New OCI Waiver

As discussed in our last decision, the record presented at that time showed that the agency had concerns about the activities of an individual identified as Mr. Y. The agency expressed interest in Mr. Y because of his former activities in connection with another contract named the EDUCATE Independent Verification and Validation (EDUCATE IV&V) contract. The EDUCATE IV&V contract called for a concern named SD Technologies, Inc. (SD Tech) to perform activities relating to determining whether DSFG was performing its contractual obligations under the EDUCATE contract, and whether the deliverables under that contract were acceptable. AR, exh. 53, EDUCATE IV&V Contract Excerpts.

Mr. Y was the program manager for SD Tech during its performance of the EDUCATE IV&V contract. The agency's investigation identified certain non-public, competitively useful information that was available to Mr. Y in connection with performance of the EDUCATE IV&V contract. AR, exh. 35, Letter from the Contracting Officer to SRA, Sept. 29, 2017, attach. A, at 5. Despite this fact, the agency confined its OCI analysis and conclusion to considering whether Mr. Y shared DSFG's proprietary information with SRA, without considering whether the other information to which he had access also could have created an unequal access type OCI.[5] In short, we sustained DSFG's last protest because the record did not show that the agency had given due consideration to the types of non-public information to which Mr. Y had access.

In its current protest, DSFG principally maintains that the agency's execution of a waiver of SRA's alleged OCI was improper because it fails to set forth the extent of SRA's OCI, and therefore is deficient under the requirements for execution of a waiver outlined in Federal Acquisition Regulation (FAR) § 9.503. The principal basis for DSFG's allegation is its position that the agency did not perform any further investigation into the activities of Mr. Y in the wake of our last decision, and therefore could not know the extent of the OCI presented by his participation in preparing the SRA quotation.

We deny this aspect of DSFG's protest. Agencies properly may waive an OCI, provided that the waiver is executed in accordance with FAR § 9.503, which states as follows:

The agency head or a designee may waive any general rule or procedure of this subpart by determining that its application in a particular situation would not be in the Government's interest. Any request for waiver must be in writing, shall set forth the extent of the conflict, and requires approval by the agency head or a designee. Agency heads shall not delegate waiver authority below the level of head of a contracting activity.

While our Office will review an agency's execution of an OCI waiver, our review is limited to consideration of whether the waiver complies with the requirements of the FAR, that is, whether it is in writing, sets forth the extent of the conflict, and is approved by the appropriate individual within the agency. AT&T Gov't. Solutions, Inc., B-407720, B-407720.2, Jan. 30, 2013, 2013 CPD ¶ 45 at 4; see also MCR Federal, LLC, B-401954.2, Aug. 17, 2010, 2010 CPD ¶ 196 at 5 (where a procurement decision--such as whether an OCI should be waived--is committed by statute or regulation to the discretion of agency officials, our Office will not make an independent determination of the matter).

Here, there is no issue regarding whether the waiver is in writing and was approved by the appropriate agency official. The only question, therefore, is whether the waiver sets forth the extent of any possible OCI on the part of SRA. We conclude that it does.

As we noted in our prior decision, the contracting officer identified an array of information that had been available to Mr. Y during his participation in performing the EDUCATE IV&V contract, including: DSFG proposals (submitted in connection with the EDUCATE contract); performance reports and other contractual artifacts; DSFG's EDUCATE solution to meeting the agency's information technology requirements; and reports that DSFG had marked "confidential," "sensitive and proprietary," and "for official use only." AR, exh. 35, Letter from the Contracting Officer to SRA, Sept. 29, 2017, Attach. A, at 5. The contracting officer also noted that Mr. Y had participated in inspecting DSFG's deliverables under the EDUCATE contract. Id.

The record shows that the contracting officer expressly identified precisely these types of information in describing any potential OCI when he executed the OCI waiver. Specifically, the waiver states as follows:

From February 22, 2011 to May 26, 2016 Mr. [Y] worked as a project manager, a key personnel position, on the EDUCATE IV&V Contract. In the course of that work, Mr. [Y] had full access to much non-public information, information not intended for use by competitors of DSFG and which would not have been learned by others outside the Department. Mr. [Y had] full access to the following types of EDUCATE IV&V information and materials, among others:

DSFG's proposals;

• Performance reports of DSFG on EDUCATE;

• Information regarding DSFG processes, procedures, resources and controls;

• Deliverables from DSFG to the Department and other contractual artifacts;

• Root cause analysis reports demonstrating sources of failed services rendered by DSFG;

• Internal discussions regarding DSFG's performance and associated materials reflecting such internal discussions.

Mr. [Y's] IV&V work also included communicating extensively with a wide array of Government officials regarding his independent findings/assessments of DSFG's services as well as recommendations for considerations.

AR, B-414461.6, exh. 1, PIVOT OCI Waiver, at 2-3.

The agency's OCI waiver goes on to recognize that the types of information available to Mr. Y would have been of interest to SRA; would have been useful to the firm in preparing its quotation for the PIVOT I requirement; and would have been helpful to Mr. Y in terms of informing any response to inquiries he addressed during preparation of the SRA quotation, even if Mr. Y did not directly share the information he had reviewed during the EDUCATE IV&V contract with SRA. AR, B-414461.6, exh. 1, PIVOT OCI Waiver, at 4. The contracting officer concluded as follows: "In short, the EDUCATE IV&V information learned by Mr. [Y] would have provided some advantage to SRA in preparing its PIVOT I proposal, even if not proprietary to DSFG or PIVOT source selection information." Id.

With that as background, the contracting officer found that any information gained by Mr. Y in connection with performance of the EDUCATE IV&V contract would have been limited in value because the nature of the PIVOT suite of acquisitions is fundamentally different than the EDUCATE contract. AR, B-414461.6, exh. 1, PIVOT OCI Waiver, at 5. He concludes as follows:

Based on the above, the conflicts that arise as a result of Mr. [Y's] access to EDUCATE IV&V contract information and his subsequent work for SRA's PIVOT-I team are not deemed to be significant. Any resulting impact on the integrity of the PIVOT-I procurement process, to include the solicitation itself, development of SRA's PIVOT-I solution, and the source selection process or the resulting award, was not significant.

Id. In addition, the contracting officer went on to discuss three other potential OCIs arising in connection with the activities of other individuals that may have had access to other DSFG information that was the subject of our first decision in these cases. Id. He concluded that any possible OCIs arising from the activities of these individuals also would be minimal in terms of competitive impact because the PIVOT and EDUCATE acquisitions were so different. Id. at 5-8.

We conclude that the agency's waiver decision took into consideration precisely the types of information that the contracting officer previously identified as a matter of concern during our last consideration of this protest. The agency's waiver also took into consideration several other concerns identified earlier in our first decision. Inasmuch as the agency's waiver sets out comprehensively the concerns that have been identified throughout our consideration of these protests, and in light of the fact that DSFG has not identified any other--new--concerns relating to any potential OCI that SRA may have, we conclude that the agency's OCI waiver here meets the requirements of FAR § 9.503. We therefore deny this aspect of DSFG's protest.  (Dell Services Federal Government, Inc. B-414461.6: Oct 12, 2018)

C2C contends that MAXIMUS has an impaired objectivity OCI by holding both the [Administrative Qualified Independent Contractor] AdQIC task order (through Q2A) and the [qualified independent contractor] QIC task order. The protester describes the conflict as follows:

The SOW [statement of work] duties of the AdQIC conflict with the loyalty they have for their own company or parent company and the duty of objectivity owed to CMS. As the AdQIC, Maximus, is financially motivated to withhold issues regarding its own processing of QIC reconsiderations while at the same time, emphasizing to CMS any discrepancies or aberrancies in the reconsideration processing of its competitors, including C2C’s, or any other non-affiliated QIC’s. Maximus’ selective notifications of questionable processing to CMS tarnish the reputation of their competitors’ and help Maximus gain corporately when the task order is re-competed.

Protest at 20.

The FAR provides that an OCI exists when, because of other 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, or the person’s objectivity in performing the contract work is or might be otherwise impaired, or the person has an unfair competitive advantage. FAR § 2.101. Under the FAR, contracting officers are required to identify and evaluate potential OCIs as early in the acquisition process as possible, and avoid, neutralize, or mitigate significant potential conflicts of interest before contract award. FAR § 9.504(a). The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting officer. Innovative Test Asset Sols., LLC, B-411687, B-411687.2, Oct. 2, 2015, 2016 CPD ¶ 68 at 17.

We review the reasonableness of a contracting officer’s OCI investigation and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. DRS Tech. Servs., Inc., B-411573.2, B-411573.3, Nov. 9, 2015, 2015 ¶ CPD 363 at 11. In this regard, the identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Id. A protester must identify “hard facts” that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Id. at 11-12. Nonetheless, once it has been determined that an actual or potential OCI exists, the protester is not required to demonstrate prejudice; rather, harm from the conflict is presumed to occur. AT&T Gov. Sols., Inc., B‑413012, B-413012.2, July 28, 2016, 2016 CPD ¶ 237 at 6.

Subpart 9.5 of the FAR, and decisions of our Office, broadly identify three categories of OCIs: biased ground rules, unequal access to information, and impaired objectivity. McConnell Jones Lanier & Murphy, LLP, B-409681.3, B-409681.4, Oct. 21, 2015, 2015 CPD ¶ 341 at 13. The primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR § 9.505; NCI Info. Sys., Inc., B-412870.2, Oct. 14, 2016, 2016 CPD ¶ 310 at 12 citing RMG Sys., Ltd., B‑281006, Dec. 18, 1998, 98-2 CPD ¶ 153 at 4. Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Alion Sci. & Tech. Corp., B-297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD ¶ 146 at 8.

The protester contends that, “[a]s the AdQIC, Maximus, through its wholly owned subsidiary Q2 Administrators, is authorized to make referrals to the Appeals Council of administrative decisions that overturn or partially overturn reconsideration decisions made by Maximus,” an ability also acknowledged by the agency and the intervenor. Protester Comments at 5-6; see also Intervenor Comments at 8; Supp. MOL at 9. Although this structure presents “hard facts” that indicate a potential conflict of interest, in that Q2A is in the position of reviewing requests for further appeal of decisions issued by Q2A’s parent, the parties disagree as to whether this is properly an impaired objectivity OCI and if so, whether there are factors that mitigate the inherent conflict. As relevant here, an impaired objectivity OCI exists where a firm’s ability to render impartial advice to the government will be undermined by the firm’s competing interests, such as a relationship to the product or service being evaluated. FAR § 9.505-3; Alion Sci. & Tech. Corp., B-297022.3, Jan. 9, 2006, 2006 CPD ¶ 2 at 5-6.

CMS and MAXIMUS assert that, despite the relationship between MAXIMUS and Q2A, no OCI exists because the AdQIC is examining only the sufficiency of the intervening level 3 ALJ review. Supp. MOL at 9; Intervenor Comments at 8. During the pendency of this protest, CMS reexamined MAXIMUS’ potential OCIs in light of C2C’s allegations. AR, Tab 14B, Pre-Award OCI Memo with June 6 Addendum, at 8. The agency concluded that there was no potential OCI if MAXIMUS and its subsidiary served concurrently in the QIC and AdQIC roles because the AdQIC does not have formal responsibility for performance evaluation of the QICs. Id. at 8-9. CMS also relied on MAXIMUS’ own conclusions as to the absence of any conflict. Id. at 4.

Our Office has explained that a firm’s participation in work that could affect its own interests or the interests of its competitors can give rise to an impaired objectivity OCI. Alion Sci. & Tech. Corp., B-297022.3, supra, at 8; see also PURVIS Sys., Inc., B‑293807.3, B‑293807.4, Aug. 16, 2004, 2004 CPD ¶ 177 at 10-11. The record indicates that the agency did not give meaningful consideration to the potential impaired objectivity OCI involving Q2A’s and MAXIMUS’ dual roles as the AdQIC and the QIC. We think that the structure here, where the AdQIC can refer for further review ALJ decisions that overturn a QIC reconsideration, could present the opportunity for the AdQIC to offer biased recommendations. The record shows that here, CMS did not investigate whether the presence of related firms operating within the same chain of review created an impaired objectivity OCI. In this regard, the agency characterized the AdQIC role as merely reviewing ALJ decisions, sidestepping the fact that the ALJ decision is itself a review of the QIC reconsideration. Furthermore, the substance of the agency’s inquiry was limited to whether the AdQIC participated in the performance evaluations of the QICs. CMS relied on the contractors’ own OCI conclusions as to the absence of any other conflict. Because the record shows that the agency has not meaningfully examined whether Q2A (in essence, MAXIMUS itself) could render objective advice to the agency while simultaneously serving as both the QIC and the AdQIC, we sustain the protest. Nortel Gov’t Sols., Inc., B-299522.5; B-299522.6, Dec. 30, 2008, 2009 CPD ¶ 10 at 5-7; Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 17.  (C2C Innovative Solutions, Inc. B-416289, B-416289.2: Jul 30, 2018)

DSFG challenges the results of the agency's evaluation of its and SRA's quotations. The company also argues that the agency should have concluded that SRA has an "unequal access" type OCI, and should have eliminated SRA from the competition. According to the protester, the record shows that SRA had access to a wide array of nonpublic, competitively useful information about DSFG that provided it with an unfair competitive advantage in preparing its quotation. DSFG's arguments in general relate to all of the events described above, and in particular, to the activities of Mr. Y and his participation in preparing the SRA quotation. For the reasons discussed below, we sustain DSFG's contention that the agency has not properly considered whether SRA has an unfair competitive advantage here.

(section deleted)

A protester must identify "hard facts" that show the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Telecommunication Systems, Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4 (citing PAI Corp. v. United States, 614 F.3d 1377, 1387 (Fed. Cir. 2010)). Nonetheless, once it has been determined that an actual or potential OCI exists, the protester is not required to demonstrate prejudice; rather, harm from the conflict is presumed to occur. See McCarthy/Hunt JV, B-402229.2, Feb. 16, 2010, 2010 CPD ¶ 68 at 10.

The agency's investigation here initially identified a wide array of nonpublic, competitively useful information that was available to Mr. Y in connection with performance of the EDUCATE IV&V contract. AR, exh. 35, Letter from the Contracting Officer to SRA, Sept. 29, 2017, Attach. A, at 5. Despite this fact, the agency inexplicably confined its OCI analysis and conclusion to considering whether Mr. Y shared DSFG's proprietary information with SRA, without considering whether the other information to which he had access could have created an unequal access type OCI. We note at the outset that there is no dispute in the record regarding the types of information to which Mr. Y had access. The record includes a letter written by the contracting officer to SRA inquiring about Mr. Y's proposal preparation activities. That letter provides:

From 22 February 2011 to 26 May 2016, Mr. [Y] was the IV&V Project Manager, one of the named Key Personnel, on the EDUCATE IV&V contract. That contract was awarded by the Department to SD Tech. That contract expired on 26 May 2016. In that capacity, Mr. [Y] had unfettered access to DSFG proposals, performance reports, and other contractual artifacts, such as root cause analysis reports, and internal discussions, and he interacted with a wide-array of Government officials, to include the Chief Information Officer, the Deputy Chief Information Officer, and various other directors. Mr. [Y's] insights are highly qualified and based on facts that were not public and were not intended for use by a competitor of DSFG. [The original document included a footnote at the end of the preceding sentence that provided as follows: Mr. [Y] had access to detailed information on DSFG's EDUCATE solution, related technologies and approaches, and contract performance data as recently as May 26, 2016. The PIVOT-I solicitation was released approximately six months after Mr. [Y]'s role ended as the EDUCATE IV&V Key Personnel, and PIVOT-H was released approximately eleven (11) months after his role ended.] Reports and types of information that Mr. [Y] had access to included reports from DSFG that are marked as "Confidential," "Sensitive and Proprietary" and "For Official Use Only." Furthermore, the depth and breadth of the reviews that the IV&V contractor conducted can be witnessed in documents whereby DSFG's services and deliverables were inspected extensively by the IV&V contractor, to include Mr. [Y]. Mr. [Y], by virtue of his role in the EDUCATE IV&V contract, had privileged access to, and learned, information that is proprietary to DSFG and which is confidential information related to DSFG's current EDUCATE solution and performance, information which other Department contractor[s], let alone outsiders, would not know.

AR, exh. 35, Letter from the Contracting Officer to SRA, Sept. 29, 2017, Attach. A, at 5 (emphasis supplied). That same document goes on to identify e-mail correspondence showing that individuals working on the SRA proposal team sought information from Mr. Y during their proposal preparation activities, and that he participated actively in preparing the SRA proposal.

The record contains only two pieces of evidence generated in connection with SRA's response to the contracting officer's letter. First, the record contains a letter from SRA's attorney to the agency responding to the agency's letter quoted above. In that letter, SRA's attorney offers legal arguments and characterizations--unsupported by any evidence--of the types of information possessed by Mr. Y and sought by SRA. AR, exh. 36, Letter from SRA's Counsel to the Contracting Officer, October 10, 2017. He characterizes the information possessed by Mr. Y as general information and best-guess assessments that would be no different than the type of information available to an incumbent contractor. For example, he states as follows:

Perhaps most importantly, Mr. [Y] did not provide proprietary information to SRA for use in SRA's PIVOT proposal. Mr. [Y] did provide his general insights and "best guesses" about things that were not proprietary based on his personal experience and observations. This information was requested and given not because SRA was seeking to discover the "non-public" or proprietary information of DSFG, but instead was sought out to better understand the Department's operating environment so that SRA and its team could be responsive to a potential customer's needs.

* * * * *

This general information, based on the opinions or observations of Mr. [Y], is no different than the types of information about the current operating environment that an incumbent, a subcontractor, present or former Department personnel, or members of the public visiting a tenant building could have observed or asked about. Accordingly, because the information was (1) not proprietary, (2) not unavailable to other competitors who could have made similar inquiries, and (3) created no unfair competitive advantage, SRA's receipt of it did not create an OCI.

Id. at 8-9 (emphasis in original).

Second, the record includes an affidavit prepared by Mr. Y and transmitted to the agency by SRA's attorney in which he describes the types of information he provided to SRA. His declaration is confined to representations that he did not provide any information that was identified as proprietary to DSFG, and that it was his understanding that providing the information that he did convey to SRA was not information that he was prohibited from providing. For example, he states as follows:

It was at that time and now remains my understanding and belief that the information sought by SRA's PIVOT Procurement proposal team was the type of non-proprietary, market information that any knowledgeable contractor would seek in order to better understand an agency's solicitation. Further, it was at the time and now remains my understanding and belief that the specific information that I provided to SRA in response to their requests was not the proprietary information of Dell Services Federal Government, Inc. ("DSFG") or some other ED contractor, but instead was information available from public sources.

AR, exh. 38a, Mr. Y Declaration, at 1.

Based on this evidence, the contracting officer determined that the activities of Mr. Y did not give rise to an unequal access type of OCI. In particular, the contracting officer concluded that the information provided by Mr. Y to SRA was general in nature, observable by any individual that may have had an opportunity to view the DSFG operations, and provided no more of a competitive advantage than would be enjoyed by any incumbent. AR, exh. 40, PIVOT Procurements-FAR 3.101 & FAR 9.5 Determination. For example, the contracting officer concluded as follows:

To assume that Mr. [Y] or any other individuals identified in the emails surrendered any non-public, competitively useful information would be speculative. SRA has provided a certification in which it represents to the Government that SRA's PIVOT solution team did not receive any proprietary information from Mr. [Y] that he obtained through his role under the EDUCATE IV&V contract. Mr. [Y] attested to the same, further declaring that he kept no copies of any proprietary information after his work under the EDUCATE IV&V contract ended. Nor did any of the information he provided to SRA in conjunction with the preparation of the PIVOT I proposal come from any proprietary or similarly marked document that may have come into his possession in connection with his EDUCATE IV&V work years earlier.

Id. at 16.

Based on the record before us, while the agency gave detailed consideration to the possible disclosure of DSFG's proprietary information, it gave no consideration to the other nonpublic, competitively useful information that the contracting officer himself specifically identified as available to Mr. Y through his work as the program manager for the EDUCATE IV&V contract. As set forth earlier, the contracting officer identified the following matters regarding Mr. Y's performance on the EDUCATE IV&V contract that do not appear related to DSFG's proprietary information:

In that capacity, Mr. [Y] had unfettered access to DSFG . . . performance reports, and other contractual artifacts, such as root cause analysis reports, and internal discussions, and he interacted with a wide-array of Government officials, to include the Chief Information Officer, the Deputy Chief Information Officer, and various other directors. Mr. [Y's] insights are highly qualified and based on facts that were not public and were not intended for use by a competitor of DSFG.[footnote omitted]. Reports and types of information that Mr. [Y] had access to included reports from DSFG that are marked as "Confidential," . . . and "For Official Use Only." Furthermore, the depth and breadth of the reviews that the IV&V contractor conducted can be witnessed in documents whereby DSFG's services and deliverables were inspected extensively by the IV&V contractor, to include Mr. [Y]. Mr. [Y], by virtue of his role in the EDUCATE IV&V contract, had privileged access to, and learned, information that is . . . confidential information related to DSFG's current EDUCATE solution and performance, information which other Department contractor[s], let alone outsiders, would not know.

AR, exh. 35, Letter from the Contracting Officer to SRA, Sept. 29, 2017, Attach. A, at 5.

In sum, the agency's own materials show that: (1) Mr. Y had access to a wide array of nonpublic, competitively useful information through his activities related to performance of the EDUCATE IV&V contract; and (2) Mr. Y participated in preparation of the SRA proposal. In addition, there is no evidence in this record to rebut the legal presumption of prejudice to DSFG attending these facts. For example, there is no evidence showing that Mr. Y did not actually have access to the information in question, or that he did not participate in proposal preparation activities on behalf of SRA.

As noted, the FAR requires contracting officers to exercise common sense, good judgment, and sound discretion in deciding whether a significant OCI exists. FAR § 9.505. Here, there is no evidence to show that the agency considered (or resolved) the potential unfair competitive advantage created by Mr. Y's access to the types of information described above; rather, the agency's entire focus was confined to considering whether DSFG's proprietary information (or the agency's source selection sensitive information) had been disseminated to SRA. [9] While we recognize that the FAR discusses "unfair access" types of OCIs principally in terms of access to proprietary or source selection sensitive types of information, the concerns expressed in the agency's own record dictate that, in the present situation, the contracting officer also should have thoroughly considered the potential unfair competitive advantage that the information he identified may have provided to SRA.

Finally, as noted, there is a presumption of prejudice where the record shows that an individual has access to competitively useful, nonpublic information, and that individual engages in proposal preparation activities. McCarthy/Hunt JV, supra. On this record, there is nothing to show that the presumption has been rebutted. Accordingly, we find that the agency's conclusion that SRA does not have an unequal access type OCI was not reasonable. We therefore sustain DSFG's protest on this basis.  (Dell Services Federal Government, Inc. B-414461.3, B-414461.4, B-414461.5: Jun 19, 2018)

Turning to the merits of the protest, the record shows that the agency disqualified AGI because of the contracting officer’s conclusion that AGI may have had access to competitively useful, non-public information that may have been helpful in preparing its proposal. In particular, he concluded that one of the two individuals proposed by the protester, AGI’s intermediate program manager, had the capability to access files on the agency’s computer system that contained competitively useful information, including an independent government estimate prepared in connection with the current acquisition, the statement of work for the current RFP, and agency budgetary information. AR, exh. 10, SSDD, at 5-7; exh. 16, Letter from the Contracting Officer to AGI, Feb. 13, 2018, at 1-3.

The record also shows that AGI represented in a letter and affidavits submitted to the agency that neither of the Ambit employees that it proposed actually accessed competitively useful information during performance of the Ambit task order. AR, exh. 15, Letter and Affidavits from AGI to the Agency, Jan. 24, 2018. Specifically, the proposed senior program manager represented that he was precluded from accessing competitively useful information on the agency’s computer system because of a firewall implemented by Ambit. Id. at 5-6. The intermediate program manager, for his part, represented that, although theoretically he had access to non-public, competitively useful information, he did not, in fact, access the information during any relevant time. Id. at 8-9.

In considering the information provided by AGI, the contracting officer queried the agency’s information technology support staff to find out whether the agency’s computer logs showed, one way or the other, whether Ambit’s intermediate program manager actually had accessed the agency’s non-public information. In response to the contracting officer’s query, agency personnel advised that the agency’s logs only went back some 30 days; consequently the agency had no way of determining with certainty whether or not the intermediate program manager actually had accessed the information in question. AR, exh. 16, Letter from the Contracting Office to AGI, Feb. 13, 2018, at 2. In summing up the agency’s position, the contracting officer stated as follows:

While the conflict of interest posed by [Ambit’s program manager and intermediate program manager] supervising Ambit personnel who had access to procurement sensitive information may have been mitigated by the undefined Ambit firewall; the fact that [the intermediate program manager] currently has access to USCIS [United States Customs and Immigration Services] systems containing USCIS procurement sensitive information (notwithstanding his protestations that he has not actually accessed the procurement sensitive information in those systems within the last year) gives rise to an appearance of conflict of interest. This appearance of a conflict of interest is aggravated by the certification by Archimedes Global Inc. that they were not aware of any facts that create actual or potential conflicts of interest relating to the award of this task order. In light of the facts giving rise to an appearance of a conflict of interest, I am reaffirming that Archimedes Global Inc. is not eligible for award due to the appearance of conflict of interest.

Id. at 3.

AGI argues that it was unreasonable for the agency to disqualify it from consideration, principally because the agency’s analysis ignored the fact that the individuals in question are not AGI employees and did not participate in the preparation of AGI’s proposal.

We sustain AGI’s protest. In challenging an agency’s identification of a disqualifying conflict of interest, a protester must demonstrate that the agency’s determination did not rely on hard facts, but instead was based on mere inference or supposition of an actual conflict of interest, or is otherwise unreasonable. VSE Corp., B-404833.4, Nov. 21, 2011, 2011 CPD ¶ 268 at 8. Here, we find that the agency’s decision to disqualify AGI is not based on hard facts, but, rather, on innuendo and supposition concerning the activities of the Ambit employees.

Chief among our concerns is the fact that the contracting officer, without any underlying evidence, concluded that, because there was a possibility that the individuals in question may have had access to competitively useful, non-public information, that information necessarily was provided to AGI. However, the record shows that neither individual currently is employed by AGI, and there is no evidence to show that the individuals provided AGI with competitively useful, non-public information, or otherwise participated in preparing the AGI proposal.

On the contrary, the record shows that both individuals currently are employed by Ambit, not AGI. AR, exh. 15, Letter and Affidavits from AGI to the Agency, Jan. 24, 2018, at 7, 10. In addition, both individuals represented under oath that they did nothing more than give AGI permission to propose them for possible positions under the resulting task order being solicited; that they did not participate in proposal preparation activities for, or on behalf of, AGI; and that, by virtue of being bound by nondisclosure agreements, they did not share any information learned while working for Ambit with AGI. Id. at 8, 10.

The contracting officer ignored these facts in reaching his conclusion. In particular, the record shows that the contracting officer based his finding that there was an “appearance” of an OCI entirely on the possibility that the two individuals in question may have had access to procurement sensitive information. He states as follows:

There does, however, appear to be an appearance of conflict of interest based upon 1) the fact that both [the program manager and intermediate program manager] supervised personnel who had access to procurement sensitive information; and 2) [the intermediate program manager] had access to USCIS [United States Customs and Immigration Services] systems containing procurement sensitive information, . . . and at some time prior to the last year, [he] actually accessed those USCIS systems containing procurement sensitive information.

* * * * *

While the conflict of interest posed by [the program manager and intermediate program manager] supervising Ambit personnel who had access to procurement sensitive information may have been mitigated by the undefined Ambit firewall; the fact that [the intermediate program manager] currently has access to USCIS systems containing USCIS procurement sensitive information (notwithstanding his protestations that he has not actually accessed the procurement sensitive information in those systems within the last year) gives rise to an appearance of conflict of interest.

AR, exh. 16, Letter from the Contracting Office to AGI, Feb. 13, 2018, at 2-3 (emphasis in original). In light of these considerations, we sustain AGI’s protest.  (Archimedes Global, Inc. B-415886.2: Jun 1, 2018)

The FAR recognizes that conflicts may arise in factual situations not expressly described in the relevant FAR sections, and advises contracting officers to examine each situation individually and to exercise "common sense, good judgment, and sound discretion" in assessing whether a significant potential conflict exists and in developing an appropriate way to resolve it. FAR § 9.505. However, as relevant here, our Office has recognized that, "where information is obtained by one firm directly from another firm . . . this essentially amounts to a private dispute between private parties that we will not consider absent evidence of government involvement." The GEO Group, Inc., B-405012, July 26, 2011, 2011 CPD ¶ 153 at 6; Ellwood Nat'l Forge Co., B-402089.3, Oct. 22, 2010, 2010 CPD ¶ 250 at 3.

MSH acknowledges that an unequal access to information OCI could not ordinarily arise through the voluntary business relationship between a subcontractor and prime contractor. Protest at 28. Nonetheless, MSH asserts that an OCI exists under these facts because its subagreement relationship with Pathfinder under the E2A cooperative agreement was not voluntarily arranged between the two firms, but was arranged by the agency. According to MSH, since Pathfinder, and ultimately Abt, obtained MSH's proprietary information at the direction of USAID, there is the requisite "government involvement" to give rise to an OCI, in contrast to the purely private disputes described in our Office's decisions in Geo Group and Ellwood. MSH contends that the agency's involvement makes USAID responsible for Pathfinder's access to MSH's proprietary information, and that the agency cannot now be permitted to claim that Abt's unfair competitive advantage is a mere private dispute.

