Wednesday, August 12, 2015

Organizational Conflicts of Interests (OCIs) - Strong and Direct Linkage Needed

FAR (Federal Acquisition Regulations) 9.5 provide rules for avoiding organization conflicts of interest (OCIs) and where the potential or OCIs exist, procedures for neutralizing and mitigating those risks. For example, a contractor that provides systems engineering and technical direction to the Government cannot be awarded a contract to supply the system or a contractor that prepares and furnishes specifications to be used in a competitive acquisition cannot be allowed to furnish those items. And there are more examples - see FAR 9.505-1 through 9.505-5.

FAR obligates an agency to conduct an organization conflict of interest analysis for significant conflicts, and contracting officers are given broad discretion in determining whether the potential conflict of interest is significant. 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.

In a recently published bid protest decision by the U.S. Court of Federal Claims, an unsuccessful bidder protested the award of a contract to a competitor on the grounds that an OCI existed between the winning bidder and the Governmental agency awarding the contract (see Vion Corporation v. The United States and World-Wide Technology, Inc.)

The plaintiff, ViON Corporation, argued that the Defense Information Systems Agency (DISA) failed to properly evaluate a potential organization conflict of interest regarding the winning bidder, World Wide Technology or WWT. ViON contended that an OCI arose because another DISA contractor, the Evaluator Group, has a strong financial relationship with Hewlett Packard (HP), one of the subcontractors for WWT. An employee (and co-founder) of the Evaluator Group conducted training for DISA employees. The Evaluator Group also recommended HP products on its website. And so, ViON contended that the Evaluator Group's work with HP may have affected the contract award process by influencing DISA's expectations.

The Court ruled that ViON's allegation of a potential OCI was not substantiated by the facts. The administrative record shows that the alleged connection between the Evaluator Group and the ultimate contract was tenuous, at best. ViON provided no evidence to show that the Evaluator Group employee had any impact on the procurement process. In fact, DISA did not use the Evaluator Group as a consultant for any aspect of the procurement process.

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