Bones of contention

Responding to the recent events, Sen. JosephLieberman (I-Conn.), chairman of theHomeland Security and Governmental AffairsCommittee, called for action to curb unmitigatedorganizational conflicts."We need an immediate overhaul of federalethics policies to ensure that conflicts of interestdon't impair the impartiality of contractors ortheir employees," Lieberman said in a March 26statement.Organizational conflicts of interest, also knownas OCIs, occur when a government contractorhas other activities or relationships that couldlead to an unfair competitive advantage. Asdefined in the Federal Acquisition Regulation,they tend to arise when a contractor plans forfuture work or evaluates past or current workperformed by other contractors. That can occurin contracts for management support, consulting,evaluation of contractor performance andsystems engineering.The number of such conflicts is not known.Gordon said companies have filed more bidprotests with GAO alleging OCIs than theydid 10 years ago, but the overall count is nomore than about 5 percent of all bid protests.There probably have been fewer than twodozenOCI protest decisions in the pastdecade, he estimated.Agency contracting officials are expected tobe aware of the potential for such conflicts andmitigate those risks."The government has to be vigilant and cannotshift to the private sector the responsibilityfor handling OCIs," Gordon said. "There issometimes a temptation to say, 'Let's let thecompany run the mitigation plan.' That isproblematic."What is new is the perception that the potentialfor such conflicts is on the rise and that theclaims court is taking them seriously.For example, the court ordered no exercise ofextensions on the Tricare contract because ofsuch conflicts. That is not a common occurrence,and it will get attention, said JonathanCain, an attorney at law firm Mintz Levin and aWashington Technology columnist. "It showsthat the court considers OCI a serious threat tocompetition for government contracts thatneeds to be closely monitored," he said.Difficulties in hiring enough skilled governmentacquisition employees have led to increasing reliance on contractors to plan, design,supervise, support and evaluate procurementcontracts, which raises the potential for conflictsof interest, according to the recent GAOreport on the Army Contracting Center ofExcellence. The Army addressed and mitigatedthose risks to someextent, but the governmentoften relies on thecontractors to identifyconflicts, GAO said.Rapid consolidation inthe defense, informationtechnology and government services contractingindustries has led to more interrelationshipsamong the contractors and more potentialfor conflict among affiliates of the samecompany, experts say.Consolidation alone is not the issue, Gordonsaid. "The problem is when the company thatsells the tanks has a corporate affiliate that sellsadvice on buying tanks."Those concerns are likely to be compoundedwhen the government embarks on buyingsophisticated advanced technologies requiringmultiple systems networked together, Colleyand others said. In such cases, the governmentmight hire contractors to design and integratethose systems and advise on procurement ofparts.If the government takes a blunt approach toOCIs, it risks losing the ability to implementsophisticated designs and buy important capabilities,Colley said."Trying to preserve fair competition withoutlosing the benefits of great capabilities, you arebetween a rock and hard place," Colley said.But some experts emphasize that the concernsare manageable. "OCIs ought to be identifiedand managed," said Alan Chvotkin, seniorvice president at the Professional ServicesCouncil, which represents service contractors.As long as agencies and contractors are awareof the potential, they can always mitigate it, hesaid.Scott Amey, general counsel at the Projecton Government Oversight, said federalacquisition rules must be updated andstrengthened to address the rise in conflictsof interest. There should also be betterenforcement, more tools to ensure competitivenessand more active deterrence, he said.The government ought to focus on identifyingpotential OCIs in earlier stages, especiallywhen a vendor is assisting in planning anddesigning the procurement, said CharlesTiefer, professor and government contractsspecialist at theUniversity of BaltimoreSchool of Law.When a contractorserves as a consultant inthe planning of a procurement,he or shebecomes a partner in the process, and thepotential for partiality becomes greater yetmore subtle, Tiefer said. "It creates a doubtthat the contract officers will be tough enoughon their partner in contracting."He suggested stronger language in theacquisition rules, including a requirement toinform superiors of potential conflicts at anearly stage.In any case, OCIs are not going away, andthey are getting heightened attention."Organizational conflicts of interest are ahuge problem that have come up fast on theradar screen," Tiefer said.