The agency responds that MSH's OCI allegation is factually and legally deficient because, consistent with Geo Group and Ellwood, GAO does not review private party disputes such as the prime-sub disagreement here. With respect to the contracting officer's duty to identify and evaluate potential OCIs, the agency contends that the contracting officer was unaware of a dispute concerning MSH's submission of information to Pathfinder under the E2A subagreement and that, in any event, any such dispute would be a private matter not for resolution by our office. The agency argues that despite USAID's involvement in identifying the E2A cooperative agreement as a mechanism to continue the integrated health project and participation in negotiations concerning the subagreement SOW, MSH was not compelled, directed, or required by the operation of any contract or process to pursue the E2A subagreement opportunity. Rather, MSH made the arms-length business decision to enter into the subagreement with Pathfinder, and only now complains because it failed to take measures to protect the information it exchanged under that agreement.

We agree with the agency that MSH's allegations in this case present a private dispute between private parties and do not present a situation in which an unequal access to information OCI would arise. While MSH urges our Office to accept that an unequal access to information OCI arises whenever an offeror has access to a competitor's proprietary information and there was some form of "government involvement" in the relationship--citing our decisions in Geo Group and Ellwood, among others--we do not agree that our prior decisions establish mere "government involvement" as an operative test or standard for identifying the scenarios under which an OCI may arise. Rather, we conclude that those decisions use the phrase "government involvement" in reference to specific types of actions that may give rise to an OCI, as established by the OCI concepts and scenarios set forth in the FAR.

(sections deleted)

Based on our review of the record, we cannot conclude that the "government involvement" in suggesting or arranging the subagreement between MSH and Pathfinder would give rise to an unequal access to information OCI under these provisions, or provide any basis to conclude that the scenario is anything other than a private dispute between private parties. Specifically, with respect to the general rules for preventing unfair competitive advantages in FAR § 9.505(b), MSH does not allege that Pathfinder obtained proprietary information "from a Government official without proper authorization," or that it possesses "[s]ource selection information . . . that is relevant to the contract but is not available to all competitors."

Next, based on the facts of USAID's involvement in MSH's subagreement with Pathfinder, we also cannot conclude that an OCI would arise under FAR § 9.505-4(a). Specifically, despite MSH's assertions that its association with Pathfinder was involuntary, we see no evidence that this was the case. Notwithstanding USAID's involvement in selecting the E2A cooperative agreement as the vehicle for continuing the DRC integrated health project, the E2A cooperative agreement provided Pathfinder no leverage to obtain MSH's proprietary information outside of MSH's own business interest in pursuing a subagreement to continue performing valuable work. Thus, we agree with the agency that MSH's subagreement with Pathfinder was voluntarily and mutually negotiated at arms-length.

Finally, Pathfinder's E2A cooperative agreement is not a contract for advisory and assistance services under FAR § 9.505-4(b), for which the contracting officer would be responsible for ensuring the execution of non-disclosure agreements. In this connection, FAR § 2.101 defines advisory and assistance services as services provided under contract to "support or improve: organizational policy development; decision-making; management and administration; program and/or project management and administration; or R&D activities," or professional advice "to improve the effectiveness of Federal management processes or procedures." The E2A cooperative agreement was not established for these purposes.

Accordingly, our review of the record establishes that Pathfinder obtained MSH's information directly from MSH pursuant to the terms of a voluntary arms-length business transaction--not from a current or former government official, through the leverage of a government contract, or as a contractor performing advisory and assistance services to the government. As a result, we conclude that MSH's unequal access to information OCI allegations present a quintessential private dispute between private parties that our Office will not review. See The GEO Group, Inc., supra; Ellwood Nat'l Forge Co., supra.  (Management Sciences for Health B-416041, B-416041.2: May 25, 2018)

ARES argues that, in providing the agency with an OCI mitigation strategy, MEI effectively made changes to its technical approach that the agency never considered in connection with its evaluation of the awardee’s proposal. The record shows that MEI and one of its proposed subcontractors, [deleted], have been performing a contract called the omnibus multidiscipline engineering services (OMES II) contract, which requires them to provide engineering services to the agency. The record shows that there is the possibility that, in performing the SMAS II requirement, MEI, or its subcontractor, could be required to review the engineering work provided under the OMES II contract, thus creating the possibility of an impaired objectivity OCI.[8]

The record shows that, in order to mitigate the possibility of an OCI arising as a consequence of its work on the OMES II contract, MEI stated that it would divest itself of all future work under the OMES II contract, and in addition, provided the agency with the following mitigation strategy:

When SMAS II task orders are awarded, Millennium [MEI] will assess all task orders to determine if there are requirements to review/approve any OMES II products, and if so, to determine whether the task orders are to review products that may have been developed by Millennium employees under OMES II. Using this information, we will not assign review/approval of any previously developed Millennium products on OMES II to Millennium or [deleted] employees working on SMAS II. Millennium will assign these tasks to other teammate employees, and those employees will coordinate all activities directly with the NASA task manager, and Millennium leadership will not participate in that coordination.

AR, exh. 30, OCI Exchange with MEI, at BATES 3983.[9] The record also shows that MEI stated that it would use physical and electronic firewalls to limit access to data among teaming members where the work being performed could give rise to a possible OCI, id. at 3972, and the agency’s contracting officer stated that she would ensure that any OCI plan incorporated into the MEI contract would include such firewall provisions. AR, exh. 31, SMAS II Corrective Action and OCI Analysis Memorandum, at BATES 4035.

ARES notes that, in contrast to these arrangements, MEI’s proposal specifically provided that its program manager would have overarching authority over all contract matters, including the management and assignment of work among subcontractors, and that he is designated as the single point of interface with the agency. See AR, exh. 17 MEI Mission Suitability Proposal at BATES 2410-2420. ARES also points out that the MEI technical approach relies on a [deleted] responsible for contract performance. Id. ARES notes as well that the MEI technical solution relies on use of a suite of software and communications tools called [deleted] a “single architecture” for the dissemination and flow of information among all members of the MEI team. See e.g., Id. at 2406.

ARES argues that MEI’s mitigation strategy--which specifically contemplates the assignment of work directly to a subcontractor that will be responsible for execution and management of the task at issue without any involvement of MEI’s personnel or resources, and also contemplates using firewalled electronic information sharing protocols--is directly inconsistent with its proposed technical approach. ARES argues that the agency never gave any consideration to the effect MEI’s mitigation strategy would have on the success of its technical approach. ARES also notes that the agency’s technical evaluation of the two firms’ proposals shows that they were close under the mission suitability evaluation factor, with ARES’ proposal being assigned a total score of 745 points compared to the 788 points assigned to the MEI proposal. The protester therefore argues that the agency’s technical evaluation is unreasonable because it never took into consideration MEI’s mitigation strategy.

We sustain this aspect of the protest. Agencies are required to consider the effect that a firm’s OCI mitigation measures have on its technical approach, and whether or not such OCI mitigation measures either directly contradict a firm’s proposed technical approach, or otherwise call into question the agency’s original evaluation conclusions concerning the merit of a firm’s proposed approach. Meridian Corp., B‑246330.4, Sept. 7, 1993, 93-2 CPD ¶ 129 at 5.

First, and perhaps most important, there is nothing in the contemporaneous record to show that the agency evaluated the impact of MEI’s mitigation strategy on its technical approach. The agency completed its evaluation of technical proposals well before MEI submitted its mitigation strategy, and there is nothing in the record to show either that the agency evaluators meaningfully considered the impact of MEI’s mitigation strategy, or that any conclusions reached by the evaluators were provided to the SSA. See AR, exh. 24, Presentation to the SSA Regarding Final Proposal Revisions, July 7, 2017.

In addition, to the extent the agency presented the SSA with materials relating to an evaluation of proposals in the wake of MEI outlining its mitigation strategy, those materials make no mention either of the particulars of MEI’s mitigation strategy, or the possible impact of that strategy on the agency’s evaluation of MEI’s technical approach. AR, exh. 33, Presentation to the SSA on Corrective Action, December 20, 2017. While the record also includes the contracting officer’s analysis of both offerors’ OCI mitigation strategies, that document does not give any consideration to the possible impact of their respective mitigation strategies on their technical approaches, except to state, without elaboration, that she verified for both offerors that their proposed OCI resolutions were consistent with the entirety of their SMAS II proposals. AR, exh. 31, SMAS II Corrective Action Analysis Memorandum, at BATES 4035.

The agency’s contracting officer makes various claims in response to ARES’ protest on this issue. First, she contends that she met with the agency’s cost and technical evaluators concerning this question. Second, she maintains that she and the evaluators assessed the impact of MEI’s mitigation strategy on its proposal. However, there simply is no documentation in the contemporaneous record to support these claims. See Contracting Officer’s Supplemental Statement of Facts, March 19, 2018. In the absence of such contemporaneous evidence, we have no basis to conclude that the agency gave reasoned consideration to the impact of MEI’s mitigation strategy on its technical approach. L3 Unidyne, Inc., supra. In addition, there is nothing in the record to show that the SSA was aware of the fact that MEI’s mitigation strategy could have had an impact on its technical approach, or that he meaningfully gave consideration to such a potential impact in making his source selection decision in the wake of MEI’s mitigation strategy being presented to the agency. AR, exh. 34, Addendum to the Source Selection Statement. Under these circumstances, we sustain this aspect of the protest.  (ARES Technical Services Corporation B-415081.2, B-415081.3: May 8, 2018)

AdvanceMed argues that although the solicitation expressly informed offerors of CMS's determination that an OCI existed where an offeror (or its affiliates) served both as a UPIC [unified program integrity contractor] and as a MMIS [Medicaid management information systems] contractor in the same geographic jurisdiction, the agency failed to meaningfully consider the conflict that arose here due to Safeguard's parent company's performance of MMIS contracts in four states in the southeast jurisdiction. See Protest at 7-11; Protester's Comments at 15.

(sections deleted)

Our Office reviews the reasonableness of a contracting officer's OCI investigation and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable. See TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4. In this regard, the identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Guident Techs., Inc., B-405112.3, June 4, 2012, 2012 CPD ¶ 166 at 7.

The primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR § 9.504; RMG Sys., Ltd., B-281006, Dec. 18, 1998, 98-2 CPD ¶ 153 at 4. Once an agency has given meaningful consideration to whether an OCI exists, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. See DV United, LLC, B-411620, B-411620.2, Sept. 16, 2015, 2015 CPD ¶ 300 at 6; Alion Sci. & Tech. Corp., B-297022.4, B-297022.5, Sept. 26, 2006, 2006 CPD ¶ 146 at 8.

We agree with the protester that despite the fact that the solicitation clearly informed offerors that CMS viewed an offeror (or its affiliates) serving both as a UPIC contractor and an MMIS contractor in the same geographic jurisdiction as having an OCI, the record here does not demonstrate that the agency meaningfully considered the conflict that arose due to Safeguard's parent company's performance of MMIS contracts in four states in the southeast jurisdiction where Safeguard would be performing as a UPIC contractor.

First, we note that while Safeguard's proposal disclosed the contracts at issue, it did not "recognize [] this perceived conflict on its own," as the agency asserts. Instead, Safeguard represented that there were no OCIs and that no mitigation was necessary despite representing that "[u]nder this contract [Safeguard's parent company] processes Medicaid [c]laims" for those states. See AR, Tab 3d3/Tab 11, SafeGuard J.6 attach. B, Disclosure of Contracts at B-25, B-33, B-34, B-45 (in each instance summarily concluding that "no OCI exists with the UPIC IDIQ contract therefore, no mitigation is necessary"). Id. at B-26, B-33, B-34-35, B-45-B-46; See also AR, Tab 3d1, Safeguard Conflict of Interest and Compliance Program Response at 16 (stating that Safeguard determined "[a]fter thorough review of the UPIC [j]urisdiction and these contracts . . . no actual OCIs exist between [the UPIC and MMIS] contracts.").

The CO's preaward OCI memorandum, the stated purpose of which "is to document the [CO's] identification, evaluation and determination of significant (actual, apparent or potential) [OCIs]," also fails to address Safeguard's parent company's contracts. See generally AR, Tab 5a, Preaward OCI Memorandum (Memo.). While the CO's memorandum included information from the offeror's proposal, internet and database searches, a conference call, and identified several potential OCIs that required "actions in order to avoid, neutralize or mitigate actual, apparent or potential [OCIs]," it did not include discussion of the MMIS-related contracts held by Safeguard's parent company. Id. In this regard, the CO concluded that unless specifically identified, the CO did not identify any concerns "with the offeror's assessment of the [OCIs] associated with the contracts listed in the submission." Id. at 2-6.

During the development of the protest, our Office requested that the agency provide additional information pertaining to its consideration of the alleged conflict, including any documentation of the conference call referenced in the CO's preaward OCI memorandum. In response, the agency pointed to an email in which CMS asked Safeguard to verify whether the Florida and Georgia Medicaid contracts support has changed, and Safeguard's response. See AR, Tab 3d7, Safeguard Aug. 3, 2017 Email. However, nothing in the record shows the agency's consideration or analysis of this information.

In its responses to GAO's questions, the agency explained that performance by one entity as both an MMIS provider and as a UPIC is merely a perceived conflict and that the agency discussed this "perceived conflict" with Safeguard prior to the award of this task order, the award of the task order for the northeastern jurisdiction, and the award of the UPIC. Agency's Oct. 20 Responses at ¶¶ 3, 4. We find the agency's responses troubling for several reasons.

First, the agency's characterization of these types of conflicts as merely presenting a "perceived conflict" is inconsistent with the clear language of the solicitation, which states that they present a conflict. Further, to the extent the agency considered this issue during the award of the northeastern jurisdiction task order, as it pertained to the potential conflicts that may have occurred due to Safeguard's parent company's performance of MMIS contracts in that jurisdiction, again, the identification of conflicts of interest is a fact-specific inquiry. Guident Techs., Inc., supra at 7. Thus, to the extent that the agency may have considered a similar type of conflict in the award of a task order in a different jurisdiction does not discharge its obligation to meaningfully consider whether a significant conflict of interest exists for this specific procurement. Id.

On this record, we cannot find that "CMS clearly gave meaningful consideration to the potential for conflicts of interest" and that the "record here is replete with solid analysis of the potential for concern with regard to the Awardee's conflict of interest," as argued by the agency. See AR, Memo. of Law at 5. Accordingly, since there is nothing in the record documenting that the agency meaningfully considered Safeguard's conflict, we conclude that the agency's actions here were not reasonable, and sustain this ground of protest.  (AdvanceMed Corporation B-415062, B-415062.2: Nov 17, 2017)

Contracting officers are required to identify and evaluate potential OCIs as early in the acquisition process as possible, and avoid, neutralize, or mitigate significant potential conflicts of interest before contract award. FAR §§ 9.504(a), 9.505. The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting officer. Innovative Test Asset Solutions, LLC, B-411687, B-411687.2, October 2, 2015, 2016 CPD ¶ 68 at 17. We review the reasonableness of a contracting officer’s OCI investigation and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. Id. at 18. In this regard, the identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Id. A protester must identify “hard facts” that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Id. Here, the agency reasonably assessed the potential for OCI’s, and the protester’s arguments largely fail due to a lack of hard facts.

Biased Ground Rules

A biased ground rules OCI exists where a firm, as part of its performance of a government contract, has in some sense set the ground rules for another government contract by, for example, writing the statement of work or the specifications: the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. Systems Made Simple, Inc., B-412948.2, July 20, 2016, 2016 CPD ¶ 207 at 6.

The protester’s allegations pertaining to a biased ground rules OCI focus on a requirement in IBM’s FSPS contract for the contractor to identify changes that may be needed to bring source systems, including GFEBS, into compliance with guidance provided by the Treasury and Office of the Secretary of Defense.

Specifically, the FSPS contractor is required to review, at least annually, the most current guidance from Treasury and the Office of the Secretary of Defense (Comptroller) regarding the United States Standard General Ledger and Department of Defense Standard Chart of Accounts (DOD SCOA), respectively. AR, Tab 4, FSPS OCI, at 18. In this connection, the contractor is to compare the DOD SCOA and GFEBS’ Reporting Chart of Accounts, and identify additions or removals which should be made to ensure the source systems’ compliance with the DOD SCOA. Id. The FSPS contractor is then required to provide the listing of proposed changes to the Assistant Secretary of the Army (Financial Management and Comptroller) staff. Id.

The protester argues that “IBM has the ability to choose which recommendations to make or not make” and speculates that “such recommendations may have impacted the GFEBS RFTOP/SOW in a manner that favored IBM.” March 3 Protest at 9. The protester has not, however, alleged any hard facts regarding recommendations made by IBM that impacted the GFEBS requirements, nor has it even provided a description of the type of recommendation IBM could have made in its FSPS role that would have skewed the competition in its favor.

Nonetheless, the agency considered the protest allegation and found that no OCI existed. In investigating the allegations raised by AFS, the contracting officer (CO) evaluated the scope and tasks of the FSPS contract, and spoke with the current contracting officer for the effort in order to discuss the scope and tasks to be performed under the FSPS contract. AR, Tab 4, OCI Determination at 1-2. With regard to the protester’s allegation that IBM may have made recommendations impacting the GFEBS RFTOP/SOW, the agency first explained that the GFEBS task order and the DSPS contract are managed by different contracting offices with different program managers. Id. at 2. More importantly, however, the CO found that while AFS might identify changes to source systems that were necessary for compliance purposes:

in order for IBM or any other contractor to make recommendations for the potential changes to the source systems, the [g]overnment must vet the recommendations to ensure that the guidance is being properly implemented. Any policy change, compliance measure, or updated guidelines that are needed to be implemented in order to be compliant with the Treasury or [Office of the Secretary of Defense (Comptroller)] will be thoroughly vetted by the government to ensure compliance. In the end, the changes made because of compliance issues are a government requirement and a government decision.

Id.

As noted above, we review the reasonableness of a contracting officer’s OCI investigation and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. Here, the agency considered the protester’s vague allegation, and determined that no OCI existed due to a number of factors, including the limitations on the types of changes IBM could identify as part of a compliance review, and the fact that it would ultimately be up to the government to decide what changes should be made to GFEBS such that IBM would not be in a position to determine the GFEBS requirements. In sum, we have no basis to find the agency’s conclusion unreasonable.

Unequal Access to Information

AFS next alleges that IBM has an unequal access to information OCI because “[t]he information to which IBM has access--financial information from all [Enterprise Resource Planning] systems--may provide IBM with a competitive advantage in the GFEBS procurement.” March 3 Protest at 8. 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 for a government contract. Systems Made Simple, Inc., supra, at 6. Here, again, the protester’s allegation is largely speculative and does not allege specific facts regarding how the kind of information available to IBM in the FSPS role could possibly provide it with a competitive advantage with regard to GFEBS.

The protester bases its allegation on the following FSPS PWS requirement:

[The FSPS contractor will] [r]egularly run reports from the source system [Enterprise Resource Planning Systems and Defense Departmental Reporting System] to monitor general ledger account codes (GLACs) which are in an abnormal position. Research any abnormal balances identified to determine the root causes. Make recommendations to [the Assistant Secretary of the Army (Financial Management and Comptroller)] staff on the actions and time necessary to correct the abnormal balances, correcting as many as possible before the next reporting period. Track efforts to identify issues that reoccur, and report trend data.

AR, Tab 70, FSPS PWS at 18.

In considering whether IBM might have an unequal access OCI, the CO’s inquiry focused on the type of information available to IBM in the course of its FSPS performance. In this regard, the CO concluded that “[t]he information that IBM receives is financial information from all [Enterprise Resource Planning] systems, which includes the GFEBS system but does not contain it singularly and would not permit IBM to have unequal access to information.” The CO further noted that “[t]he information received by IBM is raw financial data that IBM must consolidate into general financial ledgers for the Army.” AR, Tab 4, OCI Determination, at 2. Here, based on the CO’s consideration of the allegation, coupled with the protester’s failure to explain how the type of data available to IBM could give it a competitive advantage, we have no basis to conclude that the CO’s conclusion that IBM did not have an unequal access to information OCI was unreasonable.

Impaired Objectivity

AFS also argues that the PWS requirements described above create impaired objectivity OCIs because IBM would be required to “evaluate its own work.” March 3 Protest at 8-9. An impaired objectivity OCI exists where a firm’s ability to render impartial advice to the government will be undermined by the firm’s competing interests, such as a relationship to the product or service being evaluated. Innovative Test Asset Solutions, LLC, supra. Regarding the requirement for IBM to conduct an annual compliance review of source systems to determine whether they comply with Treasury and Office of the Secretary of Defense guidance, AFS contends that IBM could tailor its recommendations regarding GFEBS in such a way as to generate more work under the GFEBS task order, or to prevent a reduction of work. Id. at 8.

As discussed above, however, the agency considered this possibility and essentially concluded that IBM would not have the level of discretion implicit in the protester’s argument, or the requisite decisionmaking authority to direct that changes be made. In addressing the protester’s allegation, the CO considered the nature of the recommendations that could be reasonably made in the course of the compliance review contemplated by the PWS, as well as the process that would be needed for one of IBM’s recommendations to become a requirement for a change in GFEBS. AR, Tab 4, OCI Determination, at 2. Ultimately, the CO concluded that this FSPS requirement did not create an OCI because the FSPS contract and the GFEBS task order are managed by different contracting officers and program managers; IBM’s recommendations would be vetted by the government to determine whether they would result in proper implementation of guidance developed by Treasury and Office of the Secretary of Defense; and the ultimate decision to require a change to GFEBS in order to ensure compliance would be made by the government. Id. Once again, we find that the CO gave meaningful consideration to the protester’s allegation here, and we have no basis to conclude that the CO’s determination was unreasonable.

AFS’s other impaired objectivity OCI allegation flows from the requirement, set out above, for the FSPS contractor to generate reports from the source system, research abnormal balances found in the reports, perform a root cause determination, and make recommendations regarding the actions and time necessary to correct the abnormal balances. See AR, Tab 70, PWS at 18. According to the protester, this would have the effect of requiring IBM to “evaluate its own work” in GFEBS, and would allow IBM to make recommendations that would “generate more work for itself under the GFEBS [task order].” [7] March 3 Protest at 8.

Once again, the agency considered the protester’s allegation, and found that, as a practical matter, the protester’s allegation misses the mark. Based on its investigation into this allegation, the agency considered the nature of the recommendations IBM might make under this FSPS PWS requirement, as well as the information that would form the basis for the recommendations. AR, Tab 4, OCI Determination at 2. In this regard, the CO noted as follows:

[t]he recommendations that IBM would make regarding any abnormal balances found within the financial information are based on high-level data that pertain to multiple interfacing systems. These recommendations are not able to drive work towards the GFEBS contractor, the recommendations are only aimed at improving the services that the Army receives under the [FSPS] contract. IBM could not reasonably expect to use the [FSPS] contract to increase its workload under the GFEBS sustainment contract, as the [FSPS] workload is the maintenance of the established system, and is not a development contract.

Id.

In sum, the agency gave meaningful consideration to AFS’s allegations, and we have no basis to conclude that the CO’s determination is unreasonable. AR, Tab 4, OCI Determination, at 2.  (Accenture Federal Services, LLC B-414268.3, B-414268.4, B-414268.5: May 30, 2017)

OCI Mitigation

The RFP incorporated the clause at NASA FAR Supplement § 1852.209-71, advising that the pending contract could result in impaired objectivity or unfair competitive advantage OCIs. RFP at 18. The clause identified contracts that the SMASS III prime contractor would be ineligible to hold as a prime contractor or subcontractor, and also identified other contracts that could give rise to potential OCIs, one of which was the KLXS contract. Id. at 19. The clause directed offerors to provide notification to the contracting officer, and to submit an acceptable OCI mitigation plan, before performing work on any of the listed contracts. Id. A separate OCI mitigation plan clause stated that the contractor was required to identify conflicts immediately, to submit a proposed plan of action within 7 days, and to implement the plan as approved by the contracting officer. RFP at 26.

In its proposal, Alphaport affirmed that its own operations did not pose an OCI risk, but it identified MEI as its major subcontractor. Alphaport’s proposal acknowledged that the SMASS III services involved oversight and assessment of MEI’s performance as the KLXS contractor and could present an impaired objectivity OCI. AR Tab 13, Alphaport FPR, at 27. Alphaport proposed that it would mitigate that potential OCI by “ensur[ing] that [MEI] will not fulfill any Safety and Mission Assurance positions supporting” the ground systems development and operations program, to which MEI provides support as the KLXS contractor. Id. at 38.

A-P-T argues that Alphaport’s proposed mitigation understated the significance of the OCI as being merely potential.[13] Additionally, A-P-T argues that the OCI arose not only from MEI’s role as the KLXS contractor, but also because Alphaport’s proposed program manager for the SMASS III contract was, until recently, an MEI employee. Protest at 18. A-P-T argues that these facts render ineffective the proposed mitigation of the OCI by having MEI not involved in the support of grounds systems development and operations--which A-P-T refers to as a “firewall.” Protest at 17-18. A-P-T argues that an impaired objectivity OCI here cannot be mitigated by a firewall, and therefore Alphaport’s proposal should have been disqualified. Id. at 17. Furthermore, A-P-T argues that the contemporaneous record reflects no meaningful assessment of the OCI or Alphaport’s proposed mitigation, and that the agency’s explanations during this protest, in its agency report and contracting officer’s statement, are conclusory. Protester’s Comments at 14.

As an initial matter, NASA responds that A-P-T has not shown hard facts demonstrating the existence of or potential for an OCI. AR at 19. In that regard, our Office has explained that a protester must identify hard facts that indicate the existence or potential existence of an OCI; mere inference or suspicion of an actual or potential conflict is not enough. Platinum Bus. Servs., LLC, B-413947, Dec. 23, 2016, 2016 CPD ¶ 377 at 4. NASA’s pre-RFP assessment of potential OCI issues (drafted before the RFP was issued) specifically found that

OCI considerations do not preclude the KLXS-II prime contractor from participating in the SMASS III procurement . . . . However, a mitigation plan will still be required to address potential conflicts between SMASS III and the offeror’s roles in KLXS II and under other prime contract and subcontract arrangements.

AR Tab 01, Contracting Officer’s Memorandum for Record on Organizational Conflict of Interest Identification and Evaluation for the Safety and Mission Assurance Support Services III, at 4. Alphaport’s FPR identified MEI’s role as the KLXS prime contractor, and likewise noted the potential for an OCI. AR Tab 13, Alphaport FPR, vol. IV, at 37-40.

The potential for an impaired objectivity OCI, which principally concerns the contractor’s ability to perform its contractual obligations free of improper bias, arises where “a contractor . . . will evaluate its own offers for products or services, or those of a competitor, without proper safeguards to ensure objectivity to protect the Government's interest.” FAR § 9.505-3. As NASA concisely summarized, some of the functions of the SMASS III contract involve “risk assessments, inspections, investigations, engineering analyses, and evaluations of work performed by” NASA contractors, which expressly included the KLXS contractor. RFP attach. L-06 (Past Performance Questionnaire) at 1. In our view, the situation here presents sufficiently hard facts to demonstrate the existence of, or potential for, an OCI.

NASA argues that the SEB reviewed Alphaport’s proposed OCI mitigation plan, and found it to be appropriate. AR at 19-21. Specifically, NASA argues that the SEB reviewed a labor distribution and mapping template in Alphaport’s proposal to discern that the program supported by MEI’s KLXS contract would not be overseen by MEI staff in performing the SMASS III contract. AR at 21. Accordingly, NASA argues that all OCI concerns were clearly addressed and mitigated. Id.

Our Office reviews an agency’s OCI investigation for reasonableness, and so, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. Social Impact, Inc., B-412941, B-412941.2, July 8, 2016, 2016 CPD ¶ 203 at 5. More generally, the identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Id. Depending on the facts and judgments present, the use of firewalled subcontractors may be reasonably assessed as a sufficient means to mitigate an impaired objectivity OCI. E.g., id. at 6.

Thus, the question presented here is whether the contracting officer reasonably assessed the OCI mitigation approach in Alphaport’s FPR. Our review of the contemporaneous record identified only a brief discussion by the evaluators of Alphaport’s approach to staffing the function that MEI supports under the KLXS contract, but even that discussion makes no specific reference to OCI mitigation. See AR Tab 14.01, Mission Suitability Final Findings for Alphaport, at 10. NASA cites only to the labor distribution and mapping template in Alphaport’s FPR (rather than to any contemporaneous consideration of a possible OCI) as support for the agency’s assertion that it conducted an appropriate OCI review. See Contracting Officer’s Statement at 27-28; AR at 20-21 (citing Alphaport FPR). In short, the contemporaneous record does not document an assessment of Alphaport’s OCI mitigation plan as required (and as the agency’s own pre-RFP OCI assessment seemed to anticipate). As a result, we also sustain the protest on this basis.  (A-P-T Research, Inc. B-413731.2: Apr 3, 2017)

The protester alleges that Metris has an unequal access to information OCI based upon Metris’s employment of an individual who recently retired from the USCG. Specifically, the protester asserts that this individual entered Metris’s employ to assist the awardee in proposal preparation for the [Training and Analysis Support Services] TASS competition, and to serve as its program manager (the MPM) for the TASS effort. According to the protester, the individual in question had access to competitively useful, nonpublic information about the protester and provided that information to the awardee during its proposal preparation efforts.

Federal Acquisition Regulation subpart 9.5, and decisions of our Office, broadly identify three categories of OCIs, biased ground rules, unequal access to information, and impaired objectivity. McConnell Jones Lanier & Murphy, LLP, B‑409681.3, B-409681.4, October 21, 2015, 2015 CPD ¶ 341 at 13. As relevant here, an unequal access to information OCI exists where a firm has access to nonpublic information, and that information may provide the firm a competitive advantage in a competition for a government contract. Systems Made Simple, Inc., B‑412948.2, July 20, 2016, 2016 CPD ¶ 207 at 6. We review the reasonableness of a contracting officer’s OCI investigation and, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. Id. at 7.

The record shows that the MPM became chief of the USCG FORCECOM (Forces Readiness Command) Training Division in September of 2012. Agency Legal Memorandum at 4. In that role, the MPM had general oversight responsibility for training activities at training commands throughout the United States. Id. The MPM remained in that position until March 2015 when he began terminal leave from the USCG, leading up to his formal retirement on May 1, 2015. Id. The MPM’s role as chief of the training division during the performance of the TTSS contract, and at the time the agency issued a request for information (RFI) which preceded the TASS solicitation, form the basis for the protester’s allegations.

