS was so concerned about making sure its competitive position on this procurement was not tainted by the employment of [the former SATCOM PM] that the interviews discussions specifically did not mention this procurement and the capture responsibilities were assigned to another company vice president, . . . , with specific instructions to maintain a firewall with [the former SATCOM PM] for all matters related to this procurement.
AR, attach. 4, Tab 79 at 2.

The contracting officer reviewed numerous communications involving the former SATCOM PM while employed by TCS indicating that he was privy to, and had input regarding, information concerning TCS's revised proposal under the procurement. Contracting Officer's Investigation Report at 19, 24. The contracting officer found that the former SATCOM PM's participation in TCS's response to this procurement included reviewing and providing feedback on TCS's [deleted]Id. at 19-22; see AR, attach. 4, Tabs 44‑67, E-mails dated August 19 through October 8, 2010. Based on his review, the contracting officer determined that rather than being completely walled off from all activities related to this procurement as alleged by TCS, the former SATCOM PM "was repeatedly and regularly informed of the progress of revisions to the final proposal and asked for his opinion regarding some of those revisions." Contracting Officer's Investigation Report at 24. While the protester asserts that the contracting officer has overstated the former SATCOM PM's involvement in the preparation of TCS's revised proposal, we find that the contracting officer could reasonably be concerned about the propriety of these activities.

Conclusion

Based on the record, we conclude that the contracting officer conducted a thorough and well-documented investigation. We further conclude that the contracting officer reasonably determined that "the manner and extent of [the SATCOM PM's] involvement in the procurement may have created an actual unfair competitive advantage, but certainly created an appearance of impropriety that is based on significant documentary evidence and cannot be avoided, neutralized or mitigated." Id. at 24. In this regard, the contracting officer determined that the facts here indicated that the SATCOM PM not only had access to non-public information, but also provided input related to TCS's revised proposal. Contracting Officer's Investigation Report at 22-24. These facts, as identified by the contracting officer, create the presumption that an unfair competitive advantage has arisen, without the need to inquire as to whether the information was actually used by TCS in the preparation of its proposal. See Health Net Fed. Servs., LLC, supra.; Aetna Gov't. Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra. While TCS disagrees with the contracting officer's determination to terminate TCS's contract and to eliminate it from the competition because of an apparent conflict of interest, it has not shown that the contracting officer's conclusion was unreasonable or not based on hard facts. Because the agency has given meaningful consideration to whether a conflict of interest existed and its judgment has not been shown to be unreasonable, we will not substitute our judgment for that of the agency. See CIGNA Gov't Servs., LLC, supra.  (TeleCommunication Systems Inc., B-404496.3,October 26, 2011)  (pdf)

Unequal Access to Information

EIS argues that Paragon had access to RTGX's proprietary information, and that this access created an unequal access to information OCI. Under the PMOS contract, Paragon provides support to USTRANSCOM for acquisition of information technology goods and services. CO Statement at 24. Paragon's duties include management of cost, schedule, performance, and risk for a variety of agency requirements, such as program control, resources management, requirements management, configuration management, test and evaluation, systems engineering, program management support, risk management, information technology administrative support, and acquisition support. Id. at 24-25. EIS contends that under the PMOS contract Paragon had the ability to access RTGX's proprietary technical and cost information, such as RTGX's rates, which created an unequal access to information OCI. Supp. Protest at 38.

In her initial response to the protest, the CO stated that Paragon did not have access to confidential or proprietary RTGX information under the PMOS contract:

Paragon's PMOS contract does not provide it with access to any contractor rates or prices. Even though Paragon may be privy to some of the Programs of Records estimates, neither IRMDR contractor rates nor ITS information are included in this system. In addition, a contractor's proposal or labor rates would not be available for any Paragon employee or any other contractor to access. Contractor rates are not entered into any system accessible to, or maintained by, the PMOS contractor.

CO Statement at 25.

The CO also noted that the PMOS contract required each Paragon employee to sign a non-disclosure agreement (NDA) with the agency. Id. at 26. These agreements stated in relevant part as follows:

This Non-Disclosure Agreement is a standard agreement designed for use by contractor (including subcontractor) employees assigned to work on USTRANSCOM contracts. Its use is designed to protect non-public government information from disclosures and prevent violations of federal statutes/regulations.

* * * * *

3. In the course of performing under contract/order/solicitation # [GS-35-F-0484N] or some other contract or subcontract for the USTRANSCOM, I agree to:

a) Use only for Government purpose any and all confidential business information, contractor bid or proposal information, and/or source selection sensitive information to which I am given access. I agree not to disclose "non-public information" by any means (in whole or in part, alone or in combination with other information, directly or indirectly or derivatively) to any person except to a U.S. Government official with a need to know or to a non-Government person (including, but not limited to, a person in my company, affiliated companies, subcontractors, etc.) who has a need to know related to the immediate contract/order, has executed a valid form of this non-disclosure agreement, and receives prior clearance by the contracting officer. All distribution of the documents will be controlled with the concurrence of the contracting officer.

b) "Non-public information", as used herein, includes trade secrets, confidential or proprietary business information (as defined for government employees in 18 USC 1905); advance procurement information (future requirements, acquisition strategies, statements of work, budget/program/planning data, etc.); source selection information (proposal rankings, source selection plans, contractor bid or proposal information); . . .

c) Not to use such information for any non-governmental purposes, including, but not limited to, the preparation of bids or proposals, or the development or execution of other business or commercial ventures.

AR, Tab 10, Sample NDA, at 1-2.

In its comments and supplemental protest, and supported by a declaration of RTGX's Business Manager, the protester contended that RTGX's proprietary information, such as labor categories, cost data, and other performance-related data, were available in a networked computer system to which Paragon had access through its performance of the PMOS contract. Decl. of RTGX Business Manager at 1. Id. The protester also contended that RTGX provided invoices and other proprietary data to a Paragon employee in connection with Paragon's performance of the PMOS contract. Id. at 2.

In response, the CO acknowledged that her initial view of the potential access to information Paragon had under the PMOS contract was not correct. In her supplemental statement, the CO stated as follows:

[I]n investigating EIS's allegation, I did find an instance where a Paragon employee . . . in the DPS program office may have had access to RTGX rate information from invoice reviews as part of the duties under the PMOS support contract. However, [the Paragon employee] had previously signed a non-disclosure statement which is on file, and is included as an attachment in [the PMOS CO's] declaration (PMOS CO Declaration, Attachment 1). Even if [the Paragon employee] did have access to rates on invoices, he was precluded from disclosing this information to Paragon or using this information by the terms of his nondisclosure agreement.
Supp. CO Statement, July 20, 2011, at 8.

Notwithstanding her revised understanding of the information to which Paragon may have had access under the PMOS contract, the CO confirmed her finding that no disqualifying OCI existed because the NDAs signed by Paragon employees prohibited any disclosure which could have affected the ITS competition. Id. Specifically, the CO stated that she viewed the NDAs as precluding Paragon employees from disclosing the information to any parties not authorized to receive the information, including other Paragon employees not covered by the NDAs. Id. at 12, 14.

As our Office has held, mitigation efforts that screen or wall-off certain individuals within a company from others, in order to prevent an improper disclosure of information, may be an effective means to address an unequal access to information OCI. See Axiom Resource Mgmt., Inc., B-298870.3, B-298870.4, July 12, 2007, 2007 CPD para. 117 at 7 n.3; Aetna Gov't Health Plans, Inc., supra, at 13.

EIS argues, however, that the CO did not reasonably conclude that the NDAs mitigated the potential OCI that arose from Paragon's performance of the PMOS contract. EIS first argues that the CO's reliance on the NDAs signed by Paragon employees was unreasonable because the FAR requires a different form of NDA. In this regard, FAR sect. 9.505-4(a) states that "[w]hen a contractor requires proprietary information from others to perform a Government contract and can use the leverage of the contract to obtain it, the contractor may gain an unfair competitive advantage unless restrictions are imposed." In order to mitigate the potential competitive harm, the FAR mandates the following actions:

A contractor that gains access to proprietary information of other companies in performing advisory and assistance services for the Government must agree with the other companies to protect their information from unauthorized use or disclosure for as long as it remains proprietary and refrain from using the information for any purpose other than that for which it was furnished. The contracting officer shall obtain copies of these agreements and ensure that they are properly executed.

FAR sect. 9.505-4(b).

We agree with the protester that the PMOS CO failed to comply with the express requirements of FAR sect. 9.505-4(b). The record shows that, contrary to the requirements set forth above, Paragon did not enter into an NDA with RTGX for the PMOS contract, nor did the PMOS CO require that Paragon do so. Supp. CO Statement, July 20, 2011, at 14; PMOS CO Statement at 2. Despite this error, we do not think that the protester was prejudiced here. Competitive prejudice must be established before we will sustain a protest; where the record does not demonstrate that the protester would have had a reasonable chance of receiving the award but for the agency's actions, we will not sustain a protest, even if deficiencies in the procurement process are found. McDonald-Bradley, B-270126, Feb. 8, 1996, 96‑1 CPD para. 54 at 3.

Although the NDAs obtained by the PMOS CO did not take the form required by FAR sect. 9.505-4(b), we think that the CO for the ITS contract nonetheless concluded that the NDAs adequately mitigated the possibility that Paragon had an unequal access to information OCI. While the protester contends that the NDAs apply only to "government information," the record shows that the agreements cover a broad range of contractor business information, including "any and all confidential business information, contractor bid or proposal information, and/or source selection sensitive information." AR, Tab 10, Sample NDA, at 1-2. The NDAs prohibit Paragon employees from disclosing this information to "a non-Government person (including, but not limited to, a person in my company, affiliated companies, subcontractors, etc.)" unless that person has a valid "need to know," has executed a NDA, and has received prior clearance from the CO. Id. at 2. Finally, the NDA prohibits use of the information for "any non-governmental purposes, including, but not limited to, the preparation of bids or proposals." Id. Thus, we think the CO could reasonably find that the NDAs apply to any information provided by RTGX to Paragon employees in the course of either party's performance of any contract with USTRANSCOM, and place appropriate restrictions on the disclosure or use of that information. On this record, we conclude that the CO reasonably exercised her judgment by relying on the NDAs as mitigating the possible OCI arising from Paragon's access to RTGX information under the PMOS contract.

EIS argues, however, that the company-to-company agreements required under the FAR and the PMOS contract (which contains a requirement that mirrors FAR sect. 9.505‑4, AR, Tab 19, PMOS Contract, at 51-52) provide protections that are not provided by the NDAs between Paragon and the government. Specifically, the protester contends that "only a company-to-company agreement, as required by the FAR and OCI clause, establishes a binding contracting commitment with legal remedies in the event a company's proprietary data has been improperly used by a contractor acting on behalf of the government." Supp. Comments, July 25, 2011, at 5 n.1. However, the absence of additional protections and benefits that might be afforded to contractors under a company-to-company agreement does not render unreasonable the CO's judgment that the NDAs adequately mitigated the possible OCIs in question here.

In sum, we find that although the PMOS CO did not follow the requirements of the FAR to obtain company-to-company NDAs for the PMOS contract, this error did not prejudice the protester. In this regard, we conclude that the CO for the instant award gave meaningful consideration to the record, and reasonably relied on those NDAs as addressing the potential for an unequal access to information OCI that arose from Paragon's performance of the PMOS contract.  Thus, notwithstanding the agency's error concerning the type of NDA obtained, we find no basis to sustain the protest.  (Enterprise Information Services, Inc., B-405152; B-405152.2; B-405152.3, September 2, 2011)  (pdf)

In its current protest, TAG asserts that the agency failed to adequately consider and investigate whether SAIC has an "impaired objectivity" OCI. In this connection, TAG principally asserts that the agency's OCI review improperly was limited primarily to information provided by SAIC; according to the protester, since SAIC in effect selected the information reviewed by the agency in analyzing the OCI question, the agency's conclusion is inherently unreasonable. TAG further asserts that since the agency's analysis of the OCI question was faulty, its execution of the D&F waiving any remaining OCI also was faulty inasmuch as the waiving authority was unable to appreciate the actual potential risk of an OCI. Finally, in connection with the D&F, TAG also asserts that it improperly included a blanket waiver of potential OCIs that may arise in the future.

The responsibility for determining whether a conflict exists rests with the procuring agency. CIGNA Gov't Servs., LLC, B-401068.4, B-401068.5, Sept. 9, 2010, 2010 CPD para. 230 at 12; Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para.129 at 12. In making this determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, giving consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. Federal Acquisition Regulation (FAR) sections 9.504, 9.505. In reviewing bid protests that challenge an agency's conflicts determinations, the Court of Appeals for the Federal Circuit has mandated application of the "arbitrary and capricious" standard established pursuant to the Administrative Procedures Act (APA). See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). In Axiom, the Court of Appeals noted that "the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion." Id. The standard of review employed by this Office in reviewing a contracting officer's OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable. See, e.g., MASAI Tech. Corp., B-298880.3, B-298880.4, Sept. 10, 2007, 2007 CPD para. 179 at 8; Business Consulting Assocs., LLC, B‑299758.2, Aug. 1, 2007, 2007 CPD para. 134 at 9-10; Overlook Sys. Techs., Inc., B‑298099.4, B‑298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-18; Alion Sci. & Tech. Corp., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 5-8.


We have no basis to object to the adequacy of the agency's inquiry into whether SAIC has an OCI. The protester is correct that the starting point for the agency's effort was to obtain information from SAIC that was to be submitted in response to the discussions conducted during the agency's corrective action; both SAIC and TAG were requested to provide detailed information relating to any potential OCI, and the firm's strategy to mitigate any potential OCI. AR, exhs. 2, 3. In response to this request for information, SAIC provided detailed information, including a matrix[1] listing some [deleted] contracts that SAIC had identified as potentially presenting an OCI, along with an OCI mitigation plan intended to address any OCI concerns. SAIC Revised Cost Proposal, Tab F.

The record shows that SAIC's matrix was not simply accepted by the agency without critical analysis. Rather, the record shows that the agency's OCI analysis team carefully reviewed the contracts listed in SAIC's matrix; while the team agreed with SAIC's characterization of the contracts (and the potential for mitigating possible OCIs) in some instances, it disagreed in other instances. For example, the record shows that, in reviewing SAIC's contracts, the OCI analysis team reached the following conclusion relating to the tier one and two contracts:

The single most significant potential impaired objectivity OCI that SAIC noted revolves around the Joint Capabilities Integration and Development System (JCIDS). SAIC mentions JCIDS in its discussion of all [deleted] of the Tier 1 and Tier 2 contracts.[2] A5XP's analysis of SAIC and JCIDS was as follows:

"The potential for an OCI in A5XP is very low. A5XP is the Strategic Plans and Policy Division, which does not determine requirements, capabilities, or specifications, nor has any influence on future military acquisition of products or services. Our role is to ensure AF policies are in line with that of higher authorities."

"The only risk for an OCI stems from our contractor's access to military requirements documents as they are vetted through the Joint Capabilities Integration and Detection System (JCIDS)."

* * * * *

"When coupled with the staffing process within A5XP, which acts as an additional OCI mitigation layer, the mitigation strategies outlined by SAIC [excluding itself from participation in any JCIDS reviews or inputs related to this program] are effective and acceptable."

* * * * *

The OCI Analysis Team accepted and concurred with A5XP's analysis of JCIDS. SAIC's JCIDS strategies, which include tasking one of their teaming partners with all JCIDS reviews, when coupled with Air Force oversight of those reviews and the limited scope of those reviews (policy and directives compliance), taken together constitute an effective mitigation for this potential impaired objectivity OCI.

AR, exh. 9, at 10-11. On the other hand, the record also shows that the agency criticized SAIC's characterization of certain of its contracts, as well as its proposed mitigation efforts. See e.g., AR, exh. 9, at 11-17. After a lengthy discussion of the agency's reservations in this connection, the agency concluded as follows:

Although these [mitigation] strategies and concepts are useful, none of them can ensure that zero residual potential OCI remains. As the attached Air Force Findings attest, A5XP understands and is willing to accept this unmitigated potential OCI risk.

AR, exh. 9, at 19.

In addition to this critical analysis of the materials presented by SAIC, the record shows that the agency also independently contacted references from the contracts listed by SAIC, both to verify the accuracy of information presented by SAIC in its matrix, and to inquire whether, in light of the requirements being solicited, the points of contact thought that an OCI might potentially exist in light of the SAIC contract for which they were responsible. AR, exhs., 4, 7, 8.

Additionally, the agency performed independent research relating to the products and services offered by SAIC. That review included an examination of SAIC's own website[3] (which provides detailed information relating to the firm's products and services), AR, exh. 5, as well as an examination of other, independent, sources of information about the company, many of which were critical of the firm and its products and services. AR, exh. 6.

Finally, and most significantly, the agency, in the wake of its review, determined that it could not rule out the remote possibility that there was some residual potential for an OCI because of SAIC's other contracts. Consequently, the agency executed a D&F acknowledging and accepting this residual risk and waiving it, consistent with the requirements of the FAR. In this respect, the FAR establishes that, as an alternative to avoidance, neutralization, or mitigation, an agency head or designee may execute a waiver. Specifically, the FAR provides:

The agency head or a designee may waive any general rule or procedure of this subpart by determining that its application in a particular situation would not be in the Government's interest. Any request for waiver must be in writing, shall set forth the extent of the conflict, and requires approval by the agency head or a designee.

FAR sect. 9.503.

Here, the record shows that the contracting officer prepared and submitted a written waiver request that described the agency's investigative efforts to determine if SAIC had an OCI that could not be mitigated and the extent of any residual OCI, and that provided a detailed discussion of the bases for his conclusions that the conflict was not significant and that waiver would be in the best interests of the government. Contracting Officer's Statement, Jan. 21, 2011, exh. 1. The requested waiver was duly executed by the head of the contracting activity, as authorized by FAR sect. 9.503. Id.

TAG challenges the adequacy of the waiver on the basis that the agency relied solely on information provided by SAIC to reach its conclusions regarding the possible existence of an OCI. As discussed, however, the record shows that the agency's efforts went well beyond mere acceptance of the information presented by SAIC--the agency critically examined the information presented by SAIC, contacted the cognizant personnel for the other contracts to inquire about potential OCIs, and conducted its own independent research into the products and services offered by SAIC. In these circumstances, we have no basis to question the adequacy of the agency's investigative efforts. CIGNA Gov't Servs., LLC, supra.

As a final matter, TAG takes issue with the terms of the waiver itself insofar as it purports to waive future, currently unknown, OCIs that may arise. In this respect the waiver provides that it is being executed, in part, to waive "[t]he risk of unknown current or future SAIC contracts that may impact the planned A5XP task order." Contracting Officer's Statement, exh. 1, at 7. According to TAG, the agency cannot waive unknown future OCIs.

As an initial matter, irrespective of whether or not an agency properly can waive future, unknown OCIs, GSA's alleged attempt to do so here does not serve to invalidate the agency's waiver of the known potential OCIs on the part of SAIC, a waiver that, as discussed, we find proper. In any case, while we agree with the protester that an agency may not properly waive unknown or future OCIs, the record shows that this was understood by the agency and that the contracting officer did not intend to waive unknown future OCIs. The contracting officer states:

As the contracting officer, in my ongoing coordination with A5XP, I plan to remain aware of any changes that impact potential OCIs. I will assure that the A5XP personnel are to report any new or unknown existing contract vehicles where additional potential risks have been identified. My intention is to address any new OCI issues and handle them in accordance with my duties under the FAR. It was not my intention that the waiver would cover unanticipated conflicts that were not considered in the waiver request. Any new risks would go through the same scrutiny as identified in the Waiver D&F for adequacy of mitigation. If any risks are found to be real OCI and complete mitigation is not provided then meetings would ensue between the Government and the contractor to establish acceptable mitigation procedures or complete avoidance. The approved waiver represents the risks currently identified and is not intended to be a catch all for potential risks identified in the future.

Contracting Officer's Supplemental Statement, Feb. 15, 2011, at 2-3. We have no basis to question the contracting officer's representations in this regard. Valdez Int'l Corp., B-402256.3, Dec. 29, 2010, 2010 CPD para. 13 at 6 (GAO looks to the entire record, including the contracting officer's statement to our Office, in reviewing a contracting officer's judgment concerning a contractor's possible OCI.) In light of the foregoing, we deny TAG's protest of the OCI review.  (The Analysis Group, LLC, B-401726.3, April 18, 2011)  (pdf)

OCI Allegations

The situations in which OCIs arise, as described in Federal Acquisition Regulation (FAR) subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which a firm has access to nonpublic information as part of its performance of a government contract and that information provides a competitive advantage in a later competition (a “biased ground rules” OCI). FAR § 9.505-4. The second group consists of situations in which a firm, as part of its performance of a government contract, has in some way set the ground rules for another contract competition, thereby skewing the competition in its own favor (an “unequal access to information” OCI). Id. §§ 9.505-1, 9.505-2. The third group consists of situations in which a firm’s ability to render impartial advice to the government would be undermined by the firm’s competing interests (an “impaired objectivity” OCI). Id. § 9.505-3.

QinetiQ contends that certain work performed by CSC under the predecessor contract created the first and second types of OCIs, i.e., “unequal access to information” and “biased ground rules” OCIs. QinetiQ also contends that the agency improperly failed to recognize or address the alleged OCIs. With respect to the alleged biased ground rules OCI, QinetiQ points out that certain key personnel résumés submitted with CSC’s proposal show that the individuals reviewed, analyzed, and defined FAA operational requirements under the predecessor contract. Comments and Supp. Protest at 14-17 (referencing AR, Tab 9, CSC Technical Proposal, at 2-8, 2-9, 2-15, 2-16). QinetiQ argues that CSC was therefore in a position to have skewed the competition in its own favor. Id.

The responsibility for determining whether an OCI exists rests with the procuring agency. Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 12. In making the determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, giving consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. FAR §§ 9.504, 9.505. In reviewing bid protests that challenge an agency’s OCI determination, the Court of Appeals for the Federal Circuit has mandated application of the “arbitrary and capricious” standard established pursuant to the Administrative Procedures Act. See Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). To demonstrate that an agency’s OCI determination is arbitrary or capricious, a protester must identify “hard facts” that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Turner Constr. Co. v. United States, No. 2010-5146, slip. op. at 17-18 (Fed. Cir. July 14, 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010). In Axiom, the court noted that “the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion.” Id. The standard of review employed by this Office in reviewing a contracting officer’s OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. CIGNA Gov’t Servs., LLC, B-401068.4; B-401068.5, Sept. 9, 2010, 2010 CPD ¶ 230 at 12.

In resolving this protest, our Office conducted a 2-day hearing on the record, during which testimony was provided by the contracting officer, the TET chairman, and a QinetiQ vice president who serves as the program manager for QinetiQ’s V-TRIPS contract. At the hearing, the contracting officer testified that he considered the existence of OCIs on an ongoing basis during the procurement, and that it was his view that CSC’s prior work did not create an OCI. Hearing Tr. at 11, 30, 40-41, 110. The contracting officer stated that his OCI analysis included consideration of the circumstances described in FAR subpart 9.5. Hearing Tr. 11, 40-41. He stated that he also considered that all of the V-TRIPS contracts included a clause requiring the contractors to disclose any OCIs known before award, or discovered after award, and that CSC had made no disclosures. Id. at 260-63 (referencing AR, Tab 35, QinetiQ V-TRIPS Contract, § H.14(a), (e)).

With regard to CSC’s work under the predecessor contract, the contracting officer testified that he knew that CSC had analyzed and defined agency requirements. Id. at 49, 92-93. He also testified that he had reviewed the résumés in CSC’s proposal that described analysis and definition of requirements under the predecessor contract. Id. at 95-97. The contracting officer acknowledged, however, that he did not know, or inquire, whether CSC had participated in the preparation of the SOW for the protested task order, or whether those who prepared that SOW had used materials that CSC created under the predecessor contract.8 Id. at 37-38, 62-65, 68-6

At the hearing, the TET chairman, whose day-to-day responsibilities include management of projects supported by TRIPS and V-TRIPS contractors, testified that CSC’s analysis and definition of requirements under the predecessor contract involved identifying system features that are required by system users. Id. at 113-14, 136-37, 194-95, 200. This work generally occurred, he explained, in connection with routine efforts to create enhancements to those systems Id. at 131, 200-01. The TET chairman further testified that he had responsibility over preparation of the SOW at issue in this protest.  Id. at 118-19, 127-28. No contractors, he testified, assisted with preparation of the SOW, and no contractor-prepared documents--including the system requirement definitions prepared by CSC--or contractor input were considered in connection with preparing the SOW. Id. at 120, 128, 131, 136, 142. Additionally, he testified that even if CSC had not performed the requirements definition work, portions of the SOW relevant to this protest would not have been changed from the way that they appear in the SOW. Id. at 198-99, 205, 219-20, 224.

Notwithstanding the TET chairman’s testimony, QinetiQ argues that CSC shaped the SOW because, according to QinetiQ, the SOW includes requirements that were not included in the TRIPS contract SOW and that CSC allegedly defined. Post-Hearing Comments at 16. The only such requirement identified by QinetiQ, however, is compliance with the SWIM methodology. Id. at 12-14, 16. In this regard, QinetiQ points out that one of CSC’s key personnel résumés reflects support of the FAA SWIM/ITWS program. Id. at 12-14 (referencing AR, Tab 9, CSC Technical Proposal, at 2-9).

As discussed above, FAA’s SWIM program aims to increase the sharing of ATMS information. See FAA SWIM Questions and Answers, http://www.faa.gov/about/ office_org/headquarters_offices/ato/service_units/techops/atc_comms_services/ swim/qanda/ (last visited July 25, 2011); see also CSC Hearing Exhibits, Exh. 1, at 23; Hearing Tr. at 185. As also discussed above, 4 of the more than 125 activities described in the SOW referenced compliance with the SWIM methodology. RFP § C.3, at 8-10. In his testimony, the TET chairman characterized the SOW references to SWIM as “very generic” and indicated that they were included in the SOW for the general purpose of informing offerors that the agency has adopted the SWIM methodology. Hearing Tr. at 167-70. The TET chairman also testified that there was no connection between CSC’s work on the SWIM/ITWS program and the SOW. Id. at 165. For these reasons, and because the record does not reflect hard facts to show that CSC’s work under the predecessor contract put the firm in a position to materially affect the protested procurement--for example by influencing the agency’s decision to structure its projects to comply with the SWIM methodology--QinetiQ’s protest that CSC’s prior work created a potential or actual biased ground rules OCI is denied. See DRS C3 Sys., LLC, B-310825, B-310825.2, Feb. 26, 2008, 2008 CPD ¶ 103 at 7-8; Operational Res. Consultants, Inc., B-299131.1, B-299131.2, Feb. 16, 2007, 2007 CPD ¶ 38 at 6; Mechanical Equip. Co., Inc. et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD ¶ 192 at 26-27.

QinetiQ also argues that the award to CSC violates FAR § 9.505-1 because, as alleged by QinetiQ, the record reflects that under the protested task order, CSC will be developing and integrating system enhancements that are connected with the requirements defined by CSC under the predecessor contract. Post-Hearing Comments at 8-14. FAR § 9.505-1 requires that a contractor that provides systems engineering and technical direction for a system for which it does not have overall responsibility for development, integration, assembly, and checkout, or for its production, shall not be awarded a contract to supply the system. FAR § 9.505-1(a). The regulation states that systems engineering includes a combination of “substantially all” of the following activities: determining specifications, identifying and resolving interface problems, developing test requirements, evaluating test data, and supervising design. Id. § 9.505-1(b). It also states that technical direction includes a combination of “substantially all” of the following activities: developing work statements, determining parameters, directing other contractors’ operations, and resolving technical disputes. Id. According to the regulation, a contractor performing these activities occupies a highly influential position in determining a system’s basic concepts and supervising their execution, and thus should not be in a position to make decisions favoring its own products or capabilities. Id.

At the hearing, the contracting officer denied that CSC performed technical direction under the predecessor contract. Hearing Tr. at 41-42. Further, nothing in the record, and nothing offered by QinetiQ, demonstrates that CSC performed the technical direction activities described in FAR § 9.505-1(b), much less “substantially all” of those activities. Moreover, the basis for QinetiQ’s invocation of FAR § 9.505-1 is unclear given that FAR § 9.505-1 pertains to contracts for the “supply of [a] system or any of its major components,” and the SOW here does not call for the supply of a system or major components of a system. For these reasons, we see no merit in QinetiQ’s claim that the award to CSC violates FAR § 9.505-1.

With respect to the alleged unequal access to information OCI, QinetiQ asserts that certain résumés included with CSC’s proposal demonstrate that CSC had access to nonpublic information under the predecessor contract that gave CSC an unfair competitive advantage. Comments and Supp. Protest at 6, 9. The only specific information to which QinetiQ alleges CSC had access, however, is the agency’s preference for minimizing custom coding. Id. at 11. QinetiQ argues that the agency’s determination to assign a strength to CSC’s proposal for an emphasis on minimizing custom coding demonstrates that QinetiQ suffered prejudice as a result of the role that CSC played in developing the “configure don’t code” approach. Id. at 10 (referencing AR, Tab 11(a), TET Report Excerpt--CSC, at 6).

At base, QinetiQ’s position is that an unequal access to information OCI arose because, in QinetiQ’s words, QinetiQ’s personnel did not “have nearly the same level of inside knowledge and experience that [CSC’s personnel] enjoy[ed] through [their] roles at the Volpe Center.” Supp. Comments at 21. It is well-settled that an offeror may possess unique information, advantages, and capabilities due to its 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. See FAR § 9.505-2(a)(3); CACI, Inc.--Fed., B-403064.2, Jan. 28, 2011, 2011 CPD ¶ 31 at 10; MASAI Tech. Corp., B-298880.3, B-298880.4, Sept. 10, 2007, 2007 CPD ¶ 179 at 8. 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. Council for Adult & Experiential Learning, B-299798.2, Aug. 28, 2007, 2007 CPD ¶ 151 at 6; Government Bus. Servs. Group, B-287052 et al., Mar. 27, 2001, 2001 CPD ¶ 58 at 10.

