Organizational conflicts of interest (OCIs) are perpetually thorny issues in federal procurement that contracting officers are required to identify and evaluate “as early in the acquisition process as possible.”[1] Although the Government Accountability Office (GAO) has identified several OCI categories,[2] two recent decisions highlight so-called impaired objectivity OCIs, which arise when a contractor’s ability to provide objective advice or recommendations to the government will be undermined by competing interests. The two decisions serve as an important reminder of what does — and does not — qualify as meaningful consideration by the contracting officer in such situations, and how prospective contractors can assist in identifying and mitigating such OCIs.

Visual Connections, LLC

In December 2018, GAO denied a protest by Visual Connections, LLC of the award of a Department of Health and Human Services (DHHS) task order to CollabraLink for the design of a system to facilitate certain state Medicare and Medicaid programs. The protester contended that the agency had failed to meaningfully consider whether a proposed subcontractor, New Wave, presented an impaired objectivity OCI. The task order solicitation was issued under a multiple award IDIQ contract for the design, development, implementation, operation, and maintenance of related systems, under which New Wave had earlier been awarded a separate task order to provide systems integration services. The solicitation provided that holding another task order or contract under the same program could create a conflict of interest, and required offerors and their subcontractors to submit a conflict of interest and compliance program with their proposals.

A key factor underpinning GAO’s decision to deny the protest was that the agency required both CollabraLink and New Wave to submit an OCI mitigation plan due to New Wave’s role as the systems integrator under the separate task order. The submitted plan outlined multiple mitigation strategies, and the Contracting Officer concluded that no OCI existed that would preclude award. Moreover, the solicitation clearly defined the contractor’s and agency’s roles regarding ultimate decision responsibility; although New Wave would monitor other task order holders’ performance and report any scheduling issues to the agency, it would not evaluate or otherwise rate those contractors’ performance. And New Wave had no incentive to provide less than objective advice to CMS — indeed, New Wave could receive a negative performance assessment for failing to provide accurate reports to the agency. Under these circumstances, GAO held, the contracting officer reasonably concluded that the conflict was mitigated.

Safal Partners, Inc.

Shortly afterwards, in January 2019, GAO sustained a protest alleging an impaired objectivity OCI. In Safal Partners, the Department of Education (DOE) had awarded a contract to MSG, which proposed to subcontract certain technical assistance services to WestEd. Safal protested that DOE failed to meaningfully consider whether WestEd had an OCI, because WestEd held a separate contract with the agency that required it to identify DOE grantees who would benefit from technical assistance. That technical assistance work, however, is the same work that MSG proposed subcontracting to WestEd. Safal argued that WestEd could enrich itself by recommending grantees for technical assistance under its prime contract, and then providing that assistance under the subcontract.

As in Visual Connections, the contracting officer in Safal Partners emphasized that the agency retained ultimate responsibility for directing which grantees would receive technical assistance. He concluded that WestEd could not “funnel” work to itself, and that this lack of authority mitigated any potential OCI. Noting that “well settled” GAO precedent establishes that a contractor who is expected to offer input to the agency may have an OCI even where the agency retains final decision-making authority, GAO deemed the contracting officer’s analysis unreasonable because it applied an improper legal standard. GAO sustained the protest and recommended that the agency conduct a new OCI analysis.

Though there is arguably some tension between Visual Connections and Safal Partners in GAO’s treatment of the “ultimate decision responsibility” issue, the OCI analyses in the two cases were markedly different. Unlike in Visual Connections, the contracting officer in Safal Partners did not request an OCI mitigation plan. In fact, he was unaware of any potential OCI until the protest was filed. And his OCI analysis could fairly be described as cursory — he did not even explicitly decide whether an OCI existed. He just concluded that there was no OCI problem because the agency would make the ultimate call on who would receive technical assistance. Had the agency’s retention of ultimate decision authority been just one factor in the contracting officer’s OCI analysis in Safal Partners rather than the sole factor, GAO may well have denied the protest.

Key Takeaways

GAO rarely sustains protests based on alleged OCIs, but when it does, contractors should take note. These two decisions not only illustrate what may constitute meaningful consideration for purposes of an OCI analysis, but also serve as a reminder that impaired objectivity OCIs may arise even where the agency retains ultimate decision authority.

Contractors who recognize that their work under one contract or task order may present an impaired objectivity OCI under another should be proactive in determining ways to mitigate the potential OCI. Subcontracting the problematic work is one way contractors frequently reduce OCI risks. Yet, GAO’s recent decisions demonstrate that subcontractors may create OCI concerns of their own — particularly in multiple award task order procurements under large federal programs, where separate task orders are related to a single program. Preemptively drafting formal OCI mitigation plans, or giving due consideration to OCIs as part of a teaming agreement, can facilitate identifying and mitigating OCIs early in the procurement process.