The record shows that, before leaving the USCG, the MPM sought and received a post-government-service employment ethics memorandum from the agency dated March 19, 2015, which specifically cleared the MPM to work as the program manager for a company with intentions to pursue the TASS procurement. AR, exh. D, Post-Government-Service Employment Ethics Memorandum, at 1. Following his retirement, the MPM worked as a consultant for Metris during proposal preparation, and was hired by Metris to serve as the program manager for the TASS effort. AR, exh. H, Metris Proposal, Vol. I, at 1.

Harkcon alleges that an unequal access to information OCI exists because the MPM was chief of the training division during the time the predecessor TTSS contract was performed. In this connection, Harkcon worked on the [Training and Technical Support Services] TTSS contract as a subcontractor. The protester alleges that the MPM’s role as chief provided him access to nonpublic, competitively useful information about Harkcon.

We find no merit to this aspect of Harkcon’s protest. As noted, the agency performed an investigation into Metris’s alleged OCI. The investigator’s findings show that the MPM did not have access to procurement sensitive or competitively useful information either relating to performance of the TTSS contract, or to the proposals that were submitted for that contract when it was competed.

Generally speaking, the agency’s investigation revealed that the MPM had no access to computer records that would have revealed labor rates, monthly invoices or performance issues on the TTSS contract. AR, exh. N, Investigative Report, at 104-107. More specifically, the investigator found no evidence to support the allegation that the MPM had access to the incumbent contractor’s procurement- sensitive, financial, proprietary, and performance information related to the TTSS contract. Id. The investigator found that the MPM did not have access to the computer systems where the incumbent’s procurement-sensitive documentation was stored, and there was no evidence that such information was provided to the MPM. Id.

The investigator also found that the MPM did not have access to any USCG systems that contained procurement-sensitive, financial, proprietary, or performance information. AR, exh. N, Investigative Report, at 104-107. In addition, the investigator concluded that the labor rates for the TTSS contract would not have been competitively useful to Metris in any event because they were well below the current market rate (approximately 21.1% lower than the next lowest bidder), were established by Leidos (the prime contractor under the TTSS contract) not Harkcon, and all but two of the labor categories were subject to the Service Contract Act wage determinations which were posted publicly. Id. at 106.

The protester also contends that, because the MPM served as chief of the training division at the time the agency issued the RFI which preceded the solicitation, the MPM had access to the RFI responses. As to this allegation, the investigator found that the MPM did not have access to the RFI responses. AR, Tab N, Investigative Report at 50, 107. In any event, the information provided in those responses would not have been competitively useful.

As a final matter, the protester suggests that an OCI exists because the MPM had subject matter expertise based on his USCG employment. However, an individual’s familiarity with the type of work required under a solicitation from prior government employment is not, by itself, evidence of an unfair competitive advantage. Liquidity Servs., Inc., B-409718, et al., July 23, 2014, 2014 CPD ¶ 221 at 12. In light of the discussion above, we deny this aspect of Harkcon’s protest.  (Harkcon Inc. B-412936.2: Mar 30, 2017)

The primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR § 9.504; RMG Sys., Ltd., B-281006, Dec. 18, 1998, 98-2 CPD ¶ 153 at 4. Once an agency has given meaningful consideration to whether an OCI exists, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. See DV United, LLC, B-411620, B-411620.2, Sept. 16, 2015, 2015 CPD ¶ 300 at 6; Alion Sci. & Tech. Corp., B-297022.4, B-297022.5, Sept. 26, 2006, 2006 CPD ¶ 146 at 8.

Contracting officers are assigned several responsibilities in this area. First, a CO is required to identify potential conflicts of interest as early in the acquisition process as possible. FAR § 9.504(a)(1). Second, a CO is expected to anticipate potential significant conflicts, and recommend steps to resolve such conflicts, before the solicitation is issued. FAR § 9.504(c). As relevant here, if a CO determines that an apparent successful offeror has a conflict that cannot be avoided or mitigated, the CO is required to either: (1) notify and advise the contractor of the conflict and allow the contractor to address the conflict; (2) withhold the award, if after notifying the contractor, the CO concludes that the conflict cannot be resolved; or (3) submit a request to waive the conflict. FAR § 9.504(e).

During the development of the protest, our Office requested that the agency provide any existing documentation of the CO’s analysis regarding HPES’s OCI mitigation plan, as opposed to the analysis performed in the solicitation planning phase. GAO RFI. In response, the agency stated that “[o]ther than what has already been submitted in the [a]gency [r]eport, there is no other documentation regarding the [CO’s] analysis of HPES’s OCI mitigation plan.”[16] Agency Response to GAO RFI at 2. In that response, the agency reiterated that it recognized the potential for an OCI and developed a mitigation plan prior to releasing the solicitation, resulting in a solicitation that is structured to avoid OCIs because: (1) the contractor is required to propose alternative solutions in the event that it makes recommendations for hardware or software; (2) the government retains the right to make the ultimate decision regarding which hardware and software items to be procured; and (3) the CLINs under which equipment can be procured are optional, and allow the government to procure the items outside the HPES task order. Id. at 2-3. The agency contends that on these bases any “actual OCIs” are eliminated. Id. at 3.

We disagree that the agency’s OCI mitigation plan effectively mitigated the impaired objectivity OCI identified by HPES. Here, the fact that the agency identified a potential conflict of interest during the solicitation planning process, and attempted to provide generalized mitigation measures in the solicitation, did not address whether an award to a particular offeror, like HPES, would create an OCI. This is especially true where, as here, an offeror disclosed that it had a potential OCI and provided a mitigation plan. In a situation where an offeror has identified a potential OCI in its proposal prior to award, we have no ability to review whether the CO meaningfully considered the OCI where the agency has not documented its consideration.

Accordingly, since there is nothing in the record documenting that the agency meaningfully considered HPES’s potential impaired objectivity OCI or its proposed mitigation measures prior to award, we conclude that the agency’s actions here were not reasonable, and sustain this ground of protest.  (NCI Information Systems, Inc. B-412870.2: Oct 14, 2016)

Alleged Biased Ground Rules OCI

Next, we turn to the merits of SMS’s OCI allegations. SMS first argues that ASMR had a biased ground rules OCI. Specifically, SMS alleges that the study which ASMR’s parent company, Accenture, prepared for the VA formed the basis for the NSD PWS. The protester also contends that Accenture, at the least “in some sense set the ground rules” for the NSD competition. SMS Comments, June 20, 2016, at 19, citing Energy Sys. Group, B-402324, Feb. 26, 2010, 2010 CPD ¶ 73 at 4.

The situations in which OCIs arise, as described in FAR subpart 9.5 and decisions of our Office, can be broadly categorized into three groups: biased ground rules, unequal access to information, and impaired objectivity. See McConnell Jones Lanier & Murphy, LLP, B-409681.3, B-409681.4, Oct. 21, 2015, 2015 CPD ¶ 341 at 13. As relevant here, a biased ground rules OCI exists where a firm, as part of its performance of a government contract, has in some sense set the ground rules for another government contract by, for example, writing the statement of work or the specifications: the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. FAR §§ 9.505-1, 9.505-2; International Bus. Machs. Corp., supra, at 6; CIGNA Gov’t Servs., LLC, B-401068.4, B-401068.5, Sept. 9, 2010, 2010 CPD ¶ 230 at 10. Also of relevance, 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 for a government contract. FAR § 9.505-4; Cyberdata Techs., Inc., B-411070 et al., May 1, 2015, 2015 CPD ¶ 150 at 6; CapRock Gov’t Solutions, Inc., et al., B-402490 et al., May 11, 2010, 2010 CPD ¶ 124 at 25.

We review the reasonableness of a contracting officer’s OCI investigation and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. McConnell Jones Lanier & Murphy, LLP, supra; Alliant Techsystems, Inc., B-410036, Oct. 14, 2014, 2014 CPD ¶ 324 at 4. In this regard, the identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Guident Techs., Inc., B-405112.3, June 4, 2012, 2012 CPD ¶ 166 at 7; see Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009). A protester must identify hard facts that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4; see Turner Constr. Co., Inc. v. United States, 645 F.3d 1377, 1387 (Fed. Cir. 2011).

As set forth below, the record reflects that the contracting officer reasonably investigated and considered whether an OCI exists, and SMS has failed to identify hard facts indicating the existence or potential existence of the alleged conflict. Thus, we have no basis to question the contracting officer’s conclusion that ASMR’s participation in this procurement does not raise potential OCI concerns.

On September 23, 2014, the VA issued Accenture a task order for an assessment study of the NSD. AR, Tab 9, Accenture Task Order, Sept. 23, 2014, at 1-35. The PWS for the Accenture task order required the contractor to “assess the current VA National Service Desk management, operations, procedures and processes and recommend comprehensive improvements in the form of a to-be-model. Additionally, the Contractor shall develop a business case model for the transformation of the service desk to a centralized structure.” Id. at 11. As part of its performance of the NSD assessment task order, Accenture prepared and submitted an OCI mitigation plan so as to prevent organizational conflicts with future VA requirements. AR, Tab 14, VA Correspondence with ASMR, Accenture OCI Mitigation Plan, Nov. 25, 2014, at 1-10. The mitigation plan included a firewall of the specific Accenture employees involved in the NSD assessment effort; prohibited the transfer of information from the assessment project team to non-project personnel; and contained provisions regarding OCI training, management oversite, and disciplinary action in the event of a violation. Id. at 5-8; AR, Tab 4, OCI Mitigation Plan Review, Mar. 15, 2016, at 2.

On February 20, 2015, Accenture delivered its assessment of the NSD to the VA. The Accenture study consisted of an “as-in” assessment, “to-be” recommendations, implementation roadmap and business case model, and end state vision. AR, Tab 10, Accenture NSD Executive Summary, Feb. 20, 2015, at 1-52; Tab 11, Accenture NSD Final Presentation, Feb. 20, 2015, at 1-77. As part of its assessment, Accenture examined VA’s current NSD productivity in comparison to industry benchmarks, e.g., contacts handled annually per full time equivalent employee, cost per contact, average speed to answer, average handle time, and abandon rate. AR, Tab 10, Accenture NSD Executive Summary, Feb. 20, 2015, at 8-15. Accenture’s “end state” vision also set forth performance measurements that it suggested the VA attempt to achieve. AR, Tab 11, Accenture NSD Final Presentation, Feb. 20, 2015, at 50-59. Notably, however, Accenture did not prepare a set of requirements, or work statement, for performance of the NSD function.

The Accenture assessment was not the only study regarding the VA NSD function. From July to November 2014, the VA Office of Information and Technology conducted a study and analysis of the agency’s service delivery and engineering enterprise operations data center operations. AR, Tab 21, McKinsey Task Order Amend. 1, May 29, 2015, at 8. Also, on May 29, 2015, the agency contracted with McKinsey & Company, Inc., to perform an independent, programmatic study of the NSD function. Id. at 1-38. The contracting officer explains the VA ordered the McKinsey study of the NSD function because it found the earlier Accenture study to be “so generic in nature,” and “to obtain the assistance it needed to generate [the] PWS for the NSD re-compete effort.” Contracting Officer’s Statement, June 10, 2016, at 7; see also AR, June 28, 2016, attach. C, Declaration of VA NSD Director of Service Support Operations, June 28, 2016, at 1-2 (the agency was dissatisfied with the generic nature of the Accenture study results, and required McKinsey’s assistance to perform a “gap” analysis study and to provide recommendations for the NSD procurement).

On August 23, 2015, McKinsey delivered its study of the NSD function--a document entitled “NSD re-compete RFP.” AR, Tab 20, McKinsey NSD Study Report, Aug. 23, 2015, at 1-16. McKinsey analyzed the draft NSD PWS that the VA had developed, and its study made recommendations regarding PWS language--in the areas of service level agreement (SLA) content, performance reviews, SLA structure, penalties, gain-sharing continuous improvement, and movement to end state--that the VA should use to improve contractor accountability. AR, Tab 20, McKinsey NSD Study Report, Aug. 23, 2015, at 1-2, 13-16. The McKinsey study also included recommendations regarding contract structure in the areas of pricing, duration, single or multiple contract awards, and the degree of outsourcing. Id. at 3, 8-12. In addition to the recommendations included in its study, McKinsey also drafted proposed PWS language for the VA’s consideration for use in the subsequent NSD solicitation. Contracting Officer’s Statement, June 10, 2016, at 7. Moreover, the contracting officer for the procurement at issue was personally aware of McKinsey’s degree of involvement in recommending and drafting the NSD PWS requirements. Id. at 7-8.

After issuance of the NSD solicitation, the contracting officer received additional information directly from ASMR regarding any possible OCI. Specifically, the awardee submitted its OCI mitigation plan as part of its quotation. AR, Tab 6, ASMR OCI Mitigation Plan, Jan. 21, 2016, at 1-9. ASMR also submitted signed declarations indicating the firewalls previously established by Accenture had been implemented and maintained; the Accenture employees involved in the NSD assessment study had not disclosed the information which they reviewed with other Accenture or ASMR employees, nor were they involved in preparing the ASMR quotation. AR, Tab 14, VA Correspondence with ASMR, Accenture Compliance with OCI Mitigation Plan Declarations, at 26-32; Contracting Officer’s Statement, June 10, 2016, at 10.

The contracting officer thereafter conducted her review of ASMR’s OCI mitigation plan. AR, Tab 4, OCI Mitigation Plan Review, Mar. 15, 2016, at 1-4. As part of her review the contracting officer considered:

• the scope of Accenture’s NSD study assessment task order;
• the study products that Accenture provided to the VA;
• Accenture’s OCI mitigation plan;
• the Accenture declarations indicating compliance with the OCI mitigation plan
• the scope of McKinsey’s NSD study contract;
• the final study product that McKinsey prepared for the VA (“NSD re-compete RFP”);
• the NSD PWS and RTEP;
• ASMR’s OCI mitigation plan; and
• Other correspondence with ASMR regarding its OCI mitigation plan.

Id. at 1-3; Contracting Officer’s Statement, June 10, 2016, at 6-13.

The contracting officer also held discussions with other agency technical and program personnel, who stated that the Accenture task order did not require the firm to provide a statement of work, requirements, or specifications to be used in the NSD procurement; further, it was the McKinsey study (and not the Accenture study) which agency personnel used to create the PWS for the NSD re-compete effort. AR, Tab 4, OCI Mitigation Plan Review, Mar. 15, 2016, at 1-3; Contracting Officer’s Statement, June 10, 2016, at 5-13.

The contracting officer thereafter concluded that:

[Accenture], ASM[R]’s parent company, did not have access to any privileged data that would provide it with a competitive advantage under the current NSD re-compete requirement as a result of performing [the NSD assessment task order]. Further, the work product/assessment deliverables under [Accenture’s] prior Order did not result in or contribute to the stated PWS requirements for the current NSD re-compete effort. Instead, the findings reached/ recommendations made under a subsequent (and independent) assessment contract performed by McKinsey & Company gave rise to actual contract requirements which were incorporated into/made part of the NSD re-compete PWS.

It is also my determination that were there to be a finding and/or appearance of a potential or actual conflict due to [Accenture’s] prior Order, ASM[R]’s proposed mitigation plan, which I find acceptable, properly addresses such concerns and in my opinion mitigates any conflict concerns that may arise due to performance of the instant NSD re-compete effort should ASM[R] be selected for award. [Accenture], ASM[R]’s parent company, carried out advanced measures under its stated OCI Mitigation Plan . . . specifically designed to avoid any potential or actual future conflict concerns under subsequent NSD requirements. ASM[R] itself was diligent in adhering to and maintaining the established firewall between itself and its parent company while preparing its response for the current NSD re-compete. ASM[R]’s proactive steps ensured that designated personnel under each area of concern were (and remain) segregated by firewall, and that none of the work product/efforts under the prior NSD [assessment study] crossed over into any of ASM[R]’s efforts to prepare and submit its proposal under the current RTEP for the current NSD re-compete RTEP.

AR, Tab 4, OCI Mitigation Plan Review, Mar. 15, 2016, at 4.

Based on our review, we find that the contracting officer reasonably concluded that ASMR did not have a biased ground rules OCI. Central to SMS’s contentions, the record reflects that Accenture did not prepare the PWS requirements here. Instead, the record shows that Accenture prepared a fairly generic study regarding VA’s NSD function as compared to industry benchmarks, with general improvement recommendations and end-state performance metrics. Given the non-specific nature of the Accenture recommendations, the VA then contracted with McKinsey to prepare another study, which was directly used in developing the NSD PWS and solicitation. The fact that certain recommendations within the Accenture study can also be found in the NSD PWS (e.g., enhanced training program, location consolidation) simply does not support the protester’s assertion that Accenture shaped, or skewed, the PWS requirements such that its subsidiary, ASMR, had an unfair competitive advantage in the procurement at issue.

We also find that the agency here performed a textbook OCI review. The record reflects that in performing her OCI review, the contracting officer reasonably reviewed all pertinent information. The contracting officer also reasonably gained input from other VA program and technical personnel regarding Accenture’s assessment study and whether that firm had any role in developing the NSD PWS requirements. Based on the gathered information, the contracting officer reasonably found that Accenture did not have the ability to shape the playing field of later procurements on behalf of ASMR, because Accenture had prepared a generic assessment regarding the NSD function--not the NSD requirements--and the Accenture study did not in fact become the basis of the agency’s requirements.

Moreover, in addition to the reasonableness of the contracting officer’s OCI investigation regarding ASMR, the record reflects that the McKinsey study provided recommendations on NSD PWS requirements and contract structure. Thus, even assuming the facts as SMS alleges regarding Accenture, there were then two contractors involved in preparing the VA’s NSD requirements. Our Office has repeatedly denied biased ground rules OCI protests where the procuring agency has employed more than one contractor as a source for recommendations and input that eventually shaped the solicitation requirements. See, e.g., American Artisan Prods., Inc., B-292559, B-292559.2, Oct. 7, 2003, 2003 CPD ¶ 176 at 8; S.T. Research Corp., B-233115.2, Mar. 30, 1989, 89-1 CPD ¶ 332 at 5; see also FAR § 9.505-2(b)(1)(iii) (OCI does not exist where “[m]ore than one contractor has been involved in preparing the work statement”).

Alleged Unequal Access to Information OCI

SMS also alleges that ASMR had unequal access to information. In support thereof, the protester argues that “[t]here is no doubt that Accenture had access to non-public information” as a result of performing the NSD assessment study, and that “the information may have provided Accenture and ASMR a competitive advantage in the NSD procurement.” SMS Comments, June 20, 2016, at 23. SMS also contends the contracting officer’s OCI review was unreasonable for concluding that Accenture did not have access to privileged data that would provide it with a competitive advantage. Id. We find no merit to the protester’s challenge here.

Even assuming that Accenture did have access to non-public information as a result of performing the NSD assessment study, SMS has failed to present any facts--hard or otherwise--that this information provided ASMR with a competitive advantage. See DV United, LLC, B-411620, B-411620.2, Sept. 16, 2015, 2015 CPD ¶ 300 at 9. Regardless, the record reflects that Accenture’s OCI mitigation plan firewalled the employees involved in performing the NSD assessment study. ASMR’s OCI mitigation plan thereafter included signed declarations from the affected Accenture employees, stating that they had not disclosed the information which they reviewed to any other Accenture or ASMR employees. Further, the contracting officer reasonably found that ASMR was “diligent in adhering to and maintaining the established firewall,” such that “none of the work product/efforts under the prior NSD [assessment study] crossed over into any of ASM[R]’s efforts to prepare and submit its proposal under the current RTEP . . . .” AR, Tab 4, OCI Mitigation Plan Review, Mar. 15, 2016, at 4. As SMS has not established that Accenture’s access to information, even if non-public, provided ASMR with any kind of competitive advantage in the later NSD competition, there is no basis to find that ASMR had an unequal access to information OCI. See ITT Corp.-Elec. Sys., B-402808, Aug. 6, 2010, 2010 CPD ¶ 178 at 5-6.

In sum, the protester fails to show that the contracting officer was unaware of, or failed to consider, all relevant information when reviewing ASMR’s potential OCIs. The protester essentially expresses disagreement with the contracting officer’s judgments regarding the reasonableness of ASMR’s mitigation strategy; such mere disagreement does not rise to the hard facts necessary to support a valid challenge. See Liquidity Servs., Inc., supra, at 10.  (Systems Made Simple, Inc. B-412948.2: Jul 20, 2016)

Organizational Conflicts of Interest

Social Impact alleges that MSI’s OCI plan does not adequately mitigate impaired objectivity and unequal access to information types of OCI. The Federal Acquisition Regulation (FAR) requires that contracting officials avoid, neutralize, or mitigate potential significant conflicts of interest to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR §§ 9.504(a), 9.505. The situations in which OCIs arise, as described in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups: (1) impaired objectivity, (2) unequal access to information, and (3) biased ground rules. An impaired objectivity OCI arises where a firm’s ability to render impartial advice to the government would be undermined by the firm’s competing interests. See FAR § 9.505(a); Int’l Bus. Machs. Corp., B‑410639, B-410639.2, Jan. 15, 2015, 2015 CPD ¶ 41 at 6; QinetiQ N. Am., Inc., B‑405008, B‑405008.2, July 27, 2011, 2011 CPD ¶ 154 at 8. 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 with a competitive advantage in a later competition for a government contract. See FAR § 9.505(b); Int’l Bus. Machs. Corp., supra, at 5-6; QinetiQ N. Am., Inc., supra, at 7.

As previously discussed, the solicitation here calls for monitoring and evaluation services to assist USAID in assessing whether the intended results of its programs in Indonesia are being achieved. RFP at 12. As also discussed, MSI’s parent company--Tetra Tech--has a prominent role in implementing USAID programs in Indonesia. AR, Tab 36, USAID Ltr. to MSI (Jan. 29, 2016), at 1. Since MSI’s performance of the contract will involve monitoring and evaluating USAID programs in Indonesia, Social Impact argues that MSI “will be in a position . . . to evaluate the work of its ultimate parent company,” thus creating an impaired objectivity OCI. Protest at 6. Social Impact also argues that MSI, through its performance of the contract, will obtain “proprietary and cost-related information” of Tetra Tech’s competitors in Indonesia and the region. Id. at 9. Social Impact contends that this information will give Tetra Tech a competitive advantage in future competitions for USAID contracts, thereby creating an unequal access to information OCI. Id.

As stated previously, the contracting officer reviewed and approved an OCI plan submitted by MSI. See AR, Tab 51, OCI Mem. Social Impact raises numerous arguments as to why the firm believes the contracting officer’s acceptance of MSI’s OCI plan was unreasonable. We have considered all of Social Impact’s arguments, and we conclude, based on the record, that none has merit. Below we discuss the firm’s principal contentions. At the outset, however, we observe that our Office reviews an agency’s OCI investigation for reasonableness, and where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. See Int’l Bus. Machs. Corp., supra, at 6; QinetiQ N. Am., Inc., supra, at 8. We further observe that the identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. See Int’l Bus. Machs. Corp., supra; QinetiQ N. Am., Inc., supra.

Here, the OCI memorandum executed by the contracting officer recognizes the potential for OCIs arising from Tetra Tech’s ownership of MSI, and it explains why, in her view, MSI’s OCI plan adequately mitigates the potential OCI. AR, Tab 51, OCI Mem. The memorandum begins by discussing the solicitation’s OCI provisions. Id. at 1‑2. It then discusses how the agency, upon learning of Tetra Tech’s ownership of MSI, decided that in addition to those provisions, an OCI mitigation plan was necessary. Id. at 2. Next, the memorandum discusses how the contracting officer, the TEC chair, and office of general counsel representatives reviewed MSI’s initial OCI plan and identified various concerns with it. Id. at 2-3. The memorandum concludes by describing how, after two rounds of revisions to the plan, these concerns were addressed to the agency’s satisfaction. See id. at 3-6.

With regard to MSI’s OCI plan itself, the record reflects that the plan establishes detailed procedures for identifying and mitigating potential OCIs. [2] AR, Tab 40, Final MSI OCI Mitigation Plan, at 1-22. Additionally, the plan includes detailed assessments of the potential OCI risk associated with the tasks in the SOW. AR, Tab 40, Final MSI OCI Mitigation Plan, at 15-21. Where a potential OCI is identified under an SOW task, the type (or types) of OCI is explained, and OCI mitigation measures are specified. Id. Regarding potential impaired objectivity OCIs, the plan provides as follows:

[DELETED].

Id. at 13. In other words, this type of OCI was to be addressed through the use of firewalled subcontractors, approved by USAID.

Regarding potential unequal access to information OCIs, the plan provides that MSI will “[DELETED].” AR, Tab 40, Final MSI OCI Mitigation Plan, at 13. The plan further provides that [DELETED].” Id. at 9. Thus, this type of OCI was to be addressed through the use of a firewall and nondisclosure agreements.

Social Impact first claims that the plan “falls short” because it allegedly “does not assign responsibility for identifying an OCI.” Comments at 4-5; Supp. Comments at 8. In support of this claim, Social Impact points to a provision within the plan stating that MSI’s [DELETED]. Comments at 4 (quoting AR, Tab 40, Final MSI OCI Mitigation Plan, at 11). Social Impact argues that assigning this responsibility to the “entire office” is overbroad and that the contracting officer’s acceptance of the plan therefore was unreasonable. Supp. Comments at 8.

The contracting officer responds by identifying the project office personnel referenced in the plan as the “personnel performing the functional contract management of the Indonesia [Monitoring and Evaluation] Support contract.” Contracting Officer’s Supp. Statement at 2. The contracting officer states that assigning responsibility to this group of personnel is appropriate because they “are ideally suited to have the knowledge of the situational context [and] to review [SOW] and other taskers from USAID for possible OCIs.” Id. at 3.

The contracting officer then points out other provisions in the OCI plan that identify other specific positions as being responsible for assessing potential OCIs. The first of these provisions states that the OCI analysis includes

[DELETED].

AR, Tab 40, Final MSI OCI Mitigation Plan, at 11. Another provision states that “[DELETED][ ” Id. Finally, the plan includes a provision that

[DELETED].

AR, Tab 40, Final MSI OCI Mitigation Plan, at 9. Based on the foregoing, the contracting officer maintains that the plan adequately addresses the issue of who within MSI is responsible for identifying potential OCIs. Contracting Officer’s Supp. Statement at 2-3.

On the record here, we see no basis to question the contracting officer’s judgment. MSI’s OCI plan sets forth specific procedures for identifying potential OCIs, and it charges MSI’s Indonesia program office with implementing and adhering to those procedures. See AR, Tab 40, Final MSI OCI Mitigation Plan, at 7-14. Additionally, the plan [DELETED], a key component of the OCI review process. Id. at 10. The plan also identifies a number of specific positions to which potential OCI issues must be reported. Id. at 9, 11. We find that these aspects of the plan, together with its overall level of detail, support the contracting officer’s position that the plan adequately addresses who within MSI is responsible for identifying potential OCIs.

Next, Social Impact alleges that the plan improperly relies on MSI’s “self-assessment of whether an OCI exists.” Supp. Comments at 8. We see no merit in this claim for at least two reasons. First, the record reflects that the agency itself already has assessed the potential for OCIs under the contract. See AR, Tab 51, OCI Mem. Second, the plan establishes that the agency will be involved with assessing potential future OCIs when new requirements are assigned to MSI. Specifically, the plan states:

[DELETED][ ].

AR, Tab 40, Final MSI OCI Mitigation Plan, at 20. Thus, contrary to Social Impact’s claim, the record shows that the agency has not and will not rely only on MSI’s assessment of whether OCIs exist.

Social Impact further challenges the adequacy of the OCI plan on the basis that it does not mitigate the impaired objectivity type of OCI. In this regard, Social Impact points out that to mitigate this type of OCI, the plan relies on the use of firewalled subcontractors. Comments at 5-7; Supp. Comments at 9‑11. Social Impact then argues that the plan is insufficient because, according to Social Impact, the subcontractors will not objectively evaluate programs implemented by MSI or Tetra Tech due to a desire to be selected for future subcontract work from MSI. Comments at 5‑6; Supp. Comments at 10.

In response, the contracting officer first describes how only a small amount of work‑‑less than eight percent of the contract budget--can give rise to an impaired objectivity OCI on the part of MSI. Contracting Officer’s Statement at 9. She then describes how the solicitation established a preference for the use of local subcontractors, and points out that MSI’s OCI plan--[DELETED]--advances this preference. Id. at 13-14 (citing RFP at 21; AR, Tab 32, MSI Revised Technical Proposal, at 11, 13, 20).

Turning to Social Impact’s claim that the subcontractors will not evaluate programs objectively in the hope that MSI will retain them for future work, the contracting officer states that she surveyed more than two dozen potential subcontractors--[DELETED]--and found no indication that the firms would not exercise independent judgment in their evaluations. Contracting Officer’s Statement at 14-17. The contracting officer provided documentation of her survey, including lists of the subcontractors’ prior work product and references. Contracting Officer’s Supp. Statement at 4-26. The contracting officer also described how she discussed the recent evaluation work of local subcontractors with her technical office and learned of no quality concerns with the evaluations. Contracting Officer’s Statement at 18. Finally, the contracting officer states that in the last five years, neither the USAID inspector general’s office, nor the cognizant regional inspector general’s office, has reported any collusion among Indonesian firms in connection with USAID programs. Id. at 17.

In light of all this, the contracting officer concludes as follows:

Given the professionalism of the numerous local entities available to serve as subcontractors, I doubt any potential subcontractor would be willing to risk its corporate professional reputation . . . to please MSI in hopes of gaining further work from MSI. While providing [biased] evaluations . . . might be viewed as a way of currying favor for future work with MSI, such an approach risks exposure during [peer] reviews of the published evaluation with the accompanying damage to such a subcontractor’s reputation . . . .

Contracting Officer’s Supp. Statement at 4. In other words, the contracting officer views a subcontractor’s interest in maintaining a good reputation to promote future work within the wider business community as an adequate check against the possibility that a subcontractor will skew evaluation reports--and likely tarnish its reputation--in the hope that a single client--MSI--would retain it for future work.