The portions of the CSC résumés on which QinetiQ’s argument hinges reflect that CSC personnel had experience with supporting various Volpe Center activities, including development of a “configure don’t code” approach in connection with SWIM. See AR, Tab 9, CSC Technical Proposal, at 2-3, 2-5, 2-7, 2-9. The agency’s determination to credit CSC’s proposal for demonstrating that experience--together with the absence of evidence of any preferential treatment or unfair action by the agency--amounts to no more than a reflection of the normally occurring advantage that an incumbent may possess. See CACI, Inc.--Fed., supra; Council for Adult & Experiential Learning, supra.  (QinetiQ North America, Inc. B-405008; B-405008.2, Jul 27, 2011)  (pdf)

OCI Allegations

PCCP and Bechtel protest that CBY has an impermissible OCI that the Corps failed to reasonably investigate or mitigate. Specifically, the protesters argue that CBY's employment of the agency's Chief of Program Execution of the Hurricane Protection Office (HPO)--the office within the Corps responsible for this project and procurement--provided the awardee with an unfair competitive advantage that was based upon an unequal access to information OCI. The protesters complain that the CO's investigation of this potential OCI explored only the Chief's responsibility for this procurement prior to leaving the Corps, and did not consider the Chief's access to source selection sensitive information.

In answer, the Corps contends that the hiring of the Corps's Chief of Program Execution for the HPO by CBY's managing partner did not provide CBY with competitively useful, non-public information; the Corps also defends the CO's review of the situation, and his conclusions. See Supp. Legal Memorandum at 9, citing AR, Tab 15, OCI Determination & Findings (D&F). The agency contends that our review of the CO's determination is limited to determining whether the CO reasonably concluded that no actual OCI existed. Id. at 10.

At the time of his retirement from the Corps on August 31, 2010, the Chief of Program Execution held the most senior civilian position at the HPO. In this role, the Chief had full authority for management decisions related to major elements of the hurricane protection program and projects, including the permanent pumps project. See AR, Tab 16, October 13, 2009 Post-Employment Ethics Guidance Letter. Less than a month later, on September 20, the Chief began working as a project manager for CDM, which was the managing partner of the CBY joint venture, the awardee here. At some point thereafter, his title changed from project manager to strategic accounts manager. At the time the Chief left government service and was hired by CDM, offerors were preparing their phase II initial proposals.

After the Chief had left the Corps and was working for CDM, and after the Corps had evaluated the final proposal revisions submitted under the permanent pumps procurement, the CO began an investigation to determine whether an OCI existed. CO's Statement at 5. The CO prepared a Determination and Findings (D&F) of the potential OCI, which focused on the Chief of Program Execution's responsibilities and activities with respect to this procurement. In the OCI D&F, the CO stated that as a result of his investigation and interviews, he found that the Chief retired prior the submission of phase II proposals and that the "structure and ground rules for phase II continued to evolve and changed substantially" after his retirement. The CO concluded that the Chief "effectively removed himself from any involvement in this procurement beginning approximately June 2010." AR, Tab 15, OCI D&F, at 2, 4.

During the course of this protest, the CO revisited his review and expanded it to include consideration of a possible violation of the procurement integrity provisions of the Office of Federal Procurement Policy Act. In the Procurement Integrity D&F, the CO provided more detail supporting his conclusion that the Chief was effectively removed from participation in this procurement prior to the phase II competition. In this regard, the CO noted that the Chief stated that he reached an agreement with the Colonel heading the HPO, in June, 2009, that the Chief would have no further responsibility for acquisition activities, in order to minimize restrictions on the Chief's search for post-government employment. AR, Tab 15, Procurement Integrity D&F, at 4.

Before we begin our review, we note that the FAR requires that contracting officials avoid, neutralize or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. FAR sections 9.504(a), 9.505. The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs, Inc., B-254397 et al., July 27, 1995, 95-2 CPD 129 at 12. In making this determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, giving consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. FAR sections 9.504, 9.505; CACI, Inc.-Fed., B-403064.2, Jan. 28, 2011, 2011 CPD para. 31 at 9.

The FAR recognizes that conflicts may arise in factual situations not expressly described in the relevant FAR sections, and advises contracting officers to examine each situation individually and to exercise "common sense, good judgment, and sound discretion" in assessing whether a significant potential conflict exists and in developing an appropriate way to resolve it. FAR sect. 9.505. The regulation identifies situations in which an OCI may arise, including, as relevant here, where a firm competing for a government contract has "[p]roprietary information (that was obtained from a Government official without proper authorization)" or "source selection information . . . that is relevant to the contract but was not made available to all competitors, and such information would assist the contractor in obtaining the contract." FAR sect. 9.505(b).

In reviewing bid protests that challenge an agency's conflict of interest determinations, the Court of Appeals for the Federal Circuit has mandated application of the "arbitrary and capricious" standard established pursuant to the Administrative Procedures Act. See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). To demonstrate that an agency's OCI determination is arbitrary or capricious, a protester must identify "hard facts" that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Turner Constr. Co., Inc. v. United States, No. 2010-5146, slip. op. at 17-18 (Fed. Cir. July 14, 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010). In Axiom, the Court of Appeals noted that "the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion." Axiom Res. Mgmt., Inc., 564 F.3d at 1382. The standard of review employed by this Office in reviewing a contracting officer's OCI determination mirrors the standard required by Axiom. In this regard, we review the reasonableness of the CO's investigation and, where an agency has given meaningful consideration to whether an OCI exists, will not substitute our judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable. See CACI, Inc.-Fed., supra, at 9; CIGNA Gov't Servs., LLC, B-401068.4; B-401068.5, Sept. 9, 2010, 2010 CPD para. 230 at 12.

As set forth more fully below, we find that the CO did not conduct a reasonable investigation to determine whether CBY's employment of the agency's former Chief of Program Execution provided the firm with access to non-public, selection sensitive information that gave CBY an unfair competitive advantage. The record shows that the CO's investigation was narrowly focused upon what role the former government employee had in the conduct of the procurement before his retirement (and even then did not consider pertinent information), and did not explore the Chief's access to proprietary or source selection information and whether this information provided an unfair competitive advantage to CBY.

The Chief's Role for the Corps and His Continued Involvement in the Procurement

As indicated above, at the time of his retirement from the Corps, the Chief held the most senior civilian position at the HPO, and in that position he had full authority for management decisions related to major elements of the hurricane protection program and projects, including the permanent pumps project. See AR, Tab 16, Post‑Employment Ethics Guidance Letter, Oct. 13, 2009. The HPO was responsible for the permanent pumps project, and the Permanent Pumps Station branch reported directly to the Chief. See AR, Tab 15, Procurement Integrity D&F, attach. 4, HPO Organizational Chart. The HPO activities the Chief directed included construction management, levees, floodwalls and armoring, existing pump stations, permanent pump stations, and the Inner Harbor Navigation Canal, among others. See AR, Tab 32a, Post‑Employment Ethics Opinion, July 22, 2010, at 1-2. The Corps's ethics counselor found that the Chief had participated personally and substantially in nearly all matters within HPO, specifically naming the permanent pumps project. Id. at 2. The Chief participated in the Corps's preparation of the Acquisition Strategy for the permanent pumps. AR, Tab 15, attach. 8, Acquisition Plan, at 48. The Chief was listed as an advisor to the SSEB for both phases of the procurement (although he denies having acted in that capacity). The Director of Task Force Hope, or overall manager of the $14 billion hurricane protection system program, who was the SSA for this procurement, asked the Chief to intervene with the senior project manager for this procurement to have a different contracting officer assigned to the job. Tr. at 1091. The person whom the Chief approached in this regard, who was working as a deputy in the district at that time, was then moved to the HPO to become the chief of one of the HPO's contracting groups, and CO for this procurement in April 2010. Id.

The record does not support the agency's OCI conclusion that the Chief had removed himself from the procurement in June of 2010. See AR, Tab 15, OCI D&F, at 2. Instead, the record shows that until he retired, the Chief continued to work in close proximity and communication with the agency's project manager for the permanent pumps project, who reported to the Chief throughout his employment with the Corps. Tr. at 1043. The project manager testified, for example, that he had conversations with the Chief in hallways or in his office, Tr. 77, discussing such matters as the costs and the risks of the project, the RFP, how build-to-budget was received by industry, performance requirements, updates, and, in general, discussed the project with the Chief frequently. See Tr. at 76-78. The project manager further testified that there was never a formal declaration, even to him, that the Chief had recused himself from the project. Tr. at 944.

Other evidence supports the Chief's continued involvement in the procurement prior to his retirement. For example, Bechtel provided a sworn declaration of its Operations Manager, who stated that he and another Bechtel employee met with the agency's Chief and the Colonel in charge of the HPO on July 6, 2010, after Phase II had begun, and discussed with them the build-to-budget concept. See Bechtel Supp. Protest, exh. 2, Decl. of Bechtel Operations Manager, June 6, 2011. The Corps has offered no rebuttal to this sworn statement.

In addition, we find the assertion that there was an agreement between the Chief and the Colonel in 2009, under which the Chief allegedly agreed to have no further responsibility for acquisition activities beginning approximately a year prior to his retirement, deserving of little probative weight. This agreement (which was mentioned for the first time in a post-protest D&F) is not contemporaneously documented, and it does not appear that other government personnel were aware of its existence. In this regard, although the Chief asserted that he had made sure that the permanent pumps project manager (who was also the head of the project delivery team, source selection advisory council member, and Permanent Pump Station Branch chief) and the rest of his staff knew of the agreement with the Colonel, Tr. at 1057, the project manager testified that he was unaware of the agreement until after the protests were filed. Tr. at 972. Similarly, the contracting officer was not told of the agreement until after the protests were filed, see AR, Tab 15, Procurement Integrity D&F, at 5, although he would have been expected to learn of such an agreement as a result of his investigation of CBY's potential OCI. Moreover, it was revealed at the hearing that the Colonel did not independently recall the agreement with sufficient clarity to be willing to sign a declaration (prepared in connection with this protest) about his recollection of it, until after a copy of the declaration was provided to the Chief to "make sure [the Chief] didn't see any problems with it before [the Colonel] signed it." Tr. at 1125-30.

Despite the Chief's continued close contact within the office responsible for this procurement, the D&Fs (and the record generally) do not show any investigation into whether any boundaries or restrictions were placed on the Chief's access to non-public, competitively sensitive information. In this connection, the Corps argues in its post-hearing comments that "[e]ven absent a proactive firewall excluding [the Chief] from the acquisition, all members of the selection team told the CO that they had never discussed the acquisition with [the Chief]," citing the OCI D&F as support for this assertion. See Agency's Post-Hearing Comments at 49. We give little weight to this assertion, however, given that the OCI D&F, in contrast to the Corps's post‑protest assertions, states only that the CO inquired whether members of the selection team had discussions about the phase II evaluation with the Chief "following his departure from federal service." See AR, Tab 15, OCI D&F, at 4. This does not account for the Chief's access to non-public, selection sensitive information prior to his retirement.

The Chief's Access to Non-Public, Selection Sensitive Information and Provision of Such Information to CBY

The Corps and CBY contend that the protesters cannot show that the Chief provided non-public, competitively useful information to CBY. However, Bechtel and PCCP point to the Corps's interpretation of the RFP's build-to-budget approach, and CBY's apparently unique knowledge that offerors were permitted to propose less than the $700 million ceiling for this contract. The record shows that the Corps began considering the build-to-budget approach for this procurement as early as February 2009, when, according to the Corps, the Chief still had responsibility for the project. Also, the record shows that the Chief was a required attendee at a February 1, 2010, permanent pumps build-to-budget briefing, in which this approach, and the decision to use it, were explained to the Colonel, and at which briefing the Chief was given slides showing feedback on this issue from one-on-one meetings held with prospective competitors.  See AR, Tab 15, Procurement Integrity D&F, attach. 7, Feb. 1, 2010 E-mail Confirming the Chief's Required Attendance; Tab 30, Decl. of Project Manager, at 1. A briefing slide from that meeting expressly provides, "Require offerors to submit proposals at or below the budgeted amount," a phrase that was not included on slides from briefings to industry and did not appear in the RFP. See PCCP's Supp. Protest, exh. 34, Build-to-Budget Briefing, at 2 (emphasis added).

The record also shows that on July 22, 2010, while the Chief was still working at the Corps—after phase II of the procurement had begun—the Chief received an e-mail from the agency's permanent pumps project manager, marked "high importance," concerning the build-to-budget provision and setting forth a proposed clarification to the RFP. See Hearing exh. 6 at 6. Following the proposed clarification, the e-mail asks whether "this solves the issue." The e-mail, initially sent from the contracting officer to the consultant who introduced the build-to-budget concept and the project manager, was forwarded directly to the Chief by the project manager. There is no explanation in the record of why the Chief was continuing to receive procurement information regarding the build-to-budget issue.

The record further shows that the Chief, after accepting employment with CBY, responded to CBY's request for advice about whether the firm should take an "opportunity to come in below $700 million." Tr. at 1113. The Chief testified that he advised CBY that, "if you could increase your value for the program, increase it . . . [i]f not, you know, it says within the number. It doesn't say you've got to hit $700 million. So don't just add money to add money." Tr. at 1114. In short, he advised CBY that, notwithstanding the RFP's express direction not to offer a lower price, CBY could offer a lower price. As noted above, CBY was the only offeror to propose less than $700 million.

Agency's Failure to Investigate Chief's Role at CBY and CBY's Access to Non‑Public, Selection Sensitive Information

The record does not show that the CO reasonably investigated the Chief's role and activities with CBY and whether CBY had access to non-public, selection sensitive information through the Chief. Rather, the CO merely stated in his D&Fs that the Chief's name did not appear in any of CBY's proposal documents and that nothing in CBY's proposal indicated that the awardee had received superior knowledge from the Chief. See AR, Tab 15, OCI D&F, at 2, 5; see also Procurement Integrity D&F, at 9. No support for these conclusory statements is provided in the D&Fs, or elsewhere in the record. Although the OCI D&F was dated March 24, 2011--approximately 6 months after the Chief started working for CBY's managing joint venture partner--it is written as if the Chief had not yet been hired by CDM. The contracting officer did not contact the Chief for a first‑hand account of his activities after he retired from the Corps or to learn what role he played at CDM. The record shows, in contrast to the CO's conclusions, that, following employment by CBY's managing joint venture partner, the Chief participated in "red team" reviews on CBY's phase II proposal and FPR, see Tr. at 43, and as explained above, the Chief counseled CBY that it could offer less than the build-to-budget amount identified in the RFP.

We note that the OCI D&F concludes that "some mitigation of the potential for an appearance of a conflict occurred when [the Chief] was counseled, when he withdrew from advising the SSO, and when Corps employees were instructed to refrain from discussions with [the Chief] about the project." OCI D&F at 4. We do not believe that the CO could reasonably view the cited events as reliable evidence of mitigation. For example, we understand the "counseling" to refer to a post-employment ethics opinion the Chief received from the Corps after he was offered employment by CBY's managing partner. AR, Tab 32a, Post-Employment Ethics Opinion, July 22, 2010; Tr. at 1095. The Ethics Opinion was issued based on information the Chief provided, including a job description. AR, Tab 32a. After reciting the facts, the opinion concludes that the Chief participated personally and substantially in nearly all matters within HPO, and includes the permanent pump station projects among the three specific areas in which he personally and substantially participated. Id. at 2. With respect to the Chief's prospective employer, the opinion states, "[y]ou advise that CDM does not currently have any contracts on any projects under HPO's area of responsibility," id. at 3, without any apparent consideration of CDM's role in CBY. The opinion directed the Chief to "immediately seek an updated opinion" if his duties with CDM changed or were different from those described in the opinion. The Chief testified that he assumed the ethics counselor would verify the documents he had signed, and that, once he went to work for CDM, he "saw no reason" to ever tell the ethics counselor that he was working on the permanent pumps project. Tr. at 1247-48. With respect to his withdrawal from advising the SSO, and instructions to Corps employees not to discuss the project with the Chief, we find no contemporaneous documentation--or other meaningful evidence in the record--to support that these events took place.

In sum, we find that hard facts exist to suggest the existence of a potential, if not actual, OCI that the Corps failed to reasonably evaluate and avoid, neutralize, or mitigate. In this regard, the Corps did not reasonably investigate the extent to which the Chief had access to non-public, source selection information and whether this information provided a competitive advantage to CBY. Specifically, the agency failed to reasonably consider the Chief's access to build-to-budget information that appears to have provided CBY with a competitive advantage in this procurement. In our view, the agency's failure to reasonably investigate the OCI taints the integrity of the procurement process. We therefore sustain PCCP's and Bechtel's protests of this issue. (PCCP Constructors, JV; Bechtel Infrastructure Corporation, B-405036; B-405036.2; B-405036.3; B-405036.4; B-405036.5; B-405036.6, August 4, 2011)  (pdf)

CACI again protests that BAH's role as [Defense Human Resources Activity] DHRA support contractor created an "unequal access to information" OCI that cannot be mitigated, and as such, BAH should have been excluded from the competition. CACI also again argues that because of BAH's performance as a support contractor to DHRA's Program Management Office, BAH has "a unique knowledge of the government's plans, attitudes and preferences for future [Defense Personnel Records Information Retrieval System] DPRIS development." Protest at 13. In support of this assertion, the protester points, without explanation, to the previously discussed statements provided by the CACI employees to the agency in response to the agency's August 13 request. The protester also points to BAH's technical proposal in support of its assertion that BAH's participation in the competition created an unequal access to information OCI, noting, for example, that BAH's proposal states that BAH has a "unique understanding" of the agency's "needs and strategic vision." Id.; see AR, Tab 62, BAH Technical Proposal, at 1-1. The protester also again argues that BAH, in its performance of the DHRA task order, attended meetings at which CACI and agency personnel had been present, and that these meetings exposed BAH personnel to certain CACI proprietary information regarding CACI's performance as the incumbent DPRIS support contractor.

The responsibility for determining whether a conflict exists rests with the procuring agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra, at 12. In making this determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, giving consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. FAR sections 9.504, 9.505. In reviewing bid protests that challenge an agency's conflict determinations, the Court of Appeals for the Federal Circuit has mandated application of the "arbitrary and capricious" standard established pursuant to the Administrative Procedures Act. See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). In Axiom, the Court of Appeals noted that "the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion." Id. The standard of review employed by this Office in reviewing a contracting officer's OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable. CIGNA Gov't Servs., LLC, B‑401068.4; B‑401068.5, Sept. 9, 2010, 2010 CPD para. 230 at 12.

As indicated by the discussion above, the record reflects that the agency performed a comprehensive OCI analysis. The TEBC/DPRIS PM and contracting officer, as well as individuals associated with DHRA's Office of the General Counsel and Procurement Support Office, all participated in the OCI analysis, and clearly gave "meaningful consideration to whether an OCI exists" with regard to BAH's performance as the DHRA support contractor. The protester's assertion that BAH's DHRA task order gave BAH an unfair competitive advantage because BAH gained a "unique understanding" of the agency's plans and needs was expressly addressed by the agency during its OCI analysis, and found to be without merit. As explained above, the agency states that certain information regarding its plans for DPRIS had been released publicly, and that it failed to understand, based upon its analysis and CACI's generalized assertions, why BAH could be considered to have any such "unique awareness." In this regard, the agency also noted that to the extent BAH had an advantage in this competition because of its performance of the DHRA task order, CACI enjoys a similar or greater advantage because of its 15 years of performance as the DPRIS support contractor under its task order.

Based on our review of the record, we cannot conclude that this aspect of the agency's OCI determination was unreasonable or reflected an abuse of discretion. We agree with the agency that, with the exception of the generalized statements in BAH's technical proposal, CACI has failed to point to any specific agency information BAH may have learned during its performance of the DHRA task order that provided BAH with an unfair advantage in competing for this award. Moreover, and in regard to BAH's alleged "unique awareness" of the agency's needs or plans, it is well settled that an offeror, such as BAH (or CACI), may possess unique information, advantages and capabilities due to its 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. MASAI Techs. Corp., B‑298880.3, B-2988880.4, Sept. 10, 2007, 2007 CPD para. 179 at 8. 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. Id. With regard to the language in BAH's technical proposal, which is the only specific evidence the protester contends supports its assertion here, we cannot find that such statements, which amount to "puffery," are sufficient to establish that BAH had an unfair competitive advantage, particularly given the agency's other findings to the contrary. See Imperial Schrade Corp., B‑223527.2, Mar. 6, 1987, 87-1 CPD para. 254 at 12 (statements made by retired Army officer that only he knew the agency's needs were mere puffery and insufficient to disqualify firm from the competition). Under the circumstances here, the protester's contentions amount to no more than bare speculation that BAH had unequal access to competitively useful information, and as such provides no basis to find that BAH had a conflict of interest. See Mechanical Equip. Co., Inc., et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD para. 192 at 29.

We also do not find unreasonable the agency's determination that BAH, in its performance of its DHRA task order, was not improperly exposed to CACI proprietary or confidential information. We first note that certain of the information CACI asserts or suggestimplies was improperly disclosed was either information that in fact was not disclosed to BAH, such as the information referred to in the statement of the CACI engineer, or was information to which the agency had "unlimited data rights," and thus was "permitted to disclose" to third parties. See AR, Tab 56, TEBC/DPRIS PM OCI Memorandum, at 9, 13. With regard to the other information referenced by CACI, and provided to the agency as attachments, we find reasonable the agency's position that "it was incumbent upon CACI, to control its own information and CACI cannot now claim information as non-public or proprietary that it freely disclosed to BAH during performance of the contract." Id. at 19. In this regard, our Office has stated that, as a general rule, proprietary information is that which is so marked or otherwise submitted in confidence to the government. Snell Enters., Inc., B‑290113, B‑290113.2, June 10, 2002, 2002 CPD para. 115 at 6; Interior Sys., Inc., B-271469, July 23, 1996, 96‑2 CPD para. 34 at 2. In this regard, FAR sect. 9.505‑4(a) specifically provides:

When a contactor requires proprietary information from others to perform a Government contract and can use the leverage of the contract to obtain it, the contractor may gain an unfair competitive advantage unless restrictions are imposed. These restrictions protect the information and encourage companies to provide it when necessary for contract performance. They are not intended to protect information—

(1) Furnished voluntarily without limitations in its use; or

(2) Available to the Government or contractor from other sources without restriction.

Here, the record reflects that the information now claimed by CACI as proprietary was "furnished voluntarily without limitations on its use." That is, the record reflects that the information was not marked as proprietary, nor was it submitted in confidence to the government or BAH. Specifically, CACI has not pointed to any information that was marked or otherwise identified as proprietary or confidential in either its statements furnished to the agency in August 2010, or its submissions to our Office during this protest. Moreover, we have no reason to disagree with the agency's conclusion that none of CACI's proprietary or non-public information was ever disclosed to BAH by agency personnel. Nor does the record reasonably show that CACI was somehow misled by BAH or government personnel into believing that BAH would not compete for future DPRIS work, or that the information being freely shared would be treated as proprietary or confidential.

In sum, we find reasonable the agency's determination that BAH did not have OCIs that precluded award under this RFP.  (CACI, Inc.-Federal, B-403064.2, January 28, 2011) (pdf)

Ellwood asserts that, at a minimum, M&T has a potential unfair access to information OCI by virtue of its relationship with CTS and, more specifically, with Ellwood's former employee. Ellwood reiterates its position that this individual had access to its non-public information relating to the fabrication of HP-9-4-20M steel, and that the information would be competitively useful in the qualification process for the BLU-113 casings. Ellwod concludes that, because the individual assisted M&T both in the qualification process and in preparing its proposal, this establishes a prima facie case that M&T suffers from a potential OCI.

Ellwood's assertions are without merit. While Ellwood's argument is based principally on the fact that Ellwood's proprietary information was available to its former employee in his role as a subcontractor under a SETA contract relating to the MOP program (during which time he observed Ellwood's manufacturing activities and was privy to Ellwood's non-public information), Ellwood has not explained what information was gained during that activity that was in any way new or different from the information the individual already possessed through his employment and consultant relationships with Ellwood. In this regard, where information is obtained by one firm directly from another firm--by, for example, dissemination of information by former employees--this essentially amounts to a dispute between private parties that we will not consider absent evidence of government involvement. LLH & Assocs., LLC, B-297804, Mar. 6, 2006, 2006 CPD para. 52 at 5.

Ellwood's protest supports the proposition that its former employee already possessed the information in question, stating as follows:

Massive Ordnance Penetrator is a technology demonstration program funded by DTRA to develop a large conventional penetrating weapon that will defeat hard and deeply buried targets using high-strength alloy steel casings nearly identical to those ENF [Ellwood] produces for the BLU-113 program. See FedBizOps Website, www.fbo.gov (search "Solicitation No. 678ARSS8JUN09"). The fundamental difference between the casings is their respective sizes. The MOP is a 30,000-pound weapon designed to be carried onboard B-2 and B-52 bombers while the BLU-113 is a 5,000-pound weapon carried on most strike aircraft.

* * * * *

The [MOP] casing is comprised of the same HP-9-4-20M alloy steel used to construct the BLU-113 casings. Proprietary information and know-how regarding manufacture of the MOP, therefore, is directly applicable to manufacture of the BLU-113 and to any other penetrators made of HP-9-4-20M material.

* * * * *

[The individual], in all three of his prior capacities: (1) as a senior manager for ENF's [Ellwood's] predecessor, NFC [National Forge Company]; (2) as a consultant to ENF; and (3) as a SETA contractor to DTRA under the MOP program, [has] had access to and observed ENF's confidential and proprietary techniques used in the production of HP-9-4-20M material and the associated weapons casings.

Ellwood Letter of Protest, July 19, 2010, at 5-6. Ellwood has neither alleged nor demonstrated that information necessary to manufacture HP-9-4-20M steel for the MOP is in any way different from information necessary to manufacture HP-9-4-20M steel for the BLU-113; in fact, it alleges that the information is the same. This being the case, Ellwood's allegation amounts to no more than an assertion that information the individual acquired as an Ellwood employee and consultant was improperly shared with M&T. This is not an OCI scenario; rather, it amounts to an alleged violation of an agreement between private parties that we will not consider. LLH & Assocs., LLC, supra. Stated differently, where an individual obtains non-public, competitively useful information in connection with a private employment or consulting agreement, an allegation that the information subsequently was shared with a competitor is a dispute between private parties, and does not give rise to an OCI, notwithstanding that the individual also subsequently may have had access to the same information through performance of a government contract.

In any case, as outlined above, the contracting officer conducted an extensive investigation into any potential OCI. This effort was sufficient to provide the agency with the information necessary to reach a reasonable judgment as to the potential OCI, and thus there is no basis for us to question the contracting officer's determination that there was no need to exclude M&T from competing for the requirement, because any OCI had been mitigated or neutralized. CIGNA Govt. Servs., LLC, B‑401068.4, B-401068.5, Sept. 9, 2010, 2010 CPD para. __ at 12-13 (where record shows that contracting officer thoroughly considered all facts and circumstances surrounding alleged OCI and sought the advice of counsel and technical experts, we will not substitute our judgment for that of the contracting officer absent clear evidence that the agency's determination was unreasonable).  (Ellwood National Forge Company, B-402089.3, October 22, 2010)  (pdf)

CIGNA first protests that Palmetto's performance under the HIGLAS transition and training support contracts created "[u]nfair, [u]nmitigated, and [u]nallowable" OCIs which the contracting officer failed to reasonably recognize. CIGNA's Fourth Protest, June 1, 2009, at 30. CIGNA maintains that Palmetto's prior performance under those contracts mandate its exclusion from this competition. Id. at 3. We disagree.

The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which a firm has access to nonpublic information as part of its performance of a government contract and that information provides a competitive advantage in a later competition. FAR sect. 9.505‑4. The second group consists of situations in which a firm, as part of its performance of a government contract has, in some way, set the ground rules for another contract competition, thereby skewing the competition in its own favor. FAR sections 9.505-1, 9.505-2. The third group consists of situations where a firm's ability to render impartial advice to the government would be undermined by the firm's competing interests. FAR sections 9.505-3.

In challenging the award to Palmetto, CIGNA maintains that Palmetto's performance of the HIGLAS contracts creates each of the three types of OCIs discussed above, noting that the HIGLAS system "interacts" with the MACs systems, will eventually be used by all MAC contractors, and therefore will "impact" those contractors. CIGNA's Post-Hearing Comments, Aug. 13, 2010, at 8-17. Among other things, CIGNA asserts that Palmetto's activities regarding "workload splits," "workload renames," and "workload merges" create OCIs. Id. at 13-17. In this context, CIGNA also complains that QSSI/Palmetto is involved in updating CMS's "internet only manual" (IOM), which provides instructions to MACs regarding claims processing procedures. Id. at 10. CIGNA further asserts that information Palmetto has received in resolving transition problems encountered by other MACs, as well as information obtained in performing the HIGLAS training contract, create OCIs. Id. at 14-15. Accordingly, CIGNA maintains that the contracting officer could not have reasonably determined that performance of the HIGLAS contracts did not create an OCI.

In responding to CIGNA's numerous protest assertions, the agency has provided information and explanations regarding the HIGLAS system, and the nature of the activities that are required by the agency in transitioning to that system. For example, the agency explains that Palmetto's activities with regard to "splits," "renames," and "merges" reflect the fact that the prior accounting system data was not divided by the geographical boundaries established for the current MAC jurisdictions. Tr. at 40. Accordingly, Palmetto's activities regarding these matters involve reorganization of data from the prior organizational structure to a structure consistent with the MAC jurisdictional boundaries--not a review of other MACs' claim processing operations or procedures. Tr. at 43, 45; Declaration of Deputy Director, Financial Management Systems Group, Aug. 2, 2010, paras. 11, 13, 14. More specifically, the agency states that, in performing the HIGLAS contracts, Palmetto does not "obtain access to the contractor's systems, data, business process documents, or any other documents pertaining to the transitioning contractors." Declaration of Deputy Director, Financial Management Systems Group, June 29, 2010, para. 30.

In responding to Palmetto's assertion's regarding the agency's IOM, CMS states that, although QSSI/Palmetto have been tasked with comparing the content of the IOM with the content of HIGLAS training manuals and identifying areas in the IOM that could benefit from the addition of HIGLAS-related information, QSSI/Palmetto's input is made publicly available to all Medicare claims processing contractors. Tr. at 393. Further, no IOM revisions flowing from QSSI/Palmetto's activities have been implemented. Id. at 395.

Consistent with the above, the agency further states that, in assisting with specific problems encountered by transitioning contractors, QSSI/Palmetto have viewed "screen prints" of specific problem transactions. However, even with regard to such "screen prints," the information accessed does not involve the contractor's claims processing operations or procedures since "[t]he only financial information that

HIGLAS is involved with is the accounting data." Declaration of Deputy Director, Financial Management Systems Group, June 29, 2010, para. 30. Finally, with regard to the performance of the HIGLAS training services contract, the agency states that Palmetto does not have access to actual "production data" or "contractor-specific data," but rather relies on "dummy data"; that is, data used to simulate how the modules operate and the system works. Tr. at 44.

