(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)

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 establish a conflict.” Id. Finally, in Chenega Federal Systems, a protester alleged that the government had awarded a contract to a firm with an OCI. Chenega Fed. Sys., LLC, B-299310.2 (Comp. Gen., Sept. 28, 2007), at 5. According to the protester, the awardee hired an employee who may have had access to confidential information. Id. In response to the protest, the agency told the GAO that it would investigate the OCI allegations and then make a new source selection decision. Id. at 2. After the agency investigated and awarded the contract to the same firm, the protester filed another bid protest. Id. The GAO relied on this investigation, which was not contemporaneous with the events in question and which was conducted after the initial award and protest, and upheld the award. Id. at 5.

Dismissing the “post-protest representations” of a party or the agency defies reason. If a protester were to allege an OCI so baseless that it had never been considered before, an agency might not be able to respond except with “post-protest representations.” It was irrational in this case to depart from precedent and not consider the factually-based arguments of Turner and the Army, especially when the GAO was tasked with looking for “hard facts” of an OCI.

Finally, the parties dispute the exact application of a presumption of prejudice that can attach in OCI cases. The Court of Federal Claims and the GAO have frequently stated that, when an OCI is found, prejudice stemming from that OCI is presumed. See, e.g., Filtration Dev., 60 Fed. Cl. at 379; L-3 Servs., B-400134.11, at 17 n.19. This frees a party alleging an OCI from having to prove actual prejudice and places the onus on the other party to rebut the presumption of prejudice. Presuming prejudice coincides with the emphasis on avoiding even the appearance of impropriety in federal procurements. See NKF Eng’g, 805 F.2d at 377. The court in ARINC Engineering Services, LLC v. United States illustrates this presumption: a “protestor need not show that the information possessed by its competitor specifically benefitted the latter’s proposal—that prejudice is presumed primarily because the contracting officer must avoid and address not only actual, but apparent, conflicts of interest.” 77 Fed. Cl. at 203 (emphasis added). The GAO also adheres to this view and has provided this example: “an unfair competitive advantage is presumed to arise where an offeror possesses competitively useful nonpublic information that would assist that offeror in obtaining the contract, without the need for an inquiry as to whether that information was, actually, of assistance to the offeror.” L-3 Servs., B-400134.11, at 17 n.19.

Defendant and intervenors have made, at times, expansive arguments about this presumption of prejudice. McCarthy/Hunt, for instance, has asserted that “[w]hen an OCI investigation is post-hoc, i.e., it occurs after the act potentially tainted by an OCI has occurred, then the only thing left to investigate is the issue of prejudice.”Defendant has also argued that “the CO’s focus was not rebutting the presumption of prejudice that attached to the AECOM-EB merger discussions” and that reliance upon that investigation is therefore “misplaced.”Due to a lack of clarity in these arguments, the Court ordered the parties to conduct supplemental briefing on the issue. In its supplemental brief, defendant correctly states the law: “in a post-award, post-protest OCI investigation, an agency is required to consider both whether a potential OCI exists, and if so, whether the presumption of prejudice that attaches to an identified OCI can be rebutted.”

The critical, antecedent question of whether or not an OCI exists must be answered before presuming prejudice, and the more expansive arguments from defendant and intervenors sometimes miss this mark. In this case, as discussed below, the CO found that no OCI existed. The GAO’s first task was thus to address the issue of whether or not the CO acted reasonably in finding no OCI. Only after that initial inquiry is made can a presumption of prejudice attach. McCarthy/Hunt is thus incorrect that “the only thing left to investigate” is prejudice. Defendant has now stated the law correctly: the first question the agency was required to look at is whether a potential OCI exists, and, if it does, the agency must address prejudice.

b. Were HSMM and EB’s Interests “effectively . . . aligned”?

Turner first claims that the GAO erred in finding that AECOM and EB’s interests “effectively were aligned” as early as August 2008. Before the GAO, Turner had argued that the CO was correct in finding the relationship between the two firms too attenuated to support an OCI, and the GAO disagreed with this conclusion.

This issue is difficult for two reasons. First, the GAO has not articulated what precisely it looks for when OCI allegations are raised about potentially affiliated firms or persons, and defendant and intervenors have attempted to apply a reductionist reading of the FAR to this inquiry. Second, no prior decision appears to have found that sporadic merger discussions between firms create an effective alignment of interests, yet neither the GAO nor defendant has discussed or justified the expansive nature of that holding.

The starting point of an OCI analysis is the definition of an OCI found in the FAR. Those regulations define an OCI as a conflict that may occur due to “relationships with other persons.” 48 C.F.R. § 2.101. Since the seminal OCI decision in Aetna, GAO decisions have covered both close “relationships” that do raise OCI concerns and more tenuous “relationships” that do not. In Aetna, the GAO found that a potential OCI did exist where the government had hired a consulting company to assist with the procurement, and the winning bidder had proposed using a wholly owned subsidiary of that consultant to perform a significant subcontract worth over $180 million. Aetna Gov’t Health Plans, Inc., B-254397 (Comp. Gen., July 27, 1995), available at 1995 WL 499806, at *14. In contrast, the GAO found the relationship between firms too attenuated in its decision in American Management Systems, Inc., B-285645 (Comp. Gen., Sept. 8, 2000). In that case, the government had initiated two separate procurements: one for financial software and one for the integration of that software into the government’s systems. Id. at 2. Under the integration contract, the vendor was also supposed to assist the government with selection of the software itself. Id. An unsuccessful bidder for the software contract filed a protest because of an agreement between the winning bidders for the integration and software contracts.

Under that agreement, the two firms had adopted “a structure for submitting proposals under a prime contractor/subcontractor relationship . . . [and] a formula for splitting revenues under contracts resulting from such proposals.” Id. at 5. The agency and GAO reviewed this agreement and found that, despite their alliance for contractor/subcontractor proposals, the potential for a significant OCI was too remote and speculative for contracts, like the one under review, which did not involve a contractor/subcontractor proposal. Id. at 6.

A recent GAO decision contains one of the more extensive discussions of relationships in the OCI context. In that case, L-3 Services, a protester had alleged, among other things, that an impaired objectivity OCI existed due to the relationship between two firms. L-3 Servs., Inc., B-400134.11 (Comp. Gen., Sept. 3, 2009), at 14. The two firms had worked together on a prior contract and were trying to work together in the future; the protester alleged that a conflict existed, when one firm was called on to review the other firm. Id. The GAO found that this relationship was not sufficiently close to raise OCI concerns:

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 . . . . The protester urges us to consider that an organizational conflict of interest exists because the two firms contemplated additional work together on the [ ] 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 [ ] and there is none in this instance.

Id. at 15 (citations removed) (emphasis added). The GAO compared the facts that the protester alleged to those prior decisions of the GAO concerning relationships between firms and OCIs. Those decisions show actual relationships: a contractor reviewing its own work on another contract; an awardee making recommendations regarding its own product or its competitors’ products; a firm determining the stringency of testing requirements for tests that it itself would conduct. Id. at 14 (citing Nortel Gov’t Solutions, Inc., B-299522.5 (Comp. Gen., Dec. 30, 2008); Alion Sci. & Tech. Corp., B-297022.3 (Comp. Gen., Jan. 9, 2006); Ktech Corp., B-285330 (Comp. Gen., Aug. 17, 2000)). In contrast, the GAO found that the firm in L-3 did not have a sufficiently close relationship to raise OCI concerns. L-3 Servs., B-400134.11, at 15.

Distilling these cases, GAO decisions on this issue have looked for a direct financial benefit between firms, rather than an attenuated or potential benefit. A relationship involving a firm and its subsidiary is certainly close enough to raise potential OCI concerns, while the relationship between two firms that have merely considered future work together does not raise similar concerns. Defendant and intervenors have, however, ignored almost entirely the GAO case law described above. They repeatedly cite to the “relationship” language of FAR § 2.101 without discussing the GAO case law that has construed that term.39 It is certainly true that AECOM and EB had some type of “relationship,” but the presence of a relationship does not end the inquiry. As the GAO has stated in numerous prior cases, that relationship must be sufficiently direct to raise OCI concerns.

In this case, the Army concluded that AECOM and EB were only “potential merger partners, with no community of interests.”40 Despite that conclusion, the GAO overturned the CO’s analysis. Unlike that analysis, which had extensively discussed the facts of the case, the GAO simply stated: “[I]n our view, the record shows that, as early as August 2008, AECOM’s and EB’s interests effectively were aligned as a result of the merger/acquisition discussions sufficient to present at least a potential organizational conflict of interest.” McCarthy/Hunt, JV, B-402229.2, at 6. The GAO also dismissed the CO’s findings that the negotiations were extended and non-continuous. Id.

This Court’s task is not to conduct a de novo review of the record and make a finding as to whether or not AECOM and EB’s relationship was sufficiently close. Instead, the Court must strictly adhere to the standard of review and inquire whether the GAO had a rational basis for finding the CO’s determination unreasonable. In this case, it is, of course, true that both acquisition talks and procurement actions occurred during the past several years, but the GAO ignored the CO’s findings and merely stated that “in [their] view” the record indicated a sufficient alignment of interests. This cursory inquiry differs from the GAO decisions discussed above. Those cases discussed the facts of the case to inquire into the closeness of the connection between firms, the directness of a financial relationship, and the specific facts that could indicate whether a relationship was close enough or too attenuated to support an OCI. The GAO did not do that in this case. This failure to engage the CO and the record is especially noteworthy when a recent decision, cited by the GAO in this very case, found no OCI between two firms planning future work together because “what [] two firms considered doing has no bearing on our analysis of whether their actual relationship met the standard for an organizational conflict of interest.” L-3 Servs., B-400134.11, at 15. In OCI matters, the Federal Circuit has noted that a CO must exercise “considerable discretion” and that a CO’s determinations must not be overturned unless they are unreasonable. Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009). This Court thus finds that the GAO lacked a rational basis because it overturned the CO’s determination without highlighting any hard facts that indicate a sufficient alignment of interests. Because the GAO lacked a rational basis, the Army was not justified in following its recommendation.

c. Did the GAO Have a Rational Basis for Finding Unreasonable the CO’s Biased Ground Rules OCI Determination?