Our Office has determined in a number of protests that the use of firewalled subcontractors can adequately mitigate impaired objectivity OCIs. See Bus. Consulting Assocs., LLC, B-299758.2, Aug. 1, 2007 CPD ¶ 134 at 9‑10; Alion Sci. & Tech. Corp., B-297022.4, B-297022.5, Sept. 26, 2006, 2006 CPD ¶ 146 at 10-11; Deutsche Bank, B-289111, Dec. 12, 2001, 2001 CPD ¶ 210 at 4; Epoch Eng’g, Inc., B-276634, July 7, 1997, 97-2 CPD ¶ 72 at 5-7. The OCI mitigation arrangements in those protests do not materially differ from the arrangement here. Further, and as discussed above, the record reflects that the contracting officer considered how the OCI plan established procedures to identify when an impaired objectivity OCI might arise through the evaluation work, and how the plan ensured that the conflicted firm‑‑MSI--would not perform evaluations in those instances. See AR, Tab 51, OCI Mem. Under these circumstances, we see no basis to question the agency’s determination regarding the mitigation of potential impaired objectivity OCIs. [8] As a final challenge against the OCI plan, Social Impact alleges that it does not adequately mitigate potential unequal access to information OCIs. Comments at 8‑9; Supp. Comments at 11-12. As discussed above, the plan addresses this type of OCI through the use of firewalls and nondisclosure agreements. AR, Tab 40, Final MSI OCI Mitigation Plan, at 9, 13. Social Impact argues that the plan “lacks the specificity and scope necessary to effectively mitigate” this type of OCI. Comments at 8. As its primary example of this issue, Social Impact claims that the plan “presumes documents with competitively useful information will come marked as OCI sensitive.” Id. In reality, Social Impact contends, such information is unlikely to be marked. Id. As another example, Social Impact claims that the plan does not establish a procedure for reviewing and marking incoming information as sensitive, which may lead to competitively useful information being routed to MSI employees outside the firewall or not subject to nondisclosure agreements. Id.

In response, the contracting officer states that the OCI plan requires MSI’s [DELETED] to review documents for OCI issues regardless of whether they are marked as sensitive or proprietary. Contracting Officer’s Supp. Statement at 32. Various features of the plan support this statement. First, the plan establishes [DELETED]. See AR, Tab 40, Final MSI OCI Mitigation Plan, at 11. Second, the plan establishes [DELETED]. Id. at 11-13. Finally, the plan [DELETED]. Id. at 6.

As a further response to Social Impact’s claim, the contracting officer describes how she reviewed the plan at length, and was satisfied that the “specific measures” within it would adequately neutralize or mitigate potential unequal access to information OCIs. Contracting Officer’s Statement at 19-23; Contracting Officer’s Supp. Statement at 33. She notes also that the plan includes provisions through which the agency can review and test MSI’s OCI mitigation system once it is in place. Contracting Officer’s Supp. Statement at 33 (citing AR, Tab 40, Final MSI OCI Mitigation Plan, at 8, 10-11).

On this record, we see no basis to sustain Social Impact’s claim. The record reflects that the OCI plan establishes specific processes for identifying and containing information that could provide MSI with a competitive advantage in future procurements. See AR, Tab 40, Final MSI OCI Mitigation Plan, at 8-13. The record further reflects that the contracting officer considered these procedures and determined that they “reasonably addressed the potential for OCI[s].” See AR, Tab 51, OCI Mem., at 6. Although Social Impact disagrees with that determination, it has not persuasively identified any material basis for concluding that the determination was unreasonable. To conclude, Social Impact’s claims regarding the agency’s treatment of potential OCIs in this procurement are denied.  (Social Impact, Inc. B-412941, B-412941.2: Jul 8, 2016)

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 for a government contract. FAR § 9.505(b); Acquisition Servs. Corp., supra. A protester must identify “hard facts” that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Acquisition Servs. Corp., supra. Examples of such unequal access to information resulting in a competitive advantage include situations where a contractor competing for an award possesses “[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.” FAR § 9.505(b).

Here, the agency determined, prior to issuing the RFQ for this procurement, that contractors or subcontractors performing acquisition support services for the government under the prior task order could potentially encounter OCIs for future acquisitions, such as the one at issue here. Supplemental CO Statement at 2. As a result, the agency ensured from the beginning of the acquisition process for this procurement that only government personnel worked on the acquisition. Id. Specifically, the contracting officer explained that the agency’s program manager handled all acquisition planning work for this procurement herself and did not allow contractors or subcontractors to participate in this procurement. Id. The agency also ensured that only government personnel, and not contractor staff, were involved in the evaluation here. Id. Further, the contracting officer reviewed a contract log for the previous task order, which identified every acquisition package on which Systek worked as a subcontractor. Id. at 2-3. This contract log confirmed that Systek did not perform any work related to this acquisition. Id. at 3. The contracting officer also noted that Systek was an off-site contractor (not located in the program office’s building) so its employees would not have overheard conversations relating to the acquisition. Id.

The VA also attempted to mitigate any potential incumbency advantage by providing the following to all offerors: Q&As, the level of work effort based on expected acquisition packages, the Business Tracking Tool User Guide, and the Acquisition Package Development Guide. Supplemental CO Statement at 3; Supplemental AR, Tabs 5b-e, RFQ Attachments. Further, the RFQ described the VA’s acquisition processes and systems[7] and incorporated VAAR clause 852.209-70, which required offerors provide a statement describing all facts concerning OCIs relating to the services to be provided under the solicitation. RFQ at 15-23, 62. Systek did not indicate any OCIs. Supplemental CO Statement at 3; AR, Tab 19, Systek Technical Proposal at 2. After analyzing the above information, including the VA’s proactive attempt to mitigate any incumbency advantage, the CO concluded that no OCIs existed. Supplemental CO Statement at 3.

Millennium maintains that there is nevertheless an OCI because Systek, “as the incumbent [knows] of the future plans of [the program office] and they are able to propose an ERP system.” Supplemental Comments at 3. However, the protester has failed to present any “hard facts” indicating that Systek was privy to specific, nonpublic, competitively useful information such as proprietary, sensitive, or source selection information that would create an OCI. Specifically, Millennium fails to explain how Systek’s proposal to utilize an electronic system that would unify VA’s data collection tools (e.g., Excel, SharePoint, BTT) implicates nonpublic information or reflected an improper competitive advantage in the competition especially where the VA provided offerors with information and documents in the RFQ about its acquisition systems and processes.

It is well settled that an offeror may possess unique information, advantages, and capabilities due to its prior experience under a government contract--either as an incumbent contractor or otherwise and the government is not necessarily required to equalize competition to compensate for such an advantage, unless there is evidence of preferential treatment or other improper action. See FAR § 9.505-2(a)(3); Lovelace Sci. & Tech. Servs., B-412345, Jan. 19, 2016, 2016 CPD ¶ 23 at 12; Signature Performance, Inc., B-411762, Oct. 19, 2015, 2015 CPD ¶ 321 at 5. The existence of an incumbent advantage, in and of itself, does not constitute preferential treatment by the agency, nor is such a normally occurring advantage necessarily unfair. Lovelace Sci. & Tech. Servs., supra; Signature Performance, Inc., supra.

Based on the record presented here, we have no basis to conclude that the awardee had an unequal access to information OCI; that Systek had anything other than a normally occurring incumbent advantage as a result of its prior performance as a subcontractor; or that the agency provided Systek preferential treatment. This protest allegation is denied.

The protest is denied.  (Millennium Corporation, Inc. B-412866: Jul 14, 2016)

The Federal Acquisition Regulation (FAR) requires that contracting officials avoid, neutralize, or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR §§ 9.504(a), 9.505. The situations in which OCIs arise, as described in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups: (1) biased ground rules; (2) unequal access to information; and (3) impaired objectivity. As relevant here, a biased ground rules OCI arises where a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract. FAR §§ 9.505-1, 9.505-2. In these cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. Energy Sys. Grp., B‑402324, Feb. 26, 2010, 2010 CPD ¶ 73 at 4. 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 an unfair competitive advantage in a later competition for a government contract. FAR § 9.505(b); Cyberdata Techs., Inc., B-411070 et al., May 1, 2015, 2015 CPD ¶ 150 at 6.

Conflicts of interest may also arise in the context of individual contractor employees who assist the government during procurements, and are typically called PCIs. See FAR §§ 3.101-1, 3.1101; Savannah River Alliance, LLC, B-311126 et al., Apr. 25, 2008, 2008 CPD ¶ 88 at 23. A “personal conflict of interest” means a “situation in which a covered employee has a financial interest, personal activity, or relationship that could impair the employee’s ability to act impartially and in the best interest of the Government when performing under the contract.” FAR § 3.1101. As relevant here, a “covered employee” means an individual “who performs an acquisition function closely associated with inherently governmental functions and is--(1) An employee of the contractor.” Id. Where, as here, a protester alleges that an individual is biased because of his or her past experiences or relationships, we focus on whether the individuals involved exerted improper influence in the procurement on behalf of the awardee, or against the protester. See George A. Fuller Co., B-247171.2, May 11, 1992, 92-1 CPD ¶ 433 at 4-5; Advanced Sys. Tech., Inc.; Eng’g and Prof’l Servs., Inc., B-241530, B-241530.2, Feb. 12, 1991, 91‑1 CPD ¶ 153 at 15.

The identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Guident Techs., Inc., B‑405112.3, June 4, 2012, 2012 CPD ¶ 166 at 7; see Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009). A protester must identify hard facts that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. TeleCommunication Sys. Inc., B‑404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3. Our Office has held that once an organizational conflict of interest is established, the protester is not required to demonstrate prejudice; rather, harm from the conflict is presumed to occur. See McCarthy/Hunt, JV, B-402229.2, Feb. 16, 2010, 2010 CPD ¶ 68 at 10. Nonetheless, although we presume prejudice where a protest establishes facts that constitute an OCI or apparent OCI, that presumption is rebuttable. NetStar-1 Gov’t Consulting, Inc., B-404025.2, May 4, 2011, 2011 CPD ¶ 262 at 8; Department of the Navy--Recon., B-286194.7, May 29, 2002, 2002 CPD ¶ 76 at 12; TDF Corp., B‑288392, B-288392.2, Oct. 23, 2001, 2001 CPD ¶ 178 at 9. In reviewing protests that challenge an agency’s conflict of interest determinations, our Office reviews the reasonableness of the determination; where an agency has given meaningful consideration to whether a conflict exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. DV United, LLC, B-411620, B-411620.2, Sept. 16, 2015, 2015 CPD ¶ 300 at 6.

Personal Conflict of Interest

BAE first argues that the Army failed to reasonably evaluate a PCI for an employee of New SAIC, who was formerly an employee of Old SAIC, with regard to his role advising the Army in the evaluation of proposals for the competition under the revised AIE-3 solicitation. The protester argues that this advisor’s role in evaluating proposals for the revised solicitation was tainted because he held stock in Leidos during part of the evaluation.[4] In essence, the protester argues that the agency’s evaluation of the offerors’ proposals was tainted by the New SAIC employee’s ownership of Leidos stock, and that Leidos should therefore have been excluded from the competition.

As discussed above, Old SAIC was issued a BPA to provide acquisition and program support for the Army in connection with its AIE requirements, including assistance with preparing the initial RFP for the AIE-3 contract. The advisor began working for Old SAIC in 2002, and began assisting with that firm’s support of the Army’s AIE requirements in 2009. AR, Tab 40f(1), Decl. of New SAIC Advisor (Sept. 10, 2015), at 1. When New SAIC and Leidos became separate companies as a result of the reorganization of Old SAIC in September 2013, the advisor became an employee of New SAIC. Id.

As relevant here, the advisor was assigned to assist the Army’s source selection evaluation board (SSEB) in its evaluation of proposals for the initial and revised AIE-3 solicitations. Id. at 4; Tab 36, OCI Report, at 3. In connection with his assistance to the SSEB, the advisor, along with all other nongovernment advisors, was required to sign nondisclosure agreements (NDAs) that prohibited use or disclosure of offerors’ information or agency source-selection sensitive information. AR, Tab 36, OCI Report, at 3; Tab 35a, Advisor NDA (July 22, 2009); Tab 35b, Advisor NDA (Aug. 1, 2014). Id. In addition, the advisor signed a source selection participation agreement (SSPA) with the Army, which outlined his duties as a member of the SSEB. AR, Tab 36h, SSPA (Oct. 24, 2014). The SSPA required the advisor to, among other things, certify that he did not have any financial interests in any potential offerors, and to notify the chairperson of the SSEB or the CO of any changes to his financial interests that could affect his representations. Id. at D-1, D‑3.

The CO’s investigation of the advisor’s potential PCI primarily addressed his ownership of Leidos stock during the time he was assisting the SSEB with the competition under the revised RFP. AR, Tab 36, OCI Report, at 3-7. At the time of the Old SAIC reorganization, individuals such as the advisor were informed that shares in Old SAIC would be converted to Leidos stock. Id. at 3. In September 2014, during his work supporting the SSEB, but before the receipt of proposals in December 2014, the advisor was notified that “retirement” stock holdings in Leidos were “frozen” (i.e., no transactions could be made), and would be converted to a Vanguard retirement fund that December. AR, Tab 36i, Leidos Stock Notice (Sept. 8, 2014). The advisor explained in response to the CO’s investigation that he was not aware until December 2014 that Leidos was a potential offeror for the AIE-3 procurement, and for that reason did not disclose his stock ownership prior to that time. AR, Tab 36r, Decl. of Advisor (Oct. 19, 2015) at 2. Upon discovering that Leidos was a potential offeror, the advisor disclosed his ownership of Leidos stock to the SSEB chair, and explained that he believed that the anticipated conversion of the Leidos stock would result in divestiture of any financial interest that would affect his role with the SSEB. Id.

In April 2015, the advisor became aware as result of a quarterly portfolio statement that he still held approximately $22,000 in Leidos stock, and that this stock was not subject to the conversion described in the September 2014 notice. AR, Tab 36, OCI Report, at 4; see Tab 36r, Decl. of Advisor (Oct. 19, 2015) at 2. The advisor notified the SSEB chairperson of the situation, and then took action to dispose of the stock. Id. The sale of the stock was completed in April 2015, approximately one month before the receipt of offerors’ final revised proposals. AR, Tab 36, OCI Report, at 4; Tab 36j (transaction statement); Tab 36k (transaction statement).

The SSEB chairperson advised the CO of the advisor’s stock ownership in April 2015. AR, Tab 36, OCI Report, at 4. The CO found that the advisor had confirmed divestiture of the stock holdings, and that the advisor’s role was in the capacity of “a technical advisor, not a decision maker.” AR, Tab 36, OCI Report, at 4. The CO concluded that, based on these facts and the fact that the award decision had not yet been made, there was no basis to exclude the advisor from assisting the SSEB or to otherwise cancel the procurement. AR, Tab 36, OCI Report, at 4.

In her subsequent OCI investigation in response to BAE’s initial protest (B-411810), the CO acknowledged that the advisor’s ownership of Leidos stock during the time he assisted the SSEB created the appearance of a potential conflict: “It is true that [the advisor] owned slightly more than the de minimus amount of stock in Leidos; therefore I have determined that the appearance of a personal financial conflict of interest exists in accordance with FAR 3.11, Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions.” Id. at 7. The CO nonetheless concluded there was “compelling evidence” that the advisor’s role did not create a disqualifying PCI. Id.

The CO found that the advisor misunderstood that his stock in Leidos was “frozen” to transactions, and that it would be converted to shares in the Vanguard fund. AR, Tab 36, OCI Report, at 4; see Tab 36r, Decl. of Advisor (Oct. 19, 2015) at 2. The CO concluded that the advisor’s stock ownership was therefore properly disclosed and addressed. COS/MOL at 32-33. The CO further concluded that the prompt disclosure and disposition of the stock essentially mitigated or avoided the appearance of a disqualifying conflict of interest. Id. at 34.

The CO also found that the advisor’s actions did not give rise to PCI, based on what the CO viewed as the advisor’s limited role in support of the SSEB. AR, Tab 36, OCI Report, at 4. In this regard, the CO stated that the advisor’s role did not involve recommending ratings for an offeror’s proposal, or recommending a particular offeror for award. Id. at 5. The CO acknowledges that the advisor did not prepare written materials, and the evaluation documents do not reflect specific input from the advisor. Id. Despite this lack of documentation, the CO concluded, based on statements from the advisor, the SSA, and SSEB members, that the advisor’s role “did not unduly influence the decision-making process.” COS/MOL at 35; see AR, Tab 36, OCI Report, at 5. In investigating this potential PCI, the CO received and reviewed declarations from the advisor, the SSA, and members of the SSEB, who explained that the advisor provided technical advice as requested by the SSEB, but did not recommend specific ratings for offerors or recommend any offeror for award. AR, Tab 36, OCI Report, at 5; Tab 36n, Decl. of SSEB Member (Oct. 14, 2015), Tab 36o, Decl. of SSEB Chair (Oct. 14, 2015); Tab 36p, Decl. of Army Assistant Product Manager (Oct. 14, 2015); Tab 36q, Decl. of SSA (Sept. 3, 2015); Tab 36r, Decl. of Advisor (Oct. 19, 2015).

BAE argues that the CO’s acknowledgement of the appearance of a conflict of interest should have been the end of the inquiry, and that the award to Leidos should have been found tainted as a result the advisor’s ownership of Leidos stock. Protester’s Comments (Apr. 28, 2016) at 8. In this regard, the protester notes that when reviewing potential conflicts of interest arising from the role of individuals under FAR subpart 3.1, agencies have an obligation to avoid even the appearance of impropriety in government procurements. See FAR § 3.101-1; FAR § 3.1103(a)(3)(iii); Celeris Sys., Inc., B-404651, Mar. 24, 2011, 2011 CPD ¶ 72 at 7. Our Office has recognized that the appearance of a conflict of interest is sufficient to warrant action to address that conflict, such as exclusion of an offeror from a competition, even where no actual impropriety can be shown, provided that the agency’s determination is based on fact, and not mere innuendo and suspicion. KAR Contracting, LLC, B-310454, B-310537, Dec. 19, 2007, 2007 CPD ¶ 226 at 4.

We do not agree with the protester, however, that the CO’s finding that there was an appearance of impropriety precluded further inquiry as to whether this conflict could be mitigated or avoided. Rather, as discussed herein, the CO further examined the record and concluded that the advisor’s role did not give rise to a disqualifying conflict. In this regard, our Office has reviewed protests concerning conflicts of interest to determine whether an agency’s efforts or other factors mitigated the appearance of a conflict of interest under the provisions of FAR subpart 3.1. E.g., The Jones/Hill Joint Venture, B-286194.4 et al., Dec. 5, 2001, 2001 CPD ¶ 194 at 14; International Resources Grp., B-409346.2 et al., Dec. 11, 2014, 2014 CPD ¶ 369 at 17. For these reasons, we think the CO reasonably continued her investigation to determine whether the advisor’s stock ownership was a matter that was mitigated under the facts and circumstances here.

BAE also argues that the CO’s conclusions regarding the advisor’s understanding of his stock holdings, the size of the stock holdings and their significance, and the effect of his disposition of the stock were unreasonable, and did not address the appearance that the award to Leidos was tainted. Protester’s Comments (Apr. 28, 2016) at 7-13. BAE further contends that the CO unreasonably concluded that the role of the advisor in support of the SSEB did not “unduly influence” the evaluation. As discussed above, however, where an agency has given meaningful consideration to whether a conflict exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. DV United, LLC, supra.

Here, we find that the CO considered the relevant available record and concluded that there was no basis to find that the advisor’s role required exclusion of Leidos. Because the advisor did not work for Leidos during the competition for the award under the revised AIE-3 solicitation, his ownership of Leidos stock was the sole connection that gave rise to a potential PCI. The CO exercised her judgment by reviewing the relevant facts and concluding that the advisor’s prompt disclosure of information, subsequent disposition of the stock, and the scope of his role in advising the agency, addressed or mitigated any potential concerns regarding a PCI. On this record, we find no basis to conclude that the CO’s judgment was unreasonable, and thus no basis to sustain the protest. Although the protester disagrees with the conclusions, and although different conclusions might reasonably have been drawn from the facts reviewed by the CO, these concerns do not provide a basis to sustain the protest.[5]

Biased Ground Rules OCI

Next, BAE argues that the work performed by Old SAIC assisting the Army with preparation of the initial solicitation resulted in a biased ground rules OCI that should have disqualified Leidos from the competition. In effect, the protester argues that Leidos should be viewed as the same entity as Old SAIC, because Old SAIC was able to skew the competition in a way that later benefitted Leidos.

As discussed above, Old SAIC provided assistance to the Army in connection with the preparation of the initial RFP, which was issued on February 23, 2013. Old SAIC was reorganized into New SAIC and Leidos in September 2013. Following the award to L-3 in 2014, and BAE’s protest of that award, the agency cancelled the initial solicitation and issued the revised solicitation. Old SAIC was barred from participating in the original solicitation, and New SAIC was barred from participating in the revised solicitation. RFP-0041 at 198-99; RFP-0056 at 160-61.

The CO’s OCI investigation in response to BAE’s initial protest (B-411810) concluded that there was no basis to find that Leidos should be excluded from the competition because of a biased ground rules OCI. AR, Tab 36, OCI Report, at 9. In this regard, the CO found that, in light of the reorganization of Old SAIC into Leidos and New SAIC, the relevant inquiry was whether Old SAIC’s role in assisting the agency’s preparation of the initial RFP created a taint that was carried over to Leidos in a manner that should have precluded Leidos’ participation in the competition under the revised RFP. Id. at 7.

First, the CO noted the lapse of over 1 year between the reorganization of Old SAIC into Leidos and New SAIC, and the issuance of the revised RFP. AR, Tab 36, OCI Report, at 7-8. The CO discounted the possibility that Old SAIC could have anticipated that, despite being barred from competing under the initial RFP, there would be a sequence of events that would later permit that firm, or some version of it, to participate in the competition. Id. In this regard, the CO concluded that it was not foreseeable that the award under the initial solicitation would be made to L-3, that this award would result in a protest, that the Army would take corrective action in response to the protest by cancelling the initial solicitation and issuing a revised solicitation, and that the revised solicitation would be issued at a time after the reorganization of Old SAIC into two successor entities, one of which would compete for the award. Id.

The CO also concluded that changes in the revised solicitation mitigated the potential that Old SAIC’s role could have skewed the competition in favor of Leidos‑-that is, affect the solicitation in a way that might favor a future, reorganized version of the company. Id. at 8-9. The CO also concluded, as a result of her OCI investigation, that there were “significant” changes to the initial RFP as a result of BAE’s protest of the award to L‑3. Id. at 3, 8. As the CO explained in her OCI analysis:

The original solicitation (Attachment 2) included unclear language as to whether connectivity to authoritative databases “could” be made via the Government’s Interoperability Layer Services (IoLS) middleware, or whether it “must” be independent of IoLS. As a result of the ambiguous language, L-3 proposed to connect via IoLS, and the SSEB evaluators accepted L-3’s solution -- based directlyon the lack of clarity in the solicitation. BAE knew that this capability does not presently exist viaIoLS, and will not be available in the foreseeable future. Consequently, BAE proposed a solution that did not depend on the Government’s middleware.

Id. at 8 (emphasis in original). The CO explained that this flaw in the solicitation required the agency to take corrective action to “clarify this important programmatic issue.” Id. The CO further explained that the revised solicitation made clear that offerors “may not rely on Government middleware.” Id.

The CO also concluded that another “significant” change in the revised solicitation related to 35 “objective capabilities” in the original solicitation that were deleted and replaced with either new or revised requirements. Id. at 9 (citing AR, Tab 36y, Requirements Crosswalk (5-page summary detailing changes to capabilities)). The revised solicitation also added five key capabilities in sections L and M which specify how proposals would be evaluated:

• Vetting: Interoperability Layer Service (IoLS), Department of Motor Vehicles (DMV), in state and out of state law enforcement sources, National Crime Information Center (NCIC) III
• Registration: user interface, in-lane registration
• Driver’s License: use as a credential
• Information Assurance (IA) Hierarchical organizational unit structure: integration as part of overall system design
• Guard force reduction enablers: platooning, one guard operating multiple lanes, centralized monitoring and control, fingerprint and in-lane registration

Id. at 8-9; see RFP-0056 at 172, 191.

Finally, the CO noted in her OCI investigation that the Army was primarily responsible for preparation of important parts of the solicitation, such as the independent government estimate, the statement of work, and other requirements documents. AR, Tab 36, OCI Report, at 9. The CO concluded that these factors demonstrated that Old SAIC’s assistance to the agency in preparing the initial solicitation did not create an unfair competitive advantage that required disqualification of Leidos under the revised solicitation. Id.

BAE argues that Old SAIC’s role in preparing the initial RFP tainted the award to Leidos because, regardless of whether it was foreseeable that a successor to Old SAIC might compete in the future, the appearance of impropriety was impossible to avoid. We agree with the protester that our Office has generally held that foreseeability is not a dispositive inquiry as to whether a contractor’s role in preparing materials that are used in a solicitation gives rise to a biased ground rules OCI. See Energy Sys. Grp., supra, at 6. Instead, the relevant concern for a biased ground rules OCI is not simply whether a firm drafted specifications that were adopted into the solicitation, but, rather, whether a firm was in a position to affect the competition, intentionally or not, in favor of itself. L-3 Servs., Inc., B-400134.11, B-400134.12, Sept. 3, 2009, 2009 CPD ¶ 171 at 8.

Here, the CO found that the reorganization of Old SAIC and the passage of time between the award to L-3 and the issuance of the revised RFP demonstrated that Old SAIC was not in a position to favor a future corporate entity consisting of the part of itself that would emerge from the reorganization, i.e., Leidos. Given the CO’s consideration of the relevant facts here, and her judgment that those facts did not put Old SAIC in a position to favor Leidos, we cannot conclude that the CO’s OCI analysis was unreasonable.

Moreover, even if we were to agree with BAE that the changed circumstances regarding Old SAIC’s reorganization and the passage of time did not address the possibility that Old SAIC could have skewed the competition to favor Leidos in the future, we conclude that the CO’s OCI analysis reasonably found that the changes to the revised RFP after the reorganization of Old SAIC addressed or mitigated any potential conflict that might have attached to Leidos. See AR, Tab 36, OCI Report, at 9. Although the protester disputes the CO’s characterization of the revisions as “significant,” we do not think this disagreement provides a basis to sustain the protest. In this regard, the CO identified specific areas of the proposal that were changed as a result of BAE’s challenge to the award to L-3, and why these changes altered the solicitation in a manner that avoided the possibility that Old SAIC’s role could have favored Leidos. Id. On this record, we find no basis to sustain the protest.

Unequal Access to Information OCI

Finally, BAE argues that Leidos had unequal access to nonpublic information in the protester’s proposal as a result of Old SAIC’s support to the Army in connection with the AIE-2 contract and the AIE-3 procurement. The protester argues that Old SAIC’s access to this information likely resulted in Leidos having an unfair competitive advantage in pursuing the award under the revised RFP.

The CO’s conclusion in her OCI investigation that no unequal access to information OCI existed relied primarily on nondisclosure agreements (NDAs) signed by all contractor employees who were assigned to assist the agency in connection with the AIE-2 contract and the AIE-3 procurement. AR, Tab 36, OCI Report, at 10-11. The CO also noted that, per the terms of the two solicitations, all offerors were required to enter into NDAs with Old SAIC, under RFP-0041, or New SAIC, under RFP-0056, and that these NDAs prohibited the disclosure or improper use of offeror or source selection sensitive information. Id. at 11.

With regard to the award to Leidos, the CO noted that at the time the revised solicitation was issued, New SAIC staff who provided support to the Army in connection with the AIE-3 procurement were separate from Leidos. Id. at 11. For this reason, the CO concluded that there was no basis to believe Leidos had unequal access to information as a result of work performed by New SAIC. Id. With regard to Old SAIC’s role in the competition, prior to its reorganization, the CO concluded that the NDAs between the contractor personnel and the government, and between Old SAIC and the offerors who submitted proposals, provided adequate assurance that Leidos did not receive access to competitively useful nonpublic information. Id.

Specifically, the CO found that all Old SAIC employees who had access to competitively sensitive information in connection with the AIE-2 contract and the AIE-3 competition had signed NDAs that addressed their obligations to safeguard offeror information. Id. at 9, 11. The CO also found that the New SAIC advisor (discussed above) was the only relevant employee who had access to offerors’ proposals. Id. at 10. The CO noted that the advisor had signed numerous nondisclosure agreements throughout his support of the Army’s AIE requirements, and was designated as the point of contact for an NDA between Old SAIC and BAE in March 2013 that specifically addressed the AIE-3 procurement. AR, Tab 40e, Old SAIC NDA with BAE (Mar. 1, 2013). The CO found that the terms of these NDAs prohibited the advisor from disclosing BAE information received during the AIE-3 procurement. AR, Tab 36, OCI Report, at 10-11.

BAE primarily argues that the existence of the NDAs could not have mitigated the disclosure of information. In this regard the protester argues that the CO’s investigation did not adequately examine whether the NDAs were effective in avoiding the disclosure of information by the Old SAIC employees who had access to competitively sensitive information. For this reason, the protester argues that the CO’s “after-the-fact” reliance on the NDAs did not address or mitigate the possibility that Leidos gained access to competitively useful nonpublic information as a result to Old SAIC’s access to information during the performance of its acquisition and program support BPA. Protester’s Comments (Apr. 28, 2016) at 29.

As our Office has held, mitigation efforts that screen or wall-off certain individuals within a company from others, in order to prevent an improper disclosure of information, may be an effective means to address an unequal access to information OCI. See Axiom Resource Mgmt., Inc., B-298870.3, B-298870.4, July 12, 2007, 2007 CPD ¶ 117 at 7 n.3; Aetna Gov’t Health Plans, Inc., supra, at 13. An agency may reasonably conclude that an NDA mitigates the possibility of an unfair competitive advantage arising from unequal access to information, provided the agency reasonably concludes that the terms of the NDA prohibited the use of the information in a way that would give a firm an unfair competitive advantage. Enterprise Info. Servs., Inc., B-405152 et al., Sept. 2, 2011, 2011 CPD ¶ 174 at 11‑13.