The decisions also provide an important reminder that offerors considering a protest alleging an impaired objectivity OCI should not forget the awardee’s subcontractors in their analysis.

[1] 48 C.F.R. § 9.504.

[2] The other two categories include “unequal access to information” and “biased ground rules” OCIs.

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Photo of Peter B. Hutt II Peter B. Hutt II

Peter Hutt represents government contractors in False Claims Act and fraud matters, and accounting, cost, and pricing disputes and counseling matters.

Peter is a leading False Claims Act lawyer in the government contracts arena. He has represented contractors for 35 years in matters

Peter Hutt represents government contractors in False Claims Act and fraud matters, and accounting, cost, and pricing disputes and counseling matters.

Peter is a leading False Claims Act lawyer in the government contracts arena. He has represented contractors for 35 years in matters alleging cybersecurity noncompliance; cost mischarging; CAS violations; quality assurance deficiencies; substandard products and services; defective pricing; health care fraud; price reduction issues; inadequate subcontractor oversight; and reverse false claims. He has testified before Congress concerning the False Claims Act, and is a thought leader in the field. Peter also conducts internal investigations and advises clients on whether and how to make disclosures of potential wrongdoing.

Peter also represents contractors and grantees in accounting, cost, and pricing matters, and other contract and grant matters. He has addressed issues concerning pensions and post-retirement benefits; TINA and defective pricing; alleged CAS violations; cost accounting practice changes; alleged charging of unallowable and expressly unallowable costs; terminations; contract financing; price reduction clause issues; subcontracting and supply chain compliance; specialty metals compliance; and small business and DBE compliance. He has litigated cost, accounting, and contract breach matters in the Court of Federal Claims and the ASBCA.

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Photo of Hunter Bennett Hunter Bennett

Hunter Bennett regularly represents government contractors in bid protests before the Government Accountability Office and the U.S. Court of Federal Claims. He also counsels clients in a wide range of formation and disputes issues. Prior to entering private practice, he served as a…

Hunter Bennett regularly represents government contractors in bid protests before the Government Accountability Office and the U.S. Court of Federal Claims. He also counsels clients in a wide range of formation and disputes issues. Prior to entering private practice, he served as a Trial Attorney with the U.S. Department of Justice, where he was a member of the Department’s Bid Protest Team and frequently defended the United States against bid protests filed in the Court of Federal Claims.

During his tenure at the Department of Justice, Hunter served as lead counsel for the United States in dozens of cases involving complex commercial disputes. He also oversaw the litigation of all habeas corpus cases filed by Guantanamo Bay detainees that were pending before the Honorable Gladys Kessler in the United States District Court for the District of Columbia, and personally tried five detainee habeas cases. Additionally, Hunter briefed and/or argued more than 20 cases in the United States Court of Appeals for the Federal Circuit.

Hunter began his career as a prosecutor in the Philadelphia District Attorney’s Office, where he served as lead counsel in over 200 habeas corpus cases filed in the United States District Court for the Eastern District of Pennsylvania, and successfully briefed and/or argued multiple cases in the United States Court of Appeals for the Third Circuit.

In his spare time, Hunter plays bass guitar in the band Dot Dash, whose song “Shopworn Excuse” was dubbed “a jangly piece of heaven” by USA Today.

Photo of Brooke Stanley Brooke Stanley

Brooke Stanley helps companies of all sizes navigate the complex issues that arise from doing business with federal, state, and local governments. She routinely advises on a broad range of issues, including compliance with procurement and financial assistance regulations, contract negotiation and formation…

Brooke Stanley helps companies of all sizes navigate the complex issues that arise from doing business with federal, state, and local governments. She routinely advises on a broad range of issues, including compliance with procurement and financial assistance regulations, contract negotiation and formation, organizational conflicts of interest, flow-down requirements, equitable adjustments, claims and disputes, and small business issues. Brooke leverages her prior experience soliciting, negotiating, and administering government contracts for the United States Navy in crafting creative yet practical solutions for clients.

Brooke regularly assists clients in negotiating both procurement contracts and non-traditional agreements, such as other transaction agreements and cooperative research and development agreements. She has particular expertise assisting clients in protecting their intellectual property and confidential or proprietary information when negotiating with the government, including with respect to intellectual property rights and Freedom of Information Act issues.

In addition, Brooke frequently advises both government contractors and private equity firms in transactional matters, from preparing for sale or purchase to due diligence, negotiating transaction documents, and navigating pre- and post-closing activities. Her expertise in nuanced government contracting compliance issues helps clients understand, mitigate and manage material risks in such transactions.

Prior to entering private practice, Brooke clerked for the Honorable Susan G. Braden of the United States Court of Federal Claims.