Turner also argues that the GAO erred in overturning the CO’s decision and finding a biased ground rules OCI.  This type of OCI exists where a firm could “skew the competition” in favor of itself or where a firm could have an unfair competitive advantage due to its “special knowledge” of an agency’s future needs. Aetna Gov’t Health Plans, 1995 WL 449806, at *8.

In her factual analysis, the CO separated the negotiations between EB and AECOM into two distinct periods during which negotiations overlapped with action in the procurement process. The first period ran from May 2008, when interested firms began to contact EB, until November 30, 2008, when AECOM and EB terminated discussions. During this period, the CO found that no AECOM employees assisting the government were aware of the negotiations. Even if they had been aware, the CO found that such large changes occurred to the procurement after November 2008 that any action taken by those employees from May 2008 until November 2008 would have been unable to skew the procurement in favor of EB. The second period ran from June 2009, when negotiations between AECOM and EB restarted, through August 2009, when Turner was awarded the contract. During this period, the only changes relevant to EB that occurred were initiated by the agency. Based on these findings, the CO concluded that it was “inconceivable” to think that AECOM employees, who were unaware of a potential acquisition, could skew the competition in favor of EB.

The GAO, however, overturned the CO’s findings. According to the GAO, the record “suggests” that AECOM had “special knowledge of the agency’s requirements” and that this “special knowledge” would have given Turner an unfair advantage. McCarthy/Hunt, JV, B-402229.2, at 9. The only piece of the record that the GAO cites is AECOM’s contract with the agency to provide “‘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.’” Id. at 9–10. Relying solely on this piece of evidence, the GAO rebutted the agency’s arguments and found a biased ground rules OCI. Having found that, the GAO then presumed that prejudice existed. Id.

Turner argues that it was irrational for GAO to reach this conclusion. The Court agrees for two primary reasons. First, the GAO failed to adhere to the proper standard of review. The GAO’s task was to review the agency’s decision for reasonableness. That agency decision, as described above, tracked the precise state of negotiations between AECOM and EB, the exact dates upon which critical changes to the RFP occurred, the exact employees that could have known of the merger, and numerous other facts. Using this data, the CO concluded that no OCI existed. The GAO failed to address this OCI decision; in fact, the GAO decision on a biased ground rules OCI does not even cite the agency decision that it was tasked with reviewing. Instead, the GAO cites exactly one piece of information—the text of AECOM’s contract with the agency—to support its finding that the record “suggests” that AECOM had “special knowledge” that would have given Turner an unfair advantage.

This failure to meaningfully engage with the agency decision dramatically differs from prior GAO decisions. For instance, in its recent decision in L-3 Services, the GAO also overturned an agency decision, but, in doing so, followed a remarkably different pattern of logic. Instead of ignoring the agency’s decision, as the GAO did here, the GAO in that case engaged the CO’s decision both in facts and in reasoning. See L-3 Servs., B-400134.11, at 7 (“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.”) and at 8 (“[T]he Air Force contracting officer’s determination that there was no biased ground rules organizational conflict of interest was based on . . . a misreading of American Artisan Prods., Inc.”). Similarly, in Johnson Controls World Services, Inc., the GAO overturned an agency’s OCI decision but specifically explained its bases for disagreeing with the agency. The protester in that case had alleged that the winning bidder of a contract had access to information that gave it an unfair competitive advantage.  Johnson Controls World Servs., Inc., B-286714.2 (Comp. Gen., Feb. 13, 2001), at 3. After outlining the agency’s rationale, the GAO disagreed with the decision and spent several pages citing to the record and discussing why the agency’s determination was unreasonable. Id. at 4–7. The GAO decision in this case contains no similar discussion of the agency’s findings.

Second, the one piece of information that GAO cited is not a “hard fact.” The decision of this Court in Filtration Development is instructive in this regard. Filtration Dev. Co. v. United States, 60 Fed. Cl. 371 (2004). As discussed above, the plaintiff in that case had alleged that the winning bidder for a contract had “‘potential access to source selection information’” that created an OCI. Id. at 380. The Court found that this allegation, without more, could not satisfy the C.A.C.I. “hard facts” requirement. Id. The GAO’s sole fact in this case is similarly vague, especially in light of the CO’s findings. The GAO cited to an appendix to the design contract that contained the “General Requirements” for that contract; these requirements specify that the contractor would be responsible for “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 . . . .” This sole fact is insufficiently weighty to buttress the GAO’s finding of an OCI, because it fails to accord the CO’s contrary determination any deference and because it lacks any specificity whatsoever.

Rational basis is not a particularly demanding standard of review. In this case, however, the GAO decision fails to withstand even that level of scrutiny. The GAO was tasked with reviewing the agency decision for reasonableness, but it failed to discuss the agency’s decision in any meaningful way. Furthermore, the one piece of record evidence that the GAO cited was not a “hard fact” showing an appearance of impropriety, as the law requires, but instead was mere “suspicion or innuendo.” As discussed above, the first question an agency must address in an OCI investigation is whether or not an OCI exists.45 The Army addressed that here, and the GAO lacked a rational basis for finding the Army’s determination unreasonable.

d. Did the GAO Have a Rational Basis for Finding Unreasonable the CO’s Unequal Access OCI Determination?

Turner contends that GAO erred in finding an unequal access OCI. As noted above, this type of OCI can occur when a company has access to non-public information that is competitively useful. See Aetna Gov’t Health Plans, B- 254397 (Comp. Gen., July 27, 1995), available at 1995 WL 449806, at *8.

In this case, the CO found that no unequal access OCI existed. To support this conclusion, the CO looked at the two general types of information that AECOM could have had access to: (1) customer preferences and/or technical requirements and (2) Phase II technical proposals. For the first category of information, the CO concluded that only forty-nine AECOM employees had access to it, and no evidence indicated that the information was ever communicated to EB.46 She also found that the information could not have provided a competitive advantage to EB. This information was only related to a design concept, not an actual design, and the Army wanted each offeror to provide its own design. Furthermore, this information was memorialized in the Phase II Technical Provisions, which all Phase II offerors were given, and disclosed to the other offerors on multiple occasions from December 2008 until July 2009. Regarding the second category of information, the CO found that this could have given EB a competitive advantage if EB had access to it before final proposals were submitted. The Army, however, “strictly controlled access” to these proposals and prevented AECOM employees from accessing them until after final proposals were submitted.

The GAO overturned the CO’s determination and found that AECOM had an “unequal access to information” OCI. To support this conclusion, GAO cited three general sources of information: (1) as the design contractor, AECOM was “familiar with the details of the procurement,” (2) some of AECOM’s employees “may have had access to competitively useful information,” and (3) AECOM was “in a position to obtain information regarding the agency’s priorities, preferences, and dislikes.” McCarthy/Hunt, JV, B-402229.2, at 7–9.

As with the biased ground rules claim, the GAO failed to cite any hard facts to support its unequal access claim. As discussed above, hard facts showing actual harm are not required; for instance, the GAO did not need to show that EB had access to data that was “actually [] of assistance.” L-3 Servs., B-400134.11, at 17 n.19. The GAO did, however, need to show the “possession” of undisclosed, competitively useful information. Id. Instead, the GAO pointed only to vague allegations that someone “may have had access” to unidentified information or that someone “was familiar with the details.” These nebulous allegations are similar to the claim of “potential access to source selection information” that this Court found insufficient in Filtration. Filtration Dev., 60 Fed. Cl. at 380. According to the Federal Circuit, mere “suspicion” that a company may have had access to information is insufficient. C.A.C.I., Inc. v. United States, 719 F.2d 1567, 1582 (Fed. Cir. 1983).

The lack of concreteness in GAO’s decision can be seen quite clearly in comparison to prior GAO decisions. For instance, in L-3 Services, the GAO found an unequal access OCI when an employee of the winning bidder had, among other things, “handled competitively useful information in the form of unredacted copies of contracts, core communications requirements . . . and proprietary information of other companies that was subject to non-disclosure agreements.” L-3 Servs., B-400134.11, at 9–10. In another GAO decision, Johnson Controls, the GAO sustained an OCI protest when the winning bidder had access to a non-public database that contained data with a “significant level of detail” not available to other bidders, and the GAO listed and discussed this information in detail. Johnson Controls World Servs., Inc., B-286714.2 (Comp. Gen., Feb. 13, 2001), at 4.

Furthermore, apart from simply using the phrase “competitively useful,” the GAO cites to no facts to support their conclusion that EB had access to anything of competitive worth. As noted above, there are two elements of an “unequal access” OCI: a firm must have (1) access to non-public information that is (2) competitively useful. Aetna Gov’t Health Plans, 1995 WL 449806, at *8. In a recent Court of Federal Claims decision, the court noted that “there is no indication that whatever informational differences that may have existed . . . gave rise to a competitive disadvantage that was unfair.” ARINC Eng’g Servs. v. United States, 77 Fed. Cl. 196, 205 (2007). Lacking such an indication, the court found that it would be unreasonable to find an OCI. Id. In this case, the CO specifically discussed how each type of information to which AECOM may have had access not only lacked competitive utility but was also disclosed to all of the offerors. The GAO decision does not reference this discussion except to say that EB may have gained an unfair advantage from knowing “what the agency did not communicate” to other offerors. McCarthy/Hunt, JV, B-402229.2, at 9. In support of this assertion, GAO cites no facts.

