Link: GAO Opinion
Agency: Department of Health and Human Services
Disposition: Protest denied.
Where performance of more than one-third of the contract requirements created a conflict of interest for the protester, agency reasonably rejected protester’s final revised proposal that, for the first time, offered to perform the conflicted requirements by relying on a “firewalled subcontractor,” but failed to meaningfully address the cost and technical impacts associated with this significant proposal revision.
General Counsel P.C. Highlight:
FCSO protests that the agency was required to accept its proposed firewalled subcontractor approach as an acceptable mitigation plan, and asserts that the agency’s documentation regarding the basis for rejecting FCSO’s proposal was inadequate. GAO states that contracting officers are required to identify potential conflicts of interest as early in the acquisition process as possible, and to avoid, neutralize, or mitigate such conflicts to prevent the existence of conflicting roles that might impair a contractor’s objectivity. In assessing potential conflicts of interest, the FAR directs the contracting officer to examine each contracting situation individually on the basis of its particular facts and the nature of the proposed contract, and to exercise common sense, good judgment, and sound discretion with regard to whether a conflict exists and, if so, the appropriate means for resolving it; the primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. Once an agency has given meaningful consideration to potential conflicts of interest, GAO will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record.
Here, as discussed above, FCSO’s October 8, 2008 initial proposal contemplated that FCSO would perform both the QIC and the MAC contracts for the same area, and that separation and segregation of the day-to-day management and operation of the two contracts should be considered sufficient COI mitigation; alternatively, FCSO’s initial proposal contemplated transferring performance of the QIC contract to its sister corporation. In December, the agency clearly advised FCSO that neither approach was acceptable, and offered FCSO another opportunity to meaningfully address the COI. In January 2009, FCSO responded, continuing to argue for acceptance of the novation approach it had previously proposed. Thereafter, the agency again told FCSO that its proposed approach was unacceptable and, yet again, offered FCSO an opportunity to meaningfully address the COI. In seeking yet another response from FCSO, the agency specifically reminded FCSO that its proposed mitigation plan must be complete, comprehensive, and detailed, and that it must discuss, at a minimum, the cost and technical impact created by any proposed revisions. Notwithstanding the agency’s clear directions, FCSO’s response which reflected material changes to its previously-proposed approach–provided virtually none of the specific information the agency requested. Based on GAO’s review of this record, as discussed above and specifically including FCSO’s various responses to the agency’s multiple requests that FCSO meaningfully address the clear conflict of interest, GAO finds no merit in FCSO’s assertion that the agency was required to accept, or that it inadequately documented the basis for rejecting, FCSO’s firewalled subcontractor approach. The protest is denied.