The responsibility for determining whether a conflict exists rests with the procuring agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para.129 at 12. In making this determination, the FAR expressly directs contracting officers to examine 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 counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. FAR sections 9.504, 9.505. In reviewing bid protests that challenge an agency's conflicts determinations, the Court of Appeals for the Federal Circuit has mandated application of the "arbitrary and capricious" standard established pursuant to the Administrative Procedures Act (APA). See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). In Axiom, the Court of Appeals noted that "the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion." Id. The standard of review employed by this Office in reviewing a contracting officer's OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable. See, e.g., MASAI Tech. Corp., B-298880.3, B-298880.4, Sept. 10, 2007, 2007 CPD para. 179 at 8; Business Consulting Assocs., B‑299758.2, Aug. 1, 2007, 2007 CPD para. 134 at 9-10; Overlook Sys. Techs., Inc., B‑298099.4, B‑298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-18; Alion Sci. & Tech. Corp., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 5-8.

Here, based on our review of the entire record, we cannot conclude that the contracting officer unreasonably determined that Palmetto's performance of the HIGLAS contracts does not create an OCI. That is, the record shows that the contracting officer followed the FAR direction to consider the particular facts involved, including the nature of the contracts at issue, and to obtain the advice of counsel and the assistance of technical specialists before exercising her sound discretion. While we agree that the matters presented raise legitimate concerns regarding Palmetto's involvement in activities that relate to the performance of the MAC contracts, CIGNA has failed to persuasively explain how any of Palmetto's activities or access to information pursuant to performance of the HIGLAS contracts provided Palmetto a competitive advantage in competing for the jurisdiction 11 MAC contract. Based on our consideration of the record presented, including the testimony and declarations of the various agency personnel associated with, and knowledgeable of, the matters at issue, we cannot conclude that the contracting officer's decision reflected an abuse of her discretion. CIGNA's protests to the contrary are denied.   (CIGNA Government Services, LLC, B-401068.4, B-401068.5, September 9, 2010) (pdf)

In implementing the corrective action, the agency issued requests to both offerors for additional information concerning their performance under current and recent IC [intelligence community] contracts and followed up with clarification requests. After reviewing these responses, the contracting officer conducted interviews with government personnel responsible for administering the prior contracts in order to arrive at an assessment of OCI risk. Based on his review, the contracting officer concluded that MCR had a medium risk OCI under 2 of 7 contracts and that Scitor had a medium risk OCI in 2 of 16. Thereafter, the SSA prepared a seven-page waiver request, which she forwarded to CIA's Chief of Acquisition Services (the official authorized to grant an OCI waiver). The request included a description of the OCI concern and potential effect if not avoided, neutralized, or mitigated, and the government's interest in using the offerors notwithstanding the OCI concerns. Waiver Request at 1-3, 5-6.  The SSA explained that Scitor's and MCR's roles under existing and past contracts presented conflicting interests that theoretically might bias their judgment in performing the RFP work. Id. at 2. The agency's market research indicated that the pool of properly cleared cost estimators with sufficient experience was narrow and that, if MCR and Scitor were precluded from competing, it was "highly doubtful" that cleared personnel could be located who did not also have comparable OCI issues. Id. at 5. Given the limited number of cleared estimators and the lack of competition that would result from eliminating Scitor from the procurement, the SSA reasoned that, even if MCR were deemed not to have an OCI similar to Scitor's, it was in the government's interest to acquire the services competitively in order to obtain the best value, and that waiver of the OCIs therefore was justified. Id. at 5, 7. Accordingly, the designated official approved the waiver.

(sections deleted)

MCR asserts that it was unreasonable for CIA to waive Scitor's OCI for a number of reasons. For example, it maintains that the agency unreasonably considered the offerors' OCIs as equivalent because MCR's OCI allegedly could be easily mitigated, while Scitor's could not be mitigated at all; that the agency's waiver was inconsistent with CIA's earlier guidance on which OCIs precluded an offeror's participation; and that the waiver lacked a sufficient basis. We have considered all of MCR's assertions and find that none has merit.

Under the Federal Acquisition Regulation (FAR) subpart 9.5, when the facts of a procurement raise a concern that a potential awardee might have an OCI, the agency must determine whether an actual or apparent OCI will arise, and whether the firm should be excluded from the competition. The specific responsibility to avoid, neutralize or mitigate a potential significant conflict of interest lies with the cognizant contracting officer. Overlook Sys. Techs., Inc., B-298099.4, B-298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-11; see FAR sect. 9.504. As an alternative, the agency head or a designee may waive any general rule or procedure of [FAR subpart 9.5] by determining that its application in a particular situation would not be in the Government's interest. Any request for waiver must be in writing, shall set forth the extent of the conflict, and requires approval by the agency head or a designee.

FAR sect. 9.504. Where a procurement decision--such as whether an OCI should be waived--is committed by statute or regulation to the discretion of agency officials, our Office will not make an independent determination of the matter. Knights' Piping, Inc.; World Wide Marine & Indus. Servs., B-280398.2, B-280398.3, Oct. 9, 1998, 98-2 CPD para. 91 at 6.

Here, as outlined above, the SSA made a written request for a waiver from CIA's Chief of Acquisition Services, describing the OCI concern with both offerors; the potential effect if not avoided, neutralized, or mitigated; and, the government's interest in allowing the offerors to compete for the award notwithstanding the OCI concerns. After reviewing the request, the designated official approved the waiver. On this record, we find that CIA has met the requirements of FAR sect. 9.504; MCR's assertions to the contrary provide no basis to object to that waiver. See Knights' Piping, Inc.; World Wide Marine & Indus. Servs., supra.  (MCR Federal, LLC, B-401954.2, August 17, 2010) (pdf)

The protester maintains that Boeing had an impermissible "unequal access to information"-type OCI by virtue of the information provided to it by ITT at the October 22 meeting regarding the SRWNM 1.0+ software product. It notes, in this regard, that not all offerors had access to the information, and that Boeing had an opportunity to amend its proposal after the meeting. As a result, ITT concludes that Boeing should be excluded from the competition because of its OCI.

We find no impermissible OCI. Contracting officials must avoid, neutralize or mitigate potential significant OCIs so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. Federal Acquisition Regulation (FAR) sections 9.504(a), 9.505. The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, fall under three broad categories: unequal access to information, biased ground rules, and impaired objectivity. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 11-12.

As relevant here, an unequal access to information OCI exists where a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm a competitive advantage in a later competition. FAR sections 9.505(b), 9.505-4; Maden Techs., B-298543.2, Oct. 30, 2006, 2006 CPD para. 167 at 8; see also McCarthy/Hunt, JV, B‑402229.2, Feb. 16, 2010, 2010 CPD para. 68 at 5. As the FAR makes clear, the concern regarding this category of OCI is that a firm may gain a competitive advantage based on its possession of "[p]roprietary information that was obtained from a Government official without proper authorization," or "[s]ource selection information . . . that is relevant to the contract but is not available to all competitors, and such information would assist that contractor in obtaining the contract." FAR sect. 9.505(b).

At the heart of ITT's allegation is the notion that, because the SRWNM 1.0+ software is ITT's product, ITT should have enjoyed exclusive use of information relating to the software when preparing its proposal. In other words, ITT is complaining, not that Boeing had unequal access to information, but that ITT lost an informational advantage to which it believes it was entitled. This situation does not establish the elements of an unequal access OCI. First, an unequal access to information OCI can only be established where a protester shows that the awardee had information that it did not possess. Where the protester has the information in question and the awardee also has the same information, the awardee cannot be said to have "unequal access to information," and, correspondingly, the protester cannot be said to have been prejudiced, since both it and the awardee had access to the same information.

More fundamentally, all of the software to be integrated under the RFP--ITT's SRWNM 1.0R and SRWNM 1.0+, as well as Boeing's JWNM software product--was developed and provided to the government with a government purpose rights (GPR) license. Agency Supp. Report, Second Decl. of Agency's Deputy Project Manager, attach.; Intervenor's Supp. Comments, July 2, 2010, attach. D. Accordingly, and as conclusively demonstrated by the fact that ITT was contractually required to provide the information to Boeing at the TIM, the record establishes that the agency had a legal right to use the information by virtue of its GPR license. It follows that the implicit, underlying premise of ITT's argument--that it was entitled to the unequal advantage afforded by possession of the information because it had an exclusive, proprietary right to the information--is unsupported by the record. We therefore conclude that the fact that Boeing was provided with the information did not create an "unequal access" OCI vis-a-vis ITT, and also does not support the finding of any other procurement impropriety.  (ITT Corporation-Electronic Systems, B-402808, August 6, 2010)  (pdf)

More generally, SES's various protest submissions alternatively assert that, even if the solicitation did not create a per se prohibition on Edaptive's reliance on BCSSI as a subcontractor, the agency failed to adequately consider the potential for impaired objectivity conflicts flowing from the specific facts presented here.

The responsibility for determining whether a conflict of interest will arise, and to what extent a firm should be excluded from the competition, rests with the contracting agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para.129 at 12. Because conflicts may arise in various factual situations, including those not directly addressed in the Federal Acquisition Regulation (FAR), that regulation directs contracting officers to examine each situation individually in assessing whether conflicts exist. FAR sect. 9.505. Provided an agency gives meaningful and thorough consideration to potential conflicts, our Office will not overturn a determination based on such consideration absent a showing that it is unreasonable. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra.

In response to SES's assertions that the agency failed to reasonably consider whether Edaptive's particular proposed use of BCSSI as a subcontractor created impaired objectivity conflicts of interest, this Office sought additional information from the agency regarding the basis for its determination. Specifically, following submission of the agency report, this Office conducted a recorded telephone hearing during which testimony was provided by the contracting officer regarding the basis for determining that Edaptive's proposal of BCSSI as a subcontractor did not create a conflict, as well as for the agency's issuance of solicitation amendment Nos. 2 and 3; thereafter, the agency submitted declarations from the agency's technical evaluation panel chair and deputy director of its information systems group further explaining the agency's actions. Based on our review of the entire record, we do not question the reasonableness of the agency's determination regarding conflicts.

Specifically, as discussed above, the agency first determined that conflict of interest concerns precluded any contractor that performed under phase 1 (during which the program requirements are identified) from performing in any capacity under phase 4 (during which a system will be designed/developed to meet the requirements identified in phase 1). Given the required separation between identification of the requirements and design/development of a system, the agency concluded that the objectivity of a contractor in performing the phase 2 tasks, including testing, operating and maintaining the system as developed by the independent phase 4 contractor, was not threatened by the phase 2 contractor's involvement in the phase 1 identification of requirements. That is, the agency considered the phase 4 contract to, in effect, create a "buffer" between performance of the phase 1 and phase 2 contract requirements.

In supporting its conclusions regarding this matter, the agency has provided a comprehensive analysis of the various tasks contemplated under the phase 1 and phase 2 contracts. Agency's Post-Hearing Comments; Declaration of CMS Technical Panel Chair; Declaration of Deputy Director of CMS Information Systems Group. The agency's analysis discusses the various activities contemplated under each contract, and provides the agency's narrative assessment regarding its bases for concluding that no conflict of interest is created. Although protester's various submissions express disagreement with the agency's analysis and conclusions, that disagreement fails to demonstrate that such conclusions are unreasonable or provide this Office with a basis to question the agency's judgments. Accordingly, SES's protest that award to Edaptive was improper due to an alleged conflict of interest is without merit.  (Software Engineering Services, Inc., B-401645, October 23, 2009) (pdf)

ARTEL argues that the award to Intelsat was tainted by an OCI arising from the awardee's knowledge of the other offerors' costs for certain satellite resources. In this regard, ARTEL contends that Intelsat controls certain satellites that are necessary for performance of the CBSP contract requirements. The protester argues that, by virtue of controlling these satellites, Intelsat knew ARTEL's costs for their use, which created an unequal access to information OCI. The protester also argues that Intelsat did not negotiate fairly with ARTEL, and did not allow ARTEL to purchase services in a manner that the protester contends is consistent with industry practice. We conclude that these allegations, even if true, would not constitute an OCI.

Contracting officials must avoid, neutralize or mitigate potential significant OCIs so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. FAR sections 9.504(a), 9.505. The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three categories: unequal access to information, biased ground rules, and impaired objectivity. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 11-12.

As relevant here, an unequal access to information OCI exists where a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm a competitive advantage in a later competition for a government contract. FAR sections 9.505(b), 9.505-4; Maden Techs., B-298543.2, Oct. 30, 2006, 2006 CPD para. 167 at 8; see also McCarthy/Hunt, JV, B‑402229.2, Feb. 16, 2010, 2010 CPD para. 68 at 5 (protest sustained where awardee's subcontract had access to nonpublic information through its performance of a government contract). As the FAR makes clear, the concern regarding this category of OCI is that a firm may gain a competitive advantage based on its possession of "[p]roprietary information that was obtained from a Government official without proper authorization," or "[s]ource selection information . . . that is relevant to the contract but is not available to all competitors, and such information would assist that contractor in obtaining the contract." FAR sect. 9.505(b).

Here, ARTEL does not allege that Intelsat obtained any nonpublic information through the performance of a government contract. Instead, the protester complains that the awardee had access to certain cost information arising from ARTEL's negotiations with Intelsat for the use of satellite resources that were under Intelsat's exclusive control. We conclude that these types of negotiations between competitors do not give rise to an OCI, within the meaning of FAR part 9.5.  (CapRock Government Solutions, Inc.; ARTEL, Inc.; Segovia, Inc., B-402490; B-402490.2; B-402490.3; B-402490.4; B-402490.5, May 11, 2010)  (pdf)

Unequal Access to Information

The protester asserts that the agency unreasonably concluded that Turner/Ellerbe did not have an unequal access to information organizational conflict of interest or properly mitigated it.

In order to ensure that the agency has acted in a manner consistent with the FAR, contracting officers are required to give meaningful, deliberate consideration to information that may shed light on potential organizational conflicts of interest. Toward that end, agencies must not limit their consideration only to information that may have been furnished by a firm. The Analysis Group, LLC, B-401726, B-401726.2, Nov. 13, 2009, 2009 CPD para. 237 at 5. Where a prospective contractor faces a potential unequal access to information organizational conflict of interest, the conflict may be mitigated through the implementation of an effective mitigation plan. Axiom Res. Mgmt., Inc., B‑298870.3, B‑298870.4, July 12, 2007, 2007 CPD para. 117 at 8-9. An agency’s reliance on a contractor’s self-assessment of whether an organizational conflict of interest exists or a contractor’s unilateral efforts to implement a mitigation plan, however, is inconsistent with the FAR. L-3 Servs., Inc., supra at 12; Johnson Controls World Servs., Inc., B-286714.2, Feb. 13, 2001, 2001 CPD para. 20 at 8. In other words, an agency may not, in effect, delegate to the contractor itself complete responsibility for identifying potential organizational conflicts of interest, The Analysis Group, LLC, supra, or mitigating them. Johnson Controls World Servs., Inc., supra.

Competitively useful information giving rise to an unequal access to information organizational conflict of interest includes proprietary information beyond offerors’ proposals, such as source selection information and insights into a solicitation’s requirements. As discussed below, the record in this protest shows that AECOM, as the design contractor, was familiar with the details of the procurement. Access to such information gives rise to an unequal access to information organizational conflict of interest. See L-3 Servs., Inc., supra at 11.

AECOM’s assistant general counsel, who advised AECOM in its negotiations to purchase EB, states:

AECOM was required to maintain the confidentiality of all EB proprietary information and limit its disclosure within AECOM (and to agents of AECOM) on a “need to know” basis. Further, the confidentiality agreement expressly prohibited AECOM and EB from disclosing to any third party, without prior written consent, the fact that any confidential information had been exchanged. . . . To maintain the confidentiality of the parties’ discussions, the project would be referred to by its code “Project PACE” designation.

Intervenor’s Comments on the AR, Exh. 2, Decl. of AECOM Assistant General Counsel at para. 5. This is the clearest statement in the record of the precautions taken by AECOM to ensure that information regarding its discussions with EB was not widely disclosed.

AECOM’s efforts are deficient in several respects. There is no indication as to how many employees fit the “need to know” category, who they were, or how their need to know was determined. The assistant general counsel estimated that approximately 25 to 30 personnel participated in the initial due diligence review, id. at para. 10, and approximately the same number of personnel, and approximately the same personnel, conducted a second review. Id. at para. 16. Five AECOM employees, who may not be included in the approximately 25 to 30, attended a briefing hosted by EB management, id. at para. 8, and the AECOM directors--an undetermined number of individuals--were also aware of the negotiations. However many AECOM employees fit the definition of “need to know,” the record contains no evidence of an effective plan, that was disclosed to and approved by the contracting officer and subject to monitoring by her, to ensure that information regarding AECOM’s plans to acquire EB was kept confidential.

With respect to the other key factual element of the analysis here--the AECOM employees’ work on the design contract--the record is similarly lacking with regard to evidence of a plan to prevent disclosure to EB of competitively useful information derived from that work. In this regard, the agency identified 49 employees who worked on the design contract and who thus may have had access to competitively useful information. After the protest was filed, the agency obtained and submitted declarations from 42 of them; each declaration states that the individual did not have any knowledge of the acquisition negotiations and had no reason to, and made no attempt to, improperly influence the procurement. Only one declarant expressly stated that he did not discuss the procurement with anyone at EB. Of the 49 employees identified by the agency, seven did not submit any declarations. In addition, while presumably all of the 49 used e-mail in their work assisting the agency, there is no mention in the declarations (or evidence elsewhere in the record) of specific efforts to limit access by others to such email.

The agency asserts that, to the extent that AECOM had access to competitively useful information through its work on the design contract, that information was fully disclosed to other offerors. Moreover, the agency argues that the open-ended nature of the procurement prevented AECOM from being able to supply EB with competitively useful information. In our view, it was precisely the breadth of the discretion left to the offerors in the Phase II competition that would have made any competitively useful, non-public information known to AECOM valuable to EB. To illustrate: had the competition been for an automobile, with a particular carrying capacity, towing capacity, and performance characteristics, there would likely have been a minimal chance that AECOM would have competitively useful information; the specifications, if not the precise vehicle, would be largely established and communicated to all the offerors on an equal basis through the solicitation. In such a situation, the range of possible responses would be relatively limited. In this procurement, in contrast, the requirement was to design and build a replacement hospital of 700,000 square feet costing several hundred million dollars. AECOM was in a position to obtain information regarding the agency’s priorities, preferences, and dislikes relating to this broadly defined project. AECOM knew what the agency communicated to the offerors about the type of facility that it preferred--as well as what the agency did not communicate. [8] On this record, we think it was unreasonable for the agency to assume that AECOM did not possess competitively useful information based on its role in the procurement.

As noted above, AECOM argues that knowledge of its negotiations to acquire or merge with EB was limited to employees with a “need to know,” and that they kept that information confidential. The contemporaneous record contains no indication that that the contracting officer relied on this information from AECOM or even was aware of AECOM’s arrangements. In any event, in our view it would be unreasonable for the agency to rely on a de facto mitigation plan--namely, the assurance that the negotiations had and would only involve AECOM employees who would keep that information confidential--when, as discussed above, the efforts to maintain confidentiality were largely undisclosed to, unevaluated by, and unmonitored by the Corps--in a word, self-executing. L-3 Servs., Inc., supra at 12. Similarly with respect to the AECOM employees who worked on the design contract, without credible evidence that AECOM had systems in place to prevent the receipt of competitively useful information by EB, there is no reasonable basis to assume that the information was not made available to EB employees.

Biased Ground Rules

The protester argues that Turner/Ellerbe also had an unmitigated biased ground rules organizational conflict of interest stemming from its work on the design contract. The record suggests that AECOM had special knowledge of the agency’s requirements that would have enabled it to give Turner/Ellerbe an unfair advantage in the competition. AECOM’s contract with the agency “consist[ed] of all services necessary in the preparation of design documents, including plans, specifications, supporting design analysis, design narrative, cost estimates, etc. to construct a replacement hospital.” AR, Exh. M, App. A to Design Contract at para. 1.

The agency and the intervenor offer several defenses. The agency’s senior project manager asserts that the Corps closely supervised AECOM’s efforts in drafting the solicitation, AR, Tab 3, Decl. of Senior Project Manager at para. 11, and that the offerors were given the opportunity to review and comment on the draft requirements. The agency did solicit input from the offerors on the draft solicitation, but the record does not establish that the agency closely supervised AECOM in drafting the solicitation. Moreover, even assuming that the agency closely supervised AECOM, it is unclear why it is reasonable to assume that the agency’s mere supervision then prevented AECOM from using its special knowledge of the agency’s requirements to give Turner/Ellerbe an unfair advantage in the competition. AECOM’s contract with the agency called for it to perform “all services necessary” for preparation of the design portion of the procurement, and nothing in the record suggests that it did anything less--supervised or not.

The agency asserts that there is no evidence that AECOM skewed the competition to the benefit of EB. This is not the standard used to resolve allegations of organizational conflicts of interest. Where the record establishes that a conflict of interest exists, to maintain the integrity of the procurement process we will presume that the protester was prejudiced, unless the record establishes the lack of prejudice. See Marinette Marine Corp., B-400697, et al., Jan. 12, 2009, 2009 CPD para. 16 at 28. Nor is the relevant concern simply whether a firm drafted specifications that were adopted into the solicitation; rather, we look to see whether a firm was in a position to affect the competition, intentionally or not, in favor of itself. FAR sections 9.505-1, 9.505-2; L-3 Servs., Inc., supra at 5; Snell Enters., Inc., B‑290113, B-290113.2, June 10, 2002, 2002 CPD para.115 at 3. In short, once an organizational conflict of interest is established, the protester is not required to demonstrate prejudice; rather, harm from the conflict is presumed to occur. See The Jones/Hill Joint Venture, B-286194.4 et al., Dec. 5, 2001, 2001 CPD para. 194 at 14; Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra at 18.

The intervenor argues that at all times during the course of solicitation development, where AECOM might have been able to skew the competition in favor of EB, AECOM and EB were not in fruitful negotiations, and therefore the AECOM employees assisting the agency on this procurement would have had no knowledge of AECOM’s interest in EB. [9] Intervenor’s Comments at 9-15. Although the protester disputes the intervenor’s claim, we need not resolve this issue. Turner/Ellerbe’s assertion that limited numbers of AECOM employees were aware of the negotiations and that they kept the negotiations confidential is based solely on the intervenor’s post-protest representations. As noted above, the record contains no indication of how AECOM determined which AECOM employees had a “need to know” of the negotiations and how their confidentiality was ensured, or that AECOM had systems in place to wall off AECOM employees with a “need to know” from those AECOM employees uninvolved in the negotiations.

The agency also argues that the FAR precludes a finding that there was a biased ground rules organizational conflict of interest, pointing to FAR sections 9.505-2(a) and (b), which set out certain circumstances in which contractors who prepare specifications or statements of work may not, regardless of mitigation, provide the product described in the specifications or the services described in the statement of work. Both of these exclusions are subject to limited exceptions. The exceptions merely prevent the otherwise automatic exclusion of a firm from the competition; they are not an indication that there can be no organizational conflicts of interest under the facts described in the exceptions. In fact, the overarching concern expressed in that section of the FAR is that a firm that prepares the specifications or work statement for a contract should not be allowed to compete, as a prime contractor or a subcontractor, for that contract. See FAR sect. 9.505-2. Even if an exception applied, therefore, the contracting officer would still need to exercise sound judgment, independently investigate the circumstances giving rise to the possible organizational conflict of interest, and institute and monitor appropriate measures to mitigate or avoid the organizational conflicts of interest. See FAR sect. 9.505.

Based on the record here, we think that the agency lacked a reasonable basis for its conclusion that AECOM’s assistance to the agency did not place it in a position to skew the competition, intentionally or not, in favor of EB, with whom it was in negotiations over the course of the competition, or that the conflict somehow was properly addressed. We therefore sustain the allegation that Turner/Ellerbe had a biased ground rules organizational conflict of interest.  (B.L. Harbert-Brasfield & Gorrie, JV, B-402229, February 16, 2010)  (pdf)

Unfair Competitive Advantage

The crux of DTB’s complaint is that the RFP provides Valdez with an unfair competitive advantage, and that this advantage will arise particularly in the area of pricing. Specifically, DTB contends that the performance of the RFP’s task orders will require the use of KC-135 teardown procedures, called “protocols,” which were developed by Valdez under its existing task orders.  DTB suggests that Valdez, by virtue of its development of the protocols, may have an unfair price advantage since only Valdez has “intimate” knowledge of the cost of using the protocols to perform the KC-135 teardown and analysis work.

The Air Force explains that, when it initiated the KC-135 Teardown and Analysis Program, it knew that various contractors and other entities would be involved and wanted to prevent the compartmentalization of knowledge about these processes in one single person or organization/company. To this end, CAStLE focused on creating three items -- the protocols themselves, Teardown Analysis Program Subject Identification Documents (TAPSID), and a Teardown Data Management System. CO’s Statement at 8-9. The protocols and TAPSID were contract deliverables under Valdez’s existing task orders.

Specifically, Valdez developed eight protocols. These protocols document the procedures and standards to be followed for each primary element of the teardown program, and represent best practices and lessons learned from prior teardown programs. The TAPSID is the data package for the program. CO’s Statement at 9; Agency Report (AR), Tabs 26 and 27 (the Protocols and TAPSID, respectively). After the protocols were drafted, each protocol was reviewed and approved by the program’s oversight committee--comprised of experts from the Air Force and other government agencies--and the protocols were validated and modified by the government as required. AR, Tab 26, Protocol Documents, C/KC-135 Aircraft Teardown Plan and Objectives at 4 and Protocol 2, Teardown Section/Part Identification and Tracking, at iii. To neutralize the appearance of an OCI with respect to Valdez, the protocols and the TAPSID information were made available to potential offerors. CO’s Statement at 10; AR, Tab 14, D&F OCI, at 2-5.

The Air Force contends that Valdez will not be afforded an unfair price advantage because of its knowledge and use of the protocols. Rather, the Air Force argues that the protocols are standardized documents that level the playing field for follow-on contracts, and that Valdez lost any competitive advantage it had when its knowledge of the process was documented in the protocols and provided to industry. We agree.

Moreover, the Air Force explains, and we agree, that the work required by the RFP’s task orders is not, as DTB asserts, identical to that performed by Valdez. Instead, the magnitude of effort required by the RFP’s task orders is significantly greater than prior efforts, and will require considerably more nondestructive inspection and failure analysis tasks. In this regard, the prior effort involved some 250 sections of the airframe compared to up to 800 sections here, and sections with different types of damage. In addition, the contractor will be required to perform teardown and analysis activities on teardown sections not included under the existing contract, involving different airframes with differing structural complexities. CO’s Statement at 36-39.

DTB’s assertion--that “possible” differences in the work is “irrelevant”--does not provide a sufficient basis for our Office to disagree with the agency’s position that Valdez is not afforded an unfair price advantage by virtue of its development and use of the protocols. Any unfair competitive advantage Valdez might have gained through its development of the protocols should be minimal given their general release to prospective offerors. See Foley Co., B-203408, Sept. 14, 1993, 93-2 CPD para. 165 at 3 (bidder does not have an unfair competitive advantage where the bidder does not possess competitively useful information not available to other bidders). In addition, an agency is not required to compensate for every competitive advantage gleaned by a potential offeror’s prior performance of a particular requirement. For example, an incumbent contractor’s acquired technical expertise and functional knowledge of the costs related to a requirement’s complexity are not generally considered to constitute unfair advantages the procuring agency must eliminate. Snell Enters., Inc., B-290113, B‑290113.2, June 10, 2002, 2002 CPD para. 115 at 7.  (Dayton T. Brown, Inc., B-402256, February 24, 2010)  (pdf)

C2C and TrustSolutions argue that CMS's decision to reengage AdvanceMed regarding its proposed OCI mitigation plan, and thereby allow AdvanceMed an opportunity to revise the plan, is improper because it is inconsistent with our recommendation in C2C Solutions, Inc., supra; it is contrary to FAR sect. 9.504(e), which, according to the protesters, allows an agency to provide only an "apparent awardee" with "a" (meaning one) reasonable opportunity to respond to an agency's OCI concerns; and because allowing AdvanceMed a further opportunity to address its mitigation plan constitutes unequal discussions with only AdvanceMed.[2] Both firms also challenge CMS's corrective action on the ground that CMS has failed to "fully implement" our recommendation within 60 days, as contemplated by 31 U.S.C. sect. 3554(b)(3).

As a general matter, the details of implementing our recommendations for corrective action are within the sound discretion and judgment of the contracting agency. See, e.g., Partnership for Response and Recovery, B-298443.4, Dec. 18, 2006, 2007 CPD para. 3 at 3; NavCom Defense Elec., Inc., B-276163.3, Oct. 31, 1997, 97-2 CPD para. 126 at 2. In this regard, where an agency's corrective action extends beyond that which may be specifically called for in our recommendation, the agency's decision to pursue such a course of action does not, by itself, provide a basis for protest absent some showing that the agency's proposed corrective action is contrary to procurement law or regulation, or is otherwise improper. See, e.g., NavCom Defense Elec., Inc., supra, at 3 (agency reasonably decided to open discussions with offerors and obtain revised proposals without amending RFP notwithstanding the fact that we recommended reopening discussions only if RFP needed to be amended).

Given CMS's inherent discretion to craft and implement what it reasonably believes to be appropriate corrective action, the extent to which CMS's proposed corrective action may be characterized as broader than, or inconsistent with, our recommendation is not the relevant inquiry. Rather, the pertinent question is whether the corrective action proposed by CMS is, as the protesters have alleged, contrary to FAR sect. 9.504(e) or constitutes improper discussions. We conclude that the protester's arguments are without merit on both counts.

Under FAR sect. 9.504(e), when an agency concludes that an apparently successful offeror is ineligible for award based on a conflict of interest, the agency is required to notify the firm and allow it "a reasonable opportunity to respond" to the agency's concerns. Here, the protesters argue that it is inconsistent with FAR sect. 9.504(e) for CMS to give AdvanceMed an additional opportunity to address the agency's concerns regarding its OCI mitigation plan. The protesters maintain that FAR sect. 9.504(e) only contemplates affording AdvanceMed a single opportunity to respond to the agency's OCI concerns, and "does not allude to a series of reengagements that last until a contractor finally stumbles across the correct measure." C2C Protest at 6. In support of their position, the protesters point to the use of the indefinite article "a" in FAR sect. 9.504(e) ("a reasonable opportunity"). C2C Protest at 6. In addition, C2C argues that, by its terms, FAR sect. 9.504(e) does not apply because it only speaks to providing the "apparent" awardee with an opportunity to address the agency's OCI concerns, and AdvanceMed is an "actual" awardee at this juncture.