These prior GAO decisions are based on hard facts that show the possession of information that is both nonpublic and competitively useful. They cite specific examples of information that could have given one bidder an unfair competitive advantage. They do not require a court to draw inferences from innuendo and suspicion in order to presume the existence of such information. The GAO decision here, in contrast, only points to “familiar[ity] with the details” and potential “access to competitively useful information” and being “in a position to obtain information.”48 This is not specific enough to have overturned the agency’s OCI determination, and it was irrational for the GAO to do so. Because the GAO decision was irrational, the Army was not justified in relying on it.

2. Plaintiff Argues that the Agency Failed to Fully and Independently Evaluate the GAO’s Recommendation Before Adopting It.

Turner also argues that the Army had an obligation to “fully and independently evaluate” GAO’s recommendation. This language is drawn from a 1995 Court of Federal Claims case in which the court wrote:

Although noncompliance with a GAO recommendation may not be the preferred action of the agency, it may be the correct action. Therefore, it is the agency’s responsibility to fully and independently evaluate all recommendations given by the GAO. While this court recognizes that a procurement agency normally will accept the advice of the GAO, it is imperative that the agency perform its own evaluation of the procurement process before making final decisions. If, in its own expertise, the procurement agency determines that the GAO’s recommendation is misguided, it has a responsibility to make up its own mind and to act on its own advice.

IMS Servs., Inc. v. United States, 33 Fed. Cl. 167, 184 (1995). Based on this language, Turner argues that the Army failed to evaluate whether the recommendation of the GAO was “misguided.” Instead, Turner believes that the Army focused almost exclusively on pressure from legislators.

The government rejects Turner’s argument that such a requirement exists. To support this, the government points to two decisions: that of the Federal Circuit in Centech and that of the Court of Federal Claims in SP Systems. In Centech the Federal Circuit reaffirmed Honeywell and found that an agency’s decision is rational if it follows a rational GAO decision. Centech Group v. United States, 554 F.3d 1029, 1039 (Fed. Cir. 2009). In SP Systems, the protester had latched onto the same language from IMS Services that Turner here quotes and had used that language to argue that an agency “‘must perform [its] own analysis of whether the GAO is correct.’” SP Sys., Inc. v. United States, 86 Fed. Cl. 1, 13 (2009). The Court of Federal Claims rejected this argument and stated that it would continue to follow the “viable and applicable precedent” of Honeywell: “If the GAO makes a rational recommendation and the agency simply implements that recommendation, then the agency action itself has a rational basis. . . . [I]nquiring after the rationality vel non of the GAO decision is, where the agency action is solely based upon that decision, examining whether there exists a rational basis for the agency’s acts.” SP Sys., 86 Fed. Cl. at 14 (emphasis added).

The government is correct. Precedent does not support plaintiff’s argument that an agency must go through a separate evaluation process when considering whether to implement the GAO’s recommendation. In the normal course of events, agencies fully implement GAO recommendations, and the “fail[ure]” of an agency “to implement fully the recommendations” of the GAO is so serious that a report of this “failure” must be submitted to Congress. 31 U.S.C. § 3554(b)(3), (e)(1) (2009). Neither Honeywell nor Centech nor any other binding case mentions a separate evaluation requirement. In fact, the only two cases to mention this requirement are the two cited above—IMS, Services, where the requirement allegedly appeared in dicta, and the recent SP Systems that rejected the existence of any such requirement. Finding that such a requirement exists would be at odds with our path of review in cases such as this one; as discussed above, this Court reviews the rationality of an implemented GAO recommendation because that decision “constitutes the very reason(s) for the agency action.” Grunley Walsh Int’l, LLC. v. United States, 78 Fed. Cl. 35, 44 (2007). Furthermore, the administrative record in this case contains numerous documents and emails discussing the GAO decision and whether to implement it or waive the conflicts. This Court will not rely on challenged dicta in a nonprecedential, fifteen-year-old case to forge a new requirement.

C. The Agency was not Arbitrary and Capricious in Implementing the GAO Recommendation, Rather than Waiving the Conflicts.

Apart from the Army’s decision to follow the GAO recommendation, Turner also argues that the Army failed to adequately evaluate the OCI waiver request. According to Turner, the Army must “examine the relevant data and articulate a satisfactory explanation for its action” when deciding whether or not to seek a waiver. F.C.C. v. Fox Television Stations, Inc., 129 S. Ct. 1800, 1810 (2009) (quotations omitted). In this case, the record is replete with examples of the costs of reprocurement but contains scant evidence of the benefits of reprocuring the contract. Instead of making a decision based upon those costs— which could stretch to $100 million and involve great inconvenience for soldiers—plaintiff argues that the Army attempted to pick the action that would be “most defensible in litigation” and that would appease members of Congress who had contacted the Army about a waiver.

The government responds that the decision to waive is entirely discretionary and need not be documented. Under the FAR, “[t]he agency head or designee may waive” an OCI and any such request must be made in writing. 48 C.F.R. § 9.503 (2009) (emphasis added). The record in this case indicates that the official, LTG Antwerp, with the ability to grant a waiver was advised that “[t]here is no requirement to create a record of why you did not grant a waiver . . . .”51 The government also argues that the decision not to grant a waiver was entirely rational; the official in charge noted that he had to “balance [his] responsibilities to the competitive process . . . and [his] heart for service men and women, their families, and retirees who deserve the best medical care possible.”52 Towards this end, that official solicited substantive advice regarding the law on OCIs and waivers. The government also notes that plaintiff has failed to cite anything in the record that indicates the Army actually considered the input of legislators in making their decision to follow the GAO recommendation.

The government is also correct on this point. The FAR places the decision to waive an OCI squarely in the hands of the head of contracting activity, who “may” waive an OCI, if appropriate. 48 C.F.R. § 9.503. That language comports with the emphasis placed upon the agency’s judgment in situations involving OCIs, and that discretionary language contains no hint of a requirement that an agency must waive or must document the reasons for a waiver decision. Furthermore, precedent from this court and the GAO has never discussed any such requirement but has always referred to waiver as merely one of several options that an agency may pursue. See, e.g., Filtration Dev. Co., LLC v. United States, 63 Fed. Cl. 418, 422 (2005) (“In appropriate circumstances, the head of the contracting agency is empowered to waive an OCI . . . .”); Nortel Gov’t Solutions, Inc., B-299522.5 (Comp. Gen., Dec. 30, 2008), at 7 n.5 (noting that there are “situations” in which the FAR allows the head of contracting activity to waive an OCI); Government Bus. Servs. Group, B-287052 (Comp. Gen., Mar. 27, 2001), at 12 (noting that waiver is merely one of several courses that an agency could take, if an OCI were found). The only requirement contained in the text of the FAR is that, if a waiver is requested in writing, the “request and decision shall be included in the contract file.” 48 C.F.R. § 9.504(e). Both of these are contained in the file.53 Requiring the government to waive or to document their reasons for not waiving an OCI would also contravene the spirit of the regulations, which seek to reduce “unnecessary delays, burdensome information requirements, and excessive documentation” when dealing with OCIs. Id. § 9.504(e). Accordingly, the Court does not find the Army’s waiver decision to be arbitrary and capricious.   (Turner Construction Co., Inc. V. U. S. and McCarthy/Hunt, JV and B.L. Harbert- Brasfield & Gorrie, JV, No.  10-195C, July 16, 2010) (pdf) 

See GAO decisions B.L. Harbert-Brasfield & Gorrie, JV, B-402229, February 16, 2010  (pdf) and McCarthy/Hunt, JV, B-402229.2, February 16, 2010  (pdf)

Plaintiff’s primary argument is that the competitive integrity of the procurement was compromised through ITP’s access to nonpublic information which gave ITP an unfair advantage in the procurement. In particular, plaintiff contends that ITP’s and Wackenhut’s roles as incumbent contractors gave ITP inside information regarding how Wackenhut and other contractors planned and performed particular OST activities. In plaintiff’s view, such cost and staffing data provided ITP with a clear advantage in responding to the sample task orders set forthin the solicitation. Plaintiff thus argues that the procurement was tainted by an organizational conflict of interest—specifically, unequal access to information favoring a particular offerer—that now requires the court to declare the award to ITP unlawful.

The contracting officer addressed this very issue in a memorandum titled “Organization Conflict of Interest Analysis” issued on June 8, 2009, in response to ATL’s January 2009 protest before the Government Accountability Office. In her memorandum, the contracting officer noted that she had reviewed each offeror’s submissions regarding any potential organizational conflicts of interest (a certification was required as part of each proposal) and had determined that no significant potential conflict existed with respect to any offeror. Specifically, the contracting officer determined that although ITP and Wackenhut had access to nonpublic information through their existing contracts, such information had no competitive value in the instant procurement. With respect to ITP, the contracting officer found that the information to which it had access involved constantly changing requirements and thus was of little use as it was quickly outdated.5/ With respect to Wackenhut, the contracting officer similarly determined that the information to which it had access was not germane to the requirements addressed in the solicitation’s first two sample task orders and in the case of the third sample task order (relating to the contractor’s proposed transportation utilization program) had been effectively offset by other information disclosed in the solicitation.6/ The contracting officer further observed that both she and the technical representative regarded the information released by DOE to be sufficient to guide offerors in preparing an effective technical proposal. Based on the foregoing, the contracting officer concluded that no organizational conflicts of interest existed that would preclude an award to ITP for the support services contract.

