Organizational Conflict of Interest - Facts Required to Sustain a Bid Protest, Not Mere Speculation - Part 1

The Army issued a task order contract to IBM Corporation to support, sustain, and maintain its General Fund Enterprise Business System. Accenture Federal Services, LLC (Accenture) protested the award to IBM for a number of reasons including the argument that IBM had an impermissible organizational conflict of interest that should render it ineligible for award.

The Army's General Fund Enterprise Business System (GFEBS) is an integrated Army-wide business management system that enables General Fund financial and real property management capabilities, including funds distribution, execution, reporting, and accounting and real property accountability, maintenance, and asset accounting. Think of it as QuickBooks on steroids. It takes a lot of manpower to keep the thing running smoothly.

Contracting officers are required to identify and evaluate potential OCIs (Organizational Conflict of Interest) as early in the acquisition process as possible, and avoid, neutralize, or mitigate significant potential conflicts of interest before contract award (see FAR 9.504 and 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 officer.

In a bid protest situation involving OCIs, the GAO does not try and second guess the contracting officer when he/she has given meaningful consideration to whether a significant conflict of interest exists unless there is clear evidence that the agency's conclusion is unreasonable. Contractors must and are required to exercise considerable discretion. To be successful, a protester must identify "hard facts" that indicate the existence or potential existence of a conflict. Mere inference or suspicion of an actual or potential OCI is not enough.

OCI's typically fall into three broad categories: (i) biased ground rules, (ii) unequal access to information, and (iii) impaired objectivity. Accenture argued all three of these categories in its bid protest. We will discuss Accenture's arguments concerning biased ground rules today and the other two conditions tomorrow and Wednesday.

Biased Ground Rules

A biased ground rules OCI exists where 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. The primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself.

In this case, Accenture argued that IBM has OCIs with respect to this new contract  because IBM is also under contract to provide financial statement publication services (FSPS) for three of the Army's funds. In its role as the FSPS contractor, IBM is required to collect and process routine financial data including data pulled from the accounting system under appeal.It is the interplay of these two systems that are the focus of the OCI allegations. IBM is required to review, at least annually, the most current guidance from Treasury and DoD regarding the U.S. Standard General Ledger and identify any additions or removals which should be made to ensure the source systems' compliance with the standards.

Accenture argues that IBM has the ability to choose which recommendations to make or not make and speculates that such recommendations may have impacted the statement of work that favored IBM. Accenture did not, however, provide any hard facts regarding recommendations made by IBM that impacted the GFEBS requirements nor has it even provide a description of the type of recommendation IBM could have made in its FSPS role that would have skewed the competition in its favor.

The GAO denied this portion of Accenture's bid protest.

You can read the entire bid protest decision here.