Wednesday, December 31, 2014

Government Standards of Conduct in Contracting

There are a number of safeguards within the Federal Acquisition Regulations (FAR) that prescribe policies and procedures for avoiding improper business practices and personal conflicts of interest and for dealing with their apparent or actual occurrence. Most of these are found in FAR Subpart 3.1. The overarching principle reads as follows:
Government business shall be conducted in a manner above reproach and with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct. The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships. While many Federal laws and regulations place restrictions on the actions of Government personnel, their official conduct must, in addition, be such that they would have no reluctance to make a full public disclosure of the actions (FAR 31.101-1, emphasis added).
In a recent Comptroller General bid protest, a company alleged that its winning competitor had an unfair competitive advantage that the Government failed to "meaningfully consider". This competitor had hired the former director of the office awarding the contract. The former director had left office during the procurement and began employment with the competitor after the submission of initial proposals but prior to the date of final proposal revision (FPR). The former director, it was contended, had access to non-public, competitively useful information. The agency however, took no affirmative steps to avoid or mitigate the apparent conflict, contrary to FAR requirements.

The Comptroller General (CG) noted that according to the record, the contracting officer had not contemporaneously investigated the competitor's potential unfair competitive advantage prior to contract award. In response to the bid protest however, the Agency performed a thorough investigation and concluded that there was no reason to believe that the former director could have shared proprietary information with his new company and therefore the award was not tainted by any conflicts.

The problem with this post-award investigation however is that it did not meet the regulatory obligations to avoid even the appearance of conflict. The CG stated:
In this regard, where a firm may have gained an unfair competitive advantage through its hiring of a former government official, the firm can be disqualified from a competition based upon the appearance of impropriety which is created by this situation, even if no actual impropriety can be shown, so long as the determination of an unfair competitive advantage is based on facts and no on mere innuendo or suspicion.
The CG further stated that it typically reviews contracting officer's conflict of interest investigations and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, it will not substitute its judgment for agency's, absent clear evidence that the agency's conclusion is reasonable. However, in this case, the contracting officer had failed to meaningfully consider whether the competitor's employment of the former director had access to competitively useful, non-public information that gave it an unfair competitive advantage.

In this case, the CG sustained the bid protest. To read the full case, click here.

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