In our view, CMS is not precluded from reengaging AdvanceMed regarding its OCI mitigation plan based on the use of the indefinite article "a" in FAR sect. 9.504(e). FAR sect. 9.504(e) merely establishes an agency's minimum duty to provide an offeror with an opportunity to respond to an agency's OCI concerns where, but for the OCI concerns, the offeror would receive an award. There is no indication in the language of the provision that, by establishing this minimum duty, FAR sect. 9.504(e) otherwise limits an agency's reasonable exercise of its discretion to provide an offeror with additional opportunities to address the agency's OCI concerns.  (C2C Solutions, Inc.; TrustSolutions, B-401106.6; B-401106.7, LLC, June 21, 2010)  (pdf)  (See below for C2C Solutions, Inc., B-401106.5, January 25, 2010)

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C2C asserts that CMS acted unreasonably in concluding that the amended mitigation strategy presented in the letter from CSC was acceptable. We agree.

Contracting officers are required to identify potential conflicts of interest as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sections 9.505, 9.508. Situations that create potential conflicts of interest include situations in which a firm's work under a government contract entails evaluating itself. The concern in such "impaired objectivity" situations is that a firm's ability to render impartial advice to the government will be undermined by its relationship to the product or service being evaluated. PURVIS Sys., Inc., B‑293807.3, B‑293807.4, Aug. 16, 2004, 2004 CPD para. 177 at 7. The primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR sect. 9.505; RMG Sys., Ltd., B‑281006, Dec. 18, 1998, 98‑2 CPD para. 153 at 4. Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Alion Sci. & Tech. Corp., B‑297022.4, B-297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 8.

Here, it is undisputed that AdvanceMed's proposal presents the potential for an impaired objectivity conflict of interest where AdvanceMed, as a ZPIC contractor, could be placed in the position of evaluating its parent corporation, CSC, in connection with CSC's Medicare Part D work. The contracting officer initially determined that AdvanceMed was ineligible for award, finding that AdvanceMed's proposed mitigation strategies were inadequate. In making this initial determination, the record reflects that the contracting officer exercised deliberate care in analyzing and documenting her review of the conflicts identified by AdvanceMed in its proposal, and the mitigation plan proposed by AdvanceMed to address these conflicts. Specifically, the record reflects the contracting officer's consideration of a detailed analysis of AdvanceMed's conflicts and proposed mitigation strategies, prepared by a CMS compliance policy specialist, as well the contracting officer's own conclusions and documented analysis. CO Supplemental Statement, at 4; AR, Tab A-2, Pre-award OCI Analysis.

In contrast to the contracting officer's initial, deliberate evaluation of the conflicts posed by award to AdvanceMed and mitigation strategies, the record reflects a seemingly last-minute and hasty acceptance of AdvanceMed's "amended" mitigation strategy, which itself comprised a single sentence. The contracting officer's immediate acceptance of this revised mitigation approach is defective in several respects. As an initial matter, it is readily apparent that the amended plan lacks the necessary level of detail to reasonably assess the viability of AdvanceMed's mitigation approach. While the plan identified three potential approaches to mitigate the identified conflicts, there are no details explaining how any of the plans would work or when they would, or could, be implemented. This lack of detail is significant given the inherently complex nature of the proposed strategies, which could involve divestiture of a large corporate entity. Given the plan's inherent lack of detail, it is not surprising that the record does not contain any analysis by CMS addressing the viability of the various plans.

CMS attempts to justify its lack of analysis by arguing that the work which gives rise to the conflict, the Medicare Part C and D work, would not be ordered until some point in the future--suggesting that AdvanceMed did not need to provide a detailed mitigation plan for this work, notwithstanding the identified potential conflicts. CMS's arguments in this regard, however, are contrary to the terms of the solicitation and CMS's contemporaneous consideration of AdvanceMed's conflicts.

Specifically, sections H and M of the RFP established that CMS would not enter into a contract with an entity that has the potential for an unresolved OCI. This requirement expressly applied to the Medicare Part C and D related work where the solicitation provided as follows:

At this time, task orders will not be awarded for Part C and Part D. CMS may award a task order for Part C and Part D no earlier than October 2009. Although a Part C and/or Part D task order is not being awarded at this time, Offerors are required to propose on the [statement of work] requirements for Part C and D as outlined in Section M. Offerors will be required to provide an acceptable Conflict of Interest mitigation strategy to CMS . . . if award of Part C and/or D is an actual or perceived Conflict of Interest.

RFP, at 78, 90.

Moreover, Medicare Part C and D services were an integral part of the agency's technical evaluation; 10 of 12 technical approach sub-criteria involved capability to perform Part C and D work. RFP, at 114-115.

Further, during evaluation of proposals, the contemporaneous documentation reflects the contracting officer's recognition of the need for AdvanceMed to submit, with its proposal, an adequate strategy to mitigate its Medicare Part D conflicts. In fact, regarding these conflicts, the contracting officer specifically stated, "[e]ven though Part D work is not being awarded at this time, AdvanceMed must identify an adequate mitigation strategy it intends to put in place to address this Part C&D OCI." AR, Tab A-2, at 6. Significantly, AdvanceMed's failure to provide an adequate strategy to address the Part D conflicts resulted in the contracting officer's initial determination that AdvanceMed was ineligible for award. Based on this record, it is clear that AdvanceMed was required to submit, and CMS was required to evaluate, a mitigation strategy which CMS could reasonably conclude would resolve AdvanceMed's Medicare Part D conflicts. As set forth above, this did not happen.

In addition to the undefined and general nature of AdvanceMed's amended mitigation plan, various aspects of the plan are fundamentally problematic. Since implementation of one of the three identified mitigation strategies is entirely at CSC's "discretion," each of the three options must be capable of effectively mitigating the identified conflicts.[5] It is apparent, however, that the contracting officer has focused her attention on the viability of only one of the three options--divestiture. In a supplemental statement in response to the protest, she specifically indicates a "preference" for CSC's divestiture of AdvanceMed, notwithstanding the fact that the terms, timing, and process for such an involved process are entirely undefined and there is a concomitant lack of understanding regarding the viability of such an option. Supplemental CO Statement, at 8. Moreover, while the contracting officer readily admits to her "concerns regarding the feasibility of CSC using subcontracting to mitigate conflicts," this option "did not alarm" her because it was only one of the three possibilities and CMS had "reserved the right to terminate the contract." Id.

We think that the contracting officer's underlying concerns regarding the "subcontracting" option are understandable. While CSC indicates a general plan to "subcontract out the functions that pose an OCI with the work of AdvanceMed," it is not apparent how such an option would be feasible or effectively mitigate the conflict. As a ZPIC contractor, AdvanceMed would be responsible for identifying fraud, waste, or abuse by performing audit-type activities. Because such work may necessarily involve a retrospective look at the activities performed by a particular entity, it is not apparent how CSC's post-award subcontracting of the particular Medicare Part D work would insulate AdvanceMed from potentially auditing Medicare Part D work previously performed by CSC. In addition, it is not apparent how use of subcontractors in this situation would address the fundamental concern in connection with AdvanceMed's impaired objectivity--AdvanceMed being placed in the position of reviewing the work of its parent, CSC. Since CSC would ultimately remain contractually responsible for the functions it subcontracts, AdvanceMed's review of work performed by CSC's subcontractors could be considered a review of CSC's contractual obligations and responsibilities. Thus, AdvanceMed could be viewed as in the position of evaluating CSC, notwithstanding CSC's use of an intervening layer of subcontractors.

In addition, regarding the latter point raised by the contracting officer--that CMS's reservation of the right to terminate AdvanceMed's contract somehow negated the need for AdvanceMed to submit an adequate mitigation strategy--this argument flies in the face of the solicitation, which, as discussed above, expressly provided that the agency would not make award to an offeror with an unmitigated conflict. Accordingly, we sustain the protest on the basis that CMS failed to reasonably consider or evaluate the OCI mitigation strategy ultimately proposed by the awardee, AdvanceMed.  (C2C Solutions, Inc., B-401106.5, January 25, 2010)  (pdf)

Also see (Cahaba Safeguard Administrators, LLC, B-401842.2, January 25, 2010.)  (pdf)

FCSO protests that the agency was required to accept its proposed “firewalled subcontractor” approach as an acceptable mitigation plan, and asserts that the agency’s documentation regarding the basis for rejecting FCSO’s proposal was inadequate. We disagree.

Contracting officers are required to identify potential conflicts of interest as early in the acquisition process as possible, and to avoid, neutralize, or mitigate such conflicts to prevent the existence of conflicting roles that might impair a contractor's objectivity. In assessing potential conflicts of interest, the FAR directs the contracting officer to examine each contracting situation individually on the basis of its particular facts and the nature of the proposed contract, and to exercise common sense, good judgment, and sound discretion with regard to whether a conflict exists and, if so, the appropriate means for resolving it; the primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR sect. 9.505; Alion Sci. & Tech., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 6; RMG Sys. Ltd., B-281006, Dec. 18, 1998, 98-2 CPD para. 153 at 4. Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Alion Sci. & Tech., supra.

Here, as discussed above, FCSO’s October 8, 2008 initial proposal contemplated that FCSO would perform both the QIC and the MAC contracts for the same area, and that “separation and segregation of the day-to-day management and operation” of the two contracts should be considered sufficient COI mitigation; alternatively, FCSO’s initial proposal contemplated transferring performance of the QIC contract to its sister corporation. In December, the agency clearly advised FCSO that neither approach was acceptable, and offered FCSO another opportunity to meaningfully address the COI. In January 2009, FCSO responded, continuing to argue for acceptance of the novation approach it had previously proposed. Thereafter, the agency again told FCSO that its proposed approach was unacceptable and, yet again, offered FCSO an opportunity to meaningfully address the COI. In seeking yet another response from FCSO, the agency specifically reminded FCSO that its proposed mitigation plan must be complete, comprehensive, and detailed, and that it must discuss, “at a minimum,” the cost and technical impact created by any proposed revisions. Notwithstanding the agency’s clear directions, FCSO’s response‑‑which reflected material changes to its previously-proposed approach--provided virtually none of the specific information the agency requested.

Based on our review of this record, as discussed above and specifically including FCSO’s various responses to the agency’s multiple requests that FCSO meaningfully address the clear conflict of interest, we find no merit in FCSO’s assertion that the agency was required to accept, or that it inadequately documented the basis for rejecting, FCSO’s “firewalled subcontractor” approach.

The protest is denied.  (First Coast Service Options, Inc., B-401429, July 31, 2009) (pdf)

TAG asserts that SAIC has an "impaired objectivity" OCI. In this regard, the RFQ requires the successful firm to provide expertise to the Air Force in a number of subject areas. For purposes of this allegation, task number three in the statement of work is the focus of TAG’s protest. Under that task, the successful contractor will be required to provide a broad range of objective advisory and assistance services, technical analysis, and support in the area of counter-proliferation of weapons of mass destruction, specifically, combating chemical, biological, radiological and nuclear (C-CBRN) weapons. RFQ, Statement of Work (SOW), at 2-31 to 2-41. According to the protester, this poses an impaired objectivity OCI for SAIC because the firm also sells C-CBRN-related detection and prevention products and services. The protester maintains that SAIC will be unable to provide objective advice in this area because any advice given could affect sales of its products.

The agency responds that it considered whether SAIC might have an impaired objectivity OCI and concluded that it did not. In this connection, the record shows that the RFQ included a requirement for all concerns to submit an OCI statement disclosing information concerning actual or apparent OCIs. RFQ at 11-5. The agency asserts that the contracting officer reviewed SAIC’s information and determined that there was no reason to conclude that SAIC had an OCI. The agency also maintains that it intends to monitor SAIC during performance to ensure that there are no OCIs.

Contracting officers are required to identify and evaluate potential OCIs as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sect. 9.504. The FAR specifies that an OCI exists where, because of activities or relationships with other persons or organizations, a person or organization is unable or potentially unable to render impartial assistance or advice to the government. See FAR sect. 2.101. Situations that create potential OCIs are further discussed in FAR subpart 9.5 and decisions of our Office. One type of OCI, an impaired objectivity OCI, is created when a contractor’s judgment and objectivity in performing contract requirements may be impaired due to the fact that the substance of the contractor’s performance has the potential to affect other interests of the contractor. Alion Sci. & Tech. Corp., B-297342, Jan. 9, 2006, 2006 CPD para. 1 at 5-6. In order to ensure that the agency has acted in a manner consistent with these requirements, contracting officers are required to give meaningful, deliberate consideration to information that may shed light on potential OCIs. Toward that end, agencies must give consideration not only to information that may have been furnished by a firm, but also must consider, as appropriate, the scope of the products manufactured or services provided by the firm or its competitors. Id. at 11. In other words, an agency may not, in effect, delegate to the contractor itself complete responsibility for identifying potential OCIs.

Here, the record shows that the contractor will be involved in a full range of activities in support of the Air Force’s C-CBRN program. Task three of the contract specifies the following activities:

The contractor shall support and provide AF [Air Force] unique C-CBRN operational & hazard expertise to inform and develop AF-wide DOTMLPF [doctrine, organization, training, material, leadership and education, personnel and facilities] counter WMD [weapons of mass destruction] solutions and capabilities. Support to this task area requires codifying counter WMD in AF operational plans, policy, doctrine, guidance and procedures; integrating and synchronizing AF efforts across the full counter WMD spectrum; supporting and executing the CSAF [Chief of Staff of the Air Force] C-CBRN Master Plan & Roadmaps; providing MAJCOM [major command] support to execute C-CBRN activities; developing and implementing C-CBRN CONOPS [concept of operations]; institutionalizing C-CBRN into AF education, training and exercises . . .; leveraging science and technology (S&T) and research, development, test and evaluation (RDT&E) to refine hazards, reduce risk and demonstrate capabilities; incorporate counter WMD operational concepts into AF standards into programs and budgets; and manage AF C-CBRN operations globally. The contractor shall support the AF/A5XP mission by assisting them in establishing AF operational policy, strategy, CONOPS, and doctrine on combating WMD, CP [counter-proliferation], and C-CBRN programs.

RFQ at 2-32. In addition to the requirements for task three detailed above, the RFQ includes specific tasks ranging from conducting research and analysis and presenting the results of such efforts in briefing papers and other formats (subtask 3.1), to providing support in developing agency strategy, policy, doctrine and concepts of operations for the C-CBRN program (subtask 3.2). Additionally, and perhaps most significant, the RFQ calls for the contractor to perform detailed technical analyses that will relate directly and predictably to the agency’s selection of C-CBRN products and services. In this regard, subtask 3.3 specifically provides:

The contractor shall provide technical analysis addressing issues from the point of view of ‘what does this mean to the USAF’ on questions that arise in the C-CBRN technical domain. The contractor shall provide technical research and operational evaluations to assess, interpret, shape, and advise the Air Staff and other AF organizations regarding what tests results mean for the operator. This understanding along with good testing and analysis underpin the AF’s policy, doctrine, tactics, techniques and procedures (TTPs), as well as what equipment is best to address the threat. The general categories of analysis and quantitative assessment the contractor shall perform include: Threat and Vulnerability Assessments, Basic Challenge Sources, Attack Characterization, Atmospheric Transport Dispersion Modeling, Chem-Bio Defense (CBD) Equipment Operations, AF Operations, Risk Assessment/Management, Hazard Modeling and Analysis, Detector Capability Analysis, Decontamination Requirements Analysis, Technical Design and Conduct of Laboratory and Field Testing, which support the development and implementation of the C-CBRN CONOPS and other supporting efforts.

RFQ at 2-36-2-37. Also specifically required under subtask 3.3 is contractor support to ensure that development and acquisition programs are consistent with Air Force key performance parameters (discrete standards that new equipment must meet before the Air Force will purchase it), as well as support in connection with the Air Force’s operational testing and experimentation related to its analysis of C-CBRN products, services and procedures. RFQ at 2-37-2-38.

Thus, the contractor, while not performing acquisitions directly for the Air Force, will be engaged in a full spectrum of activities that, it appears, will lead directly and predictably to developing information that may be used by the Air Force to influence acquisition decisions.

Although performing the tasks under this order raises potential impaired objectivity OCI concerns, the record shows that the agency did little more than require the vendors to submit information that they felt was germane to determining whether or not they had an OCI. The agency did nothing to independently consider or evaluate whether SAIC had an OCI, despite that even a cursory review of the materials provided by SAIC in its quotation shows that the firm provides a full spectrum of C-CBRN products and services. AR, exh. 30. Notwithstanding that SAIC sells a full line of C-CBRN products and services, SAIC’s quotation states elsewhere, in discussing the solicitation’s requirement to assess C-CBRN test results, that its work “[e]nables objective based decisions on operational effectiveness of equipment; thereby influencing procurement and fielding decisions.” SAIC Oral Presentation at 37. The record therefore appears to show that SAIC will be providing precisely the type of advice and assistance that could influence sales of its, or a competitor’s, C-CBRN product line, but there is nothing to show that GSA actually considered these circumstances. The record as it relates to the agency’s determination of whether SAIC had an OCI, consists, in its entirety, of the following:

SAIC acknowledges there are no known real or perceived conflicts of interest. SAIC agrees and certifies to disclose information concerning the actual or potential conflict with any proposal for any solicitation relating to any work in this effort, and to handle all actual or potential OCI situations in accordance with FAR subpart 9.5.

AR, exh. 19, at 6. While this statement addresses SAIC’s own evaluation of whether there were any actual or apparent OCIs resulting from SAIC’s performance of the work, there is nothing in the record showing that GSA ever made its own independent determination in this regard, as was required by FAR part 9.5. That is, there is no indication that GSA considered all of the available information in determining whether an OCI exists, or whether any potential OCI could be avoided, mitigated or neutralized. Rather, it appears that GSA essentially delegated this determination to SAIC. This was improper. Alion Sci. & Tech. Corp., supra. Accordingly, we also sustain the protest on this ground.  (The Analysis Group, LLC, B-401726; B-401726.2, November 13, 2009)  (pdf)

Contracting officials are to avoid, neutralize or mitigate potential significant conflicts of interest so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. Federal Acquisition Regulation (FAR ) sect. 9.504(a), 9.505.

The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B--254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 12. Because conflicts may arise in factual situations not expressly described in the relevant FAR sections, the regulation advises contracting officers to examine each situation individually and to exercise "common sense, good judgment, and sound discretion" in assessing whether a significant potential conflict exists and in developing an appropriate way to resolve it. FAR sect. 9.505. We will not overturn the agency's determination except where it is shown to be unreasonable. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra.

The situations in which organizational conflicts of interest arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm a competitive advantage in a later competition for a government contract. FAR sect. 9.505-4. In these "unequal access to information" cases, the concern is limited to the risk of the firm gaining a competitive advantage; there is no issue of bias.

The second group consists of situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for another government contract by, for example, writing the statement of work or the specifications. In these "biased ground rules" cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. FAR sections 9.505-1, 9.505-2. These situations may also involve a concern that the firm, by virtue of its special knowledge of the agency's future requirements, would have an unfair advantage in the competition for those requirements. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra at 13.

Finally, the third group comprises cases where a firm's work under one government contract could entail its evaluating itself, either through an assessment of performance under another contract or an evaluation of proposals. FAR sect. 9.505-3. In these "impaired objectivity" cases, the concern is that the firm's ability to render impartial advice to the government could appear to be undermined by its relationship with the entity whose work product is being evaluated. Id.; see also FAR sect. 9.501 (definition of organizational conflict of interest).

Allegations Arising from the SI Divisions' Roles in Both the Procurement Planning Work and the Subsequent Procurement

All those involved took the view initially that a company that performed procurement planning services under the task order could not compete for the subsequent procurement. There was a consensus among the Army and Air Force that SI [SI International] could not participate in the Uni-Comm procurement because of its work under the planning effort task order, a preclusion agreed to by SI under the terms of the task order. That view is consistent with FAR subpart 9.5 and reflects concern that SI International (and its affiliate, SI Telecom) would have an unfair competitive advantage in the Uni-Comm procurement. Specifically, without the prohibition on competing for the Uni-Comm contract, SI Engineering's advice to the government in the planning effort under the task order could be tainted by its corporate interest in the subsequent procurement and the firm could obtain nonpublic, competitively useful information. This reflects the fact that the work under the task order entailed being part of the government's procurement planning process and advising the government on the "business case" for the subsequent procurement, as well as other acquisition planning work. In terms of FAR subpart 9.5, the reasons for barring a firm (or its affiliate) that participated in the task order work from competing for the subsequent procurement reflect two types of OCIs: unequal access to information--concern that the firm could obtain (or share with an affiliate) through the task order work nonpublic information that would be competitively useful in the subsequent procurement, and biased ground rules--concern that the firm could shape the Uni-Comm procurement in a way that favors itself or its affiliate.  [Bracketed information added for clarification.]

Here, the Air Force eventually reversed its original decision that SI Telecom was barred from participating in the Uni-Comm procurement due to its affiliate's role in the procurement planning work under the task order. The gravamen of this protest is whether the Air Force had a reasonable basis for that reversal. We examine first the biased ground rules concerns, and then those related to SI's access to nonpublic, competitively useful information.

L-3 alleges that SI has a biased ground rules organizational conflict of interest, given the way in which the effort to produce the Uni-Comm business or mission case and other procurement planning was intertwined with the writing of the statement of work. That interconnectedness can be seen clearly in the language of the Army task order, which described six subtasks that would be performed under phase I; five of those six subtasks were to be performed under phase Ia, and all six would be performed under phase Ib. See AR, Tab 249A, Task Order at 7. Performance of both portions of phase I would include, among others, subtask 1, Program Management, Administrative, and Quality Assurance Services, subtask 2, Communication and IT Requirements Identification and Analysis Services, and subtask 6, Technical Advice and Program Support Services. The one subtask reserved for performance under phase Ib was subtask 5, Evaluation Criteria Services.

The ability of the task order contractor under phase Ia to exert influence on both the "go/no-go" decision and the resulting statement of work was reflected in the consensus opinion of the cognizant Army and Air Force officials‑‑announced during the task order planning, included in Task Order 5017, and reiterated after issuance of the task order--that the contractor performing phase Ia would be excluded from participation in the Uni-Comm procurement. On January 7, 2005, prior to the issuance of the task order, the Air Force Uni-Comm technical manager concurred with the Army contracting officer that a firm that performed only in phase Ia would face organizational conflicts of interest. See AR, Tab 249C, Response to Offeror Questions at 32 ("Q: Will there still be an [organizational conflict of interest] if phase Ib is not turned on or funded? A: Yes."); AR, Tab 249C, E-mail from AF Technical Manager to Army Contracting Officer, Jan. 7, 2005, at 30 ("Concur with [statement of work] and Q&As."). Consistent with this position, the task order itself included a clause precluding SI from participation in the Uni-Comm procurement based on the conclusion that performance of the Uni-Comm contract would create an unmitigable organizational conflict of interest. In sum, as agreed by the Air Force technical manager and the Army contracting officer, and as confirmed in the language of the task order: performance of phase Ia of the task order would necessarily preclude a contractor from participating in the Uni-Comm competition.

Over a year after his original organizational conflict of interest analysis in April 2005, the Air Force contracting officer conducted a second analysis reversing the position that he had shared with the Army contracting officer and the Air Force technical manager, namely, that performance of phase Ia of the Army task order would preclude a firm from participation in the Uni-Comm procurement. The record shows, however, that the Air Force contracting officer's June 2006 biased ground rules organizational conflict of interest analysis failed to appreciate the way in which performance of phase Ia shaped the statement of work, thus making it inappropriate for the phase Ia contractor to participate in the Uni-Comm procurement. The Air Force contracting officer testified that in making his organizational conflict of interest determination he relied on the "clean break" between phases Ia and Ib. The record shows that the "clean break" was illusory. As noted above, the task order contained several critical subtasks that would be performed in both portions of phase I. Moreover, phase Ia was funded for a particular time period, and not for completion of particular tasks, and thus the assumption that none of the tasks assigned to phase Ib could be performed under phase Ia is incorrect. In this regard, the May Monthly Status Report stated that "[b]y direction of the [Air Force technical director], begin [in June] the development of the Uni-Comm [statement of work] and strategy to conduct a series of Industry Days. In accordance with the 5017 Task Order Plan, this activity was not scheduled to begin until Phase 1b." AR, Tab 171, Monthly Task Order Reports at 14. Similarly, the June report states, "[b]y direction of the [Air Force technical director], began the development of the Uni-Comm [statement of work] and strategy to conduct a series of Industry Days. In accordance with the 5017 Task Order Plan, this activity was not scheduled to begin until Phase 1b." Id. at 15. These reports reflect the nearly seamless way in which the effort under phase Ia blended into the drafting of the statement of work under phase Ib, which likewise was reflected in the timing of the deliverables; the draft statement of work was due only 60 days after the last site visit, with the final statement of work due only 30 days later, unless as otherwise directed by the Air Force. Agency Report (AR), Tab 249A, Task Order at 13. The Air Force contracting officer testified that he did not consider these Monthly Reports when conducting his organizational conflict of interest analysis.

Even though his analysis reversed the earlier consensus determination that the contractor under phase Ia would be precluded from participation in the Uni-Comm procurement, the Air Force contracting officer's June 1, 2006 memorandum analyzing SI's potential conflicts of interest recognized the interrelationship between the work performed under phases Ia and Ib on which that preclusion had been based. He stated that "some of the information researched by the Uni-Comm team, which included the SI International employee, was later part of the source information used to develop the requirement." AR, Tab 172 at 17, Organizational Conflict of Interest Analysis of June 1, 2006. He discounted that finding because "SI International's employee was not in a position, during the business/mission case development, to draft specifications for Uni-Comm that would favor the employee's corporation." Id.

As an initial matter, we note that the relevant concern is not simply whether a firm drafted specifications that were adopted into the solicitation, but, rather, whether a firm was in a position to affect the competition, intentionally or not, in favor of itself. FAR sections 9.505-1, 9.505-2; Snell Enters., Inc., B‑290113, B-290113.2, June 10, 2002, 2002 CPD para.115 at 3. While the Air Force contracting officer here relied on our decision in American Artisan Prods., Inc., B‑292559, B‑292559.2, Oct. 7, 2003, 2003 CPD para. 176, as support for the proposition that SI's participation in the business/mission case development did not give rise to a biased ground rules organizational conflict of interest, the facts of the two cases differ in a critical respect. We reached our conclusion in American Artisan Prods., Inc. because the firm alleged to have the biased ground rules organizational conflict of interest did not "perform the type of work solicited," American Artisan Prods., Inc., supra at 9, and thus was incapable of shaping the requirement in a way that would have been beneficial to it, as envisioned in Snell Enters. Inc.. That is not the case here, because SI Telecom, as part of the GDIT [General Dynamics Information Technology, Inc.] team, will perform [deleted] percent of the contract effort.  [Bracketed information added for clarification.]

In sum, the Air Force contracting officer's determination that there was no biased ground rules organizational conflict of interest was based on a misconception of the work performed under the task order and a misreading of American Artisan Prods., Inc. Based on the record here, we think that the agency lacked a reasonable basis for its conclusion that SI's performance under phase Ia of the task order did not place it in a position to skew the competition, intentionally or not, in favor of itself, and we therefore sustain the allegation that SI had a biased ground rules organizational conflict of interest.

L-3 also alleges that SI's performance on Task Order 5017 gave it access to competitively useful, non-public information and thus created an unequal access to information organizational conflict of interest for GDIT. The awardee and the agency assert the following: that the information was not competitively useful; that if it was competitively useful, the information was fully disclosed to the other offerors; that if it was not fully disclosed to the other offerors, the mitigation plans effectively prevented the information's disclosure; and that, based on our decision in Mechanical Equip. Co., Inc. et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD para. 192, this Office should nevertheless dismiss the organizational conflict of interest protests. As explained below, in our view there is no reasonable basis on which to conclude that all competitively useful information obtained by SI was disclosed to the other offerors, as the agency and the intervenor argue. Nor can we conclude that the mitigation plans and non-disclosure agreement effectively prevented an organizational conflict of interest. The agency has yet to adequately investigate and reasonably determine the extent and type of information to which SI had access or the efficacy of the non-disclosure agreement and mitigation plans, and absent the results of those inquiries, the record contains inadequate support for a finding that SI did not have an unequal access to information organizational conflict of interest.

The Air Force contracting officer's own organizational conflict of interest analysis in June 2006 stated that SI handled competitively useful information in the form of unredacted copies of contracts, core communications requirements, the 38 EIG information, and proprietary information of other companies that was subject to non-disclosure agreements. On the basis of this memorandum alone, it would be unreasonable to conclude that SI did not access competitively useful information in the performance of the Army task order. Moreover, while performing the task order, SI's employee was considered a member of the Program Management Office with access to the Department of Defense NIPRNET and wrote site visit reports summarizing the Program Management Office's trips to Air Force bases. Although the Air Force contracting officer testified that he was unaware whether the SI employee was ever unaccompanied on the site visits conducted under the task order, Trans. at 189-90, he never conducted any interviews with the individuals with whom the SI employee met to determine the kinds of information to which he had access. Id. at 186-91. Because the Air Force contracting officer was unaware of the full extent and nature of the SI employee's work under the task order, he could not reasonably conclude, with any certainty, the kinds of information that the SI employee accessed.

Although extensive hearing testimony appeared to show that much (and potentially most) of the known competitively useful information was made available to the other offerors, see Trans. at 51-104, the record shows that SI nevertheless likely had access to other competitively useful information not known to the Air Force. As noted above, the plain language of the task order precluded the firm performing the task order phase Ia work from competing under the Uni-Comm solicitation; the Army and Air Force officials who drafted and issued the Army task order concurred with this exclusion. With that exclusion in effect, neither the Army, nor the Air Force, nor the task order prime contractor or SI themselves, had any reason to track the information being accessed by SI. In this regard, the Air Force contracting officer stated that “[s]ince I wasn't supporting Uni-Comm from Jan 2005 to Apr or May 2005, I didn't know what the SI employee had worked on or had access to during the time (Jan 2005 to about 17 Jun 05) under the subcontract to prime FCI on the [Army] Task Order." AR, Tab 172 at 143, Contracting Officer Memorandum for Record, Dec. 19, 2005. The Air Force contracting officer also testified that he was unaware of any record of the information that SI reviewed. Trans. at 179. The earliest attempts to identify what the SI employee could have learned were made some time after the completion of phase Ia of the task order. In sum, the record contains no contemporaneous account of what information SI had access to, nor is there any accurate description in the record, memorialized after-the-fact, containing that information. Given the various ways in which SI could have accessed information and the lack of a record showing what it did access, we think that it follows that there was no support for the Air Force's belief that all competitively useful information was made public.

