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L-3 Services, Inc., B-400134.11; B-400134.12, September 3, 2009

  • By GCPC GovCon Legal Team
  • September 3, 2009
  • BiasOrganizational Conflict of Interest (OCI)Unequal Access to Information

Link:         GAO Opinion

Agency:    Department of the Air Force

Disposition:  Protest sustained in part, denied in part.

_________________________________________________________________________________________________________________

GAO Digest:

1. Protest that agency unreasonably determined that the awardee did not have a “biased ground rules” organizational conflict of interest is sustained where the record shows that the awardee’s subcontractor provided procurement development services that put it in a position to affect the subsequent competition in its favor.

2. Protest that agency unreasonably determined that awardee did not have an “unequal access to information” organizational conflict of interest is sustained where the record shows that the awardee’s subcontractor had access to competitively useful, non-public information, and the drafts of the mitigation plans intended to prevent the disclosure of that information were not furnished to the agency until after the conclusion of the performance of the work covered by those plans.

3. Protest that agency unreasonably determined that the awardee did not have an “impaired objectivity” organizational conflict of interest is denied where the relationships between the awardee’s subcontractor and the firm that was its prime contractor on a prior task order are too attenuated to support such an allegation.

General Counsel P.C. Highlight:

L-3 alleges that GDIT or its affiliate SI has each of the three types of organizational conflicts of interest, none of which has been properly mitigated. GAO first states that contracting officials are to avoid, neutralize or mitigate potential significant conflicts of interest so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting agency. Because conflicts may arise in factual situations not expressly described in the relevant FAR sections, the regulation advises contracting officers to examine each situation individually and to exercise common sense, good judgment, and sound discretion in assessing whether a significant potential conflict exists and in developing an appropriate way to resolve it. GAO will not overturn the agency’s determination except where it is shown to be unreasonable.

The situations in which organizational conflicts of interest arise, as addressed in FAR subpart 9.5 and the decisions of GAO, can be broadly categorized into three groups. The first group consists of situations in which a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm a competitive advantage in a later competition for a government contract. In the unequal access to information cases, the concern is limited to the risk of the firm gaining a competitive advantage; there is no issue of bias. The second group consists of situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for another government contract by, for example, writing the statement of work or the specifications. In the biased ground rules cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. Finally, the third group comprises cases where a firm’s work under one government contract could entail its evaluating itself, either through an assessment of performance under another contract or an evaluation of proposals. In the impaired objectivity cases, the concern is that the firm’s ability to render impartial advice to the government could appear to be undermined by its relationship with the entity whose work product is being evaluated.

L-3 first alleges that SI has a biased ground rules organizational conflict of interest, given the way in which the effort to produce the acquisition business or mission case and other procurement planning was intertwined with the writing of the statement of work. That interconnectedness can be seen clearly in the language of the Army task order, which described six subtasks that would be performed under phase I; five of those six subtasks were to be performed under phase Ia, and all six would be performed under phase Ib. Performance of both portions of phase I would include, among others, subtask 1, Program Management, Administrative, and Quality Assurance Services, subtask 2, Communication and IT Requirements Identification and Analysis Services, and subtask 6, Technical Advice and Program Support Services. The one subtask reserved for performance under phase Ib was subtask 5, Evaluation Criteria Services. GAO finds that the Air Force contracting officer’s determination that there was no biased ground rules organizational conflict of interest was based on a misconception of the work performed under the task order and a misreading of American Artisan Prods., Inc. Based on the record here, GAO thinks that the agency lacked a reasonable basis for its conclusion that SI’s performance under phase Ia of the task order did not place it in a position to skew the competition, intentionally or not, in favor of itself, and GAO therefore sustains the allegation that SI had a biased ground rules organizational conflict of interest.

L-3 also alleges that SI’s performance on Task Order 5017 gave it access to competitively useful, non-public information and thus created an unequal access to information organizational conflict of interest for GDIT. GAO finds that there is no reasonable basis on which to conclude that all competitively useful information obtained by SI was disclosed to the other offerors, as the agency and the intervener argue. Nor can GAO conclude that the mitigation plans and non-disclosure agreement effectively prevented an organizational conflict of interest. The agency has yet to adequately investigate and reasonably determine the extent and type of information to which SI had access or the efficacy of the non-disclosure agreement and mitigation plans, and absent the results of those inquiries, the record contains inadequate support for a finding that SI did not have an unequal access to information organizational conflict of interest. GAO also finds that the record lacks a thorough agency inquiry into the extent of access to information that the SI employee had and what competitively useful information his access yielded. The record similarly lacks any reasonable assessment of whether the non-disclosure agreement and the mitigation plan were effective against the disclosure of information to SI Telecom (or others). Although extensive hearing testimony appeared to show that much (and potentially most) of the known competitively useful information was made available to the other offerors, the record shows that SI nevertheless likely had access to other competitively useful information not known to the Air Force. As noted above, the plain language of the task order precluded the firm performing the task order phase Ia work from competing under the Uni-Comm solicitation; the Army and Air Force officials who drafted and issued the Army task order concurred with this exclusion. With that exclusion in effect, neither the Army, nor the Air Force, nor the task order prime contractor or SI themselves, had any reason to track the information being accessed by SI. The Air Force contracting officer also testified that he was unaware of any record of the information that SI reviewed. The earliest attempts to identify what the SI employee could have learned were made some time after the completion of phase Ia of the task order. In sum, the record contains no contemporaneous account of what information SI had access to, nor is there any accurate description in the record, memorialized after-the-fact, containing that information. Given the various ways in which SI could have accessed information and the lack of a record showing what it did access, GAO thinks that it follows that there was no support for the Air Force’s belief that all competitively useful information was made public. GAO therefore concludes that, given the inadequacies of this record, it was unreasonable for the agency to determine that SI did not have an unequal access to information organizational conflict of interest.

The protester next argues that GAO should find that GDIT, through its subcontractor SI, had an impaired objectivity organizational conflict of interest, because the prime contractor under Army Task Order 5017, FCI, supplied employees who acted as Mission Capability subfactor evaluation team advisors to the Air Force. However, the relationships between firms, or the actions of individual firms, described in the cases where GAO has sustained an allegation of an impaired objectivity organizational conflict of interest are different in kind from the relationship between FCI and SI. There is no evidence in the record of a corporate relationship between the firms, such that one firm is evaluating itself or an affiliate, or evaluating products made by itself or a competitor, or is making judgments that would otherwise directly influence its own well-being, as there was in the cases cited above. Moreover, GAO looks for some indication that there is a direct financial benefit to the firm alleged to have the organizational conflict of interest, and there is none in this instance. While SI performed as FCI’s subcontractor on the Army task order, the suggestion that FCI would benefit financially from favorably evaluating GDIT’s proposal is too remote a financial relationship on which to base an impaired objectivity organizational conflict of interest. The relationship between SI and FCI is simply too attenuated and too dissimilar to the above cases for GAO to conclude that the agency unreasonably determined that GDIT did not have an impaired objectivity organizational conflict of interest. The protest is sustained in part and denied in part.

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