Plaintiff now urges the court to reject the contracting officer’s conclusion on the grounds that: (1) the analysis should have been conducted prior to the issuance of the solicitation and was therefore untimely; (2) the remedial steps taken by the contracting officer to address any potential conflicts of interest were not approved by the chief of the contracting office and were thus unauthorized; and (3) the existence of a conflict is clear on the face of ITP’s proposal. In support of the first point, plaintiff asserts that the contracting officer is required under the Federal Acquisition Regulations (“FAR”) to analyze planned acquisitions in order to: “(1) [i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and (2) [a]void, neutralize, or mitigate significant potential conflicts before contract award.” 48 C.F.R. (FAR) § 9.504(a). Compliance with the FAR, plaintiff maintains, would have required the contracting officer to have undertaken her analysis more than a year earlier than she did, i.e., by April 2008—the date when DOE first became aware that ITP intended to partner with Wackenhut in competing for the successor OST support services contract. Plaintiff presumes that such an earlier intervention would have prompted heightened attention to the likelihood of an organizational conflict of interest.

Plaintiff’s argument, however, ignores the fact that the contracting officer did indeed act in a timely and comprehensive manner to address any potential problems associated with ITP’s and Wackenhut’s participation in the instant procurement. As the contracting officer noted in her analysis, Global Engineering & Technology, Inc., a potential bidder, had filed an agency-level protest in July 2008 (a date that preceded the issuance of the solicitation), alleging unequal access to information and thus an unfair competitive advantage to any offeror that partnered with Wackenhut. In particular, Global Engineering maintained that the solicitation, as then proposed, did not provide sufficient information regarding the staffing levels necessary to support the sixteen task areas the offerors’ were directed to address in their technical proposals.

In response to this concern, the contracting officer took a number of corrective steps, the most significant of which was to modify the required scope of the offerors’ technical proposals. The contracting officer explained this point in her analysis as follows:

[I]n light of the [Global Engineering] protest, I fundamentally altered the solicitation requirements. Instead of requiring all offerors to propose on 15 of the 16 [Performance Work Statement] Task Areas over a five year period of performance, as initially envisioned . . . offerors now only had to address three Sample Task Orders covering a 12 month period of performance or less. For example, Task Order 1 entitled “Conduct Agent Candidate Training (ACT),” set forth the performance objectives of ACT and specifically identified the applicable Task Areas. In this case, offerors were instructed to address seven Task Areas (Task Areas 1 through 7) as part of their technical approach for Task Order 1. For Task Order 2, entitled “Conduct Operational Readiness Training (ORT),” offerors were provided the performance objectives for ORT and instructed to address eight Task Areas (Task Areas 1 through 7 and 9). For Task Order 3, not only did I provide offerors with very specific information for three fictitious transportation scenarios, I provided offerors information regarding the number of drivers and transportation assets needed to complete each scenario as well as trip duration and locations.

In addition to narrowing the scope of the offerors’ technical proposals, the contracting officer also provided offerors with a historical twelve-month snapshot of the direct productive labor hours, by location, for each of the solicitation’s task areas. Further, the contracting officer provided offerors with an estimated training calendar for OST for the twelve-month period from December 2008 to December 2009, and with the Lesson Plan Master Listing which contained a detailed list of the types of training that offerors would be expected to provide. Finally, the contracting officer revised the solicitation to require all offerors to certify as part of their proposals that their participation in the procurement did not give rise to any organizational conflicts of interest. In light of these actions, plaintiff’s argument that the contracting officer did not act in a timely manner to address concerns regarding unequal access to competitively useful information is simply not correct.

Nor can we accept plaintiff’s contention that the award to ITP is unlawful because the contracting officer failed to obtain the requisite authorization for the adjustments she made to the solicitation in light of Global Engineering’s protest. In plaintiff’s view, the FAR requires that any such adjustments be approved by a senior-level procurement official. The regulation to which plaintiff refers reads as follows:

(b) If the contracting officer decides that a particular acquisition involves a significant potential organizational conflict of interest, the contracting officer shall, before issuing the solicitation, submit for approval to the chief of the contracting office (unless a higher level official is designated by the agency)— (1) A written analysis, including a recommended course of action for avoiding, neutralizing, or mitigating the conflict . . . . FAR § 9.506.

Plaintiff’s argument, which would apply the approval authority requirement of FAR § 9.506(b) to the adjustments the contracting officer made to the draft solicitation in June 2008, overreads the regulation. The focus of this regulation, as we read it, is on a solicitation that, as issued, would present significant potential organizational conflicts of interest unless remedial steps are undertaken to avoid, neutralize, or mitigate those conflicts. As the subsequent FAR provision makes clear, “potential organizational conflicts of interest are normally resolved by imposing some restraint, appropriate to the nature of the conflict, upon the contractor’s eligibility for future contracts or subcontracts.” FAR § 9.507-1. In other words, it is the “corrective” restraints introduced into a solicitation to address potential organizational conflicts of interest that are the concern of FAR § 9.506(b), not substantive adjustments to the content of the solicitation before its final release.

This is not the situation we face here. As the contracting officer explained in her analysis, she “took a number of steps to address potential [organizational conflicts of interest] during the pre-solicitation phase” and added that it is “worthwhile to note that the draft OST solicitation in June 2008 was significantly different than the final solicitation.” As to the final solicitation, the contracting officer “determined that no [organizational conflict of interest] exists . . . which would preclude an award to ITP.” FAR § 9.506(b) simply does not apply to the contracting officer’s actions.

Turning then to the third and final argument in support its claim of unequal access to information, plaintiff challenges the contracting officer’s determination that no organizational conflicts of interest existed that would preclude an award to ITP. According to plaintiff, it is clear from the opening paragraph of ITP’s response to the first and second sample task orders that ITP had a significant advantage through its own and Wackenhut’s status as incumbent OST contractors. This paragraph, however, does nothing more than declare that ITP intends to
assign responsibility for the performance of the task orders to its subcontractor, Wackenhut, and that Wackenhut, in turn, will engage the services of individuals whose prior experience includes “all of the functions associated with this [task order’s] requirements.” The paragraph, in other words, contains nothing to support a claim of unequal access to information.

The fact that Wackenhut has performed activities identified in the solicitation’s sample task orders and therefore can be expected to have a more informed understanding of those activities than a first-time contractor undoubtedly offers ITP some competitive advantage. But such an advantage is the product of experience rather than the result of having access to nonpublic information garnered from the government through a special relationship. Under prevailing case law, only information of the latter sort is regarded as yielding an unfair competitive advantage that might taint a procurement; information that draws upon a contractor’s own experience is not so regarded. This point is well explained in ARINC Engineering Services, LLC v. United States, 77 Fed. Cl. 196, 203–204 (2007), as follows:

[F]or an organizational conflict of interest to exist based upon unequal information, there must be something more than mere incumbency, that is, indication that: (i) the awardee was so embedded in the agency as to provide it with insight into the agency’s operations beyond that which would be expected of a typical government contractor; (ii) the awardee had obtained materials related to the specifications or statement of work for the instant procurement; or (iii) some other “preferred treatment or . . . agency action” has occurred.

(Footnotes omitted.) Plainly, the instant case does not involve nonpublic information within the meaning of the organizational conflict of interest rules.  (PAI Corporation v. U. S. and Innovative Technology Partnerships, LLC., No. 09-411C, September 17, 2009) (pdf)

C. The Government's Motions To Stay Judgment.

1. The Government’s Arguments.

The Government argues that "compelling reasons exist" for staying the court's February 26, 2008 Order.  See Gov't Stay Mot. at 3. First, a stay is necessary to preserve the Government's ability to maintain an appeal, because setting-aside the contract award would render the pending appeal moot. Id. (citing Powell v. McCormack, 395 U.S. 486, 496 (1969) ("Simply stated, a case is moot when the issues presented are no longer "live" or the parties lack a legally cognizable interest in the outcome.")).

Second, the Government contends that it will prevail on the merits of the appeal for the reasons discussed in "earlier pleadings" and "given the absence of dispositive appellate court guidance upon [OCI and mitigation issues in bid protests], it is certainly plausible, if not likely, that the court of appeals will agree with [the Government's] interpretation of [these issues] in this case.”Id. at 4.

Third, a stay will serve the public interest, because it would afford the United States Court of Appeals for the Federal Circuit an opportunity to provide guidance on OCI and mitigation issues, regarding the pending and future solicitations. Id. at 4-5. Without such guidance, even if the Government issued a new solicitation, future protests likely will follow by disappointed bidders and undermine judicial economy. Id. at 5.

Finally, issuance of a stay would present no harm to other interested parties, because a new solicitation would not necessarily be awarded to Plaintiff, and even it were, such an award may be "tied up in further litigation." Id.

2. The Plaintiff's Response.

Plaintiff responds that the Government does not face irreparable injury if the February 26, 2008 Final Order is not stayed, because the Government will have standing to challenge the court's determination that the Government acted "arbitrarily and capriciously." See Pl. Opp. at 6. More importantly, the Government has failed to demonstrate a likelihood of prevailing on the merits on appeal, because the Government's argument that the court improperly supplemented the Administrative Record and accepted outside expert testimony is contrary to "a substantial body of case law." Id. at 5 (citing Vantage Assocs., Inc. v. United States, 59 Fed. Cl. 1, 13 (2003) (information outside the Administrative Record may be considered by stipulation or court order)).

Finally, Plaintiff would be substantially harmed if the stay were imposed, because the Government may try to bar Plaintiff from competing for future TEAMS contract work, except for the pending June 18, 2008 RFP covering work under the pending contract, but only if the court's February 26, 2008 Order "remain[s] in effect." Id. at 6. Therefore, "[s]taying the [c]ourt's order would have the effect of completely barring [Plaintiff] from competing for the work that was subject to this protest." Id. at 6.

