Link: GAO Opinion
Agency: Department of the Army
Disposition: Protest sustained in part and denied in part.
Keywords: Organizational conflict of interest
General Counsel P.C. Highlight: It is the Agency’s responsibility to consider and, where appropriate, take efforts to mitigate every actual or perceived organizational conflict of interest.
The Department of the Army, Corps of Engineers, issued a request for proposals (RFP) in June 2008 for the design and construction of a replacement hospital at Fort Benning, Georgia. The procurement was a two-step evaluation: first evaluating offerors’ past performance and technical capabilities, and second evaluating the remaining firms on their technical proposal and price proposal. Before the procurement started, the Army awarded a contract to HSMM/HOK Martin Hospital Joint Venture (HSMM/HOK JV), which was to assist the agency with the preparation of both the design concept for the hospital and a technical review of the proposals submitted.
In May 2008, the parent company of HSMM/HOK JV, AECOM Technology Corporation (AECOM), executed a confidentiality agreement with a company that it had entered into negotiations with for a possible acquisition deal. This company was Ellerbe Becket (EB), who also was a design partner of Turner Construction Company, Inc. (Turner/Ellerbe). Turner/Ellerbe was one of the four firms selected after Phase I of the solicitation to submit price and technical proposals for the design and construction contract at Fort Benning. The Technical Review Board, with HSMM/HOK JV’s participation and support, completed its work in July 2009, and shortly thereafter, the source selection authority awarded the contract to Turner based on its proposal, which included the services of EB as a subcontractor. In October 2009, EB’s directors approved the AECOM merger, which was announced on October 23, 2009. McCarthy/Hunt JV (MH JV), one of the offerors that submitted proposals in the second step of the procurement then filed a protest.
In its protest, MH JV alleged that the contract was improperly awarded to Turner/Ellerbe, which had each of the three types of organizational conflicts of interest (OCI) identified at FAR Part 9.5, and that none of these were properly mitigated.
The first OCI alleged by MH JV is that the Turner/Ellerbe had an unequal access to information by virtue of its relationship with AECOM. Competitively useful information giving rise to an unequal access to information includes proprietary information beyond offerors’ proposals, such as source selection information and insights into a solicitation’s requirements. Because AECOM was the design contractor, and thus was familiar with the details of the procurement, it was determined that EB had unequal access to information through its relationship to AECOM, which led to an organizational conflict of interest. GAO found little evidence of AECOM’s efforts to prevent disclosure to EB of competitively useful information. As a result of AECOM’s position in the procurement and its ability to obtain information regarding the Army’s priorities, preferences, and dislikes related to the procurement, and because the Army did not mitigate this access to information strenuously enough, GAO determined that the OCI for unequal access to information did exist.
Next, MH JV argued that Turner/Ellerbe had an unmitigated biased ground rules OCI stemming from its work on the design contract. In this respect, AECOM had special knowledge of the Army’s requirements that would have enabled it to give Turner/Ellerbe an unfair advantage in the competition. Here, the Army and Turner counter with the defense that the Army closely supervised AECOM’s drafting of the solicitation. However, GAO’s review of the record did not establish the fact that the Army closely supervised the drafting, and even if that was the case, GAO went on to state that it was unclear why the Army’s supervision would have been sufficient to prevent AECOM from using its special knowledge of the Army’s requirements to give an unfair advantage to Turner/Ellerbe.
The Army and Turner also assert that there is no evidence that AECOM skewed the competition to the benefit of EB. For this proposition, GAO highlighted the burden shifting that occurs when an OCI is raised by a protestor; in particular, once an OCI is established by a protestor, it is not required to demonstrate prejudice, rather harm from the conflict is presumed to have occurred. Turner further alleged that at all times during the course of the solicitation development AECOM and EB were not in fruitful negotiations. GAO did not see reason to resolve this issue because the record did not contain evidence of AECOM’s efforts to ensure confidentiality in its negotiations and that any number of AECOM employees could have known about the negotiations, whether or not they were occurring at the same time as the solicitation. As a result, GAO sustained the allegation that Turner/Ellerbe had a biased ground rules OCI.
Finally, MH JV alleged the third OCI, 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, also known as impaired objectivity. In the face of this charge, the Army and Turner argued that the record did not demonstrate sufficient prejudice to MH JV. GAO was inclined to agree with this assessment after reviewing the evaluations of Turner/Ellerbe by the AECOM evaluators. The fact that the AECOM evaluators were relatively critical of the Turner/Ellerbe proposal, GAO found no reasonable basis to conclude that they were biased in favor of Turner/Ellerbe, thus denying the impaired objectivity OCI allegation.
In conclusion, GAO sustained the allegations that Turner/Ellerbe had an unequal access to information and a biased ground rules OCI. Because the ordinary remedy for a biased ground rules OCI is the elimination of that contractor from the competition, GAO recommended that Turner/Ellerbe be eliminated from the competition and that the Army has to make a new award determination.