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The GEO Group, Inc., B-405012, July 26, 2011

  • By GCPC GovCon Legal Team
  • September 14, 2011
  • Procurement Integrity

Link: GAO Opinion

Agency: Department of Justice

Disposition: Protest denied in part, dismissed in part.

Keywords: Procurement Integrity Violations

General Counsel P.C. Highlight: A contracting officer who receives or obtains information of a possible violation of the PIA must determine if the possible violation has any impact on the pending award or selection of the contractor.

—————————————————————————————————————————–

The GEO Group, Inc. protests the award of a contract to Community First Services, Inc. (CFS), by the Department of Justice, Bureau of Prisons (BOP), under a request for proposals (RFP), for residential reentry center (RRC) services.

The RFP sought a contractor to provide community-based residential and non-residential correctional services. GEO, the incumbent contractor, and CFS submitted proposals. With the submission of its proposal, GEO included a letter to the agency alleging that its vice president for community corrections, who had directed its incumbent contract efforts, resigned suddenly after transmitting copies of confidential GEO information to his private email account. Apparently, unbeknownst to GEO group at the time, its former vice president was also the CEO and sole owner of CFS. Upon receiving the GEO letter, the contracting officer recognized that GEO’s former vice president was the CEO of CFS, and noted similarly drafted passages in the GEO and CFS proposals. Based on these facts, the contracting officer recommended to the contracting section chief that the procurement be put on hold and that the issues presented in the GEO letter be investigated as a potential violation of the Procurement Integrity Act (PIA).

Two special agents from the Department of Justice, Office of Inspector General (DOJ OIG), were assigned to conduct the investigation. At the conclusion of the investigation, the special agents reported to the BOP contracting staff that based on a review of the interviews and relevant records, the DOJ OIG “could not substantiate bid rigging or procurement integrity violations.” In this regard, the DOJ OIG did not find any evidence that elements of CFS’s proposal had been derived from any of GEO’s information. Based on these findings, the BOP directed the procurement to continue. After evaluation of proposals, the contracting officer found that CFS’s proposal represented the best value to the government. The contracting officer then completed a certification of procurement integrity stating that, to the best of his knowledge, he was not aware of any violation of the procurement integrity act. The contracting officer also documented his affirmative responsibility determination.

GEO alleges that CFS violated the PIA, asserting that it is implausible that CFS did not utilize confidential GEO information obtained by the CFS CEO in preparing its proposal, and that the agency erred in ignoring this PIA violation. GAO states that the PIA provides that “[a] person shall not, other than as provided by law, knowingly obtain contractor bid or proposal information or source selection information before the award of a Federal agency procurement contract to which the information relates.” A contracting officer who receives or obtains information of a possible violation of the PIA must determine if the possible violation has any impact on the pending award or selection of the contractor. If the contracting officer concludes that a violation may impact the procurement, the contracting officer is required to report the matter to the head of the contracting activity (HCA). The HCA must review the information and take appropriate action, which includes either: 1) advising the contracting officer to proceed with the procurement; 2) beginning an investigation; 3) referring information to appropriate criminal investigative agencies; 4) concluding that a violation occurred; or 5) recommend to the agency head that a violation has occurred and void or rescind the contract. In the case of the BOP, the Justice Acquisition Regulation (JAR) further directs the contracting officer to refer possible violations of the PIA to the DOJ OIG.

Here, the agency followed exactly the procedures set forth above in investigating the alleged violation. Upon receiving information concerning a potential PIA violation from GEO, the contracting officer referred the matter to the HCA and the DOJ OIG. The DOJ OIG then thoroughly investigated the record, conducted interviews, and analyzed GEO computers before concluding that there was no indication of theft of GEO property or proprietary information, and no information to substantiate a PIA violation. On the basis of the investigation results, the HCA directed the contracting officer to proceed with the procurement. On this record, GAO sees no basis to conclude that a PIA violation occurred, or that the agency’s actions were unreasonable.

GEO alleges that the DOJ OIG and BOP investigations failed to reasonably consider declarations of GEO’s business manager stating that the CFS CEO requested, and was provided with, a draft of GEO’s price proposal for this procurement prior to his resignation. The agency argues, and GAO agrees, that any protected pricing materials obtained by the CFS CEO in this manner are covered by the PIA’s “savings clause,” which provides in relevant part that “[t]his section does not . . . restrict a contractor from disclosing its own bid or proposal information or the recipient from receiving that information.”

GEO objects to the application of the PIA savings clause in this context. GAO states that it has repeatedly determined that the PIA’s savings provisions apply notwithstanding the fact that the voluntarily provided information is subsequently misused or not properly safeguarded. Here, GEO voluntarily provided its confidential information to the CFS CEO in the course of his employment with GEO. The CFS CEO’s alleged misuse of that information in transferring it to CFS, breach of his fiduciary duties to GEO, or breach of GEO’s corporate code of ethics, are matters of a private dispute not for resolution by GAO.

GEO also alleges that, based on the same facts underlying its PIA allegation, CFS has an improper, unmitigated, unequal access to information OCI. More specifically, GEO states that CFS obtained nonpublic, procurement-related information as a result of the CFS CEO’s participation in GEO’s management of the incumbent contract for these services. GAO states that an unequal access to information OCI exists where 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. As the FAR makes clear, the concern regarding this category of OCI is that a firm may gain a competitive advantage based on its possession of “[p]roprietary information that was obtained from a Government official without proper authorization,” or “[s]ource selection information . . . that is relevant to the contract but is not available to all competitors, and such information would assist that contractor in obtaining the contract.”

As an initial matter, the agency reasonably found the protester’s allegations to be unsubstantiated. In this regard, the agency relied on the findings of the DOJ OIG investigation, which found that CFS’s proposal had been prepared by a third-party proposal writer, CFS’s CEO did not alter the proposal in any way, and there was no credible evidence of the CFS CEO of having obtained GEO’s pricing information. Moreover, as discussed in the context of the alleged PIA violation, above, the CFS CEO’s alleged misuse of GEO’s confidential information amounts to a private dispute not for resolution by GAO. The protest is denied.

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