3. The Court's Resolution.

On February 26, 2008, the court ruled against the Government on the dispositive issues of this bid protest. See Axiom II, 80 Fed. Cl. at 535-36 ("The court has determined that the CO did not identify and analyze a potential 'unequal access to information' conflict, as required by FAR §9.504(a), and abused his discretion in violation of FAR §9.504(e) by awarding the Task Order to Lockheed Martin, without developing a mitigation plan that does not afford Lockheed Martin any significant competitive advantages, is enforceable, and otherwise does not impose any anticompetitive effects on future competition."). The Government did not seek reconsideration of that Memorandum Opinion and Final Order, and the pending motions have not advanced any new grounds that would support success on the merits on appeal. See Gov't Stay Mot. at 4 ("Our earlier pleadings in this [c]ourt outline arguments that we will present in our appeal, and reflect why we believe that we will prevail upon the merits of the appeal.") (emphasis added); see also Minor Metals, 38 Fed. Cl. at 381 (the moving parties on a motion for injunction pending appeal "provided the court with no substantive information or argument that would compel issuance of the instant emergency motion."). As discussed in Axiom II, the potential and unmitigated "unequal access to information" and "mpaired objectivity" OCIs present in the contract may undermine ongoing and future TRICARE management activity and the integrity of the federal procurement process, if the option period of the contract is not set-aside. See Axiom II, 80 Fed. Cl. at 537-38 ("[T]he potential 'unequal access to information' and 'impaired objectivity' conflicts may undermine ongoing and future TRICARE management activity, if not adequately mitigated."); see also Labat-Anderson, Inc. v. United States, 65 Fed. Cl. 570, 581 (2005) ("It is well established that there is an overriding public interest in preserving the integrity of the federal procurement process by requiring government officials to follow procurement statutes and regulations.") (citations omitted). That remains the considered opinion of the court.

The Government filed the April 28, 2008 Notice Of Appeal on the latest date permitted under the Federal Rules of Appellate Procedure, but then waited almost two additional months before filing the June 16, 2008 Motion To Stay. See Fed. R. App. P. 3(b) ("When the United States or its officer or agency is a party, the notice of appeal may be filed by any party within 60 days after the judgment or order appealed from is entered."). More importantly, two days later, on June 18, 2008, the Government issued a notice to solicit a new TRICARE contract, without informing the court. Since the Government has decided to resolicit the TRICARE contract, the issuance of a stay is unnecessary. In fact, substantial harm likely will result, if a stay is granted. See Minor Metals, 38 Fed. Cl. at 381. As discussed in Axiom II, Plaintiff established that it would suffer irreparable harm, if the court did not set-aside the contract. See Axiom II, 80 Fed. Cl. at 536; see also Parcel 49C Limited Partnership v. United States, 31 F.3d 1147, 1151 (Fed. Cir. 1994) (recognizing that the Government has a "duty to conduct a fair procurement."); Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. 98, 110 (2004) ("It is well-settled that a party suffers irreparable injury when it loses the opportunity to compete on a level playing field with other bidders[.]"). Moreover, the contract at issue represents approximately 10% of Plaintiff's overall business. See 8/7/07 TR at 6; see also Cardinal Maint. Serv., 63 Fed. Cl. at 110 ("Irreparable injury includes, but is not limited to, lost profits which would flow from the contract.") (citing SAI Indus. Corp. v. United States, 60 Fed. Cl. 731, 747 (2004)); see also AR 472-77 (Contract W81XWH-06-F-0440) (contract expires on July 21, 2008, at which time the Government may exercise two one-year options). In addition, in light of Plaintiff’s recent allegations that the Government intends to bar Plaintiff from competing for future TEAMS RFPs, except for the pending June 18, 2008 RFP concerning work covered by the pending contract and only while the court’s February 26, 2008 Order "remain[s] in effect," granting a stay may prohibit Plaintiff from competing for the work subject to this protest. See Pl. Opp. at 6. Consequently, there is no basis for the Government's argument that "a stay would benefit" Plaintiff. See Gov't Mot. Dis. at 5.

Finally, the Government argues that a stay would afford the United States Court of Appeals for the Federal Circuit with an opportunity to provide "dispositive . . . guidance upon OCI and mitigation issues in bid protests." See Gov't Stay Mot. at 4. On June 18, 2008 the Department of Defense, General Services Administration, and National Aeronautics and Space Administration, however, issued an advance notice of proposed rule-making, inviting comment on whether the FAR's conflict of interest provisions serve the current needs of the acquisition community. See Organizational Conflicts of Interest, 73 Fed. Reg. 34,686 (June 18, 2008) (advanced notice of proposed rule-making; reopening of comment period). Again, the Government also failed to inform the court of this relevant development. Nevertheless, the court is pleased to see that the procurement agencies recognize the importance of conflict of interest considerations and the recognized need to clarify existing ambiguities. See Ralph C. Nash, Organizational Conflicts of Interest: An Increasing Problem, 20 No. 5 NASH & CIBINIC REPORT ¶ 24 (May 2006). If a new rulemaking accomplishes this objective, hopefully there will be no need for judicial review in future cases.

III. CONCLUSION. For the aforementioned reasons, the Government's June 16, 2008 Motion To Stay The Court's Order Of February 26, 2008 is denied. The Government's June 20, 2008 Motion For Expedited Consideration is denied as moot.  (Axiom Resource Management, Inc., v. U. S. and Lockheed Martin Federal Healthcare, Inc., No. 07-532C, July 7, 2008) (pdf)  (NOTE: See decision below)

On September 28, 2007, the United States Court of Federal Claims held that the Contracting Officer ("CO"), in this case, violated Federal Acquisition Regulation ("FAR") § 9.504(a), by not identifying a potential "impaired objectivity" conflict, but awarding a TRICARE Management Activity ("TMA") contract for the United States Department of Defense's healthcare program to Lockheed Martin Federal Health Insurance, Inc. ("Lockheed Martin"). See Axiom I, 2007 U.S. Claims LEXIS 314, at *79 (Fed. Cl. Sept. 28, 2007). In addition, the court determined that the CO did not exercise sound discretion as required by FAR § 9.504(e) in developing an Organizational Conflict of Interest (“OCI”) mitigation plan to correct the belatedly identified “unequal access to information” conflict, i.e., a plan that: did not afford Lockheed Martin any significant competitive advantages; was enforceable, i.e., subject to court order; and otherwise did not impose any anticompetitive effects on future competition. Id. at *80.

In considering what relief was appropriate, the court requested additional briefing on three questions: “(1) whether Lockheed Martin should be required to divest existing Category 3 contracts [Product Support], if the current Category 2 [Program Management Support] award stands; (2) whether current TMA Policy and Lockheed Martin’s voluntary mitigation efforts are sufficient to ameliorate the conflicts of interest at issue; and (3) whether the non-disclosure agreements that Lockheed Martin has required Plaintiff’s former employees to sign or other mitigation proposals may foreclose future competition for these services when the current Task Order expires in three years.”  Id. at *84.8

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Therefore, the Government and Lockheed Martin's offer to incorporate the proposed mitigation plan as a modification to the contract, without affording the court the ability to insure compliance by an independent auditor, likely will prove illusory. See 12/19/07 TR at 7-8. Given the fact that the CO repeatedly failed properly to identify or mitigate the OCIs at issue in this case, the court has little confidence that the CO will identify and properly mitigate potential or actual OCIs in the future. See Axiom I, 2007 U.S. Claims LEXIS 314, at *78-80. Surprisingly, the Government argues that a compliance auditor would usurp the CO's function to administer the contract. See Gov't Resp. To Show Cause at 3. The court does not view an independent auditor as interfering with the CO's responsibilities to administer the contract, because the auditor’s function is to ensure compliance with the court's order. See 28 U.S.C. § 1491(b)(1) (“To afford relief in [a bid protest] action[, the court] may award any relief that the court considers proper[.]”); see also Abbott Labs. v. Novopharm Ltd., 104 F.3d 1305, 1309 (Fed. Cir. 1997) (affirming that a trial court “has inherent power to order the parties to the litigation to act in a manner that will enforce its judgment.”) (citing Shillitami v. United States, 384 U.S. 364, 370 (1966)). The Government, however, has stated that it would prefer that the court set aside the award, rather than have an independent auditor oversee compliance with Lockheed Martin's proposed mitigation plan. See 12/19/07 TR at 13 (GOVERNMENT COUNSEL: “And, Your Honor, I guess that's what we're saying. It's either the contract stands or the contract falls.”). Accordingly, the court has determined that the public interest weighs in favor of injunctive relief.  

In light of the fact that the initial term of the contract expires on July 21, 2008, at which time the Government may exercise two one-year options (see AR 472-77 (September 19, 2006 Contract W81XWH-06-F-0440)), the court has decided to issue an injunction, effective on that date, setting aside the continuation of the contract through the exercise of options. This limited injunctive relief allows the Government ample time to re-solicit the contract, if it wishes, while minimizing disruption to ongoing performance. See Parcel, 31 F.3d at 1153 (quoting United States v. John C. Gimberg Co., 702 F.2d 1362, 1372 (Fed. Cir. 1983)) (advising that the court’s equitable powers “should be exercised in a way which best limits judicial interference in contract procurement.”); see also Gov't Resp. Disclosure (Dec. 19, 2007 Decl. of Ms. Suzanne Curtis) (representing that employees who sign Government non-disclosure agreement will not be prohibited from obtaining work with any follow-on contractor); 12/19/07 TR at 3 (same).  (Axiom Resource Management, inc., v. U. S. and Lockheed Martin Federal Health Insurance, Inc., No. 07-532C, February 26, 2008) (pdf)  (NOTE:  See decision below)

The federal government's increased use of and dependence on outside contractors to perform essential government functions, often entails providing these contractors with governmental, business proprietary, and otherwise private information to perform their duties. This has increased potential and actual conflicts of interest regarding how, and the extent to which, such information is utilized in performing contract services and otherwise. See Ralph C. Nash, Organizational Conflicts of Interest: An Increasing Problem, 20 No. 5 NASH & CIBINIC REPORT ¶ 24 (May 2006). Establishing the parameters of access to and use of this information will be among the most important decisions that the United States Court of Federal Claims and the United States Court of Appeals for the Federal Circuit will make in the next few years – not only for government contract jurisprudence, but to maintain competition in this growing segment of the economy.