The agency and GDIT argue that, even if SI obtained competitively useful, non-public information, the mitigation plans of SI Telecom and SI Engineering, operating alone or in tandem, prevented disclosure of that information.

The record contains two mitigation plans, one each from SI Engineering and SI Telecom, that were submitted to the agency unsigned and undated in July and August 2005, respectively. The SI Engineering mitigation plan included a signed non-disclosure agreement for the SI employee dated January, 28, 2005. Even assuming that the non-disclosure agreement was created in January 2005, that agreement was binding only as to the SI employee and not as to SI Telecom or SI Engineering; neither the SI Telecom nor the SI Engineering plan was submitted to the Air Force until after SI's performance under the task order had ended. Further, because the Air Force contracting officer had a number of significant questions concerning the adequacy of SI Telecom's plan, the final mitigation plan was not approved for over a year, in August 2006, and it was not until then that the agency had before it a signed plan. The issues the Air Force contracting officer raised as requiring clarification went to the heart of the adequacy of the plan's efficacy in addressing the potential organizational conflicts of interest stemming from SI's access to competitively useful information, including: who would decide what qualified as source selection sensitive information, and the other kinds of information that might require protection; how SI's internal computer systems would function to isolate the competitively useful information; how the government would verify that the contractor followed the mitigation plan; how the government would enforce compliance with the mitigation plan; and given that the two divisions of SI were no longer physically separate, how the workspace separation of the employees would be accomplished. AR, Tab 174 at 241-43, Memo from Contracting Officer to SI, July 6, 2006.

Where a prospective contractor faces a potential unequal access to information organizational conflict of interest, the conflict may be mitigated through the implementation of an effective mitigation plan. Axiom Res. Mgmt., Inc., B‑298870.3, B‑298870.4, July 12, 2007, 2007 CPD para. 117. An agency's reliance on a contractor's self-assessment of whether an organizational conflict of interest exists or a contractor's unilateral efforts to implement a mitigation plan, however, is inconsistent with the FAR. Johnson Controls World Servs., Inc., B-286714.2, Feb. 13, 2001, 2001 CPD para. 20 at 8. Here, in our view, it was unreasonable for the agency to rely on a mitigation plan that was undisclosed to, unevaluated by, and unmonitored by the Air Force--in a word, self-executing. Without credible evidence that an effective mitigation plan was in effect at the start of performance, there is no basis to assume that, even if the SI employee himself did not disclose competitively useful information, the information was not otherwise made available to SI Telecom employees working on the subcontract to GDIT.

Finally, citing Mechanical Equip. Co., Inc. et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD para. 192, the intervenor argues that the Air Force contracting officer's reassessment and later finding that there were no organizational conflicts of interest were based on extensive consultations with cognizant Air Force officials, such that he could reasonably rely on their knowledge of whether there were organizational conflicts of interest. The record simply does not support the intervenor's position. The agency in the Mechanical Equip. Co., Inc. protest offered testimony or statements from five agency officials involved in the procurement, including the chair and deputy chair of the source selection evaluation board, who had made an independent, contemporaneous determination, based on extensive first-hand knowledge of the firm’s involvement in the subject procurement, that the firm did not have an organizational conflict of interest. Here, the record contains no contemporaneous finding by knowledgeable Air Force Uni-Comm program officials that SI did not have an organizational conflict of interest. Nor on this record would it be reasonable for the Air Force contracting officer to assume that Air Force officials possessed sufficient familiarity with SI's participation in the procurement to make such a determination. Simply put, the showing that the agency made in Mechanical Equip. Co., Inc. was that agency officials with a breadth and depth of first-hand knowledge reasonably and contemporaneously concluded that the firm had no organizational conflict of interest. The Air Force has made no such showing here.

This record lacks a thorough agency inquiry into the extent of access to information that the SI employee had and what competitively useful information his access yielded. The record similarly lacks any reasonable assessment of whether the non-disclosure agreement and the mitigation plan were effective against the disclosure of information to SI Telecom (or others). We therefore conclude that, given the inadequacies of this record, it was unreasonable for the agency to determine that SI did not have an unequal access to information organizational conflict of interest.

Allegations Arising from the Relationship Between SI and FCI

The protester argues that we should find that GDIT, through its subcontractor SI, had an impaired objectivity organizational conflict of interest, because the prime contractor under Army Task Order 5017, FCI, supplied employees who acted as Mission Capability subfactor evaluation team advisors to the Air Force. As noted above, an impaired objectivity organizational conflict of interest exists where a firm's work under one government contract could entail its evaluating itself, either through an assessment of performance under another contract or an evaluation of a proposal submitted to obtain another contract. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra at 13.

In support of its allegation, L-3 cited FAR sect. 9.505-3, while also noting the FAR's general admonishment "to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships." FAR sect. 3.101-1. The "hard facts" that L-3 offered in support of such a finding were that SI was FCI's subcontractor on the Uni-Comm procurement, the two firms sought to work together on another task order advising the Uni-Comm procurement, and during the Uni‑Comm evaluation, the GDIT proposal, with SI as a subcontractor, was evaluated by FCI. L-3's Post Hearing Comments, Aug. 5, 2009 at 76. Thus, L-3 argues, FCI and SI sought to influence the solicitation, participate as a subcontractor in GDIT's proposal, and assist with the evaluation of the proposals, and the agency improperly failed to conduct and document an analysis of whether these relationships created an impaired objectivity organizational conflict of interest. GDIT asserts that all of these relationships were timely reported to the Air Force and the relationships and roles do not violate the FAR.

We will sustain an allegation that a firm has an impaired objectivity organizational conflict of interest when the facts of the case meet the standard in FAR sect. 9.505-3. Nortel Gov’t Solutions, Inc., B‑299522.5, B-299522.6, Dec. 30, 2008, 2009 CPD para. 10 (sustaining impaired objectivity organizational conflict of interest allegation where the record showed that contractor would review its own work on another contract); Alion Sci. & Tech. Corp., B-297022.3, Jan. 9, 2006, 2006 CPD para. 2 (sustaining impaired objectivity organizational conflict of interest where awardee would be required to perform analysis and make recommendations regarding products that might be manufactured by it or by its competitors); Ktech Corp., B-285330, B-285330.2, Aug. 17, 2000, 2002 CPD para. 77 (sustaining impaired objectivity organizational conflict of interest where a firm would be responsible for helping to determine the stringency of testing requirements and for monitoring the performance of the tests, while at the same time, as a subcontractor, the firm was responsible for conducting the tests).

The relationships between firms, or the actions of individual firms, described in the cases where we have sustained an allegation of an impaired objectivity organizational conflict of interest are different in kind from the relationship between FCI and SI. There is no evidence in the record of a corporate relationship between the firms, such that one firm is evaluating itself or an affiliate, or evaluating products made by itself or a competitor, or is making judgments that would otherwise directly influence its own well-being, as there was in the cases cited above. The protester urges us to consider that an organizational conflict of interest exists because the two firms contemplated additional work together on the Uni-Comm procurement, but we decline to do so; at least in this circumstance, what the two firms considered doing has no bearing on our analysis of whether their actual relationship met the standard for an organizational conflict of interest. Moreover, we look for some indication that there is a direct financial benefit to the firm alleged to have the organizational conflict of interest, American Mgmt. Sys., Inc., B‑285645, Sept. 8, 2000, 2000 CPD para. 163 at 5, and there is none in this instance. While SI performed as FCI's subcontractor on the Army task order, the suggestion that FCI would benefit financially from favorably evaluating GDIT's proposal is too remote a financial relationship on which to base an impaired objectivity organizational conflict of interest. See id. at 6. The relationship between SI and FCI is simply too attenuated and too dissimilar to the above cases for us to conclude that the agency unreasonably determined that GDIT did not have an impaired objectivity organizational conflict of interest.  (L-3 Services, Inc., B-400134.11; B-400134.12, September 3, 2009) (pdf)

The protester argues that the agency improperly failed to consider that Bollinger has an impermissible organizational conflict of interest (OCI) that "possibly gave [Bollinger] an advantage in this procurement and potentially prejudiced [MMC]." Protester's Comments at 96. As discussed above, the Coast Guard contracted with ABS to analyze certain aspects of the offerors' proposals. The protester points to Bollinger's FPR, which provides in relevant part as follows:

The feedback from ABS on our proposal was positive, and all concerns were addressed. From this meeting Bollinger has developed and revised plans and procedures to incorporate the recommendations of ABS. ABS feedback has validated the FRC‑B design illustrated [below] . . . . ABS and Bollinger have evaluated responsibilities during plan review and agreed to milestone and submittal dates required to meet the construction schedule. ABS has reviewed the Bollinger engineering schedule to verify that ABS resources can sustain an individual drawing review cycle of 30 days to support production.

AR, Tab 48, Bollinger Proposal, vol. III, at 108. The protester adds that the agency was aware of Bollinger's relationship with ABS, in that the PEAG Report provides in relevant part that "ABS was sought and provided [Bollinger] with a review of their proposal." AR, Tab 14, PEAG Report, at 15. The protester concludes that because ABS assisted Bollinger in some manner with the preparation of its proposal, and then assisted the Coast Guard in its evaluation of proposals, an impermissible OCI existed that rendered the award to Bollinger improper.

When the facts of a procurement raise a concern that a potential awardee might have an OCI, the FAR requires the agency to determine whether an actual or apparent OCI will arise, and whether the firm should be excluded from the competition. The specific responsibility to avoid, neutralize or mitigate a potential significant conflict of interest lies with the cognizant contracting officer. Overlook Sys. Techs., Inc., B‑298099.4, B-298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-11; see FAR sect. 9.504. As relevant here, one of the situations that creates a potential OCI is where a firm's work under a government contract entails evaluating itself or its own products. FAR sections 9.505, 9.508; Overlook Sys. Techs., Inc., supra, at 10. The concern in such situations is that a firm's ability to render impartial advice to the government will be undermined or impaired by its relationship to the product or services being evaluated; as a result, such situations are often referred to as "impaired objectivity" conflicts if interest. Overlook Sys. Techs., Inc., supra.

The agency explains that "[t]he assistance" it received from ABS in the evaluation process, which was limited to the consideration of initial proposals, "was specifically in the area of classification of the proposed ships." Agency Supp. Report (Nov. 25, 2008) at 27-28. The agency also states that to its knowledge both Bollinger and MMC "sought advice from ABS, but neither of them obtained that advice under a contract with ABS or any of its affiliates." Id. at 28. The agency asserts that because "ABS did not have a contract with either of the two firms that sought its assistance, there was no conflicting interests to avoid, neutralize or mitigate." Id. The agency adds here that "[s]ince ABS' true role with the offerors and with the Coast Guard was to take an independent position regarding the application of their rules, there could be no internal conflicts of interests." Id. at 29.

Based upon our review, we find that no significant conflict of interest exists here. As set forth above, with regard to Bollinger's pre-award relationship with ABS, although Bollinger received some advice from ABS during the proposal preparation process, ABS clearly was not part of Bollinger's "team" and there was no financial relationship between Bollinger and ABS. Moreover, as indicated above, both MMC and Bollinger obtained advice from ABS during the proposal preparation process. [24] There is no evidence or claim that the post‑award relationship between ABS and Bollinger as the result of Bollinger's status as the awardee is any different than would be the relationship between ABS and MMC had MMC been awarded the contract. That is, as recognized by the protester, the RFP required that during the performance of the contract awarded here, the awardee must contract with ABS for classification of the FRC‑B and structural analysis, and that "all offerors, including [MMC], were required to demonstrate in their proposals that they had arranged with ABS to provide post-award classification services." Protester's Supp. Comments (Dec. 11, 2008) at 5-6; see Protester's Comments at 97 n.14; RFP, pt. III, sect. J, attach. 2, COR, at 000-33. Given the lack of any financial relationship between ABS and Bollinger prior to the award, and the fact that the relationship of ABS with the awardee would be the same or similar whether Bollinger or MMC were the awardee, we find that the potential benefit to ABS here, if any, is speculative and too remote to establish a significant conflict of interest that the contracting agency had to avoid, neutralize, or mitigate pursuant to FAR subpart 9.5. See sect. 9.504(a)(2); American Mgmt. Sys., Inc., B-285645, Sept. 8, 2000, 2000 CPD para. 163 at 6; Professional Gunsmithing, Inc., B-279048.2, Aug. 24, 1998, 98-2 CPD para. 49 at 4 (FAR requires that agencies avoid or mitigate "significant potential conflicts").  (Marinette Marine Corporation, B-400697; B-400697.2; B-400697.3, January 12, 2009) (pdf)

The contracting officer (who was the SSA) determined, and DEA continues to maintain, that "SRA's performance of the FITS contract [does] not create an 'impaired objectivity OCI" with regard to SRA's performance of the EMS O&M contract. Contracting Officer's Statement at 32. In explaining her position that no OCIs will result from SRA's performance of both contracts, the contracting officer asserts that: (1) SRA will not be in a position to evaluate or assess its own work on the FITS contract, nor will SRA benefit from SRA's input as the EMS contractor since neither the EMS nor FITS systems engineering contractor will furnish any system or software that will be necessary to implement systems engineering solutions proposed by the FITS contractor; (2) all systems engineering work and implementation of systems engineering initiatives are subject to oversight and control by DEA personnel, with government personnel chairing any IPTs involved in the initiatives and all systems engineering work under the FITS contract subject to review and approval of DEA's government-led configuration control board (CCB); (3) the input from the EMS contractor regarding systems engineering solutions proposed by the systems engineering FITS contractor will be essentially limited to participating in meetings involving the implementation of systems engineering initiatives, with such meetings occupying only a relatively small portion of the EMS contractor's overall contract effort; and (4) SRA committed that, in the event of a change in these processes or if the government concluded that additional measures were necessary, it would adopt additional mitigation items including organizational/financial and informational separation of the EMS work from the FITS work (a firewall). Supplemental Contracting Officer's Statement at 2-4; SRA Mitigation Plan at 3-5, 7.

Contracting officers are required to identify potential conflicts of interest as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sections 9.505, 9.508. Situations that create potential conflicts of interest include situations in which a firm's work under a government contract entails evaluating itself. The concern in such "impaired objectivity" situations is that a firm's ability to render impartial advice to the government will be undermined by its relationship to the product or service being evaluated. PURVIS Sys., Inc., B‑293807.3, B‑293807.4, Aug. 16, 2004, 2004 CPD para. 177 at 7. The primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR sect. 9.505; RMG Sys., Ltd., B‑281006, Dec. 18, 1998, 98‑2 CPD para. 153 at 4. Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Alion Sci. & Tech. Corp., B‑297022.4, B-297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 8.

The record indicates that the agency did not give meaningful consideration to the potential impaired objectivity OCI involving SRA’s dual roles. Contrary to the agency’s assertion that SRA will not be in a position to evaluate or assess its own work on the FITS contract, the record shows that SRA, as the EMS contractor, is expected to review and offer input from the O&M perspective regarding systems engineering solutions proposed by itself as the FITS contractor. SAR at 5. Moreover, that input will involve SRA’s subjective judgment. In this regard, we note that when asked if DEA sought the O&M (EMS) contractor’s “subjective opinions of the design,” the TEP chair testified that “[t]hey can be subjective . . . depending on the level of detail of the design.” Tr. at 49. In our view, this provides an opportunity for biased advice. See PURVIS Sys., Inc., supra, 2004 CPD para. 177 at 9 (agency improperly failed to consider impaired objectivity OCI where same contractor was expected to provide subjective input on its own products and services). Further, we find persuasive the protester’s position that, while the advice may not result in implementation work for SRA under either contract, input from and review by SRA as the EMS contractor regarding systems engineering solutions proposed by SRA as the FITS contractor could have a potential impact on SRA’s relationship with the government including past performance evaluations and future competitions. In these circumstances, we believe that it is clear from the record that the performance by SRA of both the EMS and FITS contracts presents a potential impaired objectivity OCI.

Our conclusion that a potential impaired objectivity OCI exists is not altered by DEA's assertion that it does not rely on the EMS contractor alone for advice, nor by its reliance on the fact that the government retains the ultimate decisionmaking authority. The record indicates that obtaining input from a contractor with the O&M perspective was considered important. According to the testimony of the TEP chair, it would be "negligent" not to have the EMS contractor's perspective on FITS designs and so the agency would still seek the input of SRA even when it fulfills both roles. Tr. at 166‑68. In this regard, the EMS contractor will replace multiple former O&M contractors with a single O&M contractor (Tr. at 166), arguably giving it a more important role. Thus, the possibility of obtaining O&M perspective from other DEA contractors may necessarily be somewhat limited. Further, the agency broadly asserts that under its process "[a]ny contractor input" in an IPT is "vetted by the DEA personnel" and that the CCB reviews and approves all IT changes making the government the "final decision authority." AR at 20. However, it is not clear from the record that this review will address the impaired objectivity concern arising from SRA's dual roles where, as here, the contractor is expected to have a potentially significant role in providing input with regard to SRA's system design. For example, neither SRA in its OCI mitigation plan, nor the agency, provides any specifics on how the agency will accomplish its vetting of SRA's input before making its final decisions. As we explained in Johnson Controls World Servs., Inc., B-286714.2, Feb. 13, 2001, 2001 CPD para. 20 at 11-12, an approach based upon ad hoc mitigation activity such as discounting the weight given to the firm's recommendations, even if feasible, is not a substitute for the preaward deliberation contemplated under FAR sect. 9.504.

Moreover, although DEA asserts that the review work constitutes only a small portion of the EMS contractor's effort, the agency's position is not supported by the record. In this regard, in response to NGS's protest, the agency now asserts that only 2 percent of the contractor's time is spent in IPT meetings and those meetings are not solely for design reviews. AR at 21 n.8; Supplemental Contracting Officer's Statement at 4. However, not only did a representative of NGS offer persuasive testimony to the effect that 5 of 60 NGS engineers spent at least 25 percent of their time working on reviews and IPT meetings, but in addition, the TEP chair testified that the EMS contractor was spending 10 to 15 percent of its time on reviews. Tr. 158-61. Given this testimony, and the fact the 2 percent figure is not supported by any meaningful contemporary assessment, we find unpersuasive the agency's attempt to portray the review work giving rise to an impaired objectivity OCI as insignificant in terms of the EMS contractors overall level of effort. More significantly, even if the review work took little of the EMS contractor's time, there is no showing in the record that this review process is not important to the agency's mission, and it would not obviate the fact that a potential impaired objectivity OCI existed which needed to be avoided or mitigated.

Finally, SRA's proposal to separate its EMS and FITS personnel through use of a firewall appears to be of little, if any, help in resolving the OCI here. In this regard, the proposed firewall provides for SRA to manage the two contracts using "separate organizations with separate interests" and "distinct business objectives." SRA Mitigation Plan at 5. It also prohibits SRA and subcontractor personnel working on one contract from providing support under the other contract, without written approval from the contracting officer. SRA Mitigation Plan at 7. However, while a firewall arrangement may resolve an "unfair access to information" OCI, it is virtually irrelevant to an OCI involving potentially impaired objectivity. See Aetna Gov't Health Plans, Inc.; Found. Health Fed. Servs., B‑254397.15 et al., July 27, 1995, 95‑2 CPD para. 129 at 16. This is because the conflict at issue pertains to the organization, and not the individual employees. Id. Thus, while the firewall proposed by SRA may create the appearance of separation to mitigate the OCI, the fact remains that personnel under both contracts will be working for the same organization with an incentive to benefit SRA overall. Accordingly, the firewall does not avoid, mitigate or neutralize the impaired objectivity OCI resulting from SRA's performance of dual roles reviewing and providing input on its own designs.

We sustain the protest on the basis that the record does not support DEA's conclusion that there was no potential OCI involving SRA's dual roles, but instead indicates that the agency did not give meaningful consideration to this potential impaired objectivity OCI. Since the agency needs to address the extent of the OCI and what mitigation is appropriate, and because the impact that mitigation may have on SRA's technical and cost proposals is unknown, we believe that the agency will need to reopen discussions in order to address these matters.  (Nortel Government Solutions, Inc., B-299522.5; B-299522.6, December 30, 2008) (pdf)
 

   OCI

Detica asserts that CNA has an impermissible OCI, and that one of the agency's evaluators was biased in favor of CNA. In this connection, the protester asserts that an individual who formerly was the director of the agency's office of preparedness policy, planning, and analysis (PPPA), resigned from his position and subsequently was hired by CNA. The protester maintains that the former PPPA director was involved both in planning the subject acquisition, and in identifying funds for the acquisition. Detica maintains that this gives rise to an OCI that the agency did not identify or attempt to mitigate or neutralize. Detica also asserts that the former director maintained a professional relationship with one of the agency's technical evaluators; according to Detica, this resulted in bias in favor of CNA.

The Federal Acquisition Regulation (FAR) generally requires contracting officers to avoid, neutralize, or mitigate potential significant OCIs in order to prevent unfair competitive advantages or the existence of conflicting roles that might impair a contractor's objectivity. FAR sections 9.504, 9.505. As a general matter, OCIs can be broadly categorized into three groups: biased ground rules, unequal access to non‑public information, and impaired objectivity. Operational Resource Consultants, Inc., B-299131, B-299131.2, Feb. 16, 2007, 2007 CPD para. 38 at 5-6. Substantial facts and hard evidence are necessary to establish the existence of an OCI; mere inference or suspicion of an actual or apparent OCI is insufficient for our Office to sustain a protest. Id.

Although Detica has not specifically identified the type of OCI it is alleging, its contention that the former director participated in planning the subject acquisition and identifying funds within the agency suggests an alleged "biased ground rules" OCI; such an OCI arises where an individual or concern has, for example, prepared the SOW for a solicitation. FAR sect. 9.505-2. We find no basis to conclude that CNA has an impermissible OCI.

The record shows that the individual in question was the director of PPPA from September until December 2007, at which time he tendered his resignation; shortly thereafter, he became an employee of CNA. Intervenor's Comments, Oct. 6, 2008, Affidavit of Former PPPA Director, at 1. The former director states that, during this interval, PPPA's fiscal year 2008 budget remained in draft form and, although this draft budget included funding for research and analysis, there was no SOW or other acquisition documentation for the requirement that eventually evolved into the SPAR acquisition, and the budget was not finalized or approved until after his departure. Id. at 2. These representations are corroborated by affidavits from agency personnel. The new PPPA director states that the former director never saw the research branch quotation that eventually became the basis for the SPAR procurement. AR, exh. B, at 1. He further represents that the individual responsible for preparing the scope of work (SOW) for the SPAR procurement did not begin working on that document until February or March 2008, after the departure of the former director, and that the SOW document was not forwarded to him for review (as the new PPPA director) until March. Id.

The record also contains the affidavit of the individual who prepared the acquisition package for the SPAR procurement, including the SOO. She states that, at no time did she have any interaction with the former director, and that she neither received information from him, nor provided information to him relating to her development of the acquisition package for the SPAR requirement. AR, exh. C, at 1. She also states that she did not begin preparing the solicitation's SOO until early March 2008, and that she forwarded it to her director in mid-March. Id.

Against the backdrop of this evidence, the only evidence presented by Detica in support of its generalized allegation of an OCI is an affidavit in which one if its employees represents that he has observed that the former director was responsible for overseeing preparation of the agency's budget, that there were several contacts between representatives of Detica and CNA (that did not include the affiant) in February 2008 concerning possible teaming arrangements between the two firms, and that the former director had been involved in these contacts. Letter of Protest, Aug. 29, 2008, attach. A, at 1-3. This affidavit does not establish that the former director participated in planning the subject acquisition and in identifying available agency funding for the requirement, as Detica alleges.

We conclude from the evidence presented that the former director was involved in the preliminary stages of preparing the agency's annual budget; that he was aware that the budget in its draft form included funding for some unspecified research and analysis work; that he was no longer a federal employee at the time the SPAR requirement was identified with specificity and did not participate in preparing the solicitation or SOO; and that identifying the agency's actual requirements and preparing the acquisition package (including the SOO) was accomplished by other individuals who were not in contact with the former director. Simply stated, the evidence does not support a finding of an impermissible OCI on the part of CNA.  (Detica, B-400523; B-400523.2, December 2, 2008) (pdf)

Contracting officers are required to identify potential conflicts of interest as early in the acquisition process as possible, and to avoid, neutralize, or mitigate such conflicts to prevent the existence of conflicting roles that might impair a contractor’s objectivity, such as where contract performance entails evaluating itself or its own products, since the firm’s ability to render impartial advice may be undermined. See FAR sections 9.505, 9.508; PURVIS Sys., Inc., B-293807.3, B-290807.4, Aug. 16, 2004, 2004 CPD para. 177 at 7. In assessing potential OCIs, the FAR directs the contracting officer to examine each contracting situation individually on the basis of its particular facts and the nature of the proposed contract; using sound judgment, the contracting officer is to determine not only whether a conflict exists, but, if so, the appropriate means for resolving it, consistent with the terms of the solicitation and applicable procurement rules. See Alion Sci. & Tech. Corp., B-297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 8; Lucent Techs. World Servs. Inc., B-295462, Mar. 2, 2005, 2005 CPD para. 55 at 10. Our review of the record here supports the protester’s contention that the agency’s OCI assessment of AT&T, as well as the agency’s disqualification of the firm without considering its ability to avoid, neutralize, or mitigate the alleged conflict, or otherwise allowing the firm to respond to the reasons cited for its adverse OCI assessment, were unreasonable.

First, although the RFP required the contracting officer to evaluate all proposals to determine whether an apparent OCI exists, the agency here concedes that AT&T’s proposal, which included a proposed OCI mitigation plan, was not evaluated prior to the firm’s disqualification; the OCI assessment, therefore, clearly was not conducted in accordance with the terms of the RFP, which called for such an evaluation. Second, as the protester points out, and as stated above, the solicitation here included provisions (referencing the general rules of FAR sect. 9.505) for limitations on contracting as a means of avoiding, neutralizing, or mitigating perceived OCIs, but there is no indication in the record that the agency considered their application to AT&T prior to deciding to disqualify the firm. While the agency suggests that, since the RFP did not specifically request a mitigation plan from the offerors and advised that firms with an actual or apparent OCI would be disqualified, offerors should have known that plans to avoid, neutralize, or mitigate an OCI would not be considered by the agency, our review of the solicitation does not support the agency’s position. Rather, our review shows that the RFP contemplated that the agency would attempt to avoid, neutralize, or mitigate perceived OCIs, at least to the extent of applying the “contracting restrictions” provisions of the RFP. These provisions, as stated above, allow participation in the procurement with some performance limitations or where other safeguards are in place to ensure objectivity; we therefore agree with the protester that a reasonable interpretation of the RFP is that disqualification was a determination to be made after consideration of whether or not a perceived OCI could be resolved short of eliminating the firm from the competition. See RFP at 39-41. The agency, however, failed to conduct the required review of whether or not the perceived OCI attributed to AT&T could be resolved, i.e., avoided, neutralized or mitigated, without the need to disqualify the firm.

Third, the agency provides no support for its conclusion that AT&T would be evaluating its own IO security products in performance of the tasks identified in the RFP, such as the required analysis of the agency’s current IO systems. According to AT&T, its IO security products are not part of the Navy’s IO systems to be supported here; rather, AT&T’s IO products are only available to its network subscribers and the Navy does not subscribe to that network. The OCI determination, therefore, appears to be based more on unsupported inference than fact.[2] See NES Gov’t Servs., Inc.; Urgent Care, Inc., B-242358.4; B-242358.6, Oct. 4, 1991, 91-2 CPD para. 291 at 6. We think it was unreasonable for the agency to have assessed an OCI in this regard without first resolving the implications of the subscription-only limitation associated with the use of the firm’s products and services before concluding that those products and services would be evaluated by the firm during its performance of the RFP’s tasks.[3] Under these circumstances, we think that the agency’s failure to communicate its OCI concerns to AT&T and provide an opportunity for a response from the protester for consideration in the OCI assessment of the firm, was unreasonable. See FAR sect. 9.504(e) (providing that before determining to withhold an award based on conflict of interest considerations, the contracting officer is to notify the contractor of the reasons supporting proposed exclusion of the firm and allow the contractor a reasonable opportunity to respond); sect. 9.506(d)(2) (requiring the contracting officer to consider additional information provided by prospective contractors in response to the solicitation or during negotiations in review of perceived OCIs); Lucent Techs. World Servs. Inc, supra, at 11.

In light of the lack of support for the agency’s OCI assessment of AT&T, and the failure to give AT&T an opportunity to respond to the agency’s perceived OCI, we recommend that the agency give the firm notice of the reasons for its OCI concerns and an opportunity to respond. The agency’s new OCI assessment for the firm should also include, consistent with the solicitation, consideration of the firm’s proposal (including its proposed OCI mitigation plan). To the extent a perceived OCI is found, the agency should then consider the applicability of the “contracting restrictions” provided in the solicitation to resolve any OCI concerns, if appropriate (i.e., prior to a disqualification determination, if any). We also recommend that AT&T be reimbursed the costs of filing and pursuing the protest, including reasonable attorneys’ fees. 4 C.F.R. sect. 21.8(d)(1) (2008). AT&T should submit its certified claim for costs, detailing the time expended and costs incurred, directly to the contracting agency within 60 days after receipt of this decision. 4 C.F.R. sect. 21.8(f)(1).  (AT&T Government Solutions, Inc., B-400216, August 28, 2008)  (pdf)

The record shows that while both CEDS and the HAP program involve processing information from multiple security levels simultaneously, the two programs apply different separation technologies and approaches; the requirements in the two programs here are also qualitatively different. CEDS requires, at a minimum, the ability to simultaneously and separately process information from six different security classifications under the same operating system, while the HAP program involves separating information in two adjacent levels of security classification. CEDS involves a real-time operating system (i.e., the results of one process are available in time for the next computing process which requires the previous result) and the HAP program does not. Further, while CEDS utilizes separation kernel technology that is to be certified by NSA against the most rigorous security assurance requirements, the HAP program does not involve the use or adaptation of a separation kernel, or mandate compliance with the same security assurance requirements. RFP amend. 1, SRD sect. 3.6.2.3; GD Comments, Dec. 31, 2007, exh. 3, HAP Statement of Work, attach. A, Declaration of Bill Ross, at 4-8. In sum, from the record before us, it appears that to the extent that GD was familiar with separation kernel technology, it was not as a result of its work on the NSA HAP program.

