Decided: December 6, 2021
Agency: Department of the Navy
Disposition: Protest Sustained
This case is unique, because it is a rare example of GAO sustaining a protest based on an Organizational Conflict of Interest (“OCI”). Here, GAO’s conclusion rested heavily on the fact that two former government officials assisted in preparing the awardee’s proposal. This case showcases the potential pitfalls of hiring former government employees without sufficient conflict avoidance and mitigation. As GAO notes here, when an offeror hires former government officials who have had recent access to competitively useful information and uses those officials to assist in proposal preparation efforts, GAO will assume that the offeror benefited from the information.
GAO notes that in this case, the awardee made broad requests for the input of the former officials when preparing the protest, rather than placing limitations on the scope of information they provided. This failure to mitigate the extent of a conflict of interest factored into GAO’s decision to sustain the protest. Not properly handing conflicts of interest, or even apparent conflicts of interest, can have serious consequences for government contractors. If you believe you may have a potential conflict of interest issue and are looking for ways to avoid or mitigate any potential conflicts, General Counsel, P.C. can help you understand your options and make the best decision for your business.
Summary of Facts
Serco, Inc. protests the Department of the Navy’s award of a task order to Booz Allen Hamilton, Inc. (“BAH”), pursuant to request for proposals (“RFP”) No. N0016419R3504, to provide professional support services for the Deputy Commander for Surface Warfare (“SEA 21”). The solicitation explained that the contractor will provide support for four SEA 21 program offices. Of note here, former Navy Captain John Jones served as the program manager for one office from June 2015 to May 2018, and former Navy Captain Sam Smith served as another program manager from August 2014 through June 2017.
On June 12, BAH executed a teaming agreement with Hepburn and Sons, LLC, to assist BAH in preparing a proposal to support the SEA 21 task order recompete. Jones began employment with Hepburn & Sons, LLC and immediately began meeting with the BAH representatives who would later prepare BAH’s proposal. Smith was hired by CDI Government Services and BAH executed a teaming agreement with CDI, providing that CDI would assist BAH in pursuing the SEA 21 recompete contract opportunity. Beginning in September 2018, Smith met with BAH personnel to provide assistance in BAH’s ongoing efforts to compete for the task order. Smith later accepted employment with Hepburn where he continued to assist BAH in its proposal preparation.
On August 13, 2018, the agency issued a sources sought notice that included a draft statement of work for the SEA 21 task order recompetition and on July 29, 2019 the agency issued the solicitation to contractors. Proposals were submitted by Serco and BAH. BAH’s price was roughly 15% lower than Serco’s price and the agency awarded the task order to BAH. Serco filed this protest.
Basis of Protest
Serco argues BAH’s proposal should have been disqualified from the competition, because it employed two recently-retired Navy captains who improperly provided material assistance to BAH in preparing its proposal by giving BAH access to non-public competitively useful information. The agency argues that Jones’s and Smith’s access to information did not create an “unfair competitive advantage” because the information was “not competitively useful.”
GAO explained that FAR subparts 9.5 and 3.1 prohibit conflicts of interest in the government’s procurements, directing agencies to “avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.” “Where an offeror chooses to hire former government officials who have had recent access to competitively useful information, and uses those officials to assist in proposal preparation efforts” GAO will assume that the offeror benefited from the information. Additionally, GAO explained that “disqualification is appropriate based on the appearance of an unfair competitive advantage alone.” GAO reviews the reasonableness of an agency’s determination with regard to an unfair competitive advantage, taking into consideration the particular facts presented by each situation, including the credibility of the information on which the agency relied.
GAO noted that, here, Jones and Smith were recruited and hired either before or shortly after leaving government employment to assist in BAH’s proposal preparation efforts. As program managers, Jones and Smith had virtually unlimited access to Serco’s detailed information regarding prior costs staffing, technical approach, and past performance. The record shows that BAH made broad requests for Jones’s and Smith’s proposal input, rather than placing limitations on the scope of information they provided.
GAO concluded that the agency did not have a reasonable basis for determining that the information to which Jones and Smith had access did not constitute non-public competitively useful information.
Thus, GAO disagreed with the agency’s assertion that it reasonably concluded that BAH did not obtain an unfair competitive advantage in preparing its proposal. GAO ultimately found that BAH had access to information that was not public and was competitively useful, and BAH obtained an unfair competitive advantage in preparing its successful proposal. GAO recommended that the agency either disqualify BAH’s proposal or initiate actions to avoid, neutralize, or mitigate the potential impact of the information to which the former Navy employees had access, and seek revised proposals.
Our Government Contracts Practice Group has extensive experience in government contract law, helping clients solve their government contract problems relating to the award or performance of a federal government contract, including bid protests, contract claims, small business concerns, and teaming and subcontractor relations. If you need more guidance or information, contact Craig Lawless, Senior Counsel in our Government Contracts practice area at General Counsel, P.C., 703-266-1865.