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The Administrative Record, in this case, evidences that Lockheed Martin employees working on the Task Order will have access to “non-purchased” care requirement information that will give Lockheed Martin an unfair competitive advantage in future procurements. See, e.g., Adams Decl. ¶¶ 8-17 at 3-7 (AR 920-24); Richards Decl. ¶¶ 12-15 at 6-8 (AR 931-33). The competitive effect of this advantage is exacerbated by the fact that Lockheed Martin currently is one of the largest government contractors in the country. See Lockheed Martin Corporation, 2006 ANNUAL REPORT, at 2, 11 (estimating that “[in] 2006, 84% of . . . net sales [total sales were $39.6 billion] were made to the U.S. Goverment, either as a prime contractor or as a subcontractor.”); see also Compl. ¶ 77 (alleging that Lockheed Martin “currently performs 18 [TRICARE] contracts classified as Category 3 with a total contract value of $114.595 [million].”); Cole, WALL ST. J. at A10 (reporting that Lockheed's growth plans call for securing more federal government contracts in "an array of behind-the-scenes services"). Under these circumstances, the fact that neither TMA nor the CO initially identified the “unequal access to information conflict” nor to date has identified an apparent “impaired objectivity conflict” significantly undermines the court’s confidence, both in the CO’s conflict identification and wholesale endorsement of a voluntary mitigation plan. See 48 C.F.R. §§ 9.505-1-4 (defining the types of OCIs the CO must identify and mitigate). And, as Lockheed Martin has admitted: “By continuing to win competitions in our traditional business, we are positioned exceptionally well for sustained success in the defense, homeland security, and government information technology arenas.” Lockheed Martin Corporation, 2006 ANNUAL REPORT, at 4 (emphasis added).

Although the CO ultimately cured a prior failure to identify and analyze a potential “unequal access to information” conflict the CO did not identify the potential “impaired objectivity” conflict, as required by FAR § 9.504(a). In addition, the Administrative Record does not evidence that the CO exercised sound discretion in developing an appropriate mitigation plan, as required by FAR § 9.504(e). See 48 C.F.R. § 9.504(e). To be sure, the Government arguably could rescind the contract if it was not satisfied with Lockheed Martin’s mitigation efforts. Nevertheless, under the proposed mitigation plan, Lockheed Martin is not barred from performing “non-purchase” Category 3 contracts;23 TMA’s “Policy” and Lockheed Martin’s “OCI Mitigation Plan and Competitive Analysis” have no binding effect at law;24 and certain mitigation efforts, such as non-disclosure agreements, may be anticompetitive.

The Complaint in this case was not filed until July 17, 2007, after the GAO rejected three prior bid protests, concluding that “any potential future OCIs can be mitigated[.]” See Axiom Resource Mgmt., Comp. Gen. B-298870.3, at 1. On July 18, 2007, Lockheed Martin was to commence performance of the Task Order, utilizing Plaintiff's former employees. See 7/17/07 TR at 6. In light of this situation and the fact that the Administrative Record had not been filed, the court declined to issue a Temporary Restraining Order on July 17, 2007. See 7/17/07 TR at 6-11, 17-18, 22.25 After reviewing the Administrative Record, the briefs, and convening an oral argument, the court has determined that the CO abused his discretion in violation of FAR § 9.5 by awarding the Task Order to Lockheed Martin, without developing a mitigation plan that does not afford Lockheed Martin any significant competitive advantages, is enforceable, i.e., subject to court order, and otherwise does not impose any anticompetitive effects on future competition. See 5 U.S.C. § 706(2)(A).

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The Bureau of Competition of the Federal Trade Commission ("FTC") is the federal agency authorized to protect the public interest by monitoring and insuring that there is competition in the healthcare service industry. See Federal Trade Commission, FTC Antitrust Actions in Health Care Services and Products (Oct. 2003), available at http://www.ftc.gov/bc/hcupdate03/024.pdf; see also Federal Trade Commission, Hearings on Health Care and Competition Law and Policy, June 26, 2003, available at http://www.ftc.gov/ogc.healthcarehearings/030626ftctrans.pdf. Therefore, the court has decided, prior to determining whether the public interest requires the issuance of an injunction and the elements thereof, to request the views of the FTC Bureau of Competition as amicus curiae on or before December 15, 2007 to advise the court: (1) whether Lockheed Martin should be required to divest existing Category 3 contracts, if the current Category 2 award stands; (2) whether current “TMA Policy” and Lockheed Martin’s voluntary mitigation efforts are sufficient to ameliorate the conflicts of interest at issue;26 and (3) whether the non-disclosure agreements that Lockheed Martin has required Plaintiff’s former employees to sign or other mitigation proposals may foreclose future competition for these services when the current Task Order expires in three years. Compare 8/7/07 TR 90-97, 102-04 with AR 606 (“Lockheed [Martin] considers any authorized release of procurement sensitive information by a Lockheed [Martin] employee to be a felony underfederal law. All Lockheed [Martin] employees providing support services to TMA at all locations either have executed or will be required to execute a non-disclosure agreement.”);27 see also Remarks of Chairman Deborah Platt Majoras, The Role of Competitive Analysis in Regulatory Decisions, AEI/Brookings Joint Center, May 15, 2007, at 15 (“Agencies can . . . make . . . decisions in ways that enhance rather than squelch competition and [the FTC] can refuse to allow firms to undermine or manipulate regulatory processes to gain government endorsed advantages.”).  (Axiom Resource Management, inc., v. U. S., No. 07-532C, Filed September 28, 2007) (pdf)

Even if the averments of the Mr. Ouyachi are discounted as a post hoc rationalization and any possible informational advantage that Systems Plus may have gained through its prior work with DOL are similarly discounted, the court determines that Systems Plus has failed to point to evidence that would show that NetStar was “embedded” within the agency such that NetStar had the kind of specific non-public information that would create an OCI. See Johnson Controls, 2001 WL 122352, at *5. NetStar, as an incumbent supplier of planning and architecture services, may have had an advantage over some other bidders in these areas. However, it appears not to have had the kind of specific, sensitive information that would create an OCI. In this regard, the court notes that Sytel, an outside contractor that had done little or no prior work with DOL, submitted a technical proposal that was the highest-rated in DOL’s initial review of all of the proposals. See supra, at 5. Additionally, while NetStar’s initial technical proposal appears to have provided well-rated initial responses in the area of network architecture, NetStar’s original proposal was rated as “weak” in project management because it was “more theoretical than practical.” AR Tab 13 (Technical Review Team evaluation of (initial) proposal submitted by NetStar). If NetStar had enjoyed unfair access to non-public information, one would have expected NetStar to have achieved better results in the initial technical appraisal, and better overall technical ratings than a non-incumbent vendor. The court thus finds that NetStar did not benefit from an “unequal access to information” OCI. (Systems Plus, Inc., v. U. S., and NetStar-1, Inc., No. 05-1219C, Reissued: February 28, 2006) (pdf)

The CO’s determination that a significant OCI did not exist is contradicted by the record. The CO did properly contact other government personnel to apprise her of the situation. 48 C.F.R. § 9.506(a). Those personnel informed her that they recognized the potential for a conflict of interest.22 Their conclusion was buttressed by Westar’s submission of at least two proposed mitigation plans. It is, therefore, safe to conclude that all those involved recognized the significant conflict. The CO, however, exceeded her authority by concluding that the appropriate safeguards were in place to eliminate the conflict. According to the FAR, that is not a decision the CO is empowered to make. 48 C.F.R. § 9.506(b). The authority to “[a]pprove, modify, or reject the [recommended course of action for avoiding, neutralizing, or mitigating the conflict]” rests with the chief of the contracting office. Id. § 9.506(b)-(d). Accordingly, the CO failed to abide by the procedures set forth in § 9.506.  (Filtration Development Co, LLC, v. U. S.,  No. 03-2835C, Originally sealed April 13, 2004, Reissued April 27, 2004) (pdf)

Moreover, even if there were no flow down of OCI clauses, the contracting officer still could act to avoid organizational conflicts of interest. See the Federal Circuit's opinion in NKF Engineering, Inc. v. United States, 805 F.2d 372 (Fed. Cir. 1986). In NKF, no violation of the Ethics in Government Act, and particularly of 18 U.S.C. § 208(a), was found, such that all that was left was the appearance of a conflict of interest. Id. at 375. The Federal Circuit, nevertheless, held, based on the circumstances of that case, "we cannot say that the agency's conclusion, that there was an appearance of impropriety, was unreasonable or irrational," id. at 376, so that "the Claims Court order overturning that [contracting officer's] decision was erroneous and is vacated," id. at 378. Despite the seeming absence of any authority expressly authorizing the actions that were taken in this case the court is of the view that the contracting officer's responsibility of "safeguarding the interests of the United States in its contractual relationships," 48 C.F.R. § 1.602-2 (1985), is sufficient to support the exercise of authority that was asserted. What persuades us to this view is the latitude the courts have historically shown with respect to the contracting officer's basic authority to enter into, administer, or terminate contracts, and the overriding importance of the Government's need to insure full and fair competition in the conduct of its procurements. A procurement system powerless to rid itself of an unfair competitive advantage gained through inside information would soon lose every vestige of competitiveness. There can be no question, therefore, that the contracting officer had authority to act upon his concerns and, in an appropriate case, to cause the disqualification of a bidder.  (DSD Laboratories, Inc. v. U.S., No. 00-177C, April 14, 2000)

