Organizational Conflict of Interest - Facts Required to Sustain a Bid Protest, Not Mere Speculation - Part 3

For the past two days, we have been discussing a GAO (Government Accountability Office) bid protest decision involving OCI (Organizational Conflict of Interest) assertions by Accenture against IBM. If you missed Parts 1 and 2 of this series, go here to begin reading. Also, if you want to read the decision yourself, you can find the entire bid protest decision here.

Generally, OCIs 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. Monday we discussed Accenture's arguments alleging biased ground rules. Yesterday we looked at Accenture's unequal access to information arguments (both its biased ground rules and unequal access to information relied on the same speculation. Today we will conclude this short series by trying to understand what the Accenture meant by alleging that IBM acted with impaired objectivity.

Impaired Objectivity

Impaired objectivity exists where a firm's ability to render impartial advice to the Government will be undermined by the firm's competing interests, such as a relationship to the product or service being evaluated.

Recall that IBM is the support contractor for another Army system, the FSPS (Financial Statement Production Services) contract and was awarded the GFEBS (General Fund Enterprise Business System) - the subject of this protest. One of IBM's duties under the FSPS contract is to conduct annual compliance reviews of source systems to determine whether they comply with Treasury and DoD guidance. Accenture contends that IBM could tailor its recommendations in such a way as to generate more work under the GFEBS contract, or to prevent a reduction of work.

The contracting officer considered this possibility and essentially concluded that IBM would not have the level of discretion implicit in the protester's argument, or the requisite decision-making authority to direct that changes be made. The contracting officer noted that the FSPS and the GFEBS contracts were managed by different contracting officers and program managers. IBM's recommendations would be vetted by the Government to determine whether they would result in proper implementation and the ultimate decision to require a changed to GFEBS would be made by the Government.

Once again, the GAO found that the contracting officer gave meaningful consideration to the protester's allegation and found no basis to conclude the contracting officer's determination was unreasonable.

Like the previous two OCI allegations, the GAO also denied this portion of Accenture's bid protest. In all three cases, Accenture provided no factual evidence to support its OCI claims; only conjecture.

Organizational Conflict of Interest - Facts Required to Sustain a Bid Protest, Not Mere Speculation - Part 2

Yesterday we began unpacking a GAO (Government Accountability Office) bid protest decision involving OCI (Organizational Conflict of Interest) assertions by Accenture against IBM. If you missed Part 1, go here to read it. Also, if you want to read the decision yourself, you can find the entire bid protest decision here.

Generally, OCIs 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. Yesterday we discussed its arguments alleging biased ground rules. Today we look at unequal access to information and tomorrow we will complete the series looking at impaired objectivity.

Unequal Access to Information

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.

Accenture argued that IBM had an unequal access to information because, as the contractor for the Army's FSPS (financial statement publication service) system, it had access to data from all of the Army's varied ERP (Enterprise Resource Planning) systems - systems that fed the Army's GFEBS system (General Fund Enterprise Business System) - the contract being protested.

The contracting officer considered whether IBM might have unequal access by focusing on the type of information available to IBM in the course of FSPS contract. The contracting officer concluded that the information that IBM receives is financial information would not permit IBM to have unequal access to information. The contracting officer further noted that the information received by IBM is raw financial data that IBM must consolidate into general financial ledgers for the Army.

The GAO ruled that, based on the contracting officers consideration of the allegation, coupled with the protester's failure to explain how the type of data available to IBM could give it a competitive advantage, there was no basis to conclude that IBM had unequal access to information.
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The GAO denied this portion of Accenture's bid protest.

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.

Government Employees and Contractor Employees Working Side-by-Side

There are many situations where Government employees and contractor employees share offices, occupy cubicles in the same office space, or otherwise work in close proximity with one another. Those situations are not at all uncommon. It's found in the Department of Defense a lot as well as in other Governmental agencies. This creates certain challenges that need to be confronted and mitigated especially where there may be concerns about organizational conflicts of interest.

Consider a situation where a Government employee reviews and processes invoices, develops scopes of work, prepares independent Government estimates - all pertaining to a contractor whose employee is practically looking over his/her shoulder or is otherwise in a position to glean, overhear, or make inquiries about matters that have a direct bearing on his/her employment and/or his/her employer.

The Government will need to do something about such situations or face consequences like bid protests and whistleblower claims. A couple of things the Government has done in the past include:

• Non-disclosure agreements. The value of these should not be understated. Although its just paper, it does places the contractor employee on notice not to divulge anything proprietary or sensitive that they learn from working within the program office - which would include not using it to the advantage of their company. Annual updates help reinforce the prohibition.
• Implement physical separation as best as possible. Usually, the Government will try locating a contractor workforce in their own section or if that is not physically possible move them as far away from potential conflicts as possible.
• Contractor standards of ethical conduct. This almost goes without saying. Every contractor with a contract in excess of $5 million is require to have written standards of ethical conduct and periodic (annual?) training to ensure compliance. While no one from the Government checks up on contractor compliance with this requirement very often, it would behoove the Government to be pro-active in making certain that contractors who work in close proximity with Government employees have compliant ethics programs.

The Government employee has some responsibilities as well. Based on the nature of some of the tasks the government employee is working on, the Government employee must safeguard the information he/she is working on.

Ultimately, the contractor is working as part of a Government team and should be acting in an ethical manner. At the end of the day however, there is only so much the Government can do to isolate proprietary information from individuals inside an acquisition office environment and beyond. It will come down to the integrity and ethics of the individuals supporting the Government as well as sufficient management oversight to ensure potential conflicts of interests are mitigated.