Link: GAO Opinion
Agency: Department of Defense
Disposition: Protest denied.
Keywords: Hiring former government workers; personal conflicts of interest
General Counsel P.C. Highlight: Agencies are to avoid even the appearance of impropriety in government procurements. In this regard, where a firm may have gained an unfair competitive advantage through its hiring of a former government official, the firm can be disqualified from a competition based on the appearance of impropriety which is created by this situation, that is, even if no actual impropriety can be shown, so long as the determination of an unfair competitive advantage is based on facts and not mere innuendo or suspicion.
Unisys Corporation (Unisys) protests the issuance of a task order to Science Applications International Corporation (SAIC), by the Defense Information Systems Agency (DISA), Defense Information Technology Contracting Organization (DITCO), under a request for proposals (RFP), for data center operations and technical support activities.
DITCO issued the RFP for a task order under Encore II, a multiple-award task order contract. The Encore II task order at issue contemplated the issuance of fixed-price task order with a base year and four one-year option periods, for Defense Enterprise Computing Services (DECC), Technical and Operations Support. The agency maintains that the Encore II contractor is to perform “industry standard tasks found in most, if not all data centers.” While the solicitation estimated that performance of the task order required 156 full-time equivalents (FTEs), it also provided that firms should offer their own selection of labor categories and number of FTEs that would, in the offeror’s judgment, provide the best value to the agency. The current task order is a follow-on to a task order issued to Unisys under the prior Encore I multiple award contract.
R.R., an individual, was the Chief of the Technical Support Division at DECC for much of the duration of the Encore I task order. The record reflects that he was one of four Division Chiefs overseeing Unisys’s performance.As R.R. was nearing his retirement, the Encore II procurement was still in its planning stages. The record contains evidence that he participated in the planning for Encore II at least through August 2009, and that from May 2009 through June 2009, R.R. was approached by SAIC about possible employment opportunities, and after each contact, R.R. rejected SAIC’s advances. Five weeks after R.R.’s retirement, in February 2010, the contracting officer released the draft solicitation for the current task order to the Encore II contract holders. DITCO released the final RFP, which included the evaluation plan as an attachment, on March 15. On March 30, R.R. became a temporary consultant to SAIC. Proposals in response to the RFP were due April 5.
Unisys initially protested the selection of SAIC, alleging that it had obtained an unfair competitive advantage when it employed the former DISA Division Chief, R.R., to assist in its proposal preparation. The agency announced that it would take corrective action, specifically, that it would investigate the facts surrounding R.R.’s employment with SAIC. Based on its internal investigation, the agency concluded that the Division Chief’s activities did not provide SAIC with an unfair competitive advantage. In this regard, the report found that R.R.’s knowledge of Unisys’s performance of the Encore I task order was limited to Unisys’s labor categories and staffing, as it related to his own Division, and that he did not have insight into Unisys’s overall labor categories or staffing. The report also found that R.R. did not have access to Unisys’s pricing (labor rates) for the Encore I task order and that “even if he had knowledge of the Unisys labor rates, that information was outdated.” DISA informed Unisys that the selection of SAIC would not be disturbed.
Unisys alleges that SAIC gained an unfair competitive advantage through R.R.’s access to Unisys’s proprietary information, namely, the data contained in the ATAAPS and vacancy reports, as well as his alleged insider knowledge of pending workforce reductions that would affect the number of FTEs needed to perform the Encore II task order. GAO states that contracting agencies are to avoid even the appearance of impropriety in government procurements. In this regard, where a firm may have gained an unfair competitive advantage through its hiring of a former government official, the firm can be disqualified from a competition based on the appearance of impropriety which is created by this situation, that is, even if no actual impropriety can be shown, so long as the determination of an unfair competitive advantage is based on facts and not mere innuendo or suspicion. To resolve this question, GAO typically considers all relevant information, including whether (in cases such as this) the former government employee had access to competitively useful inside information, as well as whether the former government employee’s activities with the firm were likely to have resulted in a disclosure of such information. Whether the appearance of impropriety based on an alleged unfair competitive advantage exists depends on the circumstances in each case, and, ultimately, the responsibility for determining whether to continue to allow an offeror to compete in the face of such an alleged impropriety is a matter for the contracting agency, which will not be disturbed unless it is shown to be unreasonable.
As noted above, the agency’s investigation of the unfair competitive advantage concluded that R.R. had no knowledge of Unisys’s overall staffing, labor categories, or actual labor rates for the Encore I task order. The record, however, reflects, as explained above, that R.R. did in fact have access to this information through the ATAAPS reports, which he received between 2007 and 2008. But, in 2011 GAO finds that the information was outdated, rendering it not competitively useful, and thus its disclosure would not have provided SAIC with any competitive advantage in the Encore II task order competition. As the ATAAPS reports indicate, the agency employed numerous different contractors to support its efforts, Unisys being but one of them. Thus, information regarding how Unisys historically staffed the Encore I task order would have been discernable by regular observation, and GAO would not consider such information proprietary.
Unisys next alleges that R.R. had access to competitively useful inside information concerning the agency’s requirements for Encore II, namely, the agency’s intent to reduce the number of FTEs available for the performance of the Encore II task order. As an initial matter, there is no evidence in the record that R.R. had access to plans to reduce staffing for the Encore II task order. Given the lack of “hard facts” in this regard, there is no basis on which to find that R.R. afforded SAIC a competitive advantage as Unisys has alleged. Even assuming that R.R. had access to information about the potential for future FTE reductions, the information, by its nature, could not have provided SAIC with an advantage. As DITCO maintains, the information was of such an undefined and indefinite nature that its knowledge could not have been of any meaningful competitive utility. Moreover, the record reflects, as DITCO argues, staffing for the task order was authorized at 156 FTEs, this number was provided as the government’s staffing estimate in the solicitation, and there is nothing to indicate that the agency’s understanding of this estimate changed at any point up until the time of SAIC’s award. Given this record, GAO has no basis to conclude that R.R. had access to non-public information that could have provided SAIC with an unfair competitive advantage. The protest is denied.