Link: GAO Opinion
Agency: General Services Administration
Disposition: Protest sustained.
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GAO Digest:
1. Where agency allowed successful vendor to make material revision that made its quotation acceptable, but did not provide protester similar opportunity to revise its quotation, agency improperly engaged in discussions only with successful vendor, and protest on that ground is sustained.
2. Protest that successful vendor has “impaired objectivity” organizational conflict of interest (OCI) is sustained where record (1) shows that successful vendor’s advice and assistance could lead to agency’s procurement of other products and services offered by successful vendor, and (2) does not show that agency adequately considered possibility of “impaired objectivity” OCI, or whether such a potential OCI could be avoided, neutralized or mitigated.
General Counsel P.C. Highlight:
TAG asserts that the agency improperly conducted discussions with SAIC without similarly affording it an opportunity to revise its quotation. According to the protester, this was prejudicial because the agency identified a number of significant weaknesses in its quotation that it could have addressed in discussions. GAO states that generally, discussions occur where a firm is afforded an opportunity to make a material revision to its proposal or quotation.
The record shows that, subsequent to the submission of quotations and the oral presentations, the agency and SAIC had an exchange concerning an indemnification provision included in SAIC’s quotation relating to performing contract activities in a high-threat environment. The record shows that the agency contacted SAIC in connection with this provision, and that, in response, SAIC removed the indemnity provision from its quotation. The agency asserts that its exchange with SAIC was merely a clarification of the quotation, and therefore did not trigger the requirement for it to hold discussions with TAG. However, an open-ended indemnification clause cannot legally be included in a government contract because it would subject the government to unknown liability; as a result, it creates a potential violation of the Antideficiency Act, 31 U.S.C. sect. 1341 (2006). Thus, the inclusion of the indemnification provision in SAIC’s quotation rendered the quotation as submitted ineligible for selection. By affording SAIC an opportunity to remove the indemnification clause from its quotation, the agency essentially allowed SAIC to make its unacceptable quotation acceptable. This unquestionably constituted a material revision to the quotation and, therefore, discussions. Since discussions with SAIC occurred, the agency was obliged to afford TAG a similar opportunity to participate in discussions.
TAG next asserts that SAIC has an impaired objectivity organizational conflict of interest (OCI). For purposes of this allegation, task number three in the statement of work is the focus of TAG’s protest. Under that task, the successful contractor will be required to provide a broad range of objective advisory and assistance services, technical analysis, and support in the area of counter-proliferation of weapons of mass destruction, specifically, combating chemical, biological, radiological and nuclear (C-CBRN) weapons. According to the protester, this poses an impaired objectivity OCI for SAIC because the firm also sells C-CBRN-related detection and prevention products and services. GAO states that contracting officers are required to identify and evaluate potential OCIs as early in the acquisition process as possible. The FAR specifies that an OCI exists where, because of activities or relationships with other persons or organizations, a person or organization is unable or potentially unable to render impartial assistance or advice to the government. Situations that create potential OCIs are further discussed in FAR subpart 9.5 and decisions of GAO. One type of OCI, an impaired objectivity OCI, is created when a contractor’s judgment and objectivity in performing contract requirements may be impaired due to the fact that the substance of the contractor’s performance has the potential to affect other interests of the contractor. In order to ensure that the agency has acted in a manner consistent with these requirements, contracting officers are required to give meaningful, deliberate consideration to information that may shed light on potential OCIs. Toward that end, agencies must give consideration not only to information that may have been furnished by a firm, but also must consider, as appropriate, the scope of the products manufactured or services provided by the firm or its competitors. In other words, an agency may not, in effect, delegate to the contractor itself complete responsibility for identifying potential OCIs.
The contractor, while not performing acquisitions directly for the Air Force, will be engaged in a full spectrum of activities that, it appears, will lead directly and predictably to developing information that may be used by the Air Force to influence acquisition decisions. Although performing the tasks under this order raises potential impaired objectivity OCI concerns, the record shows that the agency did little more than require the vendors to submit information that they felt was germane to determining whether or not they had an OCI. The agency did nothing to independently consider or evaluate whether SAIC had an OCI, despite that even a cursory review of the materials provided by SAIC in its quotation shows that the firm provides a full spectrum of C-CBRN products and services. There is no indication that GSA considered all of the available information in determining whether an OCI exists, or whether any potential OCI could be avoided, mitigated or neutralized. Rather, it appears that GSA essentially delegated this determination to SAIC. This was improper. The protest is sustained.