Contracting officers are required to identify and evaluate potential OCIs as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sect. 9.504(a)(1). The FAR provides that an OCI exists when, because of other activities or relationships with other persons or organizations, a person or organization 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 the person has an unfair competitive advantage. See FAR sect. 2.101. Situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, are generally associated with a firm’s performance of a government contract and can be broadly categorized into three groups: (1) unequal access to information cases, where the primary concern is that a government contractor has access to nonpublic information that would give it an unfair competitive advantage in a competition for another contract; (2) biased ground rules cases, where the primary concern is that a government contractor could have an opportunity to skew a competition for a government contract in favor of itself; and (3) impaired objectivity cases, where the primary concern is that a government contractor would be in the position of evaluating itself or a related entity (either through an assessment of performance under a contract or an evaluation of proposals in a competition), which would cast doubt on the contractor’s ability to render impartial advice to the government. Mechanical Equip. Co., Inc. et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD para. 192 at 18; Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 12-13. DRS’s allegation concerning GD here is primarily that it had an unfair competitive advantage as a result of its work under the HAP contract.

We find DRS's central assertion--that as the HAP contractor GD improperly gained inside knowledge and helped to shape the separation kernel standards applicable to the CEDS procurement--to be unfounded. As a preliminary matter, there is no evidence (and DRS does not assert otherwise) that GD had a role in the development of the actual CEDS separation kernel requirements. Further, GD's work on the HAP program did not result in the offeror having a role in the development of NSA's SKPP standard. As set forth above, the record clearly reflects that the HAP program did not involve the use of separation kernel technology, none of GD's work on the HAP program involved the development or the delivery of NSA's SKPP standard, and none of GD's work product from the HAP program was used by NSA for the development of the SKPP standard.[8] Further, GD's work on the HAP program was not directly applicable to the much more difficult technology and security assurance requirements set forth in the CEDS SRD: at most, GD's work on the HAP contract taught the offeror what would not work for the CEDS procurement. There is simply no merit to DRS's allegation that GD helped to shape the NSA separation kernel standards that applied to the CEDS procurement, and any exposure that GD had to separation kernel technologies and the corresponding NSA standard was a competitive advantage that the Navy had no duty to neutralize. Gonzales Consulting Servs., Inc., B-291642.2, July 16, 2003, 2003 CPD para. 128 at 7; Government Bus. Servs. Group, B-287052 et al., Mar. 27, 2001, 2001 CPD para. 58 at 10.  (DRSC3 Systems, LLC, B-310825; B-310825.2, February 26, 2008) (pdf)

SRA contends that the key personnel evaluation is tainted by personal and organizational conflicts of interest (OCI) involving an evaluation reference, SRNS’s proposed SRNL director, and several of SRNS’s other key personnel. SRA first argues that the evaluation was tainted in that one of the individuals who provided references to the SEB in connection with two proposed key personnel provided biased information because she had a personal conflict of interest: at the time of the evaluation, she was married to an employee of one of SRNS’s team members. The RFP required each proposed key personnel to provide a reference, and stated that these “reference checks” would be part of the key personnel evaluation. RFP sect. M‑2(a)(1). One of SRA’s key personnel and one of SRNS’s key personnel identified a DOE employee as a reference. As was known by SRA at the time of its proposal submission and during the evaluation, but was not known to the SEB or SSA, this DOE employee was married to an employee of one of SRNS’s team members. Supp. Contracting Officer’s Statement at 2-3. The evaluators had no reason to suspect bias on the part of this reference, given that it was SRA that identified this DOE individual as a key personnel reference, and presumably SRA would not have identified a reference that could be biased against it. Id. at 5. The DOE employee reference gave the SRA individual a somewhat negative reference, and gave the SRNS individual a positive reference. During the evaluation, the SEB noted that, with regard to the one SRA key personnel, the negative reference was inconsistent with the other positive references, and thus the agency requested additional references, all of which were positive. As a result, the SEB “discounted” the negative reference, concluded that the reference checks for this SRA individual were “[f]avorable,” and rated this SRA individual a strength in the key personnel evaluation. Supp. Contracting Officer’s Statement at 6; AR, Tab B.2, SEB Report, app. A, at 5, 11. With regard to the one SRNS key personnel, the DOE reference was found to be consistent with other “[f]avorable” references, and the SRNS individual was also given a strength in the evaluation. Supp. Contracting Officer’s Statement at 6; Tab B.2, SEB Report, app. A, at 5, 11.

We have recognized that an actual or apparent conflict of interest may arise when an agency employee has both an “official role in the procurement” and a “personal stake in the outcome.” TPL, Inc., B-297136.10, B-297136.11, June 29, 2006, 2006 CPD para. 104 at 8 (citing examples). Here, however, the DOE reference in question did not have an official role in the procurement--she was not involved in drafting, reviewing or approving the RFP; evaluating proposals; or reviewing or approving the award. She merely provided a personnel reference for two individuals because she was identified by the offerors as a person to contact as a reference check. We have found that a conflict of interest does not necessarily exist, even where the same agency employee provides a reference and performs the evaluation, absent a showing (which has not been made here) of improper influence on the evaluation. Id. at 9. Based on this record, we find that the evaluators acted reasonably in dealing with this reference’s comments. In any event, even if the DOE reference were biased or had a conflict of interest, the record shows that this had no impact on the evaluation and thus SRA was not prejudiced as a result. See Laerdal Med. Corp., B‑297321, B-297321.2, Dec. 23, 2005, 2005 CPD para. 12 at 7 (prejudice is not established where, even if a conflict of interest or bias exists, it has no impact on the evaluation).

SRA also complains that several of SRNS’s proposed key personnel create the potential for OCIs. Specifically, it contends that the SRNL director’s role as the president and owner of a consulting firm “conflicts” with his role as SRNL director for SRNS, and that the director could use information obtained during performance for the competitive advantage of his company and clients in the future. SRA’s Comments at 87. SRA also contends that [REDACTED] of SRNS’s proposed key personnel have “divided loyalty” because they are employed by SRNS’s member companies and not SRNS itself. SRA’s Comments at 83. As discussed below, we do not agree with SRA that the situations it describes with regard to SRNS’s key personnel present the potential for OCIs.

It is true that contracting officers have a duty to avoid, neutralize, or mitigate potential significant OCIs so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. Federal Acquisition Regulation (FAR) sections 9.504(a), 9.505; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 12-13. As FAR Subpart 9.5 explains, OCIs that must be avoided include situations where a company has divided loyalties that impair its ability to render impartial advise to the government (“impaired objectivity”), or where the company has access to information that its competitors do not that could lead to a competitive advantage for the firm (“unequal access to information”). FAR sect. 9.5; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 12-13. It must be noted, however, that there is a distinction between an OCI and a personal conflict of interest: with an OCI, the conflicted party is the organization; with a personal conflict of interest, the conflict is with the individual. See Daniel I. Gordon, Organizational Conflicts of Interest: A Growing Integrity Challenge, 35 Pub. Cont. L.J. 25, 29 (Fall 2005) (distinguishing personal from organizational conflicts of interests); see also FAR sections 3.101-1, 9.505, 9.508. The facts here, at most, give rise to personal conflicts of the individual SRNS employees and are not OCIs.  SRA has not alleged, nor does the record evidence, any facts showing that SRNS or its team member organizations have impaired objectivity or that these entities serve multiple, or conflicting, roles that could lead to an impaired objectivity OCI; nor has SRA alleged that SRNS or its team member organizations had unequal access to information that would render this competition unfair. Rather, SRA argues merely that the individual employees are not adequately committed to SRNS and may use their positions to benefit their employing team member companies, or, in the case of the SRNL director, that he will use information in the future that will benefit his own company. With regard to the SRNL director, the individual’s ownership of a consulting business does not appear to “conflict” with his role as SRNS’s proposed SRNL director, as SRA asserts. The individual has divested himself of all of his consulting work, except for one unrelated contract which he is performing as a means of income until this protest is resolved. Declaration of SRNS’s SRNL director para. 5. He and the other [REDACTED] key personnel have signed commitment letters to work solely on the Savannah River Site project without any “contingencies or constraints” on their positions. SRNS’s Second Supp. Comments, exh. 4, SRNS Key Personnel Commitment Letters. To the extent that SRA asserts that the SRNL director or others may use information learned during performance to benefit themselves or their employers in future endeavors, this is speculative and insufficient to impute any conflict of interest on these individuals or their employers. See American Mgmt. Sys., Inc., B‑285645, Sept. 8, 2000, 2000 CPD para. 163 at 6 (possible benefit from current procurement to a contractor is too speculative and remote to establish a significant OCI). In addition, we see no significant potential for OCIs arising out of the fact that [REDACTED] of SRNS’s key personnel will remain employees of the team member companies rather than become direct employees of SRNS. Given that the employers are team members of SRNS working together to perform the site work, we agree with the agency that there is unlikely to be any divergence of interest. Under the incumbent contract, currently performed by SRA’s team members, the key personnel are employed by the team members and not the prime contractor, WSRC. OCIs have not arisen under that situation, and as the agency reasonably explains, OCIs are unlikely to happen here. Contracting Officer’s Statement at 56. The contracting officer here reviewed SRNS’s disclosures regarding potential OCIs, and reasonably determined that there was no basis to question these disclosures. Id. SRA’s arguments do not call into question the reasonableness of the contracting officer’s judgment.  (Savannah River Alliance, LLC, B-311126, B-311126.2, B-311126.3, B-311126.4, April 25, 2008) (pdf)

Karrar asserts that the agency improperly failed to consider that BANC3 has an impermissible OCI due to the fact that it is a subcontractor to, and has a mentor‑protégé agreement with, Lockheed Martin Corporation, one of the eight prime contractors for the R2 program. Karrar’s assertion is based on its claim that BANC3’s Internet website references the mentor-protégé relationship.  The situations in which OCIs arise are addressed in Federal Acquisition Regulation (FAR) subpart 9.5 and in decisions of our Office. As relevant here, one type of OCI, which reflects concerns about a firm’s “impaired objectivity,” consists of situations where a firm’s work under one federal contract could entail its evaluating its own or a related entity’s performance under another federal contract, thus undermining the firm’s ability to render impartial advice to the government. FAR sect. 9.505-3; Aetna Gov’t. Health Plans, Inc.: Found. Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 13.


The responsibility for determining whether an OCI exists, and the extent to which a firm should be excluded from the competition, rests with the contracting agency, SRS Techs., B-258170.3, Feb. 21, 1995, 95-1 CPD para. 95 at 8-9. Where an agency has given thorough, documented consideration to an offeror’s activities and their potential to create OCIs, we will not substitute our judgment for the agency’s conclusions drawn from such a comprehensive review, provided the conclusions are otherwise rational and reasonable. See, e.g., Business Consulting Assocs., B‑299758.2, Aug. 1, 2007, 2007 CPD para. 134 at 9-10; Overlook Sys. Techs., Inc., B‑298099.4, B-298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-18; Alion Sci. & Tech. Corp., B-297022.4, B-297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 5-8. The Army reports that it was aware of the potential OCI here--the possibility that BANC3’s relationship with Lockheed would undermine its ability to render impartial advice to the agency under the contract--because BANC3 was performing in the R2 project office as a subcontractor under a task order issued to Lockheed, which was to expire in August 2007, but was extended to October 31. AR at 10. The Army determined that, if BANC3 were awarded the contract, it would have an impermissible OCI if it continued to work with Lockheed or any other R2 prime contractor. Accordingly, on Oct. 15, after BANC3 received the award, the Army met with the firm to discuss its transition plans. At this meeting, BANC3 indicated that it was withdrawing from all teaming arrangements with R2 prime contractors and would not compete as a prime contractor or subcontractor for any future R2 contract. BANC3 further indicated that it would not have any contractual relationship with Lockheed after the current work order expired on October 31. The Army concluded that, since any services that could result in an OCI issue would not be ordered until after the relationship between Lockheed and BANC3 ended, no impermissible OCI existed. As for the alleged mentor‑protégé agreement between BANC3 and Lockheed, the Army and BANC3 state that there is not and never has been such an agreement. BANC3 explains that the statement on its website was included in a draft version of its company brochure because it explored the possibility of such an agreement, but the agreement was never completed. The protester has provided no evidence to the contrary. We find that, after thoroughly and reasonably considering the possibility of an OCI, the agency reasonably concluded that there existed no OCI that precluded BANC3 from participating in the procurement or from receiving the award. This argument thus provides no basis for questioning the award.  (Karrar Systems Corporation, B-310661; B-310661.2, January 3, 2008)  (pdf)

The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups: “unequal access to information” cases; “biased ground rules” cases; and “impaired objectivity” cases. See Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 12-13. This protest concerns the first type, unequal access to information. The record shows that an employee of TCI had access to source selection information, including the independent government estimate, the source selection plan, and other offerors’ proposals. The owner of TCI, as noted, owns [DELETED] percent of the stock of MPSC, Protest at 2 n.1, a subcontractor of VRC under the current contract and a proposed subcontractor under the current solicitation. In our view, these relationships, considered together, indicate that VRC was in a position to benefit competitively as a result of the TCI employee’s position in NGB’s contracting office, which gave her access to source selection information regarding this procurement. Contracting agencies are admonished to avoid any conflict of interest, even the appearance of a conflict of interest, in government procurements, FAR sect. 3.101-1; see Lancaster & Co., B-254418, Dec. 14, 1993, 93-2 CPD para. 319; on the record here, we find reasonable the agency’s conclusion that VRC had a conflict of interest. The protester asserts that, regardless of the business relationships among the three companies, the Chief of the Operational Contracting Division (the contracting officer’s supervisor) had the authority to decide whether the relationships in question constituted an OCI, and the agency was bound by the Chief’s opinion that they posed no conflict of interest. We disagree. With regard to conflicts of interest, the FAR assigns certain duties and responsibilities specifically to the contracting officer, some of which are noted above. The FAR, without exception, places responsibility for determining the existence of an OCI on the contracting officer and makes no provision for the contracting officer to delegate her authority. Here, the contracting officer simply exercised her authority under the FAR, notwithstanding the Chief’s apparent view of the matter. The protester also asserts that there was no conflict of interest because the agency has not shown “hard facts,” that is, that VRC was in possession of source selection information as a result of the TCI’s employee’s work for the agency. We disagree. It is true that a determination to exclude an offeror must be based on facts, rather than mere suspicion. Clement Int’l Corp., B-255304.2, Apr. 5, 1994, 94-1 CPD para. 228 at 4; see also CACI, Inc.-Fed. v. United States, 719 F.2d 1567 (Fed.Cir. 1983). The facts that are required, however, are those which establish the existence of the OCI, not the specific impact of the conflict. Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra, at 18. Once the facts establishing the existence of an OCI are present, reasonable steps to avoid, mitigate, or neutralize the conflict are required without further need for “hard facts” to prove the conflict’s impact on the competition. Where, as here, the facts demonstrate that an OCI exists, the harm from that conflict, unless it is avoided or adequately mitigated, is presumed to occur. Id.  The protester asserts that it had measures in place, in the form of “firewall arrangements” between the TCI employee and TCI and between TCI and MPSC/VRC, that the contracting officer should have found sufficient to mitigate any OCI. Protest at 6-7. The contracting officer states that, had TCI made her aware of the ownership relationships earlier in the procurement process, mitigation of the potential conflict of interest might have been possible. AR, Contracting Officer’s Statement of Facts at 4. Because the relationships were not brought to her attention until 2 days after proposals had been received, the contracting officer saw no way to successfully mitigate the actual OCI and instead chose to avoid the OCI altogether by rejecting VRC’s proposal. Again, we see no basis in the record to question the reasonableness of the contracting officer’s decision. In sum, even the appearance of an unfair competitive advantage may compromise the integrity of the procurement process, thus justifying a contracting officer’s decision to err, if at all, on the side of avoiding the appearance of a tainted competition. Lucent Techs. World Servs. Inc., B‑295462, Mar. 2, 2005, 2005 CPD para. 55 at 10. Here, the fact that an individual employed by TCI, a company with ownership ties to the protester, was assigned to work in the agency’s contracting office, together with the fact that the agency was not notified of those ownership relationships until after receipt of proposals, created a conflict of interest that the contracting officer reasonably determined could only be avoided by rejecting the protester’s proposal.  (VRC, Inc., B-310100, November 2, 2007) (pdf)

MTC maintains that any time an offeror, through performance of another government contract, gains knowledge or information that is not generally available to other offerors, that offeror has an OCI and must be excluded from the competition. In our view, MTC overstates the requirements of the FAR in this area. It is well-settled that an offeror may possess unique information, advantages and capabilities due to its prior experience under a government contract--either as in 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. See FAR sect. 9.505-2(a)(3); Crux Computer Corp., B-234143, May 3, 1989, 89-1 CPD para. 422 at 5. 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. Crofton Diving Corp., B‑289271, Jan. 30, 2002, 2002 CPD para. 32 at 6-7; Government Bus. Servs. Group, B-287052 et al., Mar. 27, 2001, 2001 CPD para. 58 at 10.  The responsibility for determining whether an OCI exists, and to what extent the firm should be excluded from the competition, rests with the contracting agency, SRS Techs., B-258170.3, Feb. 21, 1995, 95-1 CPD para. 95 at 8-9, and the FAR directs contracting officers to examine each situation individually and exercise “common sense, good judgment, and sound discretion” in determining whether significant conflicts exist. FAR sect. 9.505. The FAR and this Office’s decisions mandate that, in meeting its obligation to identify OCIs, an agency must give thorough consideration to the interests and activities of an offeror that might create OCIs. See, e.g., Alion Sci., & Tech. Corp., B-297342, Jan. 9, 2006, 2006 CPD para. 1 at 8-13; Science Applications Int’l Corp., B‑293601 et al., May 3, 2004, 2004 CPD para. 96 at 4-8. Where an agency has, in fact, given thorough, documented consideration to an offeror’s activities and their potential to create OCIs, we will not substitute our judgment for the agency’s conclusions drawn from such a comprehensive review, provided the conclusions are otherwise rational and reasonable. See, e.g., Business Consulting Assocs., B‑299758.2, Aug. 1, 2007, 2007 CPD para. 134 at 9-10; Overlook Sys. Techs., Inc., B‑298099.4, B‑298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-18; Alion Sci. & Tech. Corp., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 5-8. 

Here, as documented extensively in the agency record, the agency gave thorough and comprehensive consideration to the prior activities of Denysys and its subcontractors, as well as MTC and its subcontractors, in order to assess whether those activities created OCIs. Specifically, the contracting officer performed an analysis of the work that would be required under the solicitation at issue--that is, operational sustainment of the TEWLS system. AR, Tab 6, 26. The contracting officer then turned to documenting an extensive review regarding the activities previously performed by Denysys and its subcontractors, and MTC and its subcontractors, under prior contracts. Id. In this regard, the contracting officer noted that the TEWLS system is comprised of software owned by SAP AG and that, in performing its prior contracts, neither Denysys nor its proposed subcontractors have been materially involved in development or customizing the TEWLS system, since that function is performed by SAP itself; that Denysys and its subcontractors have not had a role in developing the requirements for the solicitation at issue; that neither Denysys nor its subcontractors have had access to any underlying software code configuration for TEWLS; that neither Denysys nor its subcontractors provided technical direction for TEWLS; and that neither Denysys or its subcontractors have been involved in any discussions where contract sensitive information has been discussed. AR, Tabs 6, 26.  Additionally, the contracting officer found that MTC has had more access to TEWLS‑related information, pursuant to MTC’s prior contract for sustainment of the URL project, than Denysys and its subcontractors. AR, Tab 26. Based on the agency’s review of the offerors’ prior activities, the contracting officer concluded that Denysys did not have an unfair competitive advantage in this procurement. We have reviewed the entire record, including documentation of the contracting officer’s review and analysis of the offerors’ prior activities, and conclude that the agency’s review was thorough and comprehensive; in this regard, MTC has not identified any material flaw in the agency’s review. Further, we find no basis to question the agency’s conclusions drawn from its review. Finally, we view MTC’s protest to be based on an interpretation of the law which would, in effect, exclude virtually any government contractor (including MTC in this procurement) from competing for procurements that in any way relate to the contractor’s prior contract performance. FAR subpart 9.5 does not establish such a sweeping exclusionary rule. (MASAI Technologies Corporation, B-298880.3, B-298880.4, September 10, 2007) (pdf)

The issue here is whether the agency reasonably considered the awardee’s proposed mitigation plan. BCA contends that MBI’s plan to move the affected work from one team member to the other, and imposing a firewall, does not adequately mitigate the potential OCI. It contends that MBI’s mitigation plan should have required MBI to subcontract the work to a firm that was not a team member of the offeror, like BCA’s mitigation plan did. In cases such as this, once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Overlook Sys. Techs., Inc., B-298099.4, B-298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 16. In this regard, contracting officer’s are allowed to exercise “common sense, good judgment, and sound discretion” in assessing whether a potential conflict exists and in developing appropriate ways to address it. FAR sect. 9.505; Epoch Eng’g, Inc., B‑276634, July 7, 1997, 97-2 CPD para. 72 at 5. Here, the agency conducted extensive discussions with each offeror about the potential OCIs and the details of each offeror’s proposed mitigation plan. As a result of these discussions, the agency reasonably determined the plans to be “similar.” In this regard, under BCA’s proposal, RER will subcontract the affected work to a separate entity and establish safeguards to ensure that RER employees will not work on the affected transactions. Similarly, under MBI’s proposal, Reznick will transfer the affected work to a separate entity (MBI) and establish safeguards to ensure that Reznick’s employees will not work on these transactions. In evaluating the adequacy of the plans, the agency considered that both offerors put into place procedures to identify the affected properties and to ensure that the conflicted company would not be performing the work on these properties. AR, Tab 12(B), Final TEP Report, at 19, 68. The agency also considered whether the affected work could be performed independently from the conflicted entity in order to determine whether the safeguards were sufficient. Contracting Officer’s Statement at 20-21. The agency concluded that MBI possessed “significant experience and skill” so as to complete the work independently of Reznick, and that the BCA team subcontractor was able to perform the work independently of RER. Id. The agency identified that only a small percentage of loans (approximately [REDACTED]) could potentially be affected, such that the proposed mitigation plans could adequately neutralize the conflict. Id. We have found, in other “impaired objectivity” OCI situations, that subcontracting or transferring work to a separate entity, and establishing a firewall around the impaired entity, can reasonably mitigate these types of OCIs. Deutsche Bank, B‑289111, Dec. 12, 2001, 2001 CPD para. 210 at 4; see also Alion Sci. & Tech. Corp., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 10; Epoch Eng’g, Inc., supra, at 6. Given that the agency thoroughly considered the parties’ potential OCIs and proposed mitigation plans, we find unobjectionable the agency’s determination that MBI’s mitigation plan adequately mitigated the potential OCI. (Business Consulting Associates, LLC, B-299758.2, August 1, 2007) (pdf)

The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups: biased ground rules, unequal access to non-public information, and impaired objectivity. Contracting officers must exercise “common sense, good judgment, and sound discretion” in assessing whether a potential conflict exists and in developing appropriate ways to resolve it; the primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR sect. 9.505; Science Applications Int’l Corp., B-293601.5, Sept. 21, 2004, 2004 CPD para. 201 at 4. Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Science Applications Int’l Corp., supra. As relevant to the protester’s allegations, a biased ground rules OCI arises where a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract by, for example, writing the SOW or the specifications. In these cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. FAR sections 9.505-1, 9.505-2. An unequal access to nonpublic information OCI arises where, as part of its performance of a government contract, a firm has access to information that may provide the firm an unfair competitive advantage in a later competition for a government contract. FAR sect. 9.505-4.  With regard to the protester’s claim of a biased ground rules OCI, the protester alleges that, as the contractor for the GSA and NIH contracts discussed above, Enspier may have had a role in drafting the SOW. The agency states that Mitretek Systems, the incumbent contractor for the FPKIA services that are the subject of this procurement, was the entity that assisted the government in developing the SOW, and that Enspier played no role in drafting or developing the SOW. AR, at 6; Contracting Officer’s Statement at 1. The protester fails to identify any information in the record that demonstrates that Enspier played a role in developing or drafting the SOW, and thus does not rebut the agency’s specific statement that Enspier had no such involvement with the SOW. In this regard, substantial facts and hard evidence are necessary to establish a conflict; mere inference or suspicion of an actual or apparent conflict is not enough. Snell Enters., Inc., supra, at 4.  With regard to the protester’s claim of an unequal access to information OCI, the protester alleges that Enspier may have had access to non-public information that provided the awardee an unfair competitive advantage in the competition. Specifically, the protester contends that the positions held by Enspier under the GSA and NIH contracts suggest that that firm may have had access to non-public information. Although the agency report contained the SOWs for Enspier’s contracts, and the record further describes the activities of Enspier under those contracts, the protester is unable to identify any specific examples of non-public information that would have provided an unfair competitive advantage to the awardee in the competition. Furthermore, as discussed above, the activities performed by Enspier under the NIH contract in support of the FPKIA were generally secretarial in nature, and the work for GSA under the E-Authentication contract pertained to the performance of validation work that relied on publicly-available FPKIA documentation for the two lower-tier levels of authentication, not the two higher-level levels that are the subject of this RFQ. The protester argues that certain publicly-available documents which were either prepared by Enspier or refer to Enspier suggest that that firm may have had access to non-public information. For example, the protester argues that a publicly-available document titled “Technical Approach for the Authentication Service Component,” AR, Exh. 32, supports ORC’s protest to the extent that an Enspier employee is listed as the “author” of the electronic file. The agency explains, however, that this document is merely a recitation of public information regarding PMO polices. Further, even assuming that an Enspier employee was the drafter of this document, the protester does not identify any non-public information that might have been used in its creation, nor does the protester suggest how any such information could have given Enspier an unfair competitive advantage in the competition. In sum, the protester has not provided support for its assertion that the award to Enspier was tainted by an OCI. (Operational Resource Consultants, Inc., B-299131.1; B-299131.2, February 16, 2007) (pdf)

Our role, within the confines of a bid protest, is to determine whether any action of the former government employee may have resulted in prejudice for, or on behalf of, the awardee during the award selection process. See Creative Mgmt. Tech., Inc., B‑266299, Feb. 9, 1996, 96-1 CPD para. 61 at 7. Specifically, we review whether an offeror may have prepared its proposal with knowledge of inside information sufficient to establish a strong likelihood that the offeror gained an unfair competitive advantage in the procurement. PRC, Inc., B‑274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD para. 115 at 19-20. Our review includes consideration of whether the former government employee had access to competitively useful information, as well as whether the individual’s activities with the firm likely resulted in disclosure of such information. Id. An individual’s familiarity with the type of work required under a solicitation from prior government employment is not, by itself, evidence of an unfair competitive advantage. Id. Consistent with our finding in the Philadelphia case, we conclude here that, even if this individual’s prior employment with DeCA had given him access to inside information regarding the agency’s initial produce procurements, it appears much, if not all, of the alleged inside information has in fact been shared with the produce industry through the agency’s informational roundtables, and thus cannot be characterized as inside information. The agency reports that the current solicitation was issued without this individual’s assistance and that material differences exist in each of its Area produce procurements; here, for instance, the contractor faces additional challenges in terms of warm climate conditions and, in some locations, harsh terrain, as well as ensuring produce delivery to the commissaries in Hawaii. As we noted in the Philadelphia decision, the consultant signed a non-disclosure agreement certifying that he would not disclose contractor or source-selection information that he may have learned as an evaluator. Moreover, as in that case, there is no indication in this record that the awardee’s proposal was prepared based on any inside information. Both the consultant and the awardee deny that any communication involving inside information took place. The awardee is an experienced federal government contractor that prepared its own proposal for additional work at numerous commissaries that it already successfully serves. The awardee reports that the consultant did not write the proposal, but was asked to review it prior to its submission. The awardee and the consultant affirm that the consultant’s suggestions were editorial in nature, including general suggestions to provide additional detail, to identify the proposal as containing proprietary information, to describe workforce and activities, and to make assorted style/format changes for consistency. This advice does not suggest the use of inside information, or, for that matter, any information that could reasonably be found to have provided an unfair competitive advantage to this experienced firm. Rather, the record here shows that the awardee’s favorable evaluation was based on the strength of the firm’s established business operations and experience, described in its comprehensive technical proposal. Accordingly, we have no reason to question the propriety of the awards. (OK Produce; Coast Citrus Distributors, B-299058; B-299058.2, February 2, 2007) (pdf)

Our role, within the confines of a bid protest, is to determine whether any action of the former government employee may have resulted in prejudice for, or on behalf of, the awardee during the award selection process. See Creative Mgmt. Tech., Inc., B-266299, Feb. 9, 1996, 96-1 CPD para. 61 at 7. Specifically, we review whether an offeror may have prepared its proposal with knowledge of inside information sufficient to establish a strong likelihood that the offeror gained an unfair competitive advantage in the procurement. PRC, Inc., B‑274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD para. 115 at 17. Our review includes consideration of whether the former government employee had access to competitively useful information, as well as whether the individual’s activities with the firm likely resulted in disclosure of such information. Id.  Here, the record shows that, while he worked for DeCA, the consultant participated in preliminary market research and strategy planning with his supervisors who were coordinating the conversion of operations from DSC-P, and that he was an agency spokesperson for the agency’s two industry roundtables. However, it is clear that those roundtables were held for the purpose of releasing to the public for industry comment, at least in summary form, research and planning information gathered by the agency. Specifically, the agency not only discussed its market research and its plan to change its produce business model, but also released to the substantial number of vendors in attendance the terms of its recent test program and follow-on procurement for the provision of produce to Area 1 commissaries. The record thus shows that at least much of the preliminary research known to the consultant was in fact shared with other vendors and thus cannot be characterized as inside information.  As for the current solicitation, the agency reports that the individual did not assist in the preparation or development of the source selection plan or the solicitation, which was issued almost 4 months after his retirement from the government. Additionally, the agency points out that there are differences in the terms of the solicitation compared to the prior procurement the former government employee participated in as an evaluator (where he reviewed two initial technical proposals, but had no access to price proposals). For instance, the previous solicitation included a requirement for port delivery of produce for commissaries in Keflavik, Iceland and Guantanamo Bay, Cuba (including meeting airlift times and sailing dates); there are no such requirements in the RFP for the Area 3, Group 2 award at issue here. While we recognize that the prior and current solicitations share similar general provisions regarding the basic performance requirement here--delivering quality produce to commissaries at competitive prices--the differences between the two solicitations suggest that the information to which the consultant had access during the prior procurement might be of limited value in the current procurement. In any event, even assuming that the consultant’s participation in the prior procurement gave him access to inside information, the consultant signed a non-disclosure agreement certifying that he would not disclose contractor or source-selection information that he may have learned as an evaluator, and we see no basis in the record here to conclude that the Four Seasons proposal was prepared based on such information. Rather, the record shows that upon his retirement, the consultant was advised by the agency ethics officer that offering his services as a commissary produce consultant would be unobjectionable as long as inside information was not used; that he relayed that information to his client, Four Seasons; that Four Seasons confirmed the accuracy of the restriction with the DeCA ethics officer; and that both the consultant and the awardee deny that any communication involving inside information took place. Our conclusion is further supported by the responses received to our inquiries as to the type of assistance rendered by the consultant. The record shows that Four Seasons, a commercial produce vendor with limited experience in contracting with the federal government, specifically hired another consultant (a professional federal government contract proposal writer)--not the consultant at issue in the protest--to work closely with the firm to prepare its proposal. The role of the consultant at issue here was limited to the review of that proposal; the record shows, for instance, that he made suggestions of editorial and style changes to the proposal related to achieving clarity and compliance with the RFP instructions calling for offerors to provide details regarding their capabilities, approaches, and accomplishments; this advice suggests no use of inside information. (Philadelphia Produce Market Wholesalers, LLC, B-298751, December 8, 2006) (pdf)