The record, as supplemented, contains scant evidence that the contracting officer considered plaintiff's OCI mitigation plan; rather, the evidence raises serious doubts about the extent and quality of the deliberation afforded plaintiff's plan. If FAR § 9.504(e) means anything, it is that the contracting officer must determine that an OCI cannot be avoided or mitigated in order to deny contract award to an otherwise qualified offeror. Consequently, the contracting officer actually must determine whether a proposed mitigation plan could mitigate or avoid a perceived or potential OCI. (Informatics Corporation, v. U.S., No. 98-16C, March 18, 2001)

New The issue before us is whether an organizational conflict of interest is so pervasive as to have created an advantage to one bidder over the others, and whether the contracting officer failed to exercise proper discretion and to follow proper procedures in making the determination that no organizational conflict of interest existed. The Federal Acquisitions Regulations (“FAR”) recognize that “the identification of [organizational conflicts of interest] and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion.” Axiom Res. Mgmt. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009) (citing 48 C.F.R. § 9.505). FAR requires that “[e]ach individual contracting situation should be examined on the basis of its particular facts and the nature of the proposed contract. The exercise of common sense, good judgment, and sound discretion is required in both the decision on whether a significant potential conflict exists and, if it does, the development of an appropriate means for resolving it.” 48 C.F.R. § 9.505 (2004); see also Axiom, 564 F.3d at 1382 (citing ARINC Eng’g Servs. v. United States, 77 Fed. Cl. 196, 202 (2007) (“The responsibility for determining whether such un-equal access exists and what steps should be taken in response thereto rests squarely with the contracting officer.”)).

This court will not overturn a contracting officer’s de-termination unless it is arbitrary, capricious, or otherwise contrary to law. John C. Grimberg Co. v. United States, 185 F.3d 1297, 1300 (Fed. Cir. 1999). To demonstrate that such a determination is arbitrary or capricious, a protester must identify “hard facts”; a mere inference or suspicion of an actual or apparent conflict is not enough. C.A.C.I., Inc. Fed. v. United States, 719 F.2d 1567, 1581 (Fed. Cir. 1983); Filtration Dev. Co., LLC v. United States, 60 Fed. Cl. 371, 380 (2004) (holding that the disappointed bidder failed to provide “any factual basis” to establish the existence of an organizational conflict of interest).

PAI’s sole argument of legal error on appeal is that the contract award to ITP is unlawful because the contracting officer failed to comply with the applicable FAR in issuing the solicitation. Specifically, PAI alleges that the contracting officer’s organizational conflict of interest analysis violates 48 C.F.R. §§ 9.504(a) and 9.506(b). PAI asserts that, in order to comply with these regulations, the contracting officer is required to (1) analyze any type of conflict that may arise during the procurement, including apparent or potential conflicts, and (2) document in writing a plan to neutralize any type of conflict before a solicitation is issued. However, PAI’s argument conflates the requirements of the two regulations.

Section 9.504(a) requires that a contracting officer “(1) [i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and (2) [a]void, neutralize, or mitigate significant potential conflicts before contract award.” 48 C.F.R. § 9.504(a) (emphasis added). This regulation requires a contracting early officer to identify and evaluate potential conflicts in the stages of the acquisition process. Section § 9.504(a) does not require that this preliminary analysis be documented in writing, but if a potential conflict is identified, the regulation specifies that the contracting officer must avoid, neutralize, or mitigate any “significant potential conflicts” before the contract award. Id. § 9.504(a). 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. See ARINC, 77 Fed. CI. at 202. Section 9.504(a) therefore requires mitigation of “significant potential conflicts,” but does not require mitigation of other types of conflicts, such as apparent or potential non-significant conflicts. The contracting officer does have considerable discretion in determining whether a conflict is significant. Moreover, the FAR provides a contracting officer with considerable discretion to conduct fact-specific inquiries of acquisition proposals to identify potential conflicts and to develop a mitigation plan in the event that a significant potential conflict exists. 48 C.F.R. § 9.505; see also Axiom, 564 F.3d at 1382.

In contrast to § 9.506(a), § 9.506(b) specifies a unique documentation requirement once a “significant potential organizational conflict” is deemed to exist. 48 C.F.R. § 9.506(b). This regulation requires that, in the event “the contracting officer decides that a particular acquisition involves a significant potential organizational conflict . . . , the contracting officer shall, before issuing the solicitation, submit . . . [a] written analysis, including a recommended course of action for avoiding, neutralizing, or mitigating the conflict . . . .” Id. (emphasis added). Moreover, § 9.506(b) requires that, if the contracting officer makes such a determination, the written analysis be approved by the chief of the contracting office. Id. This regulation requires a written analysis, but only for “significant potential conflict[s].” Id. (alteration added). Thus, the contracting officer is not required to document in writing or submit for approval a plan to neutralize apparent or potential conflicts, which in her discretion and judgment are deemed not to be significant.

In this case, the contracting officer fully complied with the FAR requirements. First, the contracting officer timely identified and evaluated any potential conflicts in compliance with § 9.504(a). After GET filed the agency-level protest in July 2008, the contracting officer pursued a number of steps to resolve any potential conflicts, including narrowing the technical scope of the solicitation, providing to the potential offerors additional information regarding the OST support services contract, and requiring that each potential offeror certify that its participation in the procurement did not create any organizational conflicts of interest. The contracting officer also completed an additional and comprehensive conflicts investigation in June 2009. In a written memorandum, the contracting officer noted that she had thoroughly re-viewed the offerors’ submissions regarding any potential organizational conflicts of interest. The contracting officer determined that no significant potential conflict existed that would preclude an award of the OST support services contract to ITP. Furthermore, because the contracting officer determined that no significant potential conflict existed, she was not required to submit a written analysis pursuant to § 9.506(b), nor was she required to obtain approval from the chief contracting officer for adjustments to the solicitation. In light of the considerable discretion given to contracting officers in identifying and mitigating significant potential conflicts, we agree with the trial court that the contracting officer in this case complied with the FAR requirements.

Moreover, PAI failed to establish that there was any significant potential conflict that provided ITP with an unfair competitive advantage during the procurement. See ARINC, 77 Fed. Cl. at 202. PAI failed to introduce any evidence before the trial court showing that ITP gained a substantial and unfair competitive advantage through unequal access to information. See C.A.C.I., 719 F.2d at 1581 (stating that a disappointed bidder must identify “hard facts” to overturn an agency’s award of a contract). Moreover, PAI’s bare allegation that ITP and Wackenhut had a prior contractual relationship with OST is insufficient to show a significant potential conflict. Id. “The mere existence of a prior or current contractual relationship between a contracting agency and a firm does not create an unfair competitive advantage, and an agency is not required to compensate for every competi-tive advantage gleaned by a potential offeror’s prior performance of a particular requirement . . . .” ARINC, 77 Fed. Cl. at 203; see also Ala. Aircraft Indus. Inc. Birmingham v. United States, 83 Fed. CI. 666, 686 (2008) (holding that incumbent status by itself is insufficient to create an organizational conflict of interest). Accordingly, we find that PAI failed to establish the existence of a significant potential conflict and thus failed to show that the integrity of the procurement was compromised.  (PAl Corporation (Doing Business As Professional Analysis) v. U. S. and Innovative Technology Partnerships, LLC, No. 2010-5003, August 5, 2010)  (pdf) 

See above PAI Corporation v. U. S. and Innovative Technology Partnerships, LLC., No. 09-411C, September 17, 2009 (pdf)

II. DISCUSSION

Appellants allege that the Court of Federal Claims committed two principal errors.  First, they argue that the court violated established principles of administrative law by permitting Axiom to supplement the record with affidavits created for litigation and then extensively relying on those affidavits to support its decision. Second, they assert that the court failed to properly review the record under the "arbitrary and capricious" standard set forth in the Administrative Procedure Act ("APA"). We agree on both grounds.

A. Supplementation of the Record

"Evidentiary determinations by the Court of Federal Claims, including motions to supplement the administrative record, are reviewed for abuse of discretion." Murakami v. United States, 398 F.3d 1342, 1346 (Fed. Cir. 2005). A trial court's determination of an evidentiary matter constitutes an abuse of discretion if, for example, it is "clearly unreasonable, arbitrary, or fanciful" or is "based on an erroneous construction of the law." Air Land Forwarders, Inc. v. United States, 172 F.3d 1338, 1341 (Fed. Cir. 1999).

Appellants argue that the Court of Federal Claims erred by permitting Axiom to supplement the record with materials that were not before the agency, including legal pleadings filed before the GAO, declarations of Axiom's employees, and declarations from consultants retained for litigation. During a telephone conference with the trial court, the government objected to Axiom’s request to add these documents to the record. The government acknowledged during the conference that the law of the Court of Federal Claims allows supplementation in at least some circumstances identified in Esch v. Yeutter, 876 F.2d 976, 991 (D.C. Cir. 1989). The government asserted, however, that Axiom had not provided any explanation as to why it would be proper to add documents to the record in this case. The court responded:

Well, let me cut to the chase here. My practice . . . since I've been on the Court is to allow everybody to put . . . whatever they want to put into the record in trial and even in an administrative record to supplement.

My own view is that I don't know what's important or not until I finally get around to looking at the record, which would be some time from now.

You know, I think that I have enough experience. Just because it's in the record doesn't mean I'm going to rely on it for any reason.  I may never even bother to do anything with it, but I do think it's better to get it in there.

If it goes up on appeal, that way the Appellate Court has a full record to work with, and the parties and the parties have put in everything that they feel they need to have put forward their best argument. I do it on both sides.

I'm not going to change that practice in this case. I don't see any prejudice to the government because you don't know what I'm going to do one way or the other with any of the stuff.  The same thing for the Plaintiff.  If they want to put it in, I'll put it in.

