Link: GAO Decision
Protestor: McTech Corporation
Agency: Department of the Army
Disposition: Protest Denied.
- Agency reasonably concluded that the protester had an organizational conflict of interest and properly eliminated it from the competition under a solicitation for the award of a construction contract, where the agency found that the close relationship between the protester and the designer of the construction project constituted an apparent conflict of interest that created the appearance of an unfair competitive advantage.
- Protester’s contention that information not considered by the contracting officer in the initial determination that the protester had an organizational conflict of interest (OCI) cannot be considered by GAO in resolving a protest challenging this determination is denied because an agency may provide further information and analysis regarding the existence of an OCI at any time during the course of a protest, and GAO will consider such information in determining whether the contracting officer’s OCI determination is reasonable
General Counsel P.C. Highlight:
McTech Corporation protested its exclusion from the competition for a contract for the construction of dormitories, a conference center, and related improvements to the Department of Homeland Security’s (DHS) Training Center in Harpers Ferry, West Virginia. The agency excluded McTech from competition on the grounds that it had an organizational conflict of interest (OCI) based on its ties to BrooAlexa Design Joint Venture LLC, the designer of the facilities. McTech had previously entered into a series of six joint ventures with BrooAlexa LLC, which had the exclusive control of BrooAlexa Design Joint Venture LLC. Mr. X, who served as project manager for BrooAlexa Design Join Venture LLC on the DHS Training Center project, had previously signed several documents on behalf of BrooAlexa LLC.
Noting first that the examples of impermissible OCIs which appear in the FAR are not exclusive, the GAO stated that it would only overturn an agency’s OCI determination if it was not reasonable. It found that, given the shared address between BrooAlexa LLC and BrooAlexa Design Joint Venture LLC, and BrooAlexa LLC’s management and control of BrooAlexa Design Joint Venture LLC, the CO’s conclusion that the two entities were affiliated was reasonable. The CO had then considered the number of joint ventures between McTech and BrooAlexa LLC, along with the entities’ mentor-protégé relationship, and determined there was a close alignment between the two which indicated a significant OCI. The GAO found the CO had reasonably excluded McTech from the competition given its close relationship with the designer of the construction project, which would otherwise have created the appearance of an unfair advantage that could compromise the integrity of the procurement process.
When a contractor enters into a joint venture with other firms, it must carefully consider the potential impact of that joint venture on future projects. The more two firms work together over a period of time, the greater the chance that a CO will consider the possibility of an OCI. Although OCI determinations are highly fact specific, the more access employees of either firm have to the facilities and files of the other, the more red flags will be raised. Contractors should have a clear OCI policy in place, and should design any joint venture in a way that will limit the likelihood that employees of either participant will be exposed to information that could harm their employer in procurements down the road.