With regard to the conflict of interest issues, Maden first contends that BAI had an “unfair competitive advantage” due to the fact that Robert Copeland, the director of SID, is a former BAI employee and supervised two of the evaluators who participated in the procurement. Maden further alleges, based on “information and belief,” that Mr. Copeland or other DARPA employees granted BAI “special access” to the project site prior to the award of the contract. Maden also argues that DARPA failed to properly consider the fact that BAI had an unfair advantage due to its teaming with Marianne Carter; according to Maden, Ms. Carter had worked as an evaluator for DARPA on a previous procurement wherein Maden had submitted a proposal and thus had access to Maden’s “proprietary information.”  Maden’s argument that BAI’s teaming arrangement with Marianne Carter presented an organizational conflict of interest (OCI) which should have resulted in BAI’s exclusion from the competition, is similarly unsubstantiated and without merit. Contracting officers are required to identify and evaluate potential OCIs as early in the acquisition process as possible, and to avoid, neutralize, or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. Federal Acquisition Regulation (FAR) sections 9.504(a); 9.505. OCIs, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract by, for example, writing the statement of work or the specifications. FAR sect. 9.505-2; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para.129 at 13. The second group, which Maden alleges is relevant in this case, consists of “unequal access to information” situations in which a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm an unfair competitive advantage in a later competition for a government contract. FAR sect. 9.505-4; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 12. The third group reflects concerns about a firm’s “impaired objectivity” and comprises cases where a firm’s work under one government contract could entail its evaluating itself or a related entity, thus undermining the firm’s ability to render impartial advice to the government. FAR sect. 9.505-3; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 13. As an initial matter, in addressing this issue, we note that Maden fails to describe the nature of the prior procurement in which DARPA utilized the services of Ms. Carter as an evaluator, nor does Maden explain how the “proprietary information” it provided in connection with that procurement could have provided BAI with an advantage under the current solicitation. In any event, the record reflects that the contracting officer recognized the potential for a conflict resulting from BAI’s use of Ms. Carter as a subcontractor, given her work as an evaluator on a prior DARPA procurement, and that he conducted an inquiry into her involvement in the preparation of BAI’s proposal. Specifically, he solicited independent statements from both BAI and Ms. Carter to determine “exactly what information was shared between BAI and [Carter] and to confirm that no source selection information or proprietary information was released.” AR, Tab 22, Source Selection Significant Event, SSP Deviations, and amend. 4 Justification, at 3. Based on the statements received, the contracting officer was satisfied that Ms. Carter did not provide any information to BAI on how it should structure its proposal and found that her participation was limited to the submission of a subcontract proposal. Moreover, the contracting officer confirmed that Ms. Carter had signed a non-disclosure agreement in connection with her services as an evaluator for DARPA, which prohibited her from disclosing any source selection or proprietary information she may have obtained while serving as an evaluator. Upon reviewing the matter with the SSEB chairperson and agency counsel, the contracting officer concluded that the “potential OCI was effectively mitigated.” AR, Tab 22, Source Selection Significant Event, SSP Deviations, and amend. 4 Justification, at 3-4). Based on this record there is nothing to support Maden’s contention that BAI should have been excluded from the competition based on proposing Ms. Carter as a subcontractor, and Maden has not shown otherwise.  (Maden Technologies, B-298543.2, October 30, 2006) (pdf)

Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. SRS Techs., B‑258170.3, Feb. 21, 1995, 95-1 CPD para. 95 at 9. Here, Alion’s protest has not identified any material aspect of the agency’s review and analysis that renders the agency’s conclusions unreasonable. Specifically, Alion has not identified any material aspect of ITT’s involvement in producing or providing spectrum-related products and services that the agency has overlooked or otherwise ignored. Based on the discussion above, we believe the agency has reasonably identified the scope and extent of ITT’s involvement with spectrum-related products and services, as well as reasonably identified ITT’s competitors and customers, including foreign governments, that possess spectrum-related interests. Further, the agency’s consideration of each particular contract activity listed in the solicitation, along with consideration of every contract project performed during the preceding fiscal year, appears to be thorough and complete. To the extent Alion has expressed disagreement with various agency judgments regarding the various solicitation activities and/or performance of particular past projects that could create OCIs for ITT, Alion’s arguments fail to identify any material flaws that would render the agency’s overall conclusions unreasonable. A protester’s mere disagreement with an agency’s judgment does not establish that the judgment was unreasonable. See, e.g., Hanford Envtl. Health Found., B-292858, B-292858.2, Apr. 7, 2004, 2004 CPD para. 164 at 4. On this record, we find no basis to question the reasonableness of the agency’s conclusion regarding the portion of contract requirements that could create OCIs for ITT. (Alion Science & Technology Corporation, B-297022.4; B-297022.5, September 26, 2006) (pdf)

The Federal Acquisition Regulation (FAR) instructs agencies to identify potential OCIs as early as possible in the procurement process, and to avoid, neutralize, or mitigate significant conflicts before contract award so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR sections 9.501, 9.504, 9.505; PURVIS Sys., Inc., B-293807.3, B293807.4, Aug. 16, 2004, 2004 CPD para. 177 at 7. The responsibility for determining whether a contractor has a conflict of interest and should be excluded from competition rests with the contracting officer, who must exercise “common sense, good judgment and sound discretion” in assessing whether a significant potential conflict exists and in developing appropriate ways to resolve it. FAR sections 9.504, 9.505; Aetna Gov. Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397 et al., July 27, 1995, 95-2 CPD para. 129 at 12. Situations that create potential conflicts of interest are identified and discussed in FAR subpart 9.5, and they include situations in which a contractor’s performance of contract requirements may affect the contractor’s other activities and interests. See FAR sections 9.505, 9.508. That is, a contractor’s judgment and objectivity in performing the contract requirements may be impaired if the substance of its performance has the potential to affect other activities and interests of the contractor. Id.; Science Applications Int’l Corp., B‑293601 et al., May 3, 2004, 2004 CPD para. 96 at 4. We find that HUD failed to reasonably consider or evaluate the potential OCI arising due to the fact that the owner of CLF (the M&M contractor in Ohio) will be receiving payments from the owner of the closing agent contractor for Ohio, the activities of which CLF will oversee. Specifically, it appears that CLF’s judgment and objectivity in performing the contract requirements could be impaired if its performance could potentially affect the ability of the owner of the closing agent contractor to make the payments owed to CLF’s owner. Further, while the contracting officer was aware of the potential OCI from having CLF’s owner receive a share of Lakeside Title’s profits, and proceeded properly to have CLF eliminate that OCI, it is clear that the contracting officer failed to consider the OCI implications of the amended version of the purchase agreement--whether the magnitude of the payments was such as to call into question whether CLF’s judgment and objectivity were likely to be impaired, or whether there were suitable mitigation measures required to address the scope of the potential conflict of interest. In these circumstances, we sustain the protest on the basis that HUD failed to reasonably consider or evaluate a potential OCI that may result from an award to CLF. (Greenleaf Construction Company, Inc., B-293105.18; B-293105.19, January 17, 2006) (pdf)

Contracting officers are required to identify and evaluate potential conflicts of interest as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sect. 9.504. The FAR provides that an OCI exists when, because of activities or relationships with other persons or organizations, a person or organization is unable or potentially unable to render impartial assistance or advice to the government. See FAR sect. 2.101. Situations that create potential OCIs are further discussed in FAR subpart 9.5 and the decisions of our Office; specifically, what is frequently referred to as an "impaired objectivity" OCI is created when a contractor’s judgment and objectivity in performing the contract requirements may be impaired due to the fact that the substance of the contractor’s performance has the potential to affect other interests of the contractor. Id.; PURVIS Sys., Inc., B‑293807.3, B‑293807.4, Aug. 16, 2004, 2004 CPD para. 177; Science Applications Int’l Corp., B‑293601 et al., May 3, 2004, 2004 CPD para. 96; Aetna Govt. Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 13. In reviewing this protest, we considered the contract requirements, as reflected in the solicitation and ITT’s proposed PWS tasks, and the basis for the agency’s assessment that ITT was likely to experience impaired-objectivity OCIs only "7.3 percent of the time over the entire contract effort." As discussed below, the agency’s assessment regarding the extent and impact of OCIs with regard to ITT’s contract performance is not reasonably supported by the record. Overall, as discussed above, the agency maintains that "an impaired objectivity OCI [is] likely to occur [for ITT] approximately 7.3 percent of the time over the entire contract effort." Contracting Officer’s Statement at 16. Based on our review of the record, discussed above, the agency’s assessment is not reasonably supported by the record. Specifically, the aggregate level of effort proposed with regard to only the PWS tasks discussed above make up more than [deleted] percent of the total level of effort proposed. Agency Report, Tab 10. As discussed above, a significant portion of the activities described under each of the PWS tasks addressed above involve analysis, evaluation, and subjective judgment with regard to matters in which DOD, ITT, ITT’s competitors, and ITT’s customers are likely to have direct, and likely divergent, interests. Further, in light of the interrelated nature of the activities both within tasks and between tasks, it does not appear from the record here that the agency, or ITT, can expect to meaningfully identify potential conflicts prior to the time the specific activities are performed, rationally segregate such conflicted portions of the contract, and successfully perform those requirements with "firewalled" subcontractors. In short, the record shows that the agency failed to reasonably identify and evaluate the extent of OCIs associated with ITT’s performance of this contract, as well as the effect of potential OCIs on contract performance.  (Alion Science & Technology Corporation, B-297342, January 9, 2006) (pdf)

Contracting officers are required to identify and evaluate potential conflicts of interest as early in the acquisition process as possible. FAR sect. 9.504. The FAR provides that an OCI exists when, because of activities or relationships with other persons or organizations, a person or organization is unable or potentially unable to render impartial assistance or advice to the government. See FAR sect. 2.101. Situations that create potential conflicts are further discussed in FAR subpart 9.5 and the decisions of this Office; specifically, an “impaired objectivity” OCI is created when a contractor’s judgment and objectivity in performing a contract’s requirements may be impaired due to the fact that the substance of the contractor’s performance has the potential to affect other interests of the contractor. FAR sections 9.505, 9.508; PURVIS Sys., B-293807.3, B-293807.4, Aug. 16, 2004, 2004 CPD para. 177; Science Applications Int’l Corp., B-293601 et al., May 3, 2004, 2004 CPD para. 96; Aetna Govt. Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 13. In reviewing this protest, we considered the description of contract requirements reflected in the solicitation, as well as the basis for the agency’s conclusion that “the maximum potential for impaired objectivity OCI occurrences is 15%” of the total contract requirements. We also considered the information provided by ITT with its OCI plan, which included its 2004 annual report, along with other publicly available information, including information contained on ITT’s Internet website. The publicly available information we reviewed leaves no doubt that ITT has multiple financial interests with regard to manufacturing and marketing of spectrum-dependent products to the U.S. government, to foreign governments, and to commercial customers worldwide.[10] Further, ITT’s public statements make clear that its financial interests and the success of its company are affected by a variety of factors, including both domestic and foreign government regulations, ITT’s ability to continue to win contracts, and ITT’s development and marketing of new products. Overall, our review of the record leads us to conclude that the agency’s assessment of potential impaired-objectivity OCI’s created by ITT’s performance of the anticipated contract activities is not adequately supported by the record.[14] Specifically, in light of the significant spectrum-related interests of ITT, ITT’s competitors, and ITT’s customers, that may well be affected by ITT’s contract performance, the agency’s failure to meaningfully consider the scope and extent of such spectrum-related interests requires the conclusion that the agency’s assessment of the “maximum potential” for impaired-objectivity OCIs is not, on the record here, reasonably supported. In short, the record shows that the agency failed to reasonably identify and evaluate potential OCIs associated with ITT’s performance of this contract and, accordingly, failed to reasonably evaluate the effect that such OCIs will have on ITT’s contract performance. (Alion Science & Technology Corporation, B-297022.3, January 9, 2006) (pdf)

As a general rule, OCIs may be broadly categorized into three situations: impaired objectivity, unequal access to information and biased ground rules. American Mgmt. Sys., Inc. , B-285645, Sept. 8, 2000, 2000 CPD 163 at 4. GSS has not articulated which of the three situations it believes is present here. However, we find that none applies. The unequal access to information and biased ground rules situations clearly are not applicable to this aspect of the protest. In an unequal access to information situation, there must be some showing that the allegedly conflicted entity has had access to information not available to the other competitors, while in a biased ground rules situation there must be some showing that the entity had an opportunity (such as in preparing the solicitation) to influence the ground rules for the competition. Id. Under the third situation, impaired objectivity, the concern is that, because of the nature of a firm's actual or potential work under another government contract, it may be unable to provide objective advice or judgments to the government. Id. Here, because the CV contractor is not called upon by the terms of its contract to provide objective judgments regarding the disposition of property as useable versus scrap (such judgments are contractually the responsibility of DRMS), it follows that there can be no issue of an impairment of LSI's objectivity. In the final analysis, GSS does not allege that LSI's objectivity will be impaired; rather, it alleges that, because of the additional potential profit available under the SV contract, LSI will have an incentive to act deliberately, in concert with SAV, to maneuver property offered to SAV under the CV contract to the SV contract. This amounts to an allegation that LSI may potentially engage in bad faith in its performance of the two contracts. However, there simply is no basis to deny a firm an award due to bad faith that has not occurred but, rather, is a mere theoretical possibility. (Government Scrap Sales, B-295585, March 11, 2005) (pdf)

Lucent argues that the contracting officer's OCI determination was flawed because Lucent did not provide "complete specifications" for the TETRA devices, as that term is used in FAR 9.505-2(a). Specifically, Lucent contends that it developed the specifications in Schedule D in conjunction with the agency, and that the agency further altered or revised the specifications in Schedule D when it issued the revised RFP. As a preliminary matter, the FAR does not define the term "complete specifications." A reasonable interpretation of the term suggests that a firm that provides specifications that are necessary and sufficient to inform the solicitation has provided "complete specifications." Based on our review of the record, we agree with the agency that Lucent's Schedule D was the source for the technical specifications in the revised RFP and that the specifications provided by Lucent are nearly identical to those listed in the amended RFP. Compare RFP, Amend. 2, at 3-10 with AR, Tab 18, Lucent Schedule D. Lucent characterizes its work on Schedule D as a collaboration with the agency, and thus argues it did not provide complete specifications. FAR 9.505-2(a)(1)(ii) provides that the OCI exclusion rule does not apply where contractors prepare specifications under the supervision and control of government representatives. Lucent's references to the record do not, however, conclusively establish that the agency played a joint role in developing the TETRA device specifications, or one that would rise to the level of supervision and control by the agency. At best, correspondence cited by Lucent suggests that the agency was kept apprised of Lucent's progress on the Schedule D specifications, participated in some discussions regarding Lucent's development of the specifications, and provided some comments or feedback prior to the final version of the specifications. See Protester's Comments, Exh. 9, E-mail Correspondence Between Agency Technical Representatives for IRCS Contract and Lucent; id. , Exh. 1, Decl. of Lucent Technical Manager, at 1; id. , Exh. 2, Decl. of Lucent Technical Consultant, at 1. The record clearly shows that Lucent provided technical specifications for the TETRA devices under IRCS Task Order 2, and that the agency incorporated those specifications into the revised RFP. (Lucent Technologies World Services Inc., B-295462, March 2, 2005) (pdf)

In response to our decision, the agency requested, received and considered additional information regarding Lockheed Martin's past and ongoing environmentally-regulated activities. Thereafter, the agency performed and documented an analysis regarding whether such activities would reasonably affect the objectivity with which Lockheed Martin will perform the work contemplated by this contract. In a memorandum dated June 9, 2004, the agency summarized the additional information it had considered and concluded: "[I]t has been determined that no actual or potential conflicts of interest exist due to Lockheed Martin's environmentally-regulated activities in the context of the entire scope of work to be performed under [this contract]." Agency Report, Tab 9, Conflict of Interest Analysis Memorandum, at 2. Despite the agency's assertion that "no . . . potential conflicts of interest exist," the agency's analysis, nonetheless, provides that, prior to issuing any task order under this contract, the agency's project officer will "ascertain that no [conflicts of interest] exist within the assigned tasks, or that adequate mitigation strategies are in place and have been discussed with the contracting officer." Id. at 8. By letter to our Office dated June 10, with a copy to SAIC's counsel, the agency stated that, as a result of its analysis and conclusions, it was proceeding with contract performance by Lockheed Martin. This protest followed. Here, notwithstanding the agency's broad assertion that "no . . . potential conflicts of interest exist," the record clearly demonstrates that the agency recognizes the potential that conflicts may arise during contract performance, and has in place procedures to safeguard against such occurrences. As noted above, the agency states that, prior to issuing each task order under this contract, the agency project officer will independently consider whether that task order's requirements create a conflict of interest for Lockheed Martin. Specifically, the project officer will "[either] ascertain that no [conflicts of interest] exist within the assigned tasks, or that adequate mitigation strategies are in place and have been discussed with the contracting officer." Agency's Conflict of Interest Analysis, June 9, 2004, at 8. In summary, the record establishes that the agency has requested and received information regarding Lockheed Martin's environmentally-regulated activities, has reasonably considered that information in the context of the solicitation's anticipated requirements, and has accepted responsibility for performing an independent and ongoing assessment of potential conflicts of interest each time a task order is issued. On this record, we deny SAIC's protest that the agency's corrective actions regarding potential conflicts of interest were inadequate. (Science Applications International Corporation, B-293601.5, September 21, 2004) (pdf) (NOTE:  See B-293601 below)

As noted above, the solicitation's SOW lists numerous activities that either expressly or inherently involve analysis, evaluation, and judgment on the part of the contractor. For example, under the task area exercise planning and preparation, the SOW establishes that the contractor is responsible for drafting scenarios to test specific tactics and recommending settings for mine simulators. Agency Report, Tab 3, RFP at 80-81 (italics added). With regard to the task area conducting and observing an exercise, the contractor is required to present first-impression reports. Id. at 81 (italics added). Under the task area exercise reconstruction and analysis, the contractor is required to conduct in-depth analysis of exercise data to include detection capability evaluation , sensor effectiveness assessment, and tactical effectiveness assessment. Id. at 81 (italics added). Under the task area program analysis, the contractors responsibilities include evaluating and comparing data and selecting and analyzing MOEs [measures of effectiveness]. Id. at 81 (italics added). Finally, under the task area program intermediary and longrange planning, the contractor is responsible for assisting the SHAREM and MIREM officers in devising, presenting and implementing their 6-year plans. Id. at82 (italics added). We view all of the above activities as requiring varying amounts of subjective analysis and judgment on the part of the contractor that go beyond objectively measuring data. The agency record regarding the evaluation of Northrop Grumman's proposal further supports the conclusion that contract performance will require--and that the agency values--subjective contractor input and judgment. For example, in evaluating Northrop Grumman's technical performance plan with regard to the task area, [deleted], the agency rated Northrop Grumman's proposal [deleted], specifically noting that, in their proposal, [deleted]. Agency Report, Tab 36, at6. Similarly, in evaluating Northrop Grumman's technical performance plan with regard to the task area [deleted], the agency concluded that Northrop Grumman specifically proposed [deleted], and further noted that Northrop Grumman's proposed performance approach includes [deleted]. Id. at 9. We view the agency's evaluation assessments identified above as reflecting the agency's expectation--and desire--that the contractor will provide subjective input and judgment in performing the contract.

Despite recognizing that Northrop Grumman is the manufacturer of a significant portion of the systems to be tested and that the vast majority of the remaining systems are manufactured by companies with whom Northrop Grumman competes, Northrop Grummans OCI plan concludes: we have determined that an actual OCI .. . does not currently exist for the envisioned work to be performed under the Contract, adding that [m]ature, fielded USW systems in use in the fleet do not pose an OCI issue. Agency Report, Tab 24, Northrop Grumman OCI Plan, at8. Northrop Grumman's conclusion that no OCI issues are created by Northrop Grumman's evaluation of its own mature, fielded systems--or similar systems manufactured by potential competitors--appears to be based on the premise that the work performed under this contract is not part of the procurement process. Even if Northrop Grumman's assertion, that the work performed and reports produced under this contract are not part of the procurement process, was factually accurate--which it is not --we reject Northrop Grumman's apparent assumption that impaired objectivity OCIs can arise only within the procurement process. To the contrary, we view a situation where, as here, a company is responsible for assessing the performance of systems it has manufactured as a classic example of an impaired objectivity OCI--without regard to whether the evaluation occurs as part of the procurement process. See, e.g. , Engineered Air Sys., Inc., supra , at 3 (contract to test and evaluate products that awardee manufactured was improper). In such situations, the firm risks having its objectivity impaired by a bias in favor of its own system's performance. Similarly, a company manufacturing systems that are, as a practical matter, competing with similar systems produced by other manufacturers, risks having a negative bias regarding the performance of the competing systems. This is particularly true where, as here, the contract requirements clearly anticipate comparisons between the performance of similar systems manufactured by competing firms. (PURVIS Systems, Inc., B-293807.3; B-293807.4, August 16, 2004) (pdf)

As discussed above, the record unambiguously establishes that the agency gave no consideration to Lockheed’s past and ongoing performance of environmentally-regulated activities and, similarly, gave no consideration to the impact those activities could have on Lockheed Martin’s judgment and objectivity in performing certain tasks that are reasonably within the scope of the contract. Our concern with the agency’s failure to consider the potential conflicts of interest is heightened by the fact that both the agency and Lockheed Martin are intent on experiencing substantial “growth” in the contract--increasing both the volume of tasks to be performed and the customer base that relies on this contract, specifically expressing the intent to expand the base to EPA’s “clients” and “partners,” including “other Federal and state agencies” and “local governments, contractors, and researchers.” RFP at C-2, C-4; Agency Report, Tab 4, Lockheed Martin Proposal, at III.2-1. (Science Applications International Corporation, B-293601; B-293601.2; B-293601.3, May 3, 2004) (pdf)

We find that TSMO reasonably viewed with concern RAM’s failure to describe an approach to avoiding OCI issues in the event that it entered into new, contractual relationships for outside technical assistance. As asserted by the agency, it was unreasonable for RAM to assume that it would not need to look outside the company (and RAM’s pool of surge personnel) for technical expertise sometime during the potential 15-year period of the contract. Given the reasonable possibility that RAM would require recourse to outside technical expertise sometime during the potential 15-year period of the contract, and given the possibility that such assistance might carry with it OCI concerns, it was not unreasonable for the agency to expect that RAM’s mitigation plan would address the OCI implications of such an eventuality. However, we also find that the agency failed to apply the same strict standard in evaluating NGTS’s mitigation plan as acceptable and its risk as low. In this regard, NGTS’s OCI plan contemplated a number of possible responses when faced with a potential OCI, including (depending on the nature of the potential OCI) [DELETED]. NGTS OCI Plan, attach. 2, at 3-4. TSMO concluded that OCIs would be rare and that NGTS’s mitigation plan would effectively eliminate OCIs that did arise. In this regard, TSMO states that, in the event it is faced with an actual OCI, it will either, as it has in the past, ask other military services or the intelligence community to provide operators, or award a short-term contract to another firm [DELETED]. Given the availability of operators from other military services or the intelligence community, TSMO expects to have to award a short‑term, limited contract for support services no more than 3-5 times over the potential 15-year period of the contract. TSMO Comments, Oct. 23, 2003, at 4-5; Declaration of TSMO Operations Team Leader, Oct. 23, 2003, at 4-6. Even if TSMO reasonably concluded that the OCIs resulting from award to NGTS could be avoided or mitigated such that award to NGTS was not precluded, it does not follow that there were no OCI concerns that had to be reflected in the evaluation, at least in light of the strict standard applied in evaluating RAM’s mitigation plan. It is clear from the record that the agency was fully aware during the evaluation that, in some limited number of instances, an award to NGTS likely would require TSMO to proceed outside the terms of NGTS’s contract and have contract work performed by some other contractor or government entity. This likely outcome does not appear to have been factored into the agency’s evaluation of NGTS’s proposal, despite the agency’s view during its evaluation of RAM’s proposal that RAM’s failure to plan for a merely potential OCI warranted downgrading RAM for performance risk. We conclude that the agency did not evaluate the proposals on an equal basis, and that the evaluation in this regard therefore was unreasonable. Symplicity Corp., B‑291902, Apr. 29, 2003, 2003 CPD ¶ 89 at 5. (Research Analysis & Maintenance, Inc.; Westar Aerospace & Defense Group, Inc., B-292587.4; B-292587.5; B-292587.6; B-292587.7; B‑292587.8, November 17, 2003) (pdf)

We have no basis on the record before us to find that [deleted] has an impaired objectivity OCI. Contrary to TDS's position, there is nothing inherently improper in a firm's monitoring the activities of a team member such as Northrop here (or its own activities); monitoring, standing alone, does not necessarily create the potential for impaired objectivity. Rather, as noted above, an impaired objectivity conflict typically arises where a firm is evaluating its own activities because the objectivity necessary to impartially evaluate performance may be impaired by the firm's interest in the entity being evaluated. See Johnson Controls World Servs., B-286714.2, Feb. 13, 2001, 2001 CPD ¶ 20 at 11-12. While we do not exclude the possibility in a different context of monitoring activities resulting in an impaired objectivity OCI, here there is no evidence that [deleted] will be evaluating the performance of the help desk contractor, and there is nothing otherwise objectionable in the interrelationship of activities performed by [deleted] on the two contracts. Instead, the record shows that the help desk contractor's performance must at least meet the minimum standards outlined in the RFQ and that the contracting officer's technical representative will be responsible for evaluating the adequacy of the firm's performance for purposes of assessing the firm's overall performance, deciding whether or not to award option year requirements, and determining the firm's compensation under the SLA. SOO at 8-9. We find no indication in the record--and TDS has not directed our attention to any information--showing that [deleted] will have any input whatsoever into the evaluation of the help desk contractor's performance. Under these circumstances, we have no basis to find that the awardee, or its subcontractor, has an impaired objectivity OCI. (TDS, Inc., B-292674, November 12, 2003) (pdf)

The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract by, for example, writing the statement of work or the specifications. In these biased ground rules cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. FAR §§ 9.505-1, 9.505-2. These situations may also involve a concern that the firm, by virtue of its special knowledge of the agency’s future requirements, would have an unfair advantage in the competition for those requirements. Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 13. The second group consists of “unequal access to information” situations in which a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm an unfair competitive advantage in a later competition for a government contract. FAR § 9.505-4; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 12. The third group comprises cases where a firm's work under one government contract could entail its evaluating itself or a related entity, either through an assessment of performance under another contract or an evaluation of proposals. FAR § 9.505-3. In these “impaired objectivity” cases, the concern is that the firm’s ability to render impartial advice to the government could appear to be undermined by the relationship with the entity whose work product is being evaluated. Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 13.  As noted by the protester, while a firewall arrangement may resolve an “unfair access to information” OCI, it is virtually irrelevant to an OCI involving potentially impaired objectivity. See Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 16. Likewise, due to the ultimate relationship of one entity to another, a firewall would not resolve an organizational conflict of interest involving biased ground rules. However, the record indicates that the OCI mitigation approach relied upon by DCC‑W in determining to issue an order to CACI extended beyond CACI’s proposed firewall. According to testimony at the hearing our Office conducted in this matter, the most important feature of the plan was CACI’s proposal to notify the agency of procurements under which CACI was interested in competition, which would allow DCC-W to act to avoid an OCI. Hearing Transcript (Tr.) at 29, 131. Specifically, contracting officials testified, and the then Acting Director of Contracting confirmed, that potential OCIs on the part of CACI would be handled in the same manner where a government employee has an interest in a matter; CACI contracting specialists would not be assigned to a procurement for which CACI was expected to submit an offer or to a CACI contract, and if CACI submitted an offer for a procurement that already was assigned to a CACI contracting specialist, the procurement would be reassigned to a government contracting specialist. Tr. at 32, 37, 39-40, 61-62, 121‑124, 138-40, 148, 183-84, 193, 196-97, 212-13; Agency Comments, September 4, 2003; Agency Comments, September 5, 2003, Statements of Contracting Officer and Former Acting Director of Contracting.[1] As a result, the mitigation approach addresses the unfair access to information and impaired objectivity OCIs by ensuring that CACI contracting specialists would not be in potential conflict positions. (The LEADS Corporation, B-292465, September 26, 2003) (pdf)

An impaired objectivity OCI exists where a firm’s work under one government contract could entail its evaluating itself, either through an assessment of performance under another contract or an evaluation of a proposal submitted to obtain another contract. Id. at 13. The concern in such situations is that the firm’s ability to render impartial advice to the government could appear to be undermined by its relationship with the entity whose work product is being evaluated. Id. CUI’s allegation that Critel will be unable to render impartial judgments because of conflicting obligations under different government contracts involves impaired objectivity. We find no prohibited OCI here. Under its equipment contract, Critel is required to provide preventative and corrective maintenance and an inspection system covering the required services, and also must maintain and make available to the government records of all inspection work performed. While the IMS contractor is required to develop a quality assurance program to provide surveillance of--that is, to monitor--the required scheduled maintenance, it is not responsible for making judgments as to what maintenance is required or how well the maintenance is being performed. We note in this regard that monitoring, standing alone, does not necessarily create the potential for impaired objectivity. Rather, as noted above, an impaired objectivity OCI typically arises where a firm is evaluating its own (or a related firm’s) activities, because the objectivity necessary to impartially evaluate performance may be impaired by the firm’s interest in the entity being evaluated. See Johnson Controls World Servs., Inc., B‑286714.2, Feb. 13, 2001, 2001 CPD ¶ 20 at 11-12. Since the IMS contractor’s responsibilities are not based on subjective judgments or evaluations, there is no basis for finding that the objectivity of the IMS contractor will be impaired under the circumstances here. Cf. Ktech Corp., B-285330, B‑285330.2, Aug. 17, 2002, 2002 CPD ¶ 77 (prohibited OCI found where subcontractor was to establish requirements for tests it or its prime contractor would perform). (Computers Universal, Inc., B-292794, November 18, 2003)  (pdf)

Protest that awardee had unfair competitive advantage due to organizational conflict of interest is sustained where awardee's proposed subcontractor possessed information through its work as a government contractor, the information was not available to other offerors, the agency took no steps to identify or mitigate the conflict in advance, and there were no meaningful procedures in place to prevent interaction between the employees possessing the information and the employees preparing the proposal.  (Johnson Controls World Services, Inc., B-286714.2, February 13, 2001)

Agency reasonably excluded protester from participating in procurement where protester has an organizational conflict of interest arising from its preparation of the statement of work and cost estimates used by the agency in the procurement.  (SSR Engineers, Inc., B-282244, June 18, 1999)

An offeror may not have an unfair competitive advantage over other competitors and, in order to protect the integrity of the procurement system, an agency may go so far as to exclude an offeror from the competition because of the likelihood that it has obtained an unfair competitive advantage. See Compliance Corp., B-239252, Aug. 15, 1990, 90-2 CPD ¶ 126 at 5; Holmes and Narver Servs., Inc./Morrison-Knudson Servs., Inc., a joint venture; Pan Am World Servs., Inc., B-235906, B-235906.2, Oct. 26, 1989, 89-2 CPD ¶ 379 at 8. In seeking competition, however, an agency is not required to construct its procurements in a manner that neutralizes the competitive advantage that some potential offerors may have over others by virtue of their own particular circumstances, such as prior or current government contracts, where the advantages did not result from unfair motives or action on the part of the government. See MCA Research Corp., B-276865, July 29, 1997, 97-2 CPD ¶ 33 at 2-3; Optimum Tech. Inc., B-266399.2, Apr. 16, 1996, 96-1 CPD ¶ 188 at 7; Validity Corp., B-233832, Apr. 19, 1989, 89-1 CPD ¶ 389 at 6; Ross Bicycles, Inc., B-217179, B-217547, June 26, 1985, 85-1 CPD ¶ 722 at 3. EDI has failed to establish that an unfair competitive advantage existed here.  (Electronic Design, Inc., B-279662.5, May 25, 1999)

1. Organizational Conflicts of Interest – Unequal Access

At issue in this case is whether there was an “unequal access to information” OCI here. Such an OCI arises when the contractor has access to “[s]ource selection information . . . that is relevant to the contract but is not available to all competitors, and such information would assist that contractor in obtaining the contract.” FAR § 9.505-4; see also Turner Constr. Co. v. United States, 94 Fed. Cl. 561, 569 (2010), aff’d, 645 F.3d 1377 (Fed. Cir. 2011); Keith R. Szeliga, “Conflict and Intrigue in Government Contracts: A Guide To Identifying and Mitigating Organizational Conflicts of Interest,” 35 Pub. Cont. L. J. 639, 643 (2006) (hereinafter “Szeliga”). As the FAR makes clear, this category of OCI raises concerns that a firm may gain a competitive advantage based on its possession of “[p]roprietary information that was obtained from a Government official without proper authorization.” FAR § 9.505(b). The FAR cautions that such conflicts are more likely to occur as the result of contracts involving management support services, the type of contract that ALON had with ICE. See FAR 9.502(b)(1).