J.A. 2034. When the government then requested to add its own supplementary evidence to the record, the court urged government counsel not to "hold back," saying:  "I let everybody put in what they want to . . . put in. The world will not come to an end.  Western civilization will not crumble based upon this value judgment." J.A. 2035.

While we recognize the need for an adequate record during judicial review, the parties' ability to supplement the administrative record is limited. In Camp v. Pitts, the Supreme Court stated that "the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court." 411 U.S. 138, 142 (1973). "The task of the reviewing court is to apply the appropriate APA standard of review, 5 U.S.C. § 706, to the agency decision based on the record the agency presents to the reviewing court.” Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985) (emphasis added). The purpose of limiting review to the record actually before the agency is to guard against courts using new evidence to “convert the 'arbitrary and capricious' standard into effectively de novo review.” Murakami v. United States, 46 Fed. Cl. 731, 735 (2000), aff’d, 398 F.3d 1342 (Fed. Cir. 2005). Thus, supplementation of the record should be limited to cases in which "the omission of extra-record evidence precludes effective judicial review." Id.

We conclude that the trial court abused its discretion in this case by adding Axiom’s documents to the record without evaluating whether the record before the agency was sufficient to permit meaningful judicial review. The court made clear that it would freely allow the parties to supplement the record "with whatever they want," and, by so doing, failed to make the required threshold determination of whether additional evidence was necessary.

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B. The Court of Federal Claims' Review of the Record

Appellants argue that the Court of Federal Claims' decision to enjoin Lockheed's performance of the contract resulted from the use of an incorrect standard of review on an improperly supplemented record. Specifically, they allege that the court erred by declining to use the APA's "arbitrary and capricious" standard and instead undertaking what was essentially a de novo review of the CO's evaluation of the mitigation efforts. They contend that the record before the CO sufficiently supports the CO's decision under a proper application of "arbitrary and capricious" review.

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We agree with Appellants that the court erred by failing to review the CO's decision under the "arbitrary and capricious" standard set forth in 5 U.S.C. § 706(2)(A). In Impresa Construzioni Geom. Domenico Garufi v. United States, this court explained that bid protest cases are reviewed under the standard set forth in the APA. 238 F.3d 1324, 1332 (Fed. Cir. 2001). Adopting the articulation of the test set forth in a line of D.C. Circuit cases, we stated that "a bid award may be set aside if either: (1) the procurement official's decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure." Id. A court evaluating a challenge on the first ground must determine "whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion." Id. at 1333 (quotation marks omitted). "When a challenge is brought on the second ground, the disappointed bidder must show a clear and prejudicial violation of applicable statutes or regulations." Id. (quotation marks omitted).

FAR § 9.504(a) provides that "contracting officers shall analyze planned acquisitions in order to (1) [i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and (2) [a]void, neutralize, or mitigate significant potential conflicts before contract award." 48 C.F.R. § 9.504(a). Section 9.504(e) further provides that "[t]he contracting officer shall award the contract to the apparent successful offeror unless a conflict of interest is determined to exist that cannot be avoided or mitigated." Id. § 9.504(e). However, 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. See 48 C.F.R. § 9.505 ("Each individual contracting situation should be examined on the basis of its particular facts and the nature of the proposed contract. The exercise of common sense, good judgment, and sound discretion is required in both the decision on whether a significant potential conflict exists and, if it does, the development of an appropriate means for resolving it."); see also ARINC, 77 Fed. Cl. at 202 ("The responsibility for determining whether such unequal access exists and what steps should be taken in response thereto rests squarely with the contracting officer.").

In light of the discretion given to COs, we cannot agree with the Court of Federal Claims that the CO in this case "violated" FAR § 9.504 in such a way as to warrant de novo review of "whether or not there may be [a] potential violation of law" and, if so, whether "the mitigation proposal [is] an actual remedy." Axiom I, 78 Fed. Cl. at 599. Under the trial court's rationale, courts might never review a CO's OCI determination under the "arbitrary and capricious" standard because every instance in which the court disagreed with the CO's decision could be fashioned as a violation of FAR § 9.504 that triggers de novo review. This result would be inconsistent with the discretion given to the CO by FAR § 9.505 and the principles underlying the APA. Accordingly, we conclude that the Court of Federal Claims erred in this case by failing to evaluate the CO's decision under the APA's "arbitrary and capricious" standard.

2. The Court of Federal Claims' Decision on the Merits

Appellants next argue that the Court of Federal Claims' determination that Lockheed's mitigation plan did not adequately resolve the alleged OCI is contrary to the record before the CO. The court decided

that the CO abused his discretion in violation of FAR § 9.5 by awarding the Task Order to Lockheed Martin, without developing a mitigation plan that does not afford Lockheed Martin any significant competitive advantages,4 is enforceable, i.e., subject to court order, and otherwise does not impose any anticompetitive effects on future competition.

Id. at 600. Because the antitrust concerns were originally raised by the trial court and are not relied upon by Axiom in this appeal, we will limit our review to the adequacy and enforceability of the mitigation plan.

In its discussion of the adequacy of Lockheed's mitigation plan, the Court of Federal Claims relied heavily on two expert witness declarations that the court permitted Axiom to add to the record. See Axiom I, 78 Fed. Cl. at 596-98. The first declaration, that of Nancy Adams, a former Senior Advisor to the Director of TMA, expressed the opinion that it would be impossible for Lockheed to prevent information relevant to its Category 2 contracts from reaching its employees who were working on its Category 3 contracts. Id. at 596-97. Accordingly, Ms. Adams believed that Lockheed's mitigation plan could not adequately resolve all OCIs. Id. In the second declaration, Ronald Richards, who was formerly TMA's Chief of the Central Operations Office, stated his belief that the Category 2 work would provide Lockheed with information that could give Lockheed an unfair competitive advantage when bidding for future purchased care and Category 3 non-purchased care contracts. Id. at 597-98.

As discussed previously, supplementation of the administrative record is only appropriate in limited circumstances. Because we have not been presented with any persuasive explanation of why the record before the CO precluded effective judicial review in this case, we do not find the court's reliance on the Richards and Adams declarations well placed. However, even if we were to give some weight to these declarations, they do not end the inquiry. After all, a decision is not necessarily unreasonable simply because the disappointed bidder is able to find two witnesses who disagree with it.

Notwithstanding the contrary opinions of Axiom's declarants, we conclude that the CO's decision to award the contract to Lockheed was not arbitrary or capricious. Mindful of the confidential nature of Lockheed's mitigation efforts, we note that the CO and TMA reviewed the OCI Mitigation Plan and comparative analysis submitted by Lockheed and determined that the processes and procedures described therein would be sufficient to mitigate the alleged conflicts. We see nothing unreasonable about that determination. Additionally, TMA barred Lockheed from bidding on future purchased care requirements. Finally, we agree with the government that it is reasonable for the CO to defer evaluating certain potential unequal access to information conflicts until Lockheed actually bids on future contracts for which it has obtained non-public information by virtue of its performance of the contract at issue in this case. See ARINC, 77 Fed. Cl. at 202 (setting out a four-part test to be applied when a protester alleges that the successful bidder on a current contract unfairly benefited from non-public information obtained through a prior contract); see also Axiom, No. B-298870.3, 2007 WL 2141694, at *5 ("In our view, conflicts that might arise from subsequent awards can properly be analyzed as part of those subsequent award decisions, and need not be addressed at this juncture.").

Turning to the enforceability of Lockheed's mitigation plan, the parties agree that the government would have had legal recourse if Lockheed failed to adhere to the plan. Oral Arg. at 30:00-30:44, available at http://oralarguments.cafc.uscourts.gov/mp3/2008-5072.mp3. However, the trial court doubted that the CO could be trusted with future enforcement of the plan. See, e.g., Axiom II, 80 Fed. Cl. at 533 ("I don't know if I can put it any better than to say that I've kind of lost confidence in this CO's ability to be the proper person to monitor this."); id. at 539 ("[T]he court has little confidence that the CO will identify and properly mitigate potential or actual OCIs in the future."). The court expressed interest in finding a monitor to serve as "a pair of independent eyes for the Court," id. at 533, and ordered the parties to show cause "why the court should not enter an order that designated the United States Army Audit Agency ('USAAA') to submit an annual compliance report to the court regarding implementation of the proposed mitigation plan," id. at 534. Ultimately, the government took the position that it would prefer to have the contract set aside instead of submitting to continuing oversight by an auditor and the court. Id.

While we doubt that it would ever be appropriate for the court to interfere with the performance of a contract based solely on its belief or suspicion that the CO cannot be trusted, court interference is certainly inappropriate in this case because the CO did not act arbitrarily or capriciously in evaluating the mitigation efforts. The Supreme Court has warned against undue judicial interference with the lawful discretion given to agencies. See Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 67 (2004) ("The prospect of pervasive oversight by federal courts over the manner and pace of agency compliance with such congressional directives is not contemplated by the APA."). Moreover, "[g]overnment officials are presumed to do their duty, and one who contends they have not done so must establish that defect by clear evidence." Carolina Tobacco Co. v. Bureau of Customs & Border Prot., 402 F.3d 1345, 1350 (Fed. Cir. 2005) (quotation marks omitted). Accordingly, we conclude that the Court of Federal Claims erred by finding that the "unenforceability" of Lockheed's mitigation plan was grounds for setting aside the contract. 

III. CONCLUSION

For the foregoing reasons, we reverse the Court of Federal Claims' decision setting aside the United States Army's contract award to Lockheed.

(Axiom Resource Management, Inc., v. U. S. and Lockheed Martin Federal Healthcare, Inc., No. 2008-5072, -5073, May 4, 2009)  (NOTE:  See Axiom cases above which are under the Court of Federal Claims.)