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Two scenarios – both involving small businesses considering a future RFP (not yet released). Company X is considering a bid on a Navy RFP and the company President is a cousin of the Government PM. Their relationship is purely personal and no business is discussed when they communicate. Company Y is considering a bid on the same RFP and the President of company Y is a good friend of the Government PM. They served together in Iraq and the President and the PM have met regularly to discuss company capabilities and the Government's future needs. Do either or both of these situations represent a conflict of interest that would require disclosure as part of the bidding process (assuming the future RFP includes a OCI clause)? If unclear, how and when could each company obtain a ruling before the RFP hits the street?
This was ran by my legal dept. (last year) and 3 issues were recognized, (all 3 required legal investigation)... An IG investigation was launched but IG will not provide status or even status on which issues they are looking into. It is now a year later and IG has given no instruction (pretty much does not respond to emails until I escalate) and due to criticality of the software we must move forward with a new acquisition/award. I am conducting a DOD acquisition which is Brand Name only and award will be made using other than full and open competition procedures to licensed product resellers of company ABC. Only licensed ABC software resellers can fulfill the requirements of the acquisition. However, based on ABC’s licensing agreement with those resellers, all resellers who supply the Federal Government must purchase their products and upgrade services from company XYZ, who in turn subcontracts with company ABC. All licensed ABC software resellers in affect obtain their quotes from company XYZ. Since company XYZ also submits their own quote, the nature of this relationship between company ABC and XYZ allows company XYZ a competitive advantage. (Also of note, the products being delivered are upgrades for current software, as such, 100% of deliverables come from company ABC. Company XYZ only adds on a pass through charge and provides no additional support or service. The same goes for every licensed reseller of ABC's products. (Resellers are both Large and Small buinesses). So XYZ essentially sets the resellers prices with exception to the resellers own pass through charge. I have received written confirmation from company ABC that it will not compete against company XYZ or provide support sole source). At this point, given an ongoing IG investigation, should I address the situation as a DFARS 209.571-3 Organizational Conflict of Interest issue? This means contacing with company ABC or XYZ or both to resolve the situation. IG has not instructed me as to what I can say or reveal so can I tell the contractor that IG is reviewing the current situation in order to facilitate change and promote competition?
1. Background: Government issues ID/IQ MAC contract for fixed price COTS equipment. The government specifies by performance criteria the types, quantities of equipment, and incidental support services, if any. Equipment descriptions are in terms of performance based specifications, brand name or equal, or brand name only requirements. The contract does not contain an OCI clause. · Deal Registration. Based on an Industry practice called “deal registration,” awardees on this ID/IQ MAC can "lock in" lowest pricing with a vendor before RFQ release as/if they gain knowledge of the requirement. The registration by its nature is very specific and is registered pre-RFQ. It guarantees the lowest price for that RFQ regardless of any existing agreement (e.g., reseller agreement). Information on the internet abounds on this industry practice. Provided below is one general description found at: http://searchitchannel.techtarget.com/definition/deal-registration "Deal registration is a feature of some vendors' channel programs in which a channel partner, often a VAR (value-added reseller) or SI (systems integrator), informs the vendor about a lead and is given priority for it. Once a lead is registered with a vendor, the partner usually has a set period of time to close the deal. During this time other channel members, or even the vendor's own sales team, are not allowed to negotiate a similar deal with that lead. Not all vendors offer deal registration, and some vendors offer it only to certain channel partners. Deal registration is usually put in place to lower the chance of channel conflict -- a situation in which channel partners have to compete against one another or the vendor's internal sales department. With a deal registration program in place, partners can work with a client without having to worry about another company trying to offer the same product at a lower price. Some vendors also offer to help partners in the selling cycle, and deal registration lowers the chance of the vendor stealing the lead once the partner has brought them into the discussion." Dell’s published deal registration criteria includes the following: "Deal Registration criteria for Dell includes the following: The deal is not the subject of an RFP, or similar tender process, that has been published; provided, however, that before such RFP, or similar tender process, has been published, the Partner shall be eligible to register the deal." http://partnerdirect.dell.com/sites/channel/Documents/DealRegistrationOfficialGuidelines.pdf · Scenario 1. Government issues RFQ for 100 quantities of Dell Laptop Model XX. MSRP is $2000 each. There are 5 MAC awardees. Company ABC registers the deal for 100 quantities of Dell Laptop Model XX and therefore locks in guaranteed lowest pricing from the OEM. RFQ is released. Dell’s quote to Company ABC is $1000/laptop; Dell’s response to the other 4 MAC offerers is that the deal has been registered and therefore will not offer a quote. · Scenario 2. Same as Scenario 1. The 4 offerers (who have various reseller agreements) request a quote from Dell. Dell does not inform the 4 offerors that the deal has been registered with Company ABC and provides quotes consistent with those agreements, which will at all times be higher than Company ABC's registered price of $1000. · Scenario 3. Same as Scenario 1. Because the deal is registered, Dell does not bother with the paperwork and does not offer quote. No explanations provided. 2. Issue: Although the contract does not contain an OCI clause, the Contracting Officer has cautioned awardees with regard to OCI issues given the competitive nature of this under an ID/IQ MAC. These deal registrations defeats the intent of a MAC. The very nature of deal registration means a prime must somehow have prior pre-RFQ knowledge of the specifics, which calls into question potential procurement integrity and OCI issues. Further, when only one bid is received, the RFQ is re-released and any subsequent rounds of competition is likely to generate either no bids or higher bids, leaving the Government with a false sense of competition. The Government ultimately receives lowest pricing regardless, but it was based on an offeror having an unfair competitive advantage. In order to afford fair opportunity, the government would have to prohibit deal registration, which would be a challnege to enforce since it is an industry practice. 3. Question: We plan to discuss this with the Contracting Officer, but wanted to get the experts to weigh in with any comments. In particular, does anyone believe this is an acceptable practice that should be allowed to continue, possibly in recognition of the fact that pohibition of this industry practice would be diffcult to enforce?
I'm chasing my tail and need some help. The General Rule appears to be that if a protester knows a firm has a conflict of interest, then the protester must wait and see who wins before it can file a protest for OCI. Apparently to protest before award is considered premature. Here is my fact scenario. Let's say the protester, the incumbent, knew that all competitors had an equal chance of winning an award. The protester also knew that one of the competitors, X had a government employee on its proposal team, and for purposes of this wifcon discussion, we'll say this team member absolutely knew the protester's pricing, labor rates, etc. (We'll all agree tremendous prejudice here and definitely an unfair competitive playing field). However, our protester waited until award to spring a protest against this competitor X who won the award. The protester used the OCI unfair competitive advantage argument when filing its protest. Why would GAO based on prior rulings consider a scenario like this timely? GAO seems to think that this impaired objectivity OCI only became viable when the agency actually selected X for award. GAO seems to regularly hold that "an alleged OCI is typically premature when raised BEFORE the protester is notified of the agency's selection decision." Don't we want the Contracting Officer to have this issue brought to its attention as soon as practicable so it can be addressed BEFORE award? The protester believed X one of its competitors had an impaired objectivity OCI. The protester knew let's say from the very beginning of the bid process this information and then just sat on it waiting. Once award was made bam, protest! I would submit the protester is obligated to disclose this information to the Contractor before the closing of proposals (or 10 days thereafter) so it could be properly addressed, and if the protester doesn't then any protest filed after this period of time would be untimely. Any thoughts? Cheers!