There are hard facts here that strongly suggest the existence of an OCI associated with ALON’s having had unequal access to information that could have provided it with a significant  competitive advantage in obtaining the BPA. See ARINC Eng’g Servs., 77 Fed. Cl. at 202. The record reveals that at least four ALON employees had access to the complete BEP and regularly used information from that plan in providing support services to the OCIO. As described by one ICE manager, that information included “vendor name, contract number, . . . period of performance, . . . contract employee name, labor category, job description, fully loaded rates, estimated number of employee hours, and anticipated funding source and amount.” The complete BEP captures the budget requirements for all program offices within the OCIO and included information regarding NetStar’s prior performance of the contract in question. Moreover, it appears that another dozen ALON employees had access to the BEP of OCIO’s Engineering Division, which tracked NetStar’s performance of the Atlas contract and also included its labor rates. Contrary to defendant’s claims, NetStar did not have comparable access to ALON’s proprietary information. NetStar’s employees did not have access to the complete BEP, but only had access to the BEP of OCIO’s Engineering Division, which plan did not contain ALON’s labor rates.

There is little doubt that the potential conflict posed by ALON’s unequal access to information was significant. “A significant potential conflict is one which provides the bidding party a substantial and unfair competitive advantage during the procurement process on information or data not necessarily available to other bidders.” PAI, 614 F.3d at 1352; see also ARINC, 77 Fed. Cl. at 202. Here, ALON stood to gain a competitive advantage if it used proprietary information regarding, inter alia, its competitor’s labor rates in crafting its own bid, as the cost evaluation model used to award the BPA in question was based solely on the offerors’ fully loaded labor rates. Indeed, the administrative record reveals that ALON was awarded the contract in question under a best-value, technical-cost trade-off decision, based on its having a lower price than that offered by NetStar. See FAR § 15.101-1. Defendant has conceded that, in a situation like this – where one competitor has another contractor’s labor rates and price is a determining factor in a subsequent award – any resulting OCI is significant. It contends, however, that the CO here identified this potential OCI on a timely basis and crafted a mitigation plan that ensured that ALON did not derive any competitive advantage by virtue of its access to NetStar’s trade secrets. It remains to be seen, however, whether this is actually the case.

2. Timely Identification

The FAR emphasizes that the CO should determine the existence of a significant OCI “as early in the acquisition process as possible.” FAR § 9.504(a). The operation of a whole host of FAR provisions depends upon this happening. FAR § 9.506(b), for example, provides that if “the contracting officer decides that a particular acquisition involves a significant potential organizational conflict . . . , the contracting officer shall, before issuing the solicitation, submit for approval to the chief of the contracting office . . . [a] written analysis, including a recommended course of action for avoiding, neutralizing or mitigating the conflict,” as well as “a draft solicitation provision and . . . a proposed contract clause.” An approving official is then entrusted to “[r]eview the contracting officer’s analysis and recommended course of action, including the draft provision and any proposed clause . . . and . . . [a]pprove, modify, or reject the recommendations in writing.”FAR § 9.506(d)(3) requires that “[b]efore awarding the contract, [the contracting officer shall] resolve the conflict or the potential conflict in a manner consistent with the approval or other direction by the head of the contracting activity.” Providing an overarching summary of this process, FAR § 9.504(a) indicates that the contracting officer shall analyze planned acquisitions in order to “[a]void, neutralize, or mitigate significant potential conflicts before contract award.” See also Turner, 645 F.3d at 1386; Jacobs Tech., 2011 WL 3555595, *11 (Fed. Cl. July 29, 2011).

All of these provisions anticipate, in one way or another, that, as part of acquisition planning, the CO will “identify and evaluate potential conflicts in the early stages of the acquisition process.” Turner, 645 F.3d at 1386; see also; PAI, 614 F.3d at 1352; Jacobs Tech., Inc., 2011 WL 3555595 at *11; The Geo Group, Inc. v. United States, 2011 WL 3455823, at *4 (Fed. Cl. July 29, 2011). As noted by two prominent commentators, “FAR 9.504, 9.506 and 9.507 seem to direct COs to figure out potential organizational conflicts of interest before a solicitation is issued and either mitigate potential conflicts before award, include restrictions in the solicitation to avoid the conflict of interest, or disqualify an offeror from a competition.” Ralph C. Nash & John Cibinic, “Conflicts of Interest: The Guidance in the FAR,” 15 No. 1 Nash & Cibinic Rep. ¶ 5 (2001). In this case, however, the contracting officer did not ascertain the existence of a potential OCI prior to the issuance of the RFQ, or even after receiving proposals, but instead made no such determination until NetStar protested the first award to ALON. This delay, in and of itself, is not indicative of arbitrary action because the existence of a potential significant conflict of interest is not always apparent before the issuance of a solicitation, and sometimes cannot be identified until after an award and a bid protest. See Turner, 645 F.3d at 1386. But, by the same token, a CO may not “ignore and not evaluate known potential OCIs prior to award.” Id.; see also Alion Sci. & Tech. Corp., 2006 C.P.D. ¶ 2 (2006). And that would appear to be the case here.

In the case sub judice, the CO knew or should have known, well before the issuance of the RFQ, that ALON was performing advisory and assistance services for the OCIO that raised serious questions regarding its participation in other procurements by that same office. No less than three of ALON’s prior contracts/task orders with OCIO, issued from September 2008 through June 2009, explicitly warned that its performance thereunder could cause future OCIs by providing the company with a competitive advantage derived from “access to proprietary, business confidential, or financial data of other companies.” In each of these instances, the contracting officer responsible for those procurements inserted into the contract clause I.9 HSAR 3052.209-73, entitled “Limitation on Future Contracting,” which stated, in relevant part:

(a) The Contracting Officer has determined that this acquisition may give rise to
a potential organizational conflict of interest. Accordingly, the attention of
prospective offerors is invited to FAR Subpart 9.5 – Organizational Conflicts of
Interest.

* * * * *

(c) The restrictions upon future contracting are as follows:

* * * * *

(2) To the extent that the work under this contract requires access to the
proprietary, business, confidential, or financial data of other companies, and as
long as these data remain proprietary and confidential, the Contractor shall protect
these data from unauthorized use and disclosure and agrees not to use them to
compete with those other companies.

Who was the contracting officer who inserted this clause? The one who “determined that this acquisition may give rise to a potential organizational conflict of interest”?

In two of the three instances, it was none other than the CO who issued the RFQ in question. Yet, rather than checking her own files and addressing these OCI issues head on prior to issuing the RFQ, the CO relied upon the offerors to identify in their proposals any OCIs they thought existed. This was unacceptable. The relevant FAR provisions and the case law construing them expect more – they do not permit agency officials to sit passively by, waiting to be alerted to the potential existence of an OCI by contractors bidding on a solicitation, when the agency’s own records (not to mention its daily operations) readily disclose the existence of potential problems.

Contrary to defendant’s claims, this is not asking too much. To the contrary, the FAR proceeds from the reasonable assumption that agencies which consistently follow its procedures for protecting third-party information will know when an envisioned solicitation poses potential conflicts. That is why FAR provisions, like § 9.506, require contracting officers to insert cautionary clauses in certain contracts. And it is why FAR § 9.505-4(b) requires agencies to obtain nondisclosure agreements from contractors who, through their government contracts, have access to the proprietary information of potential competitors. The latter subsection states that “[a] contractor that gains access to proprietary information of other companies in performing advisory and assistance services for the Government must agree with the other companies to protect their information from unauthorized use or disclosure for as long as it remains proprietary and refrain from using the information for any purpose other than that for which it was furnished.” Id. It adds that “[t]he contracting officer shall obtain copies of these agreements and ensure that they are properly executed.”

The CO here never enforced these provisions. Defendant admits as much even while acknowledging that OCIO’s contracts with ALON plainly involved the performance of advisory and assistance services. 13 OCIO was not required to obtain such agreements, defendant asserts, because FAR § 9.505-4(b) applies only where a government contractor obtains proprietary information directly from a third party and not where, as here, the contractor obtains that information indirectly from an agency. The plain wording of the regulation, however, contradicts this notion – it makes no such distinction based on how a contractor “gains access to propriety information of other companies in performing advisory and assistance services.” Nor, contrary to the intervenor’s claims, is there anything about the regulatory context of this language that leads to a contrary conclusion. Indeed, the authorities on this point have all uniformly construed this FAR provision as applying to situations like this, where the employee of a contractor is given access by an agency to a third party’s proprietary information.

Defendant and intervenor cite no authorities to the contrary – and for good reason, as research reveals none. This result is not surprising as it is hard to read the language of this provision in the cramped way defendant and the intervenor contend, let alone to understand why the drafters of the FAR would provide this protection to the proprietary information of some contractors, but not to that of others.

Had the agency complied with this provision and required ALON to enter into nondisclosure agreements with outside contractors, the CO would have had further warning that the issuance of the RFQ here posed a potential significant OCI that needed to be promptly addressed in the fashion specified by the FAR. The very existence of such agreements would have screamed this out. Of course, even without such nondisclosure agreements, the CO should have been aware of the contracts that she herself previously awarded and was administering, under which ALON was providing advisory and assistance services. And she should have known this before issuing the RFQ and, ironically enough, specifically inviting ALON to submit a response thereto.

But these findings do not end our inquiry. While the FAR plainly adopts a strong preference in favor of resolving OCIs earlier rather than later, the failure by an agency to identify the existence of a potential significant OCI before the issuance of a solicitation is not fatal, so long as the agency can implement an effective mitigation plan. Whether ICE did so here is a topic to which the court now turns.

3. Mitigation

FAR § 9.504(e) prohibits a CO from awarding a contract if an OCI cannot be avoided or mitigated. See Axiom, 564 F.3d at 1382; Robert S. Metzger, “Final DFARS OCI Rules – A Retreat From What Some Feared, A Sign of What is to Come,” 53 No. 5 Gov’t Contractor ¶ 35 (2011). Defendant and intervenor argue, however, that the contracting officer effectively mitigated any potential conflicts of interest here. In fact, though, a probing review of her conduct in this regard reveals that it was arbitrary and capricious.

In granting plaintiff a preliminary injunction in this case, this court observed that “[t]he
mitigation plan adopted by the contracting officer has some interesting features.” NetStar-1 Gov’t Consulting, 98 Fed. Cl. at 733. Quite candidly, the court did not intend the term “interesting” to be complimentary. Further review of the record has confirmed the gross inadequacy of the plan adopted by the CO. As will be discussed below, some of the provisions of that plan were defective in their design; others were flawed in their execution; and still others required the CO to rely upon ALON’s representations and promises, without any verification whatsoever and despite indications that procedures for protecting proprietary information had not been strictly followed in the past.

Some of the provisions embraced by the CO plainly were ineffective and should have been seen as such. As part of its plan, for example, ALON provided the CO with declarations from certain ALON employees working at OCIO, who indicated that they had not obtained NetStar proprietary information or shared that information with other ALON officials. The problem was that these declarations did not come from the ALON employees who had access to NetStar’s proprietary information. As since admitted by defendant, declarations from the dozen or so ALON employees who did have that access were never obtained. This is problematic not just because the CO relied upon declarations from the wrong people, but because neither she nor ALON apparently did enough of an investigation to know who these people were, at least initially. Indeed, ALON has admitted that, under its internal operating procedures, the only ALON employees who knew who had access to the various OCIO databases were the employees themselves. No outside supervisors were given this information. While ALON touts this lack of knowledge as a double-blind “firewall,” it is only half right – its willful blindness left it unable to verify and ensure that its nondisclosure policies were being complied with, and to report to the agency if they were not. And, as it turns out, they were not.

In embracing other provisions, the CO blithely assumed that the OCIO and ALON would comply with procedures that they had failed to observe in the past. A prime example of this was the CO’s reliance on ALON’s assertion that the relevant ALON employees had all signed DHS nondisclosure agreements. But, all but one these agreements were not dated, leaving open questions as to when they were signed. Moreover, none of them were approved by the companies whose proprietary information was being shared with ALON, as required by the FAR § 9.505-4(b). Defendant, however, contends that these facts are irrelevant because OCIO required that the agreements be witnessed by OCIO personnel and because the agency maintained copies of the signed agreements in its contract files. Unfortunately, these factual representations appear false.

Contradicting this claim is a series of startling electronic communications between OCIO and ALON personnel in late October of 2010, after NetStar had filed its protest of the first award. These messages reveal that, as of October 21, 2010, the agency did not have copies of many of the relevant DHS nondisclosure agreements in its contract files and, instead, was scrambling to locate these agreements. Some of these agreements could not be found within the agency and were provided by ALON – one message from the Contracting Officer Technical Representative (COTR) on the ALON contracts to an ALON supervisor listed particular nondisclosure agreements that were missing and indicated that they were needed “within 1 hour;” a later message from the same person requested the same forms “ASAP.” Responding messages from ALON indicate that they were having problems locating some of the agreements and needed to confirm with the affected employees whether they had signed such an agreement. ALON began providing copies of these agreements to OCIO on October 22, 2010 – months, of course, after the CO had invited ALON officials to prepare a response to the RFQ. Still more troubling, these electronic messages reveal irregularities in the execution of these agreements. Several indicate that at least one of the nondisclosure agreements found was not witnessed by an OCIO employee, evidenced by messages from ALON requesting an OCIO employee to sign off on the agreements then. These messages suggest that neither OICO nor ALON was bothered by the prospect of having OCIO employees countersign these agreements after-the-fact, without having actually witnessed the original signature. Other documents suggest that at least some of the nondisclosure agreements were countersigned not by OCIO employees, but rather by ALON employees.

The court cannot help but presume that the CO was aware of these problems (it was her COTR, after all, that sent most of the messages described above) when, on January 10, 2011, the CO approved ALON’s mitigation plan. That plan relied heavily upon ALON and OCIO promising to comply with procedures that the CO knew they had violated in the past. This disconnect between past performance and future promises is not only irrational in ipsum, but also raises serious questions as to the CO’s judgment in relying, without any verification whatsoever, upon other critical representations made by ALON in its plan. For example, in concluding that the OCI here had been mitigated, the CO relied upon ALON’s policy of having its employees sign internal nondisclosure forms and receive security training. Yet, there is no indication that she verified that such steps had occurred by the time of the procurement in question. The CO also did not probe what ALON meant when it averred in its plan that it had established “firewalls.” Those “firewalls” were not described in any detail in the plan and instead appear to be little more than pledges by ALON that its employees with access, through the OCIO contracts, to other companies’ proprietary information would not participate in preparing responses to ICE requests for proposals. Such bare bone promises are a far cry from the detailed procedures, as well as physical and electronic barriers, that the decisional law have found adequate to mitigate “unequal access to information” OCIs.19 These cases reveal that even when such promises are reduced to paper, they lack the inhibitory and refractory characteristics generally associated with effective firewalls.

Defendant and defendant-intervenor are left to argue that the potential OCI here was mitigated because ALON provided the CO with declarations from the four individuals who were involved in preparing ALON’s pricing proposal on the contract in question. Each of these declarations stated, under penalty of perjury, that the declarant did not have access to and did not use any of NetStar’s proprietary information. In the circumstances of this case, however, the CO’s reliance on these declarations was arbitrary and capricious. For one thing, there is no indication that an agency’s failure to adhere to the FAR’s requirements regarding OCIs may be remedied by the expediency of obtaining post hoc declarations from the winning contractor denying any wrongdoing. Can it be that the drafters of the FAR dedicated a whole subpart’s worth of guidance to how and when to identify such conflicts, as well as how and when to mitigate the conflicts so identified, yet subscribed to the notion that the failure to follow these procedures could be cured by having the awardee swear up and down it did nothing improper? Of course not. As this court stated in granting plaintiff’s motion for preliminary injunction, “if the latter were enough, one must wonder why the drafters of the FAR bothered to develop an extensive set of rules to deal with such conflicts . . .” NetStar-1 Gov’t Consulting, 97 Fed. Cl. at 734. Under well-established principles of administrative law, this court is loathe to construe any regulation in a way that would render it ineffectual.20 And it is no more inclined to defenestrate the FAR provisions in question – which is exactly what would happen were the court to countenance the post-award palliative offered up by defendant here. The court cannot do this even in the name of deferring to agency discretion, as the agency has the discretion neither to ignore the FAR nor to render any of its provisions moribund. To hold otherwise would, if nothing else, run counter to the long-standing reasons for having the OCI regulations in the first place.

While defendant and intervenor apparently believe that these declarations, standing alone, are adequate to mitigate any conflicts here, the CO did not share that view. Instead, she found it necessary to rely upon the rest of ALON’s multi-faceted mitigation plan – including the portions that were found lacking above. Given the shortcomings of that plan, the court will not treat these declarations as dispositive, when the CO herself did not do so. Doing so would violate basic principles of arbitrary and capricious review under the Administrative Procedure Act. See SEC v. Chenery Corp., 332 U.S. 194, 200 (1947); PDK Labs, Inc. v. DEA, 362 F.3d 786, 798 (D.C. Cir. 2004); Natural Resources Defense Council, Inc. v. Herrington, 768 F.2d 1355, 1397 n.40 (D.C. Cir. 1985) (“we may sustain the agency’s decision only on the rationale it offered”). “Arbitrary and capricious review ‘demands evidence of reasoned decisionmaking at the agency level,’” the D.C. Circuit has said, and “agency rationales developed for the first time during litigation do not serve as adequate substitutes.” Williams Gas Processing-Gulf Coast Co., L.P. v. F.E.R.C., 475 F.3d 319, 326 (D.C. Cir. 2006). Indeed, even if the court were inclined to rely upon the declarations, they are incomplete. While they contain assurances from ALON’s pricing team, there are no comparable assurances from other ALON employees who were involved with the preparation of other aspects of ALON’s offer (e.g., the technical proposal), any of whom might have benefited from second- or even third-hand knowledge of NetStar’s proprietary information.23 Accordingly, the court concludes that the four declarations in question do not bear the considerable weight that defendant and intervenor would heap upon them.

It remains to be seen whether any mitigation plan can neutralize the potential that ALON had access to NetStar’s pricing information. The ALON plan accepted by the CO certainly did not. It was much too little, much too late – akin to closing the stable door after the horse had bolted. The FAR requires early identification of a potential significant OCI because it recognizes that once proprietary information has crept into the competitive process, the imbalances so created are difficult to isolate and counteract. Unlike in Homer’s Greece of old, there are no Elysian Fields here, where contractors may go to wipe from their memories information regarding their competitor’s pricing information. It thus stands to reason that the later a significant OCI is discovered, the harder an agency must work to address the harm caused thereby.24 This is not to say that post hoc remedies will always be ineffective – the decisional law holds otherwise. But, remedies adopted after-the-fact cannot be effective if they look only forward and fail adequately to address unequal access problems that have occurred in the past. Nor can such plans be viewed as effective if they allocate to the putative contract awardee the task of policing and mitigating its own potential conflicts of interest. Against these standards, the ALON mitigation plan adopted by the CO fails abysmally, leading the court to conclude that the CO’s reliance upon that plan was contrary to the FAR, and arbitrary and capricious.  (NetStar-1 Government Consulting, Inc. v. U. S. and ALON, Inc., No. 11-294C, October 17, 2001) (pdf)

B. The Army’s Decision to Follow GAO’s Recommendation Was Arbitrary and Capricious.

Turner argues that the Army’s decision to implement the recommendation of the GAO was arbitrary and capricious for three primary reasons: first, the GAO decision itself was “raw judgment substitution” and irrational because it failed to defer to the discretion of the CO; second, the Army failed to “fully and independently evaluate” that decision before implementing it; third, the Army failed to reasonably evaluate the waiver request before it.

1. The Rationality of the GAO’s Decision

The GAO, according to Turner, failed to adhere to the relevant standard of review. As discussed above, the applicable standard of review is reasonableness: the GAO should not overturn an agency’s decision, unless it was unreasonable. McCarthy/Hunt, JV, B-402229.2, at 5. According to Turner, the GAO conducted a de novo review of the record that supplanted the CO’s decision, which was based on “hard facts,” with a decision based on “mere inference and suspicion.” In doing so, Turner contends that the GAO committed three major errors in reviewing the record and that these errors render the recommendation irrational. As noted above, the task before this Court is to determine whether the GAO had a rational basis to overturn the agency’s findings. If it did, the Army was not arbitrary and capricious in implementing the GAO recommendation, and the Army’s decision must stand.

a. Preliminary Matters

Before addressing the GAO’s holdings themselves, the Court must resolve two preliminary disagreements between the parties: a potential disagreement concerning the “hard facts” requirement, and an actual disagreement concerning the timing of the CO’s OCI investigation.

i. Has Plaintiff Misstated the “Hard Facts” Requirement?

Defendant and intervenors have repeatedly asserted that plaintiff has misstated the “hard facts” requirement. According to defendant, plaintiff argues that hard facts showing “actual harm” from an OCI must be present to establish an OCI. Defendant, in contrast, argues that only the appearance of a conflict must exist.

Plaintiff has, however, simply contrasted a decision based on “hard facts” with a decision based on “speculation and innuendo.” This contrast is the classic dichotomy from C.A.C.I., 719 F.2d at 1582. In that case, the Federal Circuit found that “the possibility and appearance of impropriety is not supported by the record and therefore is not a proper basis for enjoining award of the contract” and that the Claims Court erred in basing “its inferences of actual or potential wrongdoing . . . on suspicion and innuendo, [rather than] on hard facts.” Id. at 1581–82 (emphasis added). Defendant has itself cited cases that support plaintiff’s juxtaposition of hard facts and suspicion. For instance, defendant quotes the Federal Circuit’s statement that a bidder should not be rejected “where the facts of the case do not support a finding of an appearance of impropriety.” NKF Eng’g, 805 F.2d at 376. In its sur-reply, plaintiff argues that “the assessment of OCIs is a fact-specific inquiry the CO must undertake, and under the facts here, the CO reasonably concluded there was no OCI, and GAO erred in substituting its judgment for that of the CO.”32 The Court therefore agrees with plaintiff—and precedent—that a proper GAO decision is based on “hard facts” that show an “appearance of impropriety.” NKF Eng’g, 805 F.2d at 376.

ii. Were the Timing and Substance of the CO’s Investigation Improper?

Much more serious disagreements concern the timing and substance of the contracting officer’s investigation. There are three general areas of disagreement regarding this investigation: first, whether the investigation should have occurred before contract award; second, whether the GAO should have considered the postprotest declarations submitted to it as part of that investigation; third, whether the focus of the investigation should have been on rebutting a presumption of prejudice.

As noted above, the CO submitted to the GAO a detailed examination of whether any OCIs existed, but this investigation was only conducted post-award and post-protest. In their filings, defendant and intervenors have attacked the timing of this investigation for a number of reasons. For instance, according to the government, “the FAR directs that the CO shall identify and evaluate potential conflicts as early in the acquisition as possible and before contract award,” and the CO erred by not acting prior to award.33 The GAO, the government argues, correctly found that the CO acted unreasonably in finding no potential OCIs during this post-award investigation.

The government claims that one of this Court’s prior cases controls. In that case, Filtration Development, the award of a contract for engine barrier filters to Aerospace Filtration Systems (“ASF”) was at issue. Filtration Dev. Co., LLC v. United States, 60 Fed. Cl. 371, 373 (2004). ASF was a division of Westar Corporation, who, under a prior contract, received task orders and participated in meetings related to these filters. Id. at 374. The government officials in charge of that earlier contract grew concerned about the potential for OCIs and tried to “implement precautionary measures” through “two unsigned and unapproved mitigation plans.” Id. at 374. The CO for the contract at issue “was informed that the Army had recognized the conflict and that the appropriate measures were in place.” Id. at 374–75. Based on these assurances, the CO found no significant potential OCI. Id. at 375. A bidder for the contract alleged that the CO had failed to address or mitigate the potential OCI; the bidder argued that “the CO cannot abdicate her responsibilities . . . simply because government personnel represented that the conflict had been addressed through the submission of mitigation plans.” Id. at 377. This Court agreed and found that the CO had failed to address OCIs “as early in the acquisition as possible” because clear signs of a conflict were present prior to the award. Id. at 378. The Court further concluded that the CO “exceeded her authority by concluding that the appropriate safeguards were in place to eliminate the conflict,” when “all those involved recognized the significant conflict.” Id. at 378.

The government argues that Filtration Development is directly on point for this case, but that argument hinges on a misreading of the FAR and of Filtration. According to the government, the FAR requires the CO to “identify and evaluate” potential conflicts “before contract award.”34 This assertion merges two separate requirements of FAR Section 9.504. The first, under section (a)(1), requires a CO to “[i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible,” and the second, under section (a)(2), requires a CO to “[a]void, neutralize, or mitigate significant potential conflicts before contract award.” 48 C.F.R. § 9.504(a)(1)-(2) (2009) (emphasis added). The government improperly combines these two requirements. The FAR does not require a CO, in every single procurement, to review and document whether OCIs exist prior to award. Instead, a CO must evaluate OCIs as early in the process as possible, and, for significant potential OCIs, a CO must mitigate them prior to award. In some cases, the earliest time to evaluate an alleged OCI might be post-award, such as when a bid protest is brought that alleges theretofore unknown OCIs. In other cases, such as in Filtration, evidence of a “significant” OCI will exist before contract award and require a CO to evaluate and mitigate it then. Filtration Dev., 60 Fed. Cl. at 378.

A second, related timing issue infected the GAO’s decision. Turner and the Army had argued before the GAO that those AECOM employees who assisted the agency did not know of the potential merger, but GAO dismissed this argument as based on “post-protest representations” and stated that they “need not resolve this issue.” McCarthy/Hunt, JV, B-402229.2, at 10–11.

This dismissive attitude departs from prior GAO decisions which have considered post-protest representations. For instance, in Pemco Aeroplex, a protester alleged that an OCI existed because an employee of the winning bidder for a contract may have acted as a consultant and reviewed the proposals for that contract. Pemco Aeroplex, Inc., B-310372 (Comp. Gen., Dec. 27, 2007), at 14. The agency responded with factual assertions showing that no such employee had in fact reviewed the proposals. Id. The GAO acknowledged that the assertions were made “in responding to [the] protest” and considered them in finding that no OCI existed. Id. Similarly, in Integrated Concepts, the GAO relied on an “agency report” that “explained that the alleged facts underpinning the protester’s OCI allegations were not as argued.” Integrated Concepts & Res. Corp., B- 309803 (Comp. Gen., Oct. 15, 2007), at 6. The GAO also noted that “[s]ubstantial facts and hard evidence are necessary to