The record here shows that the CO considered the potential OCIs arising from Old SAIC’s access to competitively useful information, as well as the New SAIC advisor’s access. Specifically, the CO concluded that the terms of the applicable NDAs prohibited the affected Old SAIC employees from disclosing nonpublic information that could have given other Old SAIC employees, and in turn Leidos employess, an unfair competitive advantage. In the absence of hard facts showing that the NDAs were ineffective in precluding Leidos from gaining access to information that could have provided an unfair competitive advantage, we find no basis to sustain the protest.  (BAE Systems Technology Solutions & Services, Inc. B-411810.3: Jun 24, 2016)  (pdf)

ASM and the agency offer fundamentally different characterizations of the scope of the [Mobile Infrastructure Services] MIS task order. The difference is critical. If the cloud is analogous to a utility, such as for electricity, and the MIS contractor’s role with respect to apps is not significant, as the agency argues, there is less potential that cloud deficiencies (in creation or function) might be manifested in the performance of the apps themselves. The more significant the cloud’s contribution to the mobile app development process, the more likely that an evaluation of mobile apps could entail an evaluation of the role that the cloud and the cloud contractor played in app development.

According to the agency, the MIS PWS does not require the contractor to “‘create’ or ‘develop’” the cloud. Agency Comments, Dec. 10, 2015, at 8. Rather, the agency asserts, the role of the MIS contractor is “to separate the cloud platform into several enclaves for use by multiple apps developers.” Id. In the agency’s view, each of the enclaves is a resource “that can be used in the app development lifecycle, but does not influence the quality or nature of the app that is ultimately developed.” Id. at 8-9 (emphasis in original). In other words, according to the agency, “each enclave with the [Department of Veterans Affairs] VA MIS task order is analogous to an electrical outlet in a school building; it serves little to no purpose until someone plugs something into the socket,” and “it does not influence the quality/substance of” the work performed utilizing the electricity. Id. at 9.

The lengthy MIS PWS, however, imposes numerous requirements and responsibilities on the MIS contractor. In this regard, the PWS requires the contractor to provide suitable connectivity to each of the enclaves. For example, the MIS contractor will be responsible for establishing and monitoring connectivity between the cloud and the VA’s intranet. MIS PWS § 5.3.1.2.1. The MIS contractor shall provide automated monitoring of the cloud, to ensure all aspects of the cloud and the enclaves are operating within service level agreements established by the PWS. The contractor must provide a “Cloud Test Plan” that describes how the cloud will comply with specific certification, security, functionality, availability, and performance requirements outlined for all enclaves and associated environments. MIS PWS § 5.3.2.1. Upon completion of the Cloud Acceptance Test, the contractor shall deliver a “Cloud Implementation Plan outlining implementation and operations for the Cloud.” MIS PWS § 5.3.3.1 (emphasis added). After successful completion of the Cloud Acceptance Test, the contractor shall “implement/deploy the Cloud and make [it] fully available for VA use.” Id. (emphasis added).

Although the agency argues that the MIS contractor does not “develop” the cloud, see Agency Comments, Dec. 10, 2015, at 8, the above PWS requirements indicate that the MIS contractor must implement/deploy the cloud, and develop, implement, and deploy cloud enclaves. PWS §§ 5.3.3.1, 5.5.1, 5.6.2. Of particular relevance here, the MIS PWS requires the contractor to “develop” and “implement” the [Mobile Application Environment] MAE enclave; that enclave includes the six major logical environments “to create, test, and deploy VA mobile applications.” MIS PWS § 5.5.1 (emphasis added). As part of that effort, the contractor is required to provide “all source code for custom developed elements of the environment,” and to “deliver flexible, scalable processing, memory, and storage capacity necessary for the operation of each project/initiative environment in this enclave that provides a reconfigurable technical foundation.” MIS PWS §§ 5.5.1, 5.5.2 (emphasis added). After successful completion of the Cloud Operational Acceptance test, “the Contractor shall implement/deploy the enclave’s associated environments.” MIS PWS § 5.6.2 (emphasis added). That effort includes providing “all programming tools required for app development, testing, configuration control, and release to the production as applicable to each logical environment inside of each of the individual enclaves.” Id. (emphasis added). The MIS contractor shall ensure that the delivered enclaves and environments “provide the ability to conduct testing and [software quality assurance] for mobile applications developed inside the MAE.” MIS PWS § 5.6.3.4.

The MIS contractor shall provide “Build Management support to include a team of Build Managers (Configuration Managers) that will fully manage and maintain the build management process for the entire lifecycle of web and mobile application development.” MIS PWS § 5.6.4 (emphasis added). The MIS PWS further requires the contractor to “provide build management for the entire lifecycle of application development through to production of these applications working along with respective development teams using these enclaves and environments.” Id. Thus, while the PWS sometimes describes the requirement as “support,” see, e.g., MIS PWS § 3.0, in other instances the MIS contractor is tasked with actual build management. The scope and significance of the MIS contractor’s role, as defined by the PWS, runs directly counter to the VA’s characterization of the contractor’s contribution as mere “ancillary support services.” Agency Comments, Nov. 20, 2015, at 10.

Given the plain language of the MIS PWS, including the PWS requirements that the MIS contractor implement/deploy the cloud, and develop, implement and deploy the MAE, which is the critical cloud enclave in which mobile apps will be developed and tested, and given the requirement that the MIS contractor fully manage and maintain the build management process for the entire lifecycle of web and mobile application development, the VA’s conclusion that the MIS contractor will have little or no role in developing the cloud, or in app development, is not supported by the MIS PWS.  (ASM Research B-412187: Jan 7, 2016)  (pdf)

DRS contends that award to LMIS will result in an impaired objectivity OCI because LMIS will be required to review and test the work it performs under a task order issued by the Army pursuant to another IDIQ contract (referred to by the parties as “task order 57”). Supp. Protest at 20-36. The record reflects that under task order 57, LMIS is responsible for modifying, enhancing, and integrating software for the DCGS. AR, Tab 46, OCI Report, at 4. DRS argues that the PWS for the task order at issue here (referred to by the parties as the “Field Office Fort Hood task order,” or “FOFH task order”) identifies various engineering tasks, including testing and evaluation, that will necessarily require LMIS to review the work it performs under task order 57. Supp. Protest at 27-32. In this regard, the PWS sets forth three sections related to engineering work: (1) section 3.1.1--engineering and technical documentation support; (2) section 3.1.2--test and evaluation; and (3) section 3.1.3--quality engineering. AR, Tab 11, PWS, at 6-7. The protester contends that all three sections of the PWS involve work that will create an impaired objectivity OCI for LMIS. Supp. Protest at 27-32.

As a general matter, the Federal Acquisition Regulation (FAR) requires that contracting officers avoid, neutralize or mitigate potential significant OCIs. FAR § 9.504(a). An impaired objectivity OCI, as addressed in FAR subpart 9.5 and the decisions of our Office, arises where a firm’s ability to render impartial advice to the government would be undermined by the firm’s competing interests. FAR § 9.505(a); Diversified Collection Servs., Inc., B-406958.3, B-406958.4, Jan. 8, 2013, 2013 CPD ¶ 23 at 5-6. The concern in such impaired objectivity situations is that a firm’s ability to render impartial advice to the government will be undermined by its relationship to the product or service being evaluated. PURVIS Sys., Inc., B-293807.3, B-293807.4, Aug. 16, 2004, 2004 CPD ¶ 177 at 7.

We review the reasonableness of a CO’s OCI investigation and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. See TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4. In this regard, the identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Guident Techs., Inc., B-405112.3, June 4, 2012, 2012 CPD ¶ 166 at 7; see Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009). A protester must identify “hard facts” that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. TeleCommunication Sys. Inc., supra at 3; see Turner Constr. Co., Inc. v. United States, 645 F.3d 1377, 1387 (Fed. Cir. 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010).

As an initial matter, we address the agency’s contention that the protester’s OCI challenge is untimely. As discussed above, on July 30, DRS filed a protest with this Office, following DRS’s receipt of the Army’s OCI report. In that protest, DRS alleged that based on the findings of the OCI report, the PWS for the FOFH task order overstated the agency’s actual requirements and thus prevented a fair competition. Protest at 12-21. In the alternative, to the extent the Army argued that the solicitation accurately reflected the agency’s requirements, DRS contended that LMIS would have an impaired objectivity OCI as it would be responsible under the FOFH task order for evaluating the deliverables it produces under task order 57. Id. at 13, n.5. Following DRS’s receipt of the agency report, which included the PWS for task order 57 and the declarations of several agency personnel prepared as part of the Army’s OCI investigation, the protester withdrew its argument that the RTEP did not reflect the agency’s requirements, and further expanded upon its OCI argument. Supp. Protest at 2-3, 27-32.

The agency contends that the protester’s OCI argument is untimely, as it was not raised within 10 days of DRS’s receipt of the OCI report, which the agency alleges provided the operative facts underlying the protester’s OCI contention. Memorandum of Law at 17-22. The agency further argues that the protester’s OCI argument, contained in a footnote in its July 30 protest, did not provide a sufficient legal and factual basis for protest, and that DRS’s subsequent, more detailed OCI argument represents an untimely, piecemeal presentation of its argument. Id. Based on our review of the record, we find that the protester’s OCI argument was timely raised. In this regard, the record reflects that DRS’s OCI argument, filed as comments within 10 days of its receipt of the agency report, is premised on information contained in the PWS for task order 57 and the declarations of agency personnel supporting the OCI report. Supp. Protest at 24-36. Since these documents were first provided to the protester as part of the agency report, we find DRS’s OCI argument timely. 4 C.F.R. § 21.2(a)(2).

Turning to the merits of the allegation, with regard to the test and evaluation engineering tasks contained in section 3.1.2 of the PWS, the Army’s OCI report provides that the solicitation described the work “in a rather sloppy manner” that did not necessarily reflect the nature of the support required. AR, Tab 47, OCI Report, at 5. Specifically, the agency contends that the testing required under the FOFH task order is simply configuration and operational testing, in which “hardware is powered on and connected to ensure that it and the software loaded on it functions.” Id. The agency also notes, and the protester does not dispute, that the task order 57 software deliverables prepared by LMIS undergo official Army testing and evaluation before being delivered to the FOFH contractor for installation and operational testing. Id. at 4-5. As such, the agency contends that no impaired objectivity OCI will result from award to LMIS, given the relatively basic nature of the testing required under the FOFH task order and the fact that LMIS’s software deliverables under task order 57 have already been fully tested by the government. Memorandum of Law at 26-29.

With respect to the testing and evaluation requirement contained in section 3.1.2 of the PWS, we find that the agency’s OCI analysis was reasonable and supported by the record. As noted above, there is no dispute that the software delivered by LMIS under task order 57 is tested and vetted by the Army before delivery to the FOFH contractor. Furthermore, the record supports the agency’s determination that the testing at issue is focused on whether the various DCGS hardware and software components operate as a whole, not whether the specific software provided under task order 57 is functioning as intended. AR, Tab 11, PWS, at 7 (“testing activities will include operational functions necessary to determine acceptability”). Thus, we have no basis to question the agency’s conclusion that the testing work contained in section 3.1.2 of the PWS would not create a significant OCI for LMIS.

As to the other engineering work required under sections 3.1.1 and 3.1.3 of the PWS, however, we conclude that the Army did not adequately consider whether these tasks would result in an impaired objectivity OCI for LMIS. For example, the agency’s OCI report makes no mention of the PWS requirement that the awardee review and report issues with “system developer deliverables,” which DRS alleges would require LMIS to review the documentation deliverables it provides under task order 57. AR, Tab 11, PWS, at 6; Supp. Protest at 31. Indeed, consistent with the PWS, both DRS and LMIS proposed to review and audit software documentation deliverables provided by other contractors. AR, Tab 27, DRS Technical Proposal, at 10; AR, Tab 31, LMIS Technical Proposal, at 12, 16. Likewise, the agency’s OCI report does not discuss the PWS requirement that the awardee provide software code analysis/inspection, a task that, again, DRS alleges would require LMIS to review its own work under task order 57 and that both DRS and LMIS addressed in their proposals. AR, Tab 11, PWS, at 6; AR, Tab 27, DRS Technical Proposal, at 10-11; AR, Tab 31, LMIS Technical Proposal, at 13; Supp. Protest at 31-32. As such, we find that with agency’s OCI investigation was not reasonable, as it did not meaningfully consider whether the relevant tasks contained in sections 3.1.1 and 3.1.3 would create an impaired objectivity OCI for LMIS.  (DRS Technical Services, Inc. B-411573.2, B-411573.3: Nov 9, 2015)  (pdf)

The Federal Acquisition Regulation (FAR) sets forth clear and unambiguous guidelines concerning the conduct of government personnel that engage in contracting activities. The most fundamental guidance provides as follows:

Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none. Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct. The general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships. While many Federal laws and regulations place restrictions on the actions of Government personnel, their official conduct must, in addition, be such that they would have no reluctance to make a full public disclosure of their actions.

FAR § 3.101-1. Our Office has had occasion to review cases that involve questions concerning former government officials that go to work for a contractor. E.g., Health Net Federal Servs., LLC, B‑401652.3, B-401652.5, Nov. 4, 2009, 2009 CPD ¶ 220 at 26-36. Our Office also has had occasion to review cases in which private industry representatives performing evaluation activities on behalf of an agency have had an interest in the results of that evaluation, where the agency improperly failed adequately to investigate whether or not a conflict existed. See Celadon Laboratories, Inc., B‑298533, Nov. 1, 2006, 2006 CPD ¶ 158. This case presents the first occasion where we are called upon to consider circumstances where an agency knowingly failed to investigate and resolve a question concerning whether an employee who actively and extensively engaged in procurement-related activities should have been recused from those activities.

As an initial matter, there is no explanation in the record concerning why the agency failed to obtain an [non-disclosure/conflict of interest] ND/CI statement from its program manager prior to beginning any acquisition-related activities. In this connection, the record includes correspondence dating from as early as January 2015 from the contracting officer to the agency’s program manager concerning the terms of the solicitation’s evaluation factors. E.g., E-Mail From the Contracting Officer to the Program Manager, January 29, 2015. Notwithstanding the fact that the program manager was engaged in acquisition-related activities at that point in time, there is no evidence in the record to show that the agency sought to obtain the information that the contracting officer now claims ultimately led her to be concerned about the relationship between the program manager and [Satellite Tracking of People, LLC] STOP.

The record does show that on April 10, 2015 (weeks after the RFQ was prepared and issued), the agency’s contract specialist sent an ND/CI statement form to the program manager and chairman of the technical evaluation board and requested that they execute the forms. E-Mail from the Contract Specialist to the Program Manager and Chairman of the Technical Evaluation Board, Apr. 10, 2015. However, this form was never executed by the program manager or provided to the cognizant agency personnel until after the instant protest was filed in our Office. E‑Mail from the Contract Specialist to the Program Manager, Aug. 4, 2015. There also is no explanation in the record concerning why the form was not obtained from the program manager in April when it was requested.

The agency’s failure to obtain the ND/CI statement from its program manager in a timely fashion is--standing alone--a matter of concern. In effect, the record shows that the agency made no affirmative effort to pursue and obtain information that the contracting officer now claims would have shed light on the question of whether or not it would be appropriate for the program manager to participate in acquisition-related activities on behalf of the agency given her relationship with STOP.

Notwithstanding the agency’s failure to timely obtain the ND/CI statement from the program manager, the record shows that the contracting officer actually recognized early during the acquisition process--before the RFQ was issued--that there was a conflict arising out of the relationship between the program manager and STOP. In this connection, the record includes an e-mail from the contracting officer to the program manager and the chairman of the technical evaluation committee that states as follows:

In addition, [the program manager] will have to recuse herself “totally” from the GPS solicitation process once the solicitation goes out. There have been GAO protests based on the same facts surrounding an incumbent's [STOP’s] prior personnel participating in the new solicitation and the outcome has not been favorable to the Government agencies, believe me we don't want a protest. Just FYI, should a protest occur everything stops until it is resolved.

E-Mail from the Contracting Officer to the Program Manager and Chairman of the Technical Evaluation Committee, Mar. 19, 2015.

This e-mail shows that, as early as March, the contracting officer concluded that the program manager should have been recused from the acquisition because of her former relationship with STOP. The contracting officer reached this conclusion before the RFQ was issued (but well after the program manager had engaged in extensive acquisition-related activities), but for reasons that are not explained in the record, the program manager was permitted by the contracting officer to continue her participation in acquisition-related activities. These activities included, at a minimum, preparation of the solicitation and the government’s estimate, as well as participation as a subject matter expert advisor throughout the source selection process. Request for Dismissal, Contracting Officer’s Statement, at 4; Contracting Officer’s Statement at 9.

Moreover, the above-quoted e-mail from the contracting officer (concluding that the program manager should be “totally” recused from acquisition-related activities) was sent both prior to the date when the contract specialist sent out the ND/CI forms (April 10), and prior to the date when the program manager’s ND/CI statement actually was provided to the contracting officer (August 4). Therefore, the record shows that the contracting officer concluded that the program manager should have been recused from acquisition-related activities well before reviewing the contents of the program manager’s ND/CI statement. This fact is fundamentally inconsistent with the express representation of the contracting officer to our Office that she first became concerned about the relationship between the program manager and STOP as a result of her review of STOP’s initial letter of protest and the program manager’s ND/CI statement in August. Compare Request for Dismissal, Contracting Officer’s Statement, at 3, with E-Mail from the Contracting Officer to the Program Manager and Chairman of the Technical Evaluation Committee, Mar. 19, 2015.

While we agree with the contracting officer’s conclusion that the program manager’s relationship with STOP should have led to her recusal from this procurement, the impact of her ongoing participation in the procurement is not clear. For example, the contracting officer states that the RFQ included specifications that favored STOP’s products over the products of competitors, and that these specifications had to be removed. Contracting Officer’s Statement of Facts at 11. In contrast, the protester suggests that the program manager may have been a disgruntled former employee disappointed with the nature of her employment with, or the terms of her departure from, STOP, or the terms upon which she sold her stock in STOP. Supplemental Protest at 7. The protester therefore argues that the program manager actively attempted to steer the award away from STOP.

We need not resolve the question of whether the program manager’s participation in the acquisition favored, disfavored, or had no impact on STOP. Here, the record shows that the contracting officer identified a conflict of interest issue, but undertook no actions to safeguard the procurement process. As stated above, the general rule is “to avoid strictly any conflict of interest or even the appearance of a conflict of interest . . . .” FAR § 3.101-1. These strict limitations reflect the reality that the potential harm flowing from such situations frequently is, by its nature, not susceptible to demonstrable proof of bias or prejudice. Department of the Navy--Recon., B‑286194.7, May 29, 2002, 2002 CPD ¶ 76 at 11. Thus, where, as here, the record establishes that a conflict or apparent conflict of interest exists, and the agency did not resolve the issue, to maintain the integrity of the procurement process, we will presume that the protester was prejudiced, unless the record includes clear evidence establishing the absence of prejudice. Id. We see no such evidence here.

As a final matter, we are concerned about one other aspect of the events surrounding this apparent conflict of interest. As noted above, the contracting officer represented to our Office that, upon reading STOP’s letter of protest, she determined that it included the awardee’s proprietary information from its quote. The agency has never identified the information that the contracting officer concluded was proprietary to [BI Incorporated] BI, and from a reading of the protest letter and its accompanying exhibits, it is not apparent or obvious to us what information the contracting officer identified as proprietary.

We view the contracting officer’s representation that STOP’s protest included its competitor’s proprietary information to be a serious allegation. It may imply that one or more individuals within the agency knowingly provided STOP with BI’s proprietary information, and that both STOP and its counsel may knowingly have received such information. Such activity on the part of agency personnel, STOP personnel, or STOP’s counsel, could give rise to a violation of the Procurement Integrity Act (PIA), 41 U.S.C. §§ 2101-2107. Violations of the PIA are punishable by both criminal and civil penalties. 41 U.S.C. § 2105.

As discussed above, the contracting officer claims to have used her conclusion about BI’s allegedly proprietary information in STOP’s protest as a starting point for her subsequent investigative efforts surrounding the alleged OCI on the part of STOP. However, there is nothing in the record to show that the contracting officer--or anyone else in the agency--ever actually investigated the possible PIA violations that could arise as a consequence of the alleged disclosure, or receipt, of BI’s allegedly proprietary information. Rather, the contracting officer states only that the alleged OCI on the part of STOP (rather than any possible violation of the PIA) has been referred to the agency’s office of professional responsibility for investigation. Contracting Officer’s Statement of Facts at 12.

Other than referral of STOP’s alleged OCI to the agency’s office of professional responsibility, the record is silent on the question of actions taken by the agency to investigate or resolve the possible PIA violations that are implied by the contracting officer’s representation. Given the seriousness of the contracting officer’s representation, we do not understand why the alleged possible PIA violation also has not been actively and thoroughly investigated by the agency.

RECOMMENDATION

In light of the foregoing discussion, we sustain STOP’s protest that the agency’s program manager had an apparent conflict of interest that was not satisfactorily addressed by the agency. Because we conclude that the apparent conflict has not been addressed, and because the ultimate impact of the conflict undercuts the integrity of the acquisition, we recommend that the agency terminate the task order issued to BI for the convenience of the government. We further recommend that the agency cancel its RFQ and begin its acquisition anew after considering whether the facts here require recusal of the program manager (and possibly other agency contracting officials) from the agency’s subsequent acquisition for these requirements. We also recommend that the agency thoroughly investigate and resolve the possible PIA violations implicated by the contracting officer’s representation to our Office. Finally, we recommend that the agency reimburse STOP the costs associated with filing and pursuing its protest, including reasonable attorneys’ fees. The protester should submit its certified claim for costs, detailing the time expended and costs incurred, directly to the contracting agency within 60 days after receipt of this decision. 4 C.F.R. § 21.8(f)(1).

The protest is sustained.  (Satellite Tracking of People, LLC B-411845, B-411845.2: Nov 6, 2015)  (pdf)

Signature Performance argues that Benefit Recovery is ineligible for award because its role as the developer of the ABACUS medical billing software created an unequal access to information OCI. In this regard, Signature Performance argues that Benefit Recovery’s knowledge of ABACUS gives it greater insight into the functionality of the software and the amount of labor required to complete tasks using the system.[3] Protest at 4-5.

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 for a government contract. FAR § 9.505(b); CapRock Gov’t Solutions, Inc.; ARTEL, Inc.; Segovia, Inc., B-402490 et al., May 11, 2010, 2010 CPD ¶ 124 at 25. It is well settled, however, that an offeror may possess unique information, advantages, and capabilities due to its prior experience under a government contract--either as an incumbent contractor or otherwise; further, the government is not necessarily required to equalize competition to compensate for such an advantage, unless there is evidence of preferential treatment or other improper action. CACI, Inc.-Fed., B‑403064.2, Jan. 28, 2011, 2011 CPD ¶ 31 at 10; MASAI Techs. Corp., B‑298880.3, B-298880.4, Sept. 10, 2007, 2007 CPD ¶ 179 at 8. The existence of an advantage, in and of itself, does not constitute preferential treatment by the agency, nor is such a normally occurring advantage necessarily unfair. Council for Adult & Experiential Learning, B-299798.2, Aug. 28, 2007, 2007 CPD ¶ 151 at 6; Government Bus. Servs. Group, B-287052 et al., Mar. 27, 2001, 2001 CPD ¶ 58 at 10. Likewise, the advantage of an original equipment manufacturer is one that the government is not required to mitigate. See Northrop Grumman Tech. Servs., Inc., B-406523, June 22, 2012, 2012 CPD ¶ 197 at 17-18.

Here, Signature Performance has not established the existence of an unequal access to information OCI. Signature Performance in essence complains that Benefit Recovery gained a competitive advantage as a result of its knowledge and experience as the owner of the commercial software upon which ABACUS is based and its experience customizing the software for DOD. Signature Performance, however, has not presented any evidence of preferential treatment or other improper action on the part of the Army that would create an OCI under such circumstances. The advantage of which Signature Performance complains is akin to that of an original equipment manufacturer or incumbent contractor. See Northrop Grumman Tech. Servs., Inc., supra; Halifax Eng’g, Inc., B-219178.2, Sept. 30, 1985, 85-2 CPD ¶ 559 at 3 (development of diagnostic software for equipment is similar to incumbents advantage and does not create preferential treatment or other unfair action). Moreover, while Benefit Recovery no doubt retains some advantage as a result of its experience, we note that Signature Performance also had experience with the underlying commercial software and received some training on the use of ABACUS.

Signature Performance also argues that Benefit Recovery obtained greater insight into DOD’s needs as a result of its experience with the ABACUS development contract. Comments at 7. In this regard, however, we note that Signature Performance arguably obtained its own competitive advantage based on its experience as the incumbent contractor for the Army’s third party billing and collection program. Signature Performance fails to explain how the software developer could have greater insight into the Army’s needs than an offeror that has direct, day-to-day experience with the Army’s billing and collection requirements. (Signature Performance, Inc. B-411762: Oct 19, 2015)  (pdf)

Organizational Conflict of Interest

First, DVU contends that NES employees had access to a DVU team member’s proprietary information during its performance under an unrelated Army contract. More specifically, DVU explains that one of its 19 joint venture members, Dynamic Technology Systems, Inc. (DTS), provides support to the Army Publishing Directorate’s enterprise content management service (ECMS). Separately, NES employees staff a “Tiger Team” for the Office of the Administrative Assistant to the Secretary of the Army (OAA), in which they provide support for the “modernization and migration goals for ECMS.” AR, Tab 21, Questionnaire C (chief, IT acquisition program manager, ECMS), at 4. In this capacity, the NES employees “participate in technical exchanges with DTS.” Id.

According to DVU, NES’s role on the OAA Tiger Team provided the company with access to DTS’s proprietary data, including DTS’s line item prices; personnel and labor mix; policies, processes, and standard work operating procedures; and specific methods and design and development approaches used to perform certain aspects of the contract. DVU therefore asserts that NES gained an unfair competitive advantage in the current engineering support services competition because the firm’s knowledge of how DTS staffs and performs tasks under the ECMS contract provided NES with insight into how DVU would staff, perform, and price the work required under the RFQ here.

Contracting officials must avoid, neutralize or mitigate potential significant OCIs so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR §§ 9.504(a), 9.505. The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, fall under three broad categories: unequal access to information, biased ground rules, and impaired objectivity. E.g., Enter. Info. Servs., Inc., B-405152 et al., Sept. 2, 2011, 2011 CPD ¶ 174 at 7-8.

As relevant here, an unequal access to information OCI exists where a firm has access to nonpublic information as part of its performance of a government contract that may provide the firm a competitive advantage in a later competition. FAR §§ 9.505(b), 9.505-4; Maden Techs., B‑298543.2, Oct. 30, 2006, 2006 CPD ¶ 167 at 8. 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.” FAR § 9.505(b) (underline added).

In reviewing bid protests that challenge an agency’s conflict of interest determinations, our Office reviews the reasonableness of the CO’s investigation and, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. See Enter. Info. Servs., Inc., supra, at 8; NetStar-1 Gov’t Consulting, Inc., B-404025.2, May 4, 2011, 2011 CPD ¶ 262 at 7. A protester must identify hard facts that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. TeleCommunication Sys., Inc., B‑404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3‑4; see Turner Constr. Co., Inc. v. U.S., 645 F.3d 1377, 1387 (Fed. Cir. 2011). The identification of conflicts of interest are fact-specific inquiries that require the exercise of considerable discretion. NetStar-1 Gov’t Consulting, Inc., supra; see Axiom Res. Mgmt., Inc. v. U.S., 564 F.3d 1374, 1382 (Fed. Cir. 2009).

In response to DVU’s OCI allegations, the DOI contracting officer conducted an investigation of DVU’s contentions. In this regard, the contracting officer interviewed via questionnaire five Army personnel from OAA and [Army Program Executive Office Enterprise Information System] PEO EIS. CO Statement at 13. The personnel with knowledge of DTS’s ECMS support tasks and NES’s role on the OAA Tiger Team maintained that NES did not have access to DTS proprietary information. AR, Tab 21, Questionnaire A (chief, PEO EIS enterprise architecture division), at 5-6; Questionnaire C (chief, IT acquisition program manager, ECMS), at 4-5; Questionnaire D (ECMS project manager), at 4‑5; and Questionnaire E (chief of staff, Army Headquarters Services), at 4-5. In addition, the Army personnel explained that the ECMS support services and the PEO EIS engineering support services are “vastly different” and “in no way related.” Id., Tab 21, Questionnaire A, at 3-4. As a result of the contracting officer’s investigation, DOI concluded that NES did not have access to non-public competitively useful information. As explained below, we find reasonable the agency’s ultimate conclusion, even though the record suggests that NES had access to DTS’s proprietary information.

With regard to the DTS information, the record demonstrates that during the course of performing the OAA contract NES employees were given access to a roster of the DTS personnel assigned to the ECMS project team along with the employees’ specialties and roles, as well as an organizational chart depicting the team. Comments, exh. N, Email from OAA Official to NES Tiger Team Member, Feb. 13, 2015, at 3; exh. O, DTS ECMS Project Team Spreadsheet, at 1; and exh. P, DTS ECMS Project Team Organizational Chart, at 1. In addition, the record shows that NES employees on the Tiger Team had access to two of DTS’s internal standard operating procedures (SOPs), one outlining the firm’s ECMS deployment process and one describing the SOP for the preparation and delivery of documentation on the ECMS effort.[8] Comments at 14; id., exh. Q, Declaration of DTS Executive Vice President, at ¶ 5; and exh. R, Deployment Process SOP, at 1-18; and exh. S, Documentation SOP, at 1-22.

