A hard line on organizational conflicts

Organizational conflicts of interestcontinue to be a hot topic in federal acquisitionand a potential risk area for contractors.Federal courts have confirmed intwo recent decisions the importance ofscrupulously following OCI rules for competitive andcompliance reasons.The first decision, whichaffects competitive viability,was issued in late Septemberby Judge Susan Braden of theU.S. Court of Federal Claims.Braden sustained a post-awardprotest that claimed LockheedMartin Corp. had an impermissibleOCI in performing programmanagement services forthe Defense Department'sTricare programs. The courtheld that the department violatedOCI regulations becauseit failed to identify a potentialconflict and exercise sound discretionin developing a mitigation plan.The case is noteworthy for threereasons. First, the GovernmentAccountability Office had previouslydenied the same protest after DODtwice took corrective action to fix thealleged OCI issues. Thus, the casedemonstrates that an agency cannotalways correct its way out of an OCIprotest. It also illustrates the court'sindependence and the potential valueto contractors of seeking judicialreview.Second, the judge prefaced thedecision by opining on the broad significanceof the OCI issues facing thecourt. "The federal government'sincreased use of and dependence onoutside contractors to perform essentialgovernment functions oftenentails providing those contractorswith governmental, business proprietaryand otherwise private informationto perform their duties. ... Establishing the parameters of accessto and use of this information will beamong the most important decisions that the [courts] will make in thenext few years ? not only for governmentcontract jurisprudence, but tomaintain competition in this growingsegment of the economy."Third, the court elected not todecide whether performance of thecontract should be enjoined. Rather,the court asked the Federal TradeCommission to provide its views, asamicus curiae, on the competitiveissues in the case. Although notunprecedented, this step is highlyunusual in bid protest cases andreflects the court's view of the complexityof the issues. This is a case towatch in the future ? in the Court ofFederal Claims and, almost certainly,on appeal.In another recent OCI decision,Judge Richard Roberts of the D.C.District Court declined to dismiss acase in which the governmentclaimed a contractor had violated theFalse Claims Act by failing to disclosean OCI. The decision was importantfor two reasons.For one, it linked a contractor'sOCI representations with potentialliability under the False Claims Act.This was not a first, but it was asobering reminder that OCI representationsand certifications must betaken seriously and can be the sourceof thorny compliance issues.Second, the decision was notablebecause the undisclosed conflict didnot stem from a contractual relationshipbut rather from the contractor'sdealings with a trade association. Thecourt found that, under the applicabledefinition of an OCI, the contractorwas required to disclose not onlycontracting and consulting relationshipsbut also "any relationship whichmay have compromised its neutralityunder the contracts."The court concluded that, by workingdirectly with a trade associationwhose goal was to advocate for a certainpolicy position, the contractor'sability to provide impartial assistanceto the government could be calledinto question. Accordingly, the courtfound that the failure to disclose therelationship was improper and createdthe basis for a claim under theFalse Claims Act.These cases are vivid remindersthat contractors must know the ropeson OCIs to protect their competitivepositions and avoid potentially significantliability.