Infotech and the Law: Tough to stick this conflict of interest charge

Jon Cain

Organizational conflict of interest is a charge often bandied about but infrequently pinned down. Teaming partners frequently are asked to avow that they'll have no OCI if a contract is awarded, and subcontractors must warrant that their previous work for an agency won't create an OCI.

For as often as OCI is raised in an IT services procurement, relatively few court cases offer guidance as to what constitutes it. The U.S. Court of Federal Claims last month decided a bid protest in an IT services procurement in which OCI charges were a central issue.

The case arose when the Labor Department procured network-infrastructure and operations-support services. The agency invited a dozen holders of the General Services Administration Federal Supply Schedule contracts to bid for the multiyear blanket purchasing agreement.

One bidder, for seven years, had been an incumbent supplier of many of the operations-support services sought in the procurement. Another, for two years, had been a subcontractor providing system design, enterprise architecture and project planning and administration.

At the end of the evaluation, the operations-support incumbent lost the new contract to the systems development subcontractor. The operations contract incumbent filed a protest claiming that OCI rules barred award to the systems development subcontractor.

Because the Court of Federal Claims has little precedent of its own on which to rely in deciding OCI cases, it turned to a 10-year old decision from the General Accountability Office. That decision set three circumstances in which one offerer can, as a result of previous work for the agency, gain an unfair competitive advantage: unequal access to information, biased ground rules and impaired objectivity.

The most common charge ? and a claim made in this case ? is that as a result of previous work, one offerer has access to information not available to other competitors. The protester alleged that the awardee had participated
in daily internal agency meetings from which the protester was excluded, and had worked on development and integration of the systems that were to be maintained under the new contract. The court found this insufficient to establish OCI.

In the court's view, any incumbent will have access to such information in the performance of its contract, and mere incumbency does not create an unfair competitive advantage. A successful OCI protest requires proof that the awardee acquired competitive information as a result of its previous work, and it enabled the awardee to submit a superior technical or price proposal.

This protester's case was weakened further by the fact that a non-incumbent, with no previous access to any non-public information, submitted the highest-ranked technical proposal.

The protester also charged that the awardee had helped design the systems the agency would use, participated in hardware and software selection and worked on assembly and integration of those systems. The protester claimed that this prior work unfairly gave the awardee means to bias the award process in its favor.

OCI can arise from a contractor having the means to skew the competition in its favor by setting ground rules for the follow-on work, or by obtaining special knowledge of the agency's future requirements. But as there was no evidence that the awardee had written any of the solicitation or helped set its specifications, the court rejected the claim.

Jonathan Cain is a member of the law firm Mintz Levin Cohn Ferris Glovsky and Pepeo PC in Reston, Va. The opinions expressed in this article are his. He can be reached by e-mail at jcain@mintz.com.

About the Author

Jonathan Cain is a member of law firm Mintz Levin.

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