With regard to whether this information was competitively useful, the agency concluded, notwithstanding that NES has or had access to certain DTS information, that the information was not relevant to the PEO EIS procurement at issue here. In this regard, the agency found that the two contractual activities are unrelated, and that information related to a vendor supporting the ECMS effort would not provide any advantage to a competitor for the IT engineering support task order. More specifically, the Army explains that the services that DTS provides on the ECMS contract support the operation and maintenance of the ECMS software application and the systems in the ECMS environment (which are servers). AR at 10, citing AR, Tab 21, Questionnaire A, at 3‑4. The objectives of the ECMS support effort are “to support Army electronic publishing and to enable the automation of forms-based business processes” in support of the Army Publishing Directorate’s mission to provide quality publications and forms. Protest, exh. C, DTS ECMS Contract, at 6. The specific services DTS provides include “overall architecture planning supporting content/data management of the Army departmental publishing mission and the electronic publishing process which includes integration, interfacing, installation, life cycle replacement, technical refresh, operations, maintenance, training, and sustainment of the ECMS.” Id.

On the other hand, the Army explains that the PEO EIS engineering support services task order contemplates architecture and engineering services to meet the Army’s requirements for the re-engineering and upgrading of Army network infrastructure. AR, Tab 21, Questionnaire A, at 4. The chief of the PEO EIS enterprise architecture division--who is familiar with both efforts--further explains the scope of the engineering support services task order as follows:

[P]rovide the Army with engineering technical expertise for . . . the development of the architecture, engineering and design of the Joint Regional Security Stack (JRSS) environment, pathway diversity engineering and the re‑engineering of the Department of Defense [] optical network, as well for the assessment and elimination of Time Division Multiplexing (TDM) systems and point‑to‑point circuits supporting systems to be migrated to the upgraded and improved network infrastructure. Additionally, the task order will provide Information Assurance and Security Engineering support to develop, review, and provide technical evaluations to DOD Information Assurance Certification and Accreditation Process packages and deliverables for the systems under design and deployment. Lastly, the task order would provide senior engineering resources for the architecture, engineering and design, installation and support of an Army enterprise Voice over Internet Protocol (VolP)/Unified Capabilities (UC) environment.

Id. at 3, 8. Put plainly, the agency concluded that the ECMS effort involves the operation of a software application, and the engineering support services involve the infrastructure and architecture of the Army IP network, i.e., hardware. See Supp. AR at 3. As such, the agency determined that the two contracts are “vastly different, with minimal similarities which are mostly in the use of words and phrases.” AR, Tab 21, Questionnaire A, at 3, 8; see also id., Questionnaire B (technical management division chief under PEO EIS), at 4 (describing the expertise under the efforts as “completely different IT disciplines”); Questionnaire D, at 3 (ECMS project manager reporting that “there is nothing related between the two systems or contract[s]”).

Here, we find reasonable the agency’s conclusion that any DTS staffing information and SOPs in support of the ECMS effort were of no relevance or competitive usefulness to NES in responding to the PEO EIS engineering support services RFQ. While the protester disagrees with the agency’s conclusions with regard to whether the information could provide a competitive advantage, the protester has not demonstrated that the agency’s conclusions are unreasonable. For example, we find unavailing the protester’s assertion that the two procurements were similar simply because they both involve a system certification process and achieving authority to operate (ATO) an IT system. In this regard, the chief of the PEO EIS enterprise architecture division explains that the OAA ECMS certification and ATO tasks relate to software application and the systems on which it is processed, while the engineering support services certification and ATO tasks are for Army enterprise network infrastructure. AR, Tab 21, Questionnaire A, at 9. The Army official maintains that these two tasks (of many) are “greatly different in technical expertise required, scale and complexity.” Id. The official further reports that some of the engineering support tasks that DVU attempts to pin to system certification and ATO work are not actually related to those functions whatsoever. Id. at 9-10. On this record, we find that any slight similarity in the PWS requirements related to these two specific tasks does not establish that the agency erred in concluding that insight into DTS’s processes under the ECMS effort would not have been useful to NES as it developed its quotation for the engineering support services RFQ.

We similarly disagree with the protester’s contention that because the record shows some overlap between DTS’s ECMS staffing and a portion of DVU’s proposed labor mix (labor categories and employee roles) that the information was of any usefulness to NES. In this respect, that both efforts require a program manager or IT subject matter expert, for example, does not establish that DTS’s ECMS staffing information was competitively useful to NES under the RFQ here. Moreover, the staffing comparison is particularly unpersuasive given that DTS was but one of 19 members of DVU. In addition, we note that the record does not establish that NES was aware that DTS was part of the DVU team during the task order competition. See Intervenor Supp. Comments at 7 (noting that NES did not know that DTS was part of the DVU team until after it reviewed a copy of DVU’s protest).

In sum, based on the circumstances here and given the considerable discretion afforded to contracting officers’ OCI investigations, we have no basis to conclude that the agency’s determination that NES did not have unequal access to non-public competitively useful information was unreasonable. Thus, the protest allegation is denied.  (DV United, LLC B-411620, B-411620.2: Sep 16, 2015)  (pdf)

ViON alleges the agency improperly failed to review a potential OCI. ViON Comments at 24-35; ViON Supp. Comments at 50-52. ViON’s allegation concerns an IT storage consulting firm known as the Evaluator Group. ViON alleges that since late 2009, the agency has had “subscription” contract with the Evaluator Group and that under this contract the Evaluator Group provides IT storage education, product briefs and analysis, product comparisons, consultations, and training sessions. ViON Comments at 27. ViON further alleges the Evaluator Group has “financial ties” with HP because the Evaluator Group’s website lists HP as one of its “Clients.” ViON Comments at 27-29. ViON claims HP paid the Evaluator Group for a white paper favorable to HP 3PAR products. Id. at 30. Finally, ViON claims that in August, 2014--which coincides with the time the evaluation in this procurement took place--an Evaluator Group senior strategist gave a presentation to the agency regarding storage trends and technology. ViON Comments at 33. Based on these allegations, ViON argues “The Evaluator Group’s role advising DISA on its IT storage procurement needs may very well have resulted in ‘biased ground rules’ and/or ‘impaired objectivity.’” Supp. Comments at 34.

The FAR requires contracting officials to avoid, neutralize, or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR §§ 9.504(a), 9.505. The situations in which OCIs arise, as described in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups: biased ground rules, unequal access to information, and impaired objectivity. Organizational Strategies, Inc., B-406155, Feb. 17, 2012, 2012 CPD ¶ 100 at 5.

As relevant here, a biased ground rules OCI arises where a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract by, for example, writing the statement of work or providing materials upon which a statement of work was based. FAR §§ 9.505-1, 9.505-2; Networking & Eng’g Techs., Inc., B-405062.4 et al., Sept. 4, 2013, 2013 CPD ¶ 219 at 10. An impaired objectivity OCI arises where a firm’s ability to render impartial advice to the government would be undermined by the firm's competing interests. FAR § 9.505‑3. A protester must identify hard facts that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4.

In response to ViON’s claims, the agency’s technical team lead states as follows:

DISA did not use [the Evaluator Group senior strategist] or Evaluator Group as a consultant for any consultation or training of DISA personnel in support of the ESS II procurement process. Moreover, DISA did not utilize [the Evaluator Group senior strategist] or Evaluator Group for any part of ESS II procurement or evaluations. As identified in the RFP, [the firm] Kepler was an identified support contractor and provided the Source Selection Training for the ESS II acquisition . . . not Evaluator Group [or the Evaluator Group senior strategist]. In terms of the ESS II Source Selection, DISA did not use [the Evaluator Group senior strategist] or Evaluator Group as a consultant for this RFP, DISA had no discussion with Evaluator Group or [the senior strategist] regarding the ESS II solicitation, evaluation, training or any other aspect of the RFP.

ViON AR, Tab 33A, Technical Evaluation Team Lead Decl., at 31-32.

With regard to the Evaluator Group presentation described in ViON’s OCI allegation, the technical team lead states as follows:

In the course of normal operations, DISA did utilize Evaluator Group to provide an approximately three hour presentation on storage trends and technology to the DISA Storage Engineering team and DISA field staff . . . . [T]he [Evaluator Group senior strategist’s] presentation was a small portion of a normal operational discussion and was widely attended by the majority of DISA storage support personnel. This presentation discussed overall storage technology trends at a very high level and did not focus on any specific storage solution or particular vendor. The presentation and discussion did not involve the ESS II procurement or acquisition effort.

ViON AR, Tab 33A, Technical Evaluation Team Lead Decl., at 32.

Here, ViON has alleged the Evaluator Group’s work under its subscription services contract with the agency may have resulted in biased ground rules or impaired objectivity OCI. However, ViON has failed to satisfy the standard required to support an allegation regarding the existence of an OCI because it does not identify hard facts in support of its allegations. Specifically, ViON fails to allege hard facts indicating the Evaluator Group was involved in crafting the PWS or any provisions of the solicitation such that WWT--through its team member HP--could be said to potentially have a biased ground rules OCI. Further, ViON fails to allege hard facts indicating the Evaluator Group’s work for the agency somehow triggers an impaired objectivity OCI on the part of WWT, or WWT’s team member HP. In sum, ViON simply has not provided sufficient facts to indicate the existence or potential existence of an OCI. See TeleCommunication Sys. Inc., supra.

The protest is denied.  (ViON Corporation; EMC Corporation B-409985.4, B-409985.5, B-409985.6, B-409985.7, B-409985.8: Apr 3, 2015)  (pdf)

Harmonia alleges that Soliel has an unmitigated OCI, which was not considered by the agency prior to the award. In this regard, Harmonia contends that, although the agency presented the RFQ as a new requirement, there was a predecessor contract for the requirement, which was held by Soliel. Harmonia asserts that Soliel’s work on the prior effort granted it unequal access to nonpublic information about the requirement under this RFQ, or allowed Soliel to influence the ground rules of the competition.

The Federal Acquisition Regulation (FAR) requires that contracting officials avoid, neutralize, or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR §§ 9.504(a), 9.505. The situations in which OCIs arise, as described in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups: biased ground rules, unequal access to information, and impaired objectivity. Organizational Strategies, Inc., B-406155, Feb. 17, 2012, 2012 CPD ¶ 100 at 5.

As relevant here, 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 for a government contract. FAR § 9.505(b); CapRock Gov’t Solutions, Inc., et al., B-402490 et al., May 11, 2010, 2010 CPD ¶ 124 at 25. A biased ground rules OCI arises where a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract by, for example, writing the statement of work or providing materials upon which a statement of work was based. FAR §§ 9.505-1, 9.505-2; Networking & Eng’g Techs., Inc., B-405062.4 et al., Sept. 4, 2013, 2013 CPD ¶ 219 at 10. A protester must identify hard facts that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4.

Here, Harmonia fails to satisfy the standard required to support an allegation regarding the existence of an OCI because it does not identify hard facts in support of its allegations. Specifically, Harmonia fails to allege hard facts indicating that Soliel was privy to any specific nonpublic competitively useful information, such as proprietary, sensitive, or source selection information, or that Soliel was involved in crafting the PWS or any other provisions of the RFQ.

In its protest, Harmonia asserts that Soliel’s prior contract has a high degree of overlap with the current PWS, and that Soliel designed many of the elements used in the current work. For example, Harmonia asserts that:

Soliel had a significant role in developing the specifications and design for the Content Discovery and Retrieval (CD&R) Integrated Project Team (“IPT”), including ‘author[ing] and coauthor[ing] REST and SOAP Describe Brokered Search, CDR Manage, Query Management and Deliver Specifications for the CD&R IPT.’

Harmonia Comments at 22. Harmonia argues that these same CD&R elements form the CD&R IPT support requirement for PWS task four of this RFQ, “such as REST and SOAP Search Results Management Specs, [and] REST and SOAP Catalog Replication and Synchronization specs.” Id.

As explained by the agency and intervenor, however, Harmonia’s allegations in this area are premised on a misunderstanding of Soliel’s prior contract, and the work to be accomplished under the current RFQ. While both Soliel’s prior effort and the current work involve “REST” and “SOAP,” the agency and intervenor explain that REST (Representational State Transfer) and SOAP (Simple Object Access Protocol) are not work products, but program interfaces that are widely used by software developers. Next, while both the prior effort and current RFP are for the agency’s CD&R IPT, the fact that two projects share the same client does not indicate that the current RFQ is a follow-on effort, or that Soliel’s prior work involved establishing the ground rules for the new requirement.

To the extent the two contracts share software tools and involve work for the same client, the agency and the intervenor further explain that the actual requirements of the contracts are not the same. Specifically, Soliel’s prior effort involved using REST and SOAP to author or coauthor software functions including “Describe Brokered Search,” “CDR Manage,” and “Query Management” and “Deliver Specifications.” In contrast, the functions to be delivered under the current RFQ involve “Search Results Management Specs,” “Catalog Replication,” and “Synchronization.”

In sum, we see nothing to indicate that Soliel’s prior contract with the agency involved establishing the specifications or PWS for the current RFQ, or provided Soliel with access to nonpublic information concerning the current requirement. In this case, Harmonia has simply not provided sufficient facts to indicate the existence or potential existence of an OCI. See TeleCommunication Sys. Inc., supra.  (Harmonia Holdings Group, LLC B-410591, B-410591.2: Jan 14, 2015)  (pdf)

One of the guiding principles recognized by our Office is the obligation of contracting agencies to avoid even the appearance of impropriety in government procurements. TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 2 (citing Federal Acquisition Regulation (FAR) § 3.101‑1; Celeris Sys., Inc., B‑404651, Mar. 24, 2011, 2011 CPD ¶ 72 at 7; Guardian Techs. Int’l, B‑270213 et al., Feb. 20, 1996, 96‑1 CPD ¶ 104 at 5). The FAR requires that contracting officials avoid, neutralize, or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR §§ 9.504(a), 9.505. The situations in which organizational conflicts of interest arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups.

The first group consists of situations in which 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 for a government contract. FAR § 9.505-4. In these “unequal access to information” cases, the concern is the firm could gain a competitive advantage. CIGNA Gov’t Servs., LLC, B‑401068.4; B‑401068.5, 2010 CPD ¶ 230 at 10; L-3 Servs., Inc., B‑400134.11, B‑400134.12, Sept. 3, 2009, 2009 CPD ¶ 171 at 5.

The second OCI group consists of situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for another government contract by, for example, writing the statement of work or the specifications. In these “biased ground rules” cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. FAR §§ 9.505-1, 9.505-2; CIGNA Gov’t Servs., LLC, supra; L-3 Servs., Inc., supra. These situations may also involve a concern that the firm, by virtue of its special knowledge of the agency’s future requirements, would have an unfair advantage in the competition for those requirements. L-3 Servs., Inc., supra; Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95‑2 CPD ¶ 129 at 11.

Finally, the third OCI group comprises cases 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. FAR § 9.505‑3; L-3 Servs., Inc., supra. In these “impaired objectivity” cases, the concern is that the firm’s ability to render impartial advice to the government could appear to be undermined by its relationship with the entity whose work product is being evaluated. L-3 Servs., Inc., supra.

The identification of conflicts is a fact-specific inquiry that requires the exercise of considerable discretion. Noonan & Assoc., B-409103, Jan. 10, 2014, 2014 CPD ¶ 29 at 4; Guident Techs., Inc., B‑405112.3, June 4, 2012, 2012 CPD ¶ 166 at 7; see Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009). We review an agency’s OCI investigation for reasonableness, and where the agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. Noonan & Assoc., supra; Oklahoma State University, B‑406865, Sept. 12, 2012, 2012 CPD ¶ 276 at 9.

Here, based on our review of the record, we find no basis to question the contracting officer’s OCI determination. First, we find that the contracting officer performed an extensive review of the facts related to IBM’s potential OCI and reasonably concluded that IBM’s proposed team member, BAH, through its agent Mr. [DELETED], was closely involved in developing the ground rules for this procurement. Second, the record reflects that BAH expressed interest in competing for this requirement during the time that its agent, Mr. [DELETED], was still participating in developing and drafting the documents related to this acquisition. Therefore, as set forth in more detail below, we find the contracting officer’s determination that BAH’s involvement in this procurement resulted in an OCI for IBM to be reasonable and supported by the record.

In the contracting officer’s 15-page, single-spaced OCI determination, he found that, until September 26, 2014, Mr. [DELETED] was directly employed by or contracted for and paid by BAH. AR, Tab 32, OCI Determination, at 14. Specifically, on July 16, 2013, the agency awarded a task order for DRAS2 acquisition support services to Horizon Industries Limited, which subcontracted with BAH. AR, Tab 21, Program Manager Declaration, at 3. At that time, BAH provided its personnel, specifically Mr. [DELETED], to perform the acquisition support services required under the subcontract, including assistance with, and preparation of, the acquisition strategy, performance work statement, analysis of alternatives, work breakdown schedules, business case analysis, cost and financial management documentation, milestone reviews, and in‑progress reviews. Id. at 3‑4. In August 2013, Mr. [DELETED] signed a document naming both BAH and Horizon as his affiliate organizations. Id. at 5.

As part of his OCI determination, the contracting officer obtained copies of the subcontract agreements under which BAH and its agent, Mr. [DELETED], were performing the acquisition support services. In reviewing these subcontract agreements, the contracting officer found that the base contract and option year contract both contained the full text of the DRAS2 program management office support services performance work statement. AR, Tab 32, OCI Determination, at 5.

(sections deleted)

The contracting officer also received input from the agency’s program management office regarding Mr. [DELETED]’s role in developing the ground rules for this procurement. Specifically, an individual from that office who also served as a member of the source selection evaluation board advised the contracting officer that Mr. [DELETED] was “intimately involved in the development of the RFP documents, PWS [performance work statement], IGCE [independent government cost estimate], and Q&As [solicitation questions and answers].” AR, Tab 32, OCI Determination at 8. The program management office employee also informed the contracting officer that “[t]here is not an area of the DRAS2 program that [Mr. [DELETED]] hasn’t worked on.” Id. Finally, the contracting officer obtained a copy of Mr. [DELETED]’s resume, which confirmed Mr. [DELETED]’s role in developing the acquisition documents for this procurement. Id. Based on all of the foregoing information, the contracting officer concluded that BAH, as a result of its employee’s role in developing the ground rules for this procurement, had an actual or potential biased ground rules OCI.

Our review of the record indicates that the contracting officer, in his OCI determination document, reasonably concluded that IBM, through its subcontractor BAH and BAH’s agent, assisted in the development of the RFP, the performance work statement, the IGCE, the solicitation amendments, and the responses to questions submitted by interested firms. AR, Tab 32, OCI Determination, at 12. As noted, the contracting officer concluded that this resulted in a biased ground rules OCI.[2]

Further, our review of the record indicates that, while Mr. [DELETED] was performing work on the acquisition documents and strategy for this procurement, BAH determined that it was interested in potentially competing for the procurement. Specifically, in April 2014, while Mr. [DELETED] was still assisting with the development of the acquisition documents and before the issuance of the solicitation, BAH sent an e-mail to the agency advising that it planned to submit a proposal in response to the solicitation, and asserting that no OCIs existed. Supp. Protest at 4; AR, Tab 29, April 21 Email from BAH to DLA, at 2. The e-mail did not request, and the agency did not provide, a response. AR, Tab 29, April 21 Email from BAH to DLA, at 1-4; AR at 14; Supp. Protest at 6. Ultimately, BAH decided to compete for the procurement as a subcontractor to IBM, rather than as a prime contractor.

Given the extensive involvement of Mr. [DELETED] in drafting and advising on the ground rules of this procurement, and given that there is no basis to distinguish between a firm and its affiliates, at least where concerns about potentially biased ground rules are at issue, L-3 Servs., Inc., B-400134.11, B‑400134.12, Sept. 3, 2009, 2009 CPD ¶ 171 at 5 n.3, we find that the protester has not shown the contracting officer’s OCI determination to be unreasonable. In this regard, although IBM responded to the contracting officer’s OCI inquiries by asserting that Mr. [DELETED] was firewalled from BAH, and stating that BAH would end its employment of Mr. [DELETED], we believe that the contracting officer reasonably concluded that IBM had failed to mitigate the potential OCI here. As our Office has previously noted, due to the ultimate relationship of one entity to another, including an identity of interests between the entities, a firewall does not resolve an organizational conflict of interest involving biased ground rules. The LEADS Corp., B-292465, Sept. 26, 2003, 2003 CPD ¶ 197 at 5‑6. Further, as noted by the contracting officer, termination of Mr. [DELETED]’s employment after he had influenced the ground rules for the procurement in no way avoided any potential harm in this regard.

While IBM disagrees with the contracting officer’s determination to eliminate it from the competition because of an apparent conflict of interest, it has not shown that the contracting officer’s conclusion was unreasonable or not based on hard facts. In its protest, IBM argues that the contracting officer’s identification of a biased ground rules OCI is unreasonable since Mr. [DELETED] was unaware of the fact that BAH intended to compete for the procurement, and therefore he would have had no motivation to influence the ground rules of the procurement in a manner that would be potentially beneficial to BAH. However, BAH (and IBM) failed to inform the agency of the factual predicate for this argument (Mr. [DELETED]’s ignorance of BAH’s intent to compete) during the contracting officer’s investigation of the OCI. That is, even after the contracting officer raised concerns that Mr. [DELETED] had been involved in numerous aspects of the DRAS2 acquisition, the protester failed to inform the agency that Mr. [DELETED] was unaware of BAH’s intent to compete under this procurement. Since the protester had the opportunity to furnish this information to the agency prior to its final OCI determination, but failed to do so, this claim provides no basis for concluding that the contracting officer’s determination was unreasonable. In sum, because the agency has given meaningful consideration to whether a conflict of interest existed and its judgment has not been shown to be unreasonable, we will not substitute our judgment for that of the agency.  (International Business Machines Corporation B-410639, B-410639.2: Jan 15, 2015)  (pdf)

Alliant asserts that the Air Force failed to conduct a meaningful OCI analysis and, as a result, failed to adequately consider that (1) Raytheon had an undue influence on the specifications such as to amount to biased ground rules, and (2) the unavailability to Alliant of certain proprietary information that was available to Raytheon demonstrated an unequal access to information. Alliant initially raised with the Air Force the potential for OCIs associated with the inappropriate use of certain documents and specifications. After consulting with legal counsel, the contracting officer, on February 23, 2014 (prior to issuance of the solicitation), concluded that Raytheon’s participation in the competition would not result in any OCIs. Contracting Officer’s Memorandum to the File, Feb. 23, 2014; Protest at 39-41. The agency subsequently communicated to Alliant its rejection of Alliant’s OCI concerns. AR, Tab 53-03.

The Federal Acquisition Regulation (FAR) requires that contracting officials avoid, neutralize, or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR §§ 9.504(a), 9.505. The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting officer. PricewaterhouseCoopers LLP; IBM U.S. Federal, B-409885 et al., Sept. 5, 2014, 2014 CPD ¶ __ at 19; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95‑2 CPD ¶ 129 at 12.

We review the reasonableness of a contracting officer’s OCI investigation and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. See TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4. In this regard, the identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Guident Techs., Inc., B‑405112.3, June 4, 2012, 2012 CPD ¶ 166 at 7; see Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009). A protester must identify hard facts that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. TeleCommunication Sys. Inc., supra, at 3; see Turner Constr. Co., Inc. v. United States, 645 F.3d 1377, 1387 (Fed. Cir. 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010).

As set forth below, Alliant has failed to satisfy the standard required to demonstrate the existence of the alleged OCI. Thus, we have no basis to question the CO’s conclusion that Raytheon’s participation in this procurement does not raise potential OCI concerns.

1. Biased Ground Rules

As relevant here, a biased ground rules OCI arises where a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract by, for example, writing the statement of work or providing materials upon which a statement of work was based. FAR §§ 9.505-1, 9.505-2; Networking & Eng’g Techs., Inc., B‑405062.4 et al., Sept. 4, 2013, 2013 CPD ¶ 219 at 10. Alliant bases its claim of biased ground rules on that fact that several of the specifications incorporated into the solicitation here are specifications for the [High-speed Anti-Radiation Missile (HARM) Control Section Modification] HCSM as designed and developed by Raytheon for the Air Force; according to the protester, these specifications are unnecessary, at least insofar as pertains to the Alliant HCSM design, and impose additional costs on Alliant to comply, thereby competitively disadvantaging Alliant.

However, while the current specifications may be based on the HCSM as designed and developed by Raytheon in conjunction with the Air Force, that fact alone does not constitute biased ground rules raising OCI concerns. In this regard, the mere existence of a prior or current contractual relationship between a contracting agency and a contractor does not create an unfair competitive advantage unless the alleged advantage was created by an improper preference or unfair action by the procuring agency. See Science Applications International Corp., B-405718, B‑405718.2, Dec. 21, 2011, 2012 CPD ¶ 42 at 6 n.12; Philadelphia Produce Market Wholesalers, LLC, B‑298751.5, May 1, 2007, 2007 CPD ¶ 87 at 3; Optimum Tech., Inc., B‑266339.2, Apr. 16, 1996, 96-1 CPD ¶ 188 at 7-8. Likewise, the FAR states that, while a “development contractor,” such as Raytheon, “has a competitive advantage, it is an unavoidable one that is not considered unfair; hence no prohibition should be imposed.” FAR § 9.505-2(a)(3). Accordingly, the FAR recognizes the unique role played by a development contractor with respect to a solicitation work statement by providing as follows:

(b)(1) If a contractor prepares, or assists in preparing, a work statement to be used in competitively acquiring a system or services‑‑or provides material leading directly, predictably, and without delay to such a work statement--that contractor may not supply the system, major components of the system, or the services unless--

. . . . .

(ii) It has participated in the development and design work . . . .

FAR § 9.505-2(b)(1). Thus, even if certain current specifications were based on the HCSM as designed and developed by Raytheon in conjunction with the Air Force, this fact alone does not confer an unfair competitive advantage on Raytheon to be addressed under the OCI rules.

Further, to the extent that Alliant’s arguments amount simply to claims that the specifications exceed the agency’s needs and are unduly restrictive of competition, the arguments furnish no basis upon which to question the specifications. In this regard, a contracting agency has the discretion to determine its needs and the best method to accommodate them. Womack Mach. Supply Co., B-407990, May 3, 2013, 2013 CPD ¶ 117 at 3. In preparing a solicitation, a contracting agency is required to specify its needs in a manner designed to achieve full and open competition, and may include restrictive requirements only to the extent they are necessary to satisfy the agency’s legitimate needs. 10 U.S.C. § 2305(a)(1) (2014); Innovative Refrigeration Concepts, B-272370, Sept. 30, 1996, 96-2 CPD ¶ 127 at 3. Where a protester challenges a specification as unduly restrictive, the procuring agency has the responsibility of establishing that the specification is reasonably necessary to meet its needs. Streit USA Armoring, LLC, B-408584, Nov. 5, 2013, 2013 CPD ¶ 257 at 4; Total Health Res., B-403209, Oct. 4, 2010, 2010 CPD ¶ 226 at 3. The adequacy of the agency’s justification is ascertained through examining whether the agency’s explanation is reasonable; that is, whether the explanation can withstand logical scrutiny. See SMARTnet, Inc., B-400651.2, Jan. 27, 2009, 2009 CPD ¶ 34 at 7; Chadwick-Helmuth Co., Inc., B-279621.2, Aug. 17, 1998, 98‑2 CPD ¶ 44 at 3. A protester’s disagreement with the agency’s judgment concerning the agency’s needs and how to accommodate them does not show that the agency’s judgment is unreasonable. Dynamic Access Sys., B-295356, Feb. 8, 2005, 2005 CPD ¶ 34 at 4. Further, where, as here, a requirement relates to national defense or human safety, an agency has the discretion to define solicitation requirements to achieve not just reasonable results, but the highest possible reliability and/or effectiveness. AAR Airlift Group, Inc., B-409770, July 29, 2014, 2014 CPD ¶ 231 at 3; Vertol Sys. Co., Inc., B-293644.6 et al., July 29, 2004, 2004 CPD ¶ 146 at 3; Caswell Int’l Corp., B-278103, Dec. 29, 1997, 98-1 CPD ¶ 6 at 2.

Here, we find that the record supports the reasonableness of the agency’s position that the challenged specifications are necessary to meet the agency’s needs. The first specification challenged by Alliant concerns the seeker power switch requirement, which provides as follows:

In addition, a switch is provided in the Control Section (CS) to allow it to control the application of power to the Guidance Section (GS). This switch allows the missile to conduct alignment and remain in continuous communication with the aircraft while limiting the GS on-time in the presence of 3-phase power to the missile during longer missions.

AR, Tab 33-1, AS-5186 Rev C.

Based on the record before us, we find the agency’s explanation of the need for the seeker power switch to be compelling. In this regard, the agency reports that the capability to remove seeker power without removing power to the control section was generated by operational considerations. According to the agency, powering down the HARM missile can serve as an additional safety measure before coming into proximity with friendly aircraft, such as during refueling, [Redacted]. In addition, the agency reports that crews may also want to reduce the power-on time for the seeker to reduce wear and tear on it. [Redacted]. Declaration of Air Force Lead Engineer for HARM HCSM at 6-8; COS at 20‑21; Agency Legal Memorandum at 31-32.

Although Alliant suggests that other factors render the seeker power switch unnecessary to ensure safety, we see no basis to object to the agency’s desire for the highest degree of safety when the health and safety of the pilots and the success of military missions are at stake. Further, while Alliant questions the agency position that powering down the seeker when not needed could save wear and tear on the seeker, arguing instead that more frequently (“Repeatedly”) powering up the seeker is more likely to result in additional wear and tear, Alliant Comments, Sept. 3, 2014, at 41, its unsupported claim does not show that the preference for a seeker power switch on the part of those charged with maintaining the missile in the theaters of operations is unreasonable. Finally, we note that Alliant has already demonstrated compliance with this requirement during its limited production contract, incorporating it into its proposed HCSM design, such that it is unclear how the requirement can now result in any material competitive prejudice to Alliant. Declaration of Air Force Lead Engineer for HARM HCSM at 7. In sum, Alliant has furnished no basis to question the seeker power switch requirement.

Nor has Alliant furnished any basis to question the current requirement for reprogrammable Digital Terrain Elevation Data (DTED), a requirement that the protester also challenges. In this regard, [Redacted]. Id.

Alliant asserts that [Redacted]. As explained by the agency, however, [Redacted]. Thus, we find that the record clearly supports the agency position that [Redacted]. In these circumstances, we find no basis to question the agency’s position that [Redacted].

2. Unequal Access to Information

Alliant further argues that Raytheon had an unequal access to information OCI. Specifically, Alliant asserts that only Raytheon had access to information regarding the interface between the HARM HCSM and the Air Force’s F-16 aircraft as a result of Raytheon’s work under its Aircraft Launcher Interface Computer (ALIC) contract (for the launcher that Raytheon builds to connect the HARM missile to the F-16 aircraft). The ALIC, originally developed by a portion of Texas Instruments that is now part of Raytheon, acts as an interface between the computers in the HARM and the computers in the F-16 C/J aircraft. Texas Instruments and Raytheon developed the ALIC software and documentation. The document sought by Alliant, the HARM ALIC F-16 Interface Control Document (ICD), defines the interface between the ALIC computer software and the computer software for the F-16 C/J aircraft. Agency Legal Memorandum at 34, 36; see AR, Tab 35-01, HARM ALIC F‑16 ICD.

The software on the computers in the F-16 aircraft is the Operational Flight Program (OFP). The OFP software and related documentation are covered under a special license agreement between Lockheed Martin, the current manufacturer of the F-16, and the government. In this regard, the agency determined that content in the HARM ALIC F-16 ICD is likewise subject to this special license agreement between Lockheed Martin and the government. COS at 22; Supplemental Agency Legal Memorandum at 15. Under the terms of the special license agreement, the government has government purpose rights to the OFP and related documentation, except that the government may not release the OFP documents to outside parties for certain prohibited purposes related to the F-16, including weapons integration. AR, Tab 35-02, OFP Document Data Statement, Mar. 1, 2007, at I; Agency Legal Memorandum at 36-37; Second Supplemental Agency Legal Memorandum at 6. Since the F-16 special license agreement prohibited the government from disclosing documentation concerning the F-16 OFP software to outside parties such as Alliant for purposes of weapons integration, the agency’s HCSM program office contacted Lockheed Martin through the Air Force F-16 program office to ask for permission to release various documents which describe the interface between the ALIC software and the F-16 aircraft software. Lockheed Martin, however, refused to grant permission for the requested document release by the government. See AR, Tab 35-06, Agency E‑Mail, Sept. 2009; COS at 22; Agency Legal Memorandum at 37. The Air Force then suggested that Alliant obtain access to any desired documents using an associate contractor agreement directly with Lockheed Martin, similar to what the government understood previously existed between Alliant and Lockheed Martin during Alliant’s prior HCSM efforts. AR, Tab 35-07, Agency E‑Mail, Sept. 25, 2009; see Agency Legal Memorandum at 37; COS at 22. Alliant states that it was unable to obtain the document from Lockheed Martin, Alliant Comments at Sept. 3, 2014, at 46, and claims that this indicates that Raytheon has an unequal access to information OCI.

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. FAR §§ 9.505(b), 9.505-4; The GEO Group, Inc., B-405012, July 26, 2011, 2011 CPD ¶ 153 at 5. The concern regarding this category of OCI is that a firm may gain a competitive advantage based on its possession of proprietary information furnished by the government or source 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. See FAR § 9.505(b); Phoenix Management, Inc., B‑406142.3, May 17, 2012, 2013 CPD ¶ 154 at 3 n.6; The GEO Group, Inc., supra, at 6.

Here, we find reasonable the agency’s conclusion that the above facts do not demonstrate the existence of an OCI resulting from Raytheon’s unequal access to information. Again, the FAR requires that contracting officials avoid, neutralize, or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage. FAR §§ 9.504(a), 9.505. The information in question here is not Alliant proprietary information, but instead information arising out of development work by other companies, including Raytheon. It is well settled, however, that while an offeror may possess unique information, advantages, and capabilities due to its prior experience under a government contract, including performance as the incumbent contractor, the government is not required to equalize competition to compensate for such an advantage, unless there is evidence of preferential treatment or other improper action. See FAR § 9.505‑2(a)(3); Onsite Health Inc., B-408032, B-408032.2, May 30, 2013, 2013 CPD ¶ 138 at 9. The existence of an advantage, in and of itself, does not constitute preferential treatment by the agency, nor is such a normally occurring advantage necessarily unfair. Id. Indeed, the FAR specifically states that, while a “development contractor,” such as Raytheon, “has a competitive advantage, it is an unavoidable one that is not considered unfair; hence no prohibition should be imposed.” FAR § 9.505‑2(a)(3). Finally, we note that the Air Force requested permission to release interface information, albeit unsuccessfully, and Alliant has made no showing that the agency withheld from Alliant necessary information that it had the right to release. In these circumstances, we find that Alliant’s protest furnishes no basis to question the agency’s conclusion that Raytheon’s participation in the competition would not give rise to an OCI.  (Alliant Techsystems, Inc., B-410036: Oct 14, 2014)  (pdf)

Q2 alleges that the agency failed to evaluate whether C2C has an impaired objectivity organizational conflict of interest because its parent organization, TMF, has, or will have, “significant partnering relationships” with providers under its [Quality Innovation Network-Quality Improvement Organizations] QIN‑QIO task order in some of the same coverage areas where C2C would be conducting reconsiderations as a QIC (i.e., Arkansas, Oklahoma, Texas, and Puerto Rico). Protest at 3-4; see supra n.4 (Part B South QIC jurisdiction). The protester cites in this respect, various requirements under TMF’s previous QIO contract, and its recent QIN-QIO task orders, which require TMF to solicit and recruit healthcare providers to participate in various quality of care improvement initiatives. Protester’s Comments at 14; Protester’s Supp. Comments at 3-5; citing, inter alia, Agency Report (AR), Tab 12.A, TMF IDIQ Contract No. HHSM-500-2014-QIN005I, §§ C.5‑C.6, Work Statement, Contractor Performance Measurement, & Comprehensive Strategic Plan, at 32-38; see Tabs 12.B‑F, TMF Task Orders. According to Q2, TMF’s partnering relationships provide a financial incentive for C2C to rule more favorably on claim reconsiderations from those providers, because TMF will be evaluated on the number of providers that TMF is able to recruit and maintain in the QIN-QIO program. See Protester’s Comments at 14; Protester’s Supp. Comments at 5, 8.

[Centers for Medicare and Medicaid Services] CMS argues that the contracting officer thoroughly examined the protester’s OCI allegations, properly evaluated C2C’s conflict of interest disclosures consistent with statutory and RFP requirements, and reasonably concluded that no conflict exists. Supp. AR at 3‑5. The agency emphasizes that TMF will not be making initial benefits determinations under its QIN-QIO contract, and disputes that TMF’s performance of quality improvement initiatives with Medicare providers creates an impaired objectivity OCI for TMF’s subsidiary, C2C. AR at 10‑11. CMS maintains in this regard that Q2 has not identified any potential or actual OCI, or demonstrated that C2C’s parent/subsidiary affiliation with TMF would violate the statutory independence provisions. See id.

The FAR requires that contracting officers avoid, neutralize, or mitigate potential significant OCIs so as to prevent an unfair competitive advantage or the existence of conflicting roles that might bias a contractor’s judgment or impair its objectivity. FAR §§ 9.504(a), 9.505. Certain procurements may be particularly sensitive to conflicts of interests, and, as here, an agency’s statutes and regulations may impose additional, often more stringent conflict of interest limitations in addition to the FAR. See, e.g., Radiation Safety Servs., Inc., B-237138, Jan. 16, 1990, 90-1 CPD ¶ 56 at 3 (The Nuclear Regulatory Commission (NRC), because of its functions as both licensor and regulator of nuclear devices, is particularly sensitive to conflicts of interests, and NRC regulations implementing the Atomic Energy Act of 1954, as amended, 42 U.S.C. § 2210a, impose a more precise standard than the FAR). The FAR recognizes that conflicts may arise in factual situations not expressly described in the relevant FAR sections, and advises contracting officers to examine each situation individually and to exercise “common sense, good judgment, and sound discretion” in assessing whether a significant potential conflict exists and in developing an appropriate way to resolve it. FAR § 9.505.

The identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Guident Techs., Inc., B-405112.3, June 4, 2012, 2012 CPD ¶ 166 at 7; see Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009). The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting agency. Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 11. OCI determinations must be based on “hard facts” that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. See Turner Constr. Co., Inc. v. United States, 645 F.3d 1377, 1387 (Fed. Cir. 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010). Our Office reviews a contracting officer’s consideration of an OCI for reasonableness and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. See TeleCommunication Sys. Inc., B‑404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4; PCCP Constructors, JV; Bechtel Infrastructure Corp., B-405036 et al., Aug. 4, 2011, 2011 CPD ¶ 156 at 17.

As relevant here, the protester’s arguments concern an “impaired objectivity” OCI, which arises where a firm’s ability to render impartial advice to the government will be undermined by the firm’s competing interests, such as a relationship to the service being evaluated. FAR § 9.505-4; Pragmatics Inc., B-407320.2, B‑407320.3, Mar. 26, 2013, 2013 CPD ¶ 83 at 3; PURVIS Sys., Inc., B‑293807.3, B-293807.4, Aug. 16, 2004, 2004 CPD ¶ 177 at 7. In this regard, the protester alleges that C2C has significant professional relationships with healthcare professionals or institutions because of C2C’s parent organization’s (TMF’s) quality improvement initiatives with those healthcare professionals or institutions. As we describe above, Q2 contends that TMF’s significant professional relationships could present an improper financial incentive for its subsidiary, C2C, to rule more favorably on claim reconsiderations from such providers, because TMF will be evaluated on the number of providers that TMF is able to recruit and maintain in the QIN-QIO program. That is, such significant professional relationships could, the protester suggests, impair C2C’s ability to impartially reconsider, or adjudicate, claim appeals in those states where TMF provides QIN‑QIO services.

The protester’s impaired objectivity allegations also concern statutory independence requirements of QICs. In this respect, the statute requires that a QIC be “independent of any organization under contract with the Secretary that makes initial determinations,” and meet the “requirements established by the Secretary consistent with paragraph [c](3),” which provide in relevant part:

[(c)(3)](K) Independence requirements

(i) In general …, [a QIC] shall not conduct any activities in a case unless the entity--

(I) is not a related party (as defined in subsection (g)(5) of this section);

(II) does not have a material familial, financial, or professional relationship with such a party in relation to such case; and

(III) does not otherwise have a conflict of interest with such a party.

42 U.S.C. § 1395ff(c)(3)(K). We find, based on our review of the record, including all of the arguments raised by the parties, that the contracting officer meaningfully considered whether C2C had a impaired objectivity OCI, consistent with the terms of the RFP and statute (42 U.S.C. § 1395ff(c)), and reasonably concluded that no conflict existed.

As described above, the solicitation incorporated the statutory definition of a QIC, and advised offerors that CMS would review their disclosure statement and conflict of interest certificate to evaluate whether the offeror demonstrated that: it is free from any apparent or perceived conflict of interest; it has sufficient independence between itself and any of its related entities that make initial determinations; and if the entities are independent, whether the resources of one entity affect the contract performance of the other. RFP, § H.2, at 9.

The contracting officer states that, after receiving Q2’s protest, he investigated the protester’s OCI allegations by consulting with CMS contracting officials responsible for the “legacy” (e.g., TMF’s expired) QIO contract and with the contracting officials responsible for the recent QIN‑QIO and [Beneficiary and Family Centered Care] BFCC-QIO competitions. CO’s Statement at 9. He also states that he met with CMS’s contractor compliance officer to discuss the recent restructuring of the QIO program. Id. Moreover, the contracting officer states that the contracting officials discussed the scopes of work for each of these types of contracts and the extent to which they could result in an OCI for a QIC contractor. See id. The contracting officer further states that he reviewed the QIC independence statute before reaching his conclusion.

Based upon this information and investigation, the contracting officer states that he concluded that: C2C is free from any apparent or perceived conflict of interest; C2C has sufficient independence from any entities that make initial determinations; and TMF’s QIN-QIO partnerships would not affect C2C’s performance. Supp. CO’s Statement at 2-3. In reaching the conclusion that no conflict exists, the contracting officer specifically found that C2C is independent of any organization under contract with CMS that makes initial determinations in Part B South QIC jurisdiction. CO’s Statement at 11-12. In this regard, the contracting officer noted that, as explained in C2C’s proposal, TMF’s legacy QIO contract, under which it had made initial determinations, expired on July 31. Id. at 9. Moreover, the contracting officer found that C2C’s parent organization, TMF, would not be conducting initial determinations under its new QIN-QIO contract and task orders. Id. That is, C2C is independent of any MAC or BFCC that makes initial determinations in Arkansas, Oklahoma, Texas, and Puerto Rico. The contracting officer also found--as required by the solicitation--satisfactory indicia of independence between C2C and TMF (the parent/subsidiary). Supp. CO’s Statement at 4. He concluded that they operate as different companies based on their separate boards of directors and senior management, as well as geographically distinct corporate operations and separate computer and information technology (IT) systems. Id.

With regard to the protester’s allegation of significant (material) financial or professional relationships, the contracting officer found no direct financial relationship between healthcare providers and TMF. Id. at 3. The contracting officer observed that providers’ claims are paid by the government through MACs, and C2C is paid for its reconsideration services directly by the government, regardless of the outcome of the claim. Id. at 4. He also considered whether C2C and TMF would have any financial motivation to rule favorably on reconsiderations, and concluded that C2C would be jeopardizing much more financially than TMF would stand to gain, when comparing the relative value and period of performance for the QIC task orders and QIN-QIO. Id. at 5. The contracting officer also concluded that the relationship between TMF and providers was too attenuated with regard to C2C to impair the objectivity of C2C because multiple claim reviews occur before C2C would reconsider claims from any of the providers affected by the initial claim determination and redetermination. Id. at 3-4. That is, C2C provides the third claim review (or second appeal). The contracting officer also noted that appeal files, as submitted to C2C, contain no information on whether the provider-claimant had any involvement with TMF’s quality improvement initiatives. Id.

We see no basis on which to conclude that the contracting officer’s conclusions here were unreasonable. The contracting officer concluded that C2C is independent of any organization under contract with CMS that makes initial determinations, that the relationship between C2C and the provider relationships of its parent company were too remote to raise concerns, and that there was no direct financial benefit to either the parent or subsidiary organizations. Our Office has recognized that an agency may reasonably find that certain relationships between companies or corporate affiliates are too remote or that the possibility of a conflict is too unlikely or speculative to conclude that there is a disqualifying OCI. See, e.g., AdvanceMed Corp.; TrustSolutions, LLC, B-404910.4 et al., Jan. 17, 2012, 2012 CPD ¶ 25, at 10‑12 (protest that awardee would have impaired objectivity OCI providing Zone Program Integrity Contractor (ZPIC) services because it would audit preferred providers and entities with whom its parent organization holds contracts is denied where CO reasonably concluded that possibility of a conflict was too remote and too far removed). Accordingly, we find no basis to sustain the protester’s contention that the contracting officer abused his discretion in concluding that no conflict exists in this situation.  (Q2 Administrators, LLC, B-410028: Oct 14, 2014)  (pdf)

LSI alleges that IronPlanet gained an unfair competitive advantage by retaining former DLA staff.] See Protest at 12-15. The protester asserts that DLA’s former operations director, for example, had access to LSI proprietary information because he “directly” supervised LSI’s performance of the CV3 sales contract that, according to LSI, reflects “precisely” the same requirement as the solicitation here. Id. at 18-22. LSI cites the various briefing materials, correspondence, and reports discussed above (supra at 3-4) as evidence that he was aware of LSI’s technical approach, including LSI’s development of a web-based “quarantine tool” and procedures for inventory accounting, managing restricted items, and obtaining end-use certificates. Id.; Protester’s Comments & 2nd Supp. Protest at 30-37. The protester also maintains that these documents show he had inside knowledge of LSI’s pricing strategies, proposal assumptions, and resources, including workload and staffing data, and that he divulged these details to IronPlanet. Protest at 21-22; Protester’s Supp. Comments at 26-28. In this regard, LSI contends that the former operations director was aware of the firm’s 2009 request for a price adjustment in the CV3 contract that LSI argues provided him with confidential pricing information. LSI also contends that DLA’s OCI investigation was inadequate, because it did not consider the former operations director’s involvement with IronPlanet’s proposal preparation, or the scope of his responsibilities with the firm. Protest at 17-18, 22. The protester also complains that the investigation of the other three former DLA employees lacks any contemporaneous documentation, but relied solely on verbal advice, even though the sales contracting officer explicitly requested a legal ruling. Protester’s Comments & 2nd Supp. Protest at 52-54; Protester’s 2nd Supp. Comments at 33-34.

DLA responds that LSI overstates the complexity of the CV3 requirements, and disputes the protester’s apparent belief that inventorying and selling surplus property requires some unique, proprietary technical approach. AR at 29, 31. The agency maintains that LSI was not required to provide, and did not provide, to DLA under the CV3 contract any proprietary software in order to perform the CV3 sales contract. Rather, the CV3 contract, like the CV4 requirements, simply requires that the contractor have or develop some web-based application (called the Quarantine Tool), to allow the agency a 5-day preview of property that the contractor will offer for sale. DLA states that the government did not obtain any software coding or proprietary information concerning this tool, or any other intellectual property from LSI. See id. at 12, 32; Supp. AR at 34. DLA also states that the solicitation here has significantly changed the pricing methodology and the type of surplus property to be sold, compared to the CV3 sales contract. Supp. AR at 33-36. The agency also points out that neither the CV3 contract, the CV4 contract, nor the IFB here require the contractor or offeror to submit cost or pricing data. See id. Moreover, the agency maintains that the former operations director had no involvement in negotiating the 2009 price adjustment, and regardless, any information that he may have learned in that regard is outdated and useless, because the CV3 and the CV4 are fixed-price contracts and the competition here was conducted using sealed bidding and a live auction. Id. Furthermore, DLA states that LSI’s CV3 contract pricing, including sales volumes and types of property sold, are publicly available data and based on standard industry mark-ups. See id. at 33-34.

As an initial matter, we disagree with DLA that the protester’s OCI challenges are untimely. The agency maintains that LSI knew, or should have known, that IronPlanet intended to compete for the CV4 contract, based on the firms’ attendance at pre-proposal conferences, and that the protester was on notice when it received DLA’s February 3 letter that IronPlanet would not be excluded from the competition. AR at 16-18; 2nd Request for Dismissal. DLA argues that LSI was thus required to file its OCI protest by the February 21, 2014, closing date for receipt of proposals, rather than wait to see if IronPlanet would be selected for award. AR at 18, citing, inter alia, Honeywell Tech. Solutions, Inc., B-400771, B-400771.2, Jan. 27, 2009, 2009 CPD ¶ 49 at 6-7 and International Sci. & Tech. Inst., Inc., B-259648, Jan. 12, 1995, 95-1 CPD ¶ 16 at 3. Unlike the Honeywell and International Science cases cited by DLA, however, the RFTP here, including its questions and answers, did not advise offerors that the agency had considered and resolved OCI concerns regarding a particular offeror, such that the protester was required to protest the terms of the solicitation in that regard. Accordingly, as we have previously stated, a protester is generally not required to protest that another firm has an impermissible OCI until after that firm has been selected for award. REEP, Inc., B-290688, Sept. 20, 2002, 2002 CPD ¶ 158 at 1-2; see, e.g., North Wind, Inc., B-404880.7, Nov. 5, 2012, 2012 CPD ¶ 314 (finding pre-award OCI protest timely where solicitation advised offerors that agency was not aware of any unmitigated OCIs).

With regard to the substance of LSI’s OCI claims, the responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting agency. Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 12. We review the reasonableness of a contracting officer’s OCI investigation and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. See TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4; PCCP Constructors, JV; Bechtel Infrastructure Corp., B-405036 et al., Aug. 4, 2011, 2011 CPD ¶ 156 at 17. The identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Guident Techs., Inc., B-405112.3, June 4, 2012, 2012 CPD ¶ 166 at 7; see Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009). A protester must identify hard facts that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. TeleCommunication Sys. Inc., supra, at 3; PCCP Constructors, JV; Bechtel Infrastructure Corp., supra, at 17.

Here, the record does not support the protester’s OCI challenges, which, though numerous, provide no basis to question the reasonableness of the agency’s OCI investigation. The record shows that DLA gave meaningful consideration to the protester’s OCI allegations, and reasonably concluded that IronPlanet’s use of former agency employees did not give the firm an unfair competitive advantage. As described above, DLA performed a detailed investigation of LSI’s allegations, regularly communicating with LSI’s counsel and requesting additional information from the protester, from September 2013, when LSI first brought its OCI concerns to the agency and requested an investigation, until April 2014, when LSI filed the instant protest. See, e.g., AR, Tabs A-4-1-20, DLA-LSI emails and correspondence regarding investigation request. DLA states--and the protester does not dispute--that the agency reviewed hundreds of documents, including those provided by LSI, the CV contract files, and any documents that were available to the former operations director. See AR, Tab A-4-2, DLA Letter to LSI, Feb. 3, 2014, at 2. The agency also states that it interviewed DLA personnel who attended the vendor conference or who subsequently came in contact with the former operations director, and that none reported any conversations with him where he attempted to discuss the solicitation. AR, Tab A-4-15, DLA Response to LSI Request for Investigation, Oct. 9, 2013, at 2. Moreover, the agency queried the former operations director regarding the facts and circumstances of his involvement with the current solicitation. AR, Tab A-4-2, DLA Feb. 3, 2014, Letter to LSI, at 2.

Although LSI disputes the agency’s OCI investigation and its documentation, the protester fails to identify any hard facts showing that IronPlanet had an actual or potential OCI that should have excluded it from the competition. Few, if any, of the documents provided by the protester contain information that could have given IronPlanet a competitive advantage in this procurement. What little information in those documents might, at some point, arguably, have been considered competitively useful or proprietary information, is either outdated or publicly available, as the agency points outs. For example, the protester cites, as evidence of the former operations director’s knowledge of LSI’s technical approach, briefing slides discussing, among other things, the firm’s number of licensed fork-lift drivers in February 2011 and the number of “hits” to the firm’s website from January to November 2010. AR, Tab A-4-14, LSI Reply to DLA, Oct. 24, 2013, exh. B, Feb. 8, 2011 LSI/DOD Surplus Briefing, at 10-11, 20. There is no explanation in the record for how such information could give a competitor a competitive advantage for the sale of surplus property, nor does such information rise to the level of hard facts that indicate an actual or potential OCI.

To the extent that the documents provided by the protester may include any pricing information, the protester does not rebut the agency’s argument that LSI’s CV3 contract pricing, including sales volumes and types of property sold, are publicly available data and based on standard industry mark-ups. Similarly, although LSI contends that the former operations director may have had access to its 2009 request for a price adjustment in its CV3 contract, the protester does not explain how access to information in this request would provide competitively useful information, nor has LSI rebutted the agency’s position that the price adjustment request is based upon standard industry pricing information. Moreover, LSI fails to address DLA’s assertion that the current solicitation significantly altered the pricing methodology for the CV4 contract, such that pricing information from LSI’s CV3 contract is not competitively useful. Compare IFB at 11 (bid as percentage of gross revenue that contractor will share with government when property is resold) with CV3 Contract/IFB No. 08-0001-0001, at 10 (bid as percentage of acquisition value of property delivered; contractor’s upfront purchase price for property determined by multiplying bid percentage by item’s acquisition value).

In this respect, despite access to IronPlanet’s proposal under the protective order, LSI has not identified any aspect of IronPlanet’s proposal that reflects the use or reliance on proprietary LSI information or agency source selection sensitive information. Rather, as the agency points out, most, if not all, of the protester’s allegations regarding an OCI or violations of post-employment are speculative at best. Moreover, contrary to the protester’s assertion, nothing in the record suggests that DLA’s former operations director directly supervised LSI’s performance. See AR, Tab A-3-24, OCI Waiver, Mem. for the Record, at 2-3 (discussing the three levels of staff between the former operations director and those who did, in fact, directly supervise performance of the CV3 contract). Furthermore, nothing in the record suggests that the former operations director was, as the protester wrongly asserts, “directly and substantially involved” in the CV4 procurement, see Protest at 23, 25. Rather, the record shows that he retired in February 2011, and LSI does not persuasively dispute that planning of the successor CV4 solicitation began in 2013 with the issuance of an April 10, request for information seeking disposal concepts for usable and scrap excess property. AR at 33; 2nd Supp. AR at 2. The protester also does not dispute that the agency began drafting the solicitation in June 2013, and as noted above, the RFTP at issue here was not issued until January of 2014. AR, Tab A-3-24, OCI Waiver, Mem. for the Record, at 2.

To the extent that LSI alleges that the former operations director violated federal post-employment restrictions, the interpretation and enforcement of post-employment conflict of interest restrictions are primarily matters for the procuring agency and the Department of Justice, not our Office. See Medical Dev. Int’l, B-281484.2, Mar. 29, 1999, 99-1 CPD ¶ 68 at 7-8; Physician Corp. of Am., B-270698 et al., Apr. 10, 1996, 96-1 CPD ¶ 198 at 5 n.1. We will, however, within the confines of a bid protest alleging an OCI, determine whether any action of the former government employee may have resulted in an unfair competitive advantage for, or on behalf of, the awardee during the award selection process. See Creative Mgmt. Tech., Inc., B-266299, Feb. 9, 1996, 96-1 CPD ¶ 61 at 7. Specifically, we review whether an offeror may have prepared its proposal with knowledge of inside information sufficient to establish a strong likelihood that the offeror gained an unfair competitive advantage in the procurement. PRC, Inc., B-274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD ¶ 115 at 19-20. Our review includes consideration of whether the former government employee had access to competitively useful information, as well as whether the individual’s activities with the firm likely resulted in disclosure of such information. OK Produce; Coast Citrus Distrib., B-299058, B-299058.2, Feb. 2, 2007, 2007 CPD ¶ 31 at 9. An individual’s familiarity with the type of work required under a solicitation from prior government employment is not, by itself, evidence of an unfair competitive advantage. Id.

As described above, we find that DLA reasonably investigated the protester’s OCI allegations, and reasonably concluded that IronPlanet did not obtain an unfair competitive advantage from its hiring of former DLA employees.  (Liquidity Services, Inc., B-409718, B-409718.2, B-409718.3, B-409718.4: Jul 23, 2014)  (pdf)

Organizational Conflict of Interest

Finally, Harmonia argues that ArdentMC’s role as the incumbent contractor developing the SSA’s software created an unfair competitive advantage due to an organizational conflict of interest. Protest at 4; Protester’s Comments at 3-4. As explained below, we conclude that Harmonia identified little support for its allegations of an OCI; furthermore, the SSA has considered these issues and, in our view, reasonably determined that any risk of an OCI has been mitigated.

The SSA first sought dismissal of this ground of protest, arguing that the protest was premature because the agency had not yet expressed a view about whether ArdentMC was eligible for award. Agency Dismissal Request at 1. In general, a protest arguing that a competitor has an impermissible organizational conflict of interest is premature if filed before award. REEP, Inc., B-290688, Sept. 20, 2002, 2002 CPD ¶ 158 at 2. However, where an agency has stated in a solicitation that a firm is eligible for award, any objection to that determination must be filed as a challenge of the terms of the solicitation, before the closing time for receipt of proposals. Id.

Here, a potential offeror asked whether “the incumbent contractor (Ardent Management Consulting) is eligible to submit” a proposal. The SSA’s answer stated that “[a]ny responsible HUB Zone small business may submit a proposal.” RFP amend. 5, Q&A attach., at 9 (Answer to Question 37). The agency’s response to a specific question about ArdentMC’s eligibility placed offerors on notice that ArdentMC was allowed to compete. Therefore, under our decision in North Wind, Inc., B-404880.7, Nov. 5, 2012, 2012 CPD ¶ 314 at 4, Harmonia was required to file this protest before the closing date for submission of proposals. Harmonia did so and, accordingly, its protest challenge to the eligibility of ArdentMC is not premature. We turn to the merits of this issue.

The responsibility for determining whether an OCI exists rests with the procuring agency. Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 12. In making the determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, giving consideration to the nature of the contracts involved. FAR §§ 9.504, 9.505. OCI determinations must be based on hard facts that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Diversified Collection Servs., Inc., B-406958.3, B-406958.4, Jan. 8, 2013, 2013 CPD ¶ 23 at 6. The identification of conflicts of interest is a fact-specific inquiry that requires the exercise of considerable discretion. Id. Our Office reviews a contracting officer’s consideration of an OCI for reasonableness and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. Id.

Harmonia’s protest arguments lack the hard facts required for our Office to sustain the protest on the basis that ArdentMC should be excluded from the competition. Although cast as an OCI argument, Harmonia generally only contended that ArdentMC was the incumbent contractor, and thus, that ArdentMC had a competitive advantage in the competition here. Harmonia did not provide any evidence that ArdentMC prepared the RFP or set its ground rules, had unequal access to non-public information of the nature that gives rise to an OCI, or otherwise had impaired objectivity in its performance of this contract. Its arguments are steeped in suspicion, which is insufficient to demonstrate the existence of an OCI.

With regard to ArdentMC’s status as an incumbent contractor, we have long held that an offeror may possess unique information, advantages, and capabilities due to its prior experience under a government contract--either as an incumbent contractor or otherwise; further, the government is not necessarily required to equalize competition to compensate for such an advantage, unless there is evidence of preferential treatment or other improper action (which Harmonia did not show here). CACI, Inc.--Fed., B-403064.2, Jan. 28, 2011, 2011 CPD ¶ 31 at 10; MASAI Tech. Corp., B-298880.3, B-298880.4, Sept. 10, 2007, 2007 CPD ¶ 179 at 8. Thus, the existence of an advantage in and of itself does not constitute preferential treatment by the agency, nor is such a normally occurring advantage necessarily unfair. Council for Adult & Experiential Learning, B-299798.2, Aug. 28, 2007, 2007 CPD ¶ 151 at 6; Government Bus. Servs. Group, B-287052 et al., Mar. 27, 2001, 2001 CPD ¶ 58 at 10.

In any event, the agency’s written acquisition plan documents the agency’s resolution of OCI concerns with respect to ArdentMC:

Organizational Risk: One potential risk is that the incumbent, Ardent, may have a potentially unfair competitive advantage pursuant to [FAR §] 9.505. Under its previous contract with the agency, Ardent created and implemented the [the software] application. As part of that implementation, it gained knowledge of the agency’s system architecture; advanced knowledge of the issues with the present [software] application; and has access to the [software] source code. Other firms would likely not have this information available.

As part of this risk, and pursuant to FAR Section 9.506, we will take strides to mitigate a potential unfair advantage by providing as much information within the solicitation as possible balancing public disclosure of information with security restrictions (see Security Risk below).[8] We anticipate providing system details for the agency’s GIS application, including hardware and software configurations. While we will not provide the source code, we plan to provide details on the source code, including the number of functions and lines of source code. Further, we anticipate providing screenshots of the [software] application to demonstrate functionality issues where applicable. Lastly, we anticipate providing the [software] source code to the winning Offeror.

We believe that by providing this information, we can mitigate a possible unfair competitive advantage and ensure that all potential Offeror’s have all necessary information to compete. We will also incorporate a solicitation provision pursuant to FAR 9.507-1 that will request Offerors’ input on whether a potential conflict of interest exists and how the Offeror will mitigate that risk. We do not feel that a contract clause limiting the Offeror’s involvement in future contracts is appropriate.

AR, Tab A, Written Acquisition Plan, at 5.

In our view, the agency’s determination to permit ArdentMC to compete for this contract--together with the absence of evidence of any preferential treatment or unfair action by the agency--reflects the agency’s conclusion that ArdemtMC has only the normally-occurring advantage that any incumbent may possess. See CACI, Inc.--Fed., supra; Council for Adult & Experiential Learning, supra. Since the SSA has considered the possibility of an OCI, has determined that any OCI has been mitigated, and since Harmonia’s arguments to the contrary lacked hard facts, we find no reason to sustain the protest on the basis of either unequal access to information or biased ground rules OCIs. Accordingly, we deny this ground of protest.  (Harmonia Holdings, LLC, B-407186.2, B-407186.3, Mar 5, 2013)  (pdf)

Disparate Treatment Regarding OCI

Wyle protests that the Navy treated offerors disparately regarding a subcontractor’s OCI. Specifically, the protester argues the Navy permitted Imagine One to propose J.F. Taylor, Inc., as a subcontractor here, but the Navy had previously informed Wyle that J.F. Taylor had an impermissible OCI which precluded J.F. Taylor’s participation. As detailed below, the record does not show that the Navy treated the Wyle and Imagine One disparately.

The relevant facts are as follows: In 2010, in response to other task order solicitations, Wyle proposed J.F. Taylor as one of its subcontractors. During the evaluation of those proposals, the Navy raised an OCI concern: one of J.F. Taylor’s proposed employees, who had been performing technical and advisory assistance services for the Navy, had been privy to the IGCE and other solicitation documents and had likely played a significant role in the creation of the IGCE. AR, Tab 16, Navy Letter to Wyle, Sept. 23, 2010. The contracting officer subsequently determined that J.F. Taylor’s participation was prohibited by the OCI clause in the task order under which the employee had performed (which had a 3-year “cooling off” period). AR, Tab 19, Navy Letter to Wyle, Oct. 26, 2010. In response, Wyle elected to replace all J.F. Taylor personnel with Wyle personnel in its proposals. AR, Tab 20, Wyle Letter to Navy, Nov. 16, 2010.

In September 2011, prior to the issuance of the solicitation here, J.F. Taylor inquired of the contracting officer whether it would be able to participate in the subject procurement; it was J.F. Taylor’s understanding that the OCI involving its employee affected only its ability to participate in the earlier solicitations. AR, Tab 21, J.F. Taylor Letter to Navy, Sept. 20, 2011. The ensuing exchange led the contracting officer to conclude that the previous OCI determination did not preclude J.F. Taylor’s participation as either a prime or subcontractor in the upcoming subject procurement, although an OCI mitigation plan would be required. AR, Tab 24, Navy Memorandum Regarding J.F. Taylor OCI Determination, Feb. 13, 2012. The contracting officer then informed J.F. Taylor of the same. AR, Tab 25, Navy Letter to J.F. Taylor, Feb. 13, 2012.

The RFP here was issued on March 1, 2012, and Imagine One proposed J.F. Taylor as one of its subcontractors. J.F. Taylor included an OCI mitigation plan with its subcontractor proposal; the Navy reviewed the plan and concluded that Imagine One’s proposed use of J.F. Taylor did not result in an impermissible OCI. AR, Tab 28, Navy Memorandum Regarding J.F. Taylor OCI Determination, July 11, 2012.

Wyle does not dispute the Navy’s determination that neither Imagine One, nor its proposed subcontractor J.F. Taylor, has an impermissible OCI in the procurement here. Rather, the protester argues that Navy treated offerors disparately: Wyle operated under the assumption that it could not propose J.F. Taylor as a teammate under the subject solicitation, while in fact the Navy allowed Imagine One to propose J.F. Taylor as a subcontractor. Protest, Dec. 17, 2012, at 16. The Navy argues that it treated both firms equally, and that its determination that J.F. Taylor was precluded from competing on previous occasions has no relevance to the present procurement.

We find no merit in Wyle’s assertion of disparate treatment. In 2010, the Navy determined that J.F. Taylor’s OCI prohibited its participation in other procurements, regardless of who proposed the company. In 2012, the Navy determined that J.F. Taylor’s previous OCI did not preclude its participation in the subject procurement, regardless of who proposed the company. The fact that Wyle mistakenly assumed that it could not propose J.F. Taylor as a teammate under the subject solicitation does not constitute disparate treatment on the part of the agency.  (Wyle Laboratories, Inc., B-407784, Feb 19, 2013)  (pdf)

After the record was fully developed, the Government Accountability Office (GAO) attorney assigned to the protest conducted an outcome prediction alternative dispute resolution (ADR) conference on January 18, 2013. See Bid Protest Regulations, 4 C.F.R. § 21.10(e) (2012). During this conference call, the GAO attorney indicated that our Office would likely sustain the protest because, despite the Marine Corps’ investigation, the record showed that the agency failed to meaningfully consider whether Jacobs had unequal access to information and impaired objectivity [organizational conflict of interests] OCIs. On January 22, the agency informed our Office that it would not take voluntary corrective action in response to the ADR conference.

On January 28, three days before the 100-day deadline for our Office to resolve the protest under the Competition in Contracting Act, 31 U.S.C. § 3554(a)(1) (2006), the Marine Corps advised that it had waived any OCIs regarding the award to Jacobs, and requested that our Office dismiss the protest as academic. In this regard, the FAR establishes that, as an alternative to avoiding, neutralizing, or mitigating an OCI, an agency head or designee, not below the level of the head of the contracting activity (HCA), may execute a waiver. Specifically, the FAR provides as follows:

The agency head or a designee may waive any general rule or procedure of this subpart by determining that its application in a particular situation would not be in the Government’s interest. Any request for waiver must be in writing, shall set forth the extent of the conflict, and requires approval by the agency head or a designee.

FAR § 9.503.

Here, the Marine Corps’ cognizant HCA prepared and executed a waiver under the FAR authority. The HCA’s waiver stated as follows:

1. I exercise my authority under FAR 9.503 to waive any and all residual OCI concerns and potential impacts which are not completely eliminated or otherwise neutralized or mitigated by the circumstances described in the analysis developed in support of this waiver.

2. My conclusion that the waiver is appropriate is based upon:

a. My access to the complete supporting contract file materials;

b. My finding that the risk of any potential or real OCI existing under the subject contract is negligible to non-existent;

c. My finding that the potential residual impact of OCI in this procurement is insignificant in comparison to the estimated annual savings . . . and the substantive impact of disrupted support to the SIPRNET; and

d. My finding that other performance strategies are not acceptable options for this requirement due to the limited market of qualified sources that would result and the loss of critical support services during the time needed to conduct a re-procurement.

Agency Waiver, HCA Approval, (Jan. 28, 2013), at 1.

Our Office has previously recognized an agency’s authority to seek and obtain a waiver under the FAR for “any organizational conflict of interest.” See L-3 Servs., Inc., B 400134.11, B-400134.12, Sept. 3, 2009, 2009 CPD ¶ 171 at n. 20; see also CIGNA Gov’t Servs., LLC, B-401068.4, B-401068.5, Sept. 9, 2010, 2010 CPD ¶ 230 at 13-14; MCR Fed., LLC, B-401954.2, Aug. 17, 2010, 2010 CPD ¶ 196 at 4-5. To the extent AT&T argues that the exercise of a waiver does not render academic the protester’s unequal access to information OCI allegation, we disagree. While AT&T’s protest alleged that the award to Jacobs was tainted by a potential conflict, the FAR authority here permits waiver of any general rule or procedure within FAR Subpart 9.5. The issues in dispute in this case arise from the rules and procedures in Subpart 9.5, and, as of January 28, 2013, the application of these rules and procedures have been waived for this procurement by the Marine Corps, which renders the protest academic.

The protest is dismissed.  (AT&T Government Solutions, Inc, B-407720, B-407720.2, Jan 30, 2013)  (pdf)

We review the reasonableness of a contracting officer’s OCI investigation and, where an agency has given meaningful consideration to whether a significant conflict of interest exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. See TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 CPD ¶ 229 at 3-4; PCCP Constructors, JV; Bechtel Infrastructure Corp., B-405036 et al., Aug. 4, 2011, 2011 CPD ¶ 156 at 17. A protester must identify hard facts that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. TeleCommunication Sys. Inc., supra, at 3; see Turner Constr. Co., Inc. v. United States, 645 F.3d 1377, 1387 (Fed. Cir. 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010). The identification of conflicts of interest are fact-specific inquiries that require the exercise of considerable discretion. Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009).

We find that the contracting officer conducted a reasonable OCI investigation. SAIC’s chief complaint here is that the agency conducted a different level of OCI analysis with regard to SAIC and CSC. The record, however, does not support the protester’s arguments that the agency failed to analyze CSC’s potential OCIs. As discussed above, CSC’s proposal stated that it did not offer for sale any equipment or products that could be incorporated as part of the ocean observation buoy system. As also discussed above, the agency searched CSC’s and Oceaneering’s websites to confirm that the firms did not sell products relevant to NDBC. The agency also searched the Federal Awardee Performance and Integrity Information System (FAPIIS) website and found no negative reports regarding the integrity or performance of any CSC federal contracts. To the extent that the agency did not discuss potential OCIs during its discussions with CSC, the agency has explained that it had no knowledge of potential OCIs for the firm. See CO’s Statement at 9; AR at 26-27.

Moreover, when CSC’s potential OCIs were brought to the agency’s attention during the protest, NOAA investigated and analyzed whether the advisory role of CSC’s vice president or CSC’s proposal of Oceaneering raised an OCI that could not be mitigated or neutralized. Insofar as the agency considered CSC’s vice president’s potential OCI after contract award and during the course of this protest, both this Office and the Court of Federal Claims have recognized that an agency may investigate possible OCIs after the filing of bid protests. See, e.g., PCCP Constructors, JV; Bechtel Infrastructure Corp., B-405036 et al., Aug. 4, 2011, 2011 CPD ¶ 156 at 16; NETSTAR-1 Gov’t Consulting, Inc. v. United States, 101 Fed. Cl. 511, 521 (Oct. 17, 2011).

SAIC has not shown that the agency’s judgments concerning SAIC’s and CSC’s potential OCIs were unreasonable. SAIC does not dispute, for example, the agency’s assertion that any OCI that might arise from CSC’s proposed advisory board can be easily mitigated after award and completely resolved by recusal or removal of CSC’s vice president from the board. Supp. AR at 9; AR at 27. Nor does the protester dispute that no impaired objectivity OCI exists with regard to Oceaneering because the subcontractor will not evaluate its or competitors’ products or otherwise provide engineering services, but will only perform operations and maintenance functions. See id. Similarly, SAIC does not dispute--or even address--the agency’s assertion that SAIC’s proposed [DELETED] mitigation plan would impose an administrative burden and additional costs on the agency.

Contrary to the protester’s assertion, this record does not suggest that the agency treated SAIC and CSC disparately or unreasonably in evaluating the firms’ respective potential OCI. See, e.g., Operational Research Consultants, Inc., B-299131, B-299131.2, Feb. 16, 2007, 2007 CPD ¶ 38 at 7 n.5 (although contracting officer’s statement did not specifically address similar analysis regarding protester’s OCI allegations, the protester was unable to identify any information that would give rise to an OCI under theories identified in its protest and protest that award was tainted by OCIs was denied). Although SAIC disagrees with the contracting officer’s judgment in this regard, it has not shown that this judgment was unreasonable. See PAI Corp. v. United States, supra.  (Science Applications International Corporation, B-406899, Sep 26, 2012)  (pdf)
 

Cognosante asserts that the agency unreasonably concluded that its state [Recovery Audit Contractor] RAC and CMS Audit [Medicaid Integrity Contractor] MIC roles would result in an “impaired objectivity” OCI. In this regard, the protester asserts that the agency unreasonably concluded that a firewall would not address the perceived OCI.

The responsibility for determining whether a conflict exists rests with the procuring agency. Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 12. In making this determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, paying consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. FAR §§ 9.504, 9.505. The FAR identifies general rules and cites examples of types of OCIs that may arise, and ways to avoid, neutralize, or mitigate those OCIs. FAR § 9.505. The general rules and examples, however, are not intended to be all-inclusive, and the FAR recognizes that “[c]onflicts may arise in situations not expressly covered in this section 9.505 or in the examples in 9.508.” Id.; see also, Lucent Techs. World Servs. Inc., B-295462, Mar. 2, 2005, 2005 CPD ¶ 55 at 4-6. In reviewing bid protests that challenge an agency’s conflicts determinations, the Court of Appeals for the Federal Circuit has mandated application of the “arbitrary and capricious” standard established pursuant to the Administrative Procedures Act. See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). In Axiom, the Court of Appeals noted that “the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion.” Id. The standard of review employed by this Office in reviewing a contracting officer’s OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. CIGNA Gov’t Servs., LLC, B-401068.4, B-401068.5, Sept. 9, 2010, 2010 CPD ¶ 230 at 12.

Here, based on our review of the record, we find that the contracting officer gave meaningful consideration to whether an OCI exists, reasonably determining that Cognosante in fact would have an unmitigated OCI if awarded the TO. First, contrary to Cognosante’s assertions, serving as both the North Dakota RAC and the CMS Audit MIC with responsibility for North Dakota plainly created a potential OCI. In this regard, the protester’s own CMS ID/IQ contract specifically identified as a conflict the contractor conducting audits of health benefit payments or cost reports of Medicaid providers already assigned to be audited. ID/IQ Contract § H.5.

Second, the contracting officer determined that the potential OCI could not be adequately mitigated. Upon receiving notice of Cognosante’s identified conflict and its proposed firewall-based mitigation plan, the contracting officer discussed the matter and obtained review by agency subject matter experts as well as legal counsel. Memorandum to File, Sept. 29, 2011; AR at 5. As part of this review, the contracting officer was concerned that the different basis under which state RACs and CMS Audit MICs are paid for their work could result in an impaired objectivity type of OCI on the part of the Audit MIC, with that contractor having an incentive to audit a claim under its state contract rather than under its CMS contract. In this regard, the contracting officer noted that a state RAC, which reviews all potential claims and chooses which audits to conduct, will be paid a percentage of any overpayment, resulting in a potentially greater financial benefit to the contractor than that provided under the CMS Audit MIC TO, pursuant to which the Audit MIC is reimbursed on a cost-plus-award-fee basis for its work. COS ¶ 10. Further, the agency explains that if a particular audit is performed by a state RAC, the government will recoup less of an overpayment than it would if the audit were performed by the CMS Audit MIC. AR at 4. In the contracting officer’s view, given these conflicting roles and the potential financial benefit to the contractor from conducting an audit under the RAC contract rather than the CMS contract, there would always be a question of where the company would place its resources in performing the two contracts. COS ¶ 10. Further, the contracting officer concluded that a firewall between Cognosante’s Audit MIC and RAC teams would not be an acceptable means of mitigating the apparent impaired objectivity OCI that would be created if Cognosante held both contracts.

Cognosante asserts that a firewall would properly address any potential OCI. In this regard, it explains that it has no control over which audits CMS would assign it to perform, and notes that once an audit is begun by either the RAC or the Audit MIC, another contractor is prohibited from re-auditing the claim. Cognosante Comments at 11-12. Thus, it maintains that only if there were some exchange of information between the RAC and Audit MIC employees--that is, only if there were an active collusion between the two groups of its employees--would there be any conflict, but that the proposed firewall would mitigate any such conflict. Id. at 16.

We find the contracting officer’s position regarding the proposed firewall to be reasonable. In this regard, we have found that a firewall arrangement is virtually irrelevant to an OCI involving potentially impaired objectivity. Nortel Gov’t Solutions, Inc., B-299522.5, B-299522.6, Dec. 30, 2008, 2009 CPD ¶ 10 at 6. This is because the conflict at issue pertains to the organization, and not the individual employees. Here, while the firewall proposed by Cognosante may create the appearance of separation to mitigate the OCI, the fact remains that personnel in both the RAC and Audit MIC roles will be working for the same organization with the same incentive to benefit Cognosante overall. Thus, the RAC contract staff would have an incentive to identify and commence audits on those North Dakota claims with the largest potential for overpayment before they could be identified by CMS, with the result that the government would realize a smaller return when recovering the overpayment, and the CMS Audit MIC staff would have an incentive to permit the RAC contract staff to capture such claims first. Although a firewall between the RAC and Audit MIC staff may make such gaming of the system more difficult, we find reasonable the contracting officer’s determination that the concerns associated with the OCI extend beyond individual employees sharing information, and that the different, conflicting roles Cognosante would have, if it held both the RAC and Audit MIC contracts, would always call into question how the company would approach contract performance, including where it would place its resources. COS ¶ 10. While Cognosante disagrees with the contracting officer’s conclusions with respect to the conflict between the different roles, it has not shown that the contracting officer’s judgment here reflects an abuse of discretion. Valdez Int’l Corp., B-402256.3, Dec. 29, 2010, 2011 CPD ¶ 13 at 6.

Our conclusion is not changed by Cognosante’s assertions that it was not provided sufficient information on the agency’s reasons for rejecting its plan, and that the agency did not take sufficient time to resolve the matter, opting instead to issue the TO prior to the end of the fiscal year. Protest at 8-9. In our view, Cognosante was responsible for preparing an adequate mitigation plan, and the contracting officer’s explanation that the proposed firewall to address the perceived OCI was inadequate, along with her invitation to submit a revised plan, were sufficient to place the protester on notice that it needed to revise its solution. As to the alleged lack of time devoted to consideration and review of the OCI, the responsibility lies primarily with Cognosante and its delay of 7 weeks (from award of the RAC contract) before providing notice of the OCI to CMS, contrary to the provisions of its ID/IQ contract, ID/IQ Contract § H.5(e) at 43-44. In sum, we see nothing unreasonable in the agency’s handling of Cognosante’s OCI.  (Cognosante, LLC, B-405868, Jan 5, 2012)  (pdf)
 

Organizational Conflicts of Interest

AdvanceMed and TrustSolutions each argue that the award to Cahaba was tainted by OCIs arising from Cahaba’s status as a wholly-owned subsidiary of Blue Cross/Blue Shield of Alabama (BCBSAL), as well as conflicts arising from Cahaba’s own business activities. For the reasons discussed below, we conclude that CMS reasonably evaluated the potential conflicts posed by the award to Cahaba, and concluded that the conflicts were either mitigated, or did not constitute significant OCIs that merited exclusion of Cahaba’s proposal from the competition.

The Federal Acquisition Regulation (FAR) requires that contracting officers avoid, neutralize or mitigate potential significant OCIs so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR §§ 9.504(a), 9.505. The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting agency. Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 12.

The protesters’ arguments here concern the category described in FAR subpart 9.5 and the decisions of our Office as arising from impaired objectivity. An impaired objectivity OCI exists where a firm’s work under one government contract could entail its evaluating itself. FAR § 9.505-4; Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254297.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 13. The concern in such “impaired objectivity” situations is that a firm’s ability to render impartial advice to the government will be undermined by its relationship to the product or service being evaluated. PURVIS Sys., Inc., B-293807.3, B-293807.4, Aug. 16, 2004, 2004 CPD ¶ 177 at 7.

In reviewing bid protests that challenge an agency’s conflict of interest determinations, the Court of Appeals for the Federal Circuit has mandated application of the “arbitrary and capricious” standard established pursuant to the Administrative Procedures Act. See Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). To demonstrate that an agency’s OCI determination is arbitrary or capricious, a protester must identify “hard facts” that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Turner Constr. Co., Inc. v. United States, 645 F.3d 1377, 1387 (Fed. Cir. 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010). In Axiom, the Court of Appeals noted that “the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion.” Axiom Res. Mgmt., Inc., 564 F.3d at 1382. The standard of review employed by this Office in reviewing a contracting officer’s OCI determination mirrors the standard required by Axiom. In this regard, we review the reasonableness of the CO’s investigation and, where an agency has given meaningful consideration to whether an OCI exists, will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. See Enterprise Info. Servs., Inc., B-405152 et al., Sept. 2, 2011, 2011 CPD ¶ 174 at 8.

BCBSAL’s Relationship with Prime Therapeutics LLC

AdvanceMed argues that the agency failed to reasonably evaluate an OCI arising from BCBSAL’s 17-percent ownership stake in Prime Therapeutics LLC, a pharmacy benefit management company. The protester contends that BCBSAL’s ownership of Prime Therapeutics creates an OCI in the event that Cahaba is issued a task order to conduct audits in connection with Medicare part D, which is for prescription drug benefits, and part C, which can include part D coverage.

As part of its corrective action in response to AdvanceMed’s and TrustSolution’s initial protests, CMS asked Cahaba to address the potential OCI arising from BCBSAL’s ownership stake in Prime Therapeutics. The CO noted that BCBSAL “acquired 16.78% investment interest in Prime Therapeutics LLC (Prime) in 2010,” and holds one of the 10 seats on Prime Therapeutics’ board of directors. AR, Tab 22a, Letter from CMS to Cahaba (June 28, 2011) at 2. The CO further noted that “Prime offers pharmacy services, Medicare Part D administration, and other consulting services” for customers of Blue Cross Blue Shield plans, and also provides services for four customers in Zone 3. Id. Based on these concerns, the CO stated that she determined that an unmitigated impaired objectivity OCI existed “because in the event that a Part D task order is issued, [Cahaba] may have to investigate/evaluate Prime in its role as a [pharmacy benefit management] company for possible fraud, waste and abuse.” Id. The CO requested that Cahaba provide a mitigation plan to address the concern.

In response to the request for a mitigation plan, Cahaba expressed its view that its ownership stake in Prime Therapeutics did not create an OCI because: (1) there are no direct contractual relationships between Prime Therapeutics and Cahaba; (2) Cahaba does not receive any direct financial benefit from Prime Therapeutics’ actions; (3) Cahaba’s management is independent of BCBSAL; and (4) in Cahaba’s view, BCBSAL’s “small ownership interest in Prime is too attenuated to create an OCI.” AR, Tab 22i, Letter from Cahaba to CMS (July 22, 2011), at 4-5. Nonetheless, Cahaba also proposed several mitigation strategies, including [deleted]. Id. at 16-17.

The CO advised Cahaba that the agency did not accept its views concerning BCBSAL’s ownership of Prime Therapeutics, and still viewed the relationship as creating a potentially disqualifying OCI for Cahaba. The CO also stated that the agency did not view the proposed mitigation strategies as acceptable, in part because of the additional administrative duties they would impose on the agency. The CO advised that Cahaba was required to provide an acceptable response to the agency’s concerns, and that “failure to avoid, neutralize or mitigate a conflict of interest may result in the award of this contract to another offeror.” AR, Tab 22b, Letter from CMS to Cahaba (Sept. 23, 2011), at 3.

Cahaba subsequently advised CMS that BCBSAL had agreed to divest itself of Cahaba upon notice that CMS intended to issue a task order for Medicare parts C or D. AR, Tab 22h, Letter from Cahaba to CMS, Sept. 29, 2011, at 1. Cahaba’s proposed mitigation approach provided a timeline with five milestones from the date of CMS’s announcement of its intent to issue a task order: (1) within [deleted]: establish the terms of sale, obtain approval from BCBSAL’s Board of Directors, and issue a formal announcement of the intent to sell Cahaba; (2) within [deleted]: identify and vet prospective buyers, conduct industry research of prospective buyers, and conduct OCI analyses; (3) within [deleted]: agree on terms of sale with buyer; (4) within [deleted]: execute the sale and complete all required corporate actions and approvals; and (5) within [deleted]: execute state corporate documents and novate required leases. Id. at 2-3. In addition, Cahaba provided the following “contingency plan” in the event that the milestones are not met:

If BCBSAL cannot identify a buyer within the timeline listed above, BCBSAL shall [deleted].

Id. at 3-4. Cahaba’s response also included a letter from the BCBSAL Senior Vice President and Chief Financial Officer stating that the parent company “is in agreement with the mitigation plan proposed by Cahaba . . . related to any future Part C or D task order for the above mentioned solicitations [zones 3 and 6].” AR, Tab 22g, Letter from BCBSAL to CMS (Sept. 29, 2011), at 1.

The CO concluded that Cahaba’s proposed mitigation plan was acceptable. AR, Tab 22d, OCI Memorandum, at 6. The CO found that Cahaba’s proposed [deleted] schedule for divestiture was reasonable and realistic. In this regard, the CO noted that CMS expected that it could take between 7-8 months from announcement of the agency’s intent to issue a task order for part C or D to develop a statement of work, obtain funding approval, negotiate the task order with Cahaba, and complete the transition of the work from the incumbent. Id. at 5.

The CO also stated that, in the event the divestiture could not be achieved within the proposed [deleted] time frame, and CMS required the services from Cahaba at that time, the cognizant head of the CMS contracting activity (HCA) “will authorize a waiver of the Prime Therapeutics conflict during the time that the contingency plan is in place.” Id. at 6. The FAR provides that an HCA may “waive any general rule or procedure of this subpart by determining that its application in a particular situation would not be in the Government’s interest.” FAR § 9.503. Here, the OCI memorandum included a memorandum from the HCA, which stated as follows:

With regard to the mitigation strategy for the OCI caused by BCBSAL’s ownership in Prime Therapeutics, should it be necessary to afford [Cahaba] additional time, in excess of the [deleted] proposed, to finalize the sale of [Cahaba] and should CMS require [Cahaba] to begin work on a Part C and/or Part D task order, the HCA will authorize a waiver in accordance with FAR 9.503 while the contractor’s contingency plan is being finalized. The waiver would be in affect only until such time as the sale of [Cahaba] is completed. Once the sale of [Cahaba] is completed, the waiver would no longer be necessary and the conflict would be fully mitigated.

AR, Tab 22d, OCI Memorandum, at 11.

AdvanceMed argues that the CO unreasonably accepted the divestiture plan because it did not provide adequate details to address the OCI. In particular, AdvanceMed contends that the plan lacks specificity because it does not identify a potential buyer or sales terms. The protester cites two decisions in which our Office sustained protests of awards to AdvanceMed for ZPIC zones 1 and 2, based on what the protester contends were similar OCI concerns and divestiture plans to those at issue here. See C2C Solutions, Inc., B-401106.5, Jan. 25, 2010, 2010 CPD ¶ 38; Cahaba Safeguard Adm’rs, LLC, B-401842.2, Jan. 25, 2010, 2010 CPD ¶ 39. As relevant here, we concluded in both protests that the CO failed to evaluate AdvanceMed’s proposed mitigation approach of divestiture, in part because the proposed plans lacked any meaningful detail. In this regard, the record in the C2C Solutions and Cahaba decisions shows that the CO’s OCI analysis merely observed that “[t]he other mitigation strategy, total divestiture of AdvanceMed, includes some uncertainties as to the particulars of the divestiture that are and cannot be known at this time.” C2C Solutions, Inc., supra, at 5; Cahaba Safeguard Adm’rs, LLC, supra, at 6. In light of the lack of any meaningful details to support the divestiture plans, we sustained both protests.

In contrast to C2C Solutions and Cahaba, however, the awardee’s mitigation plan here provided specific details and milestones. As discussed above, the awardee stated that BCBSAL would, upon notice of the agency’s intent to begin the process of issuing a task order for Medicare parts C and D, commence the necessary steps to divest itself of Cahaba. The mitigation plan included five milestones, which the agency evaluated and concluded were reasonable. Additionally, as the intervenor notes, the lack of a specific price or buyer was not unreasonable, as there was no timeframe for a possible parts C and D task order at the time of the award.[6] On this record, we conclude that the CO acted within the reasonable exercise of her discretion in concluding that Cahaba’s proposed mitigation plan adequately addressed the OCI concerning BCBSAL’s ownership of Cahaba and its 17 percent stake in Prime Therapeutics.

BCBSAL’s Other Contractual Relationships

Next, AdvanceMed argues that Cahaba will be in a position to conduct audits of companies with whom BCBSAL has contracts, thereby creating an OCI. In this regard, AdvanceMed argues that those providers could threaten to sever their relationship with BCBSAL in the event of an audit or negative finding by Cahaba, and that the threat of such actions would impair Cahaba’s judgment.

During the corrective action, the CO asked Cahaba to address BCBSAL’s contractual relationships with healthcare facilities and providers who operate within zone 3. AR, Tab 22a, Letter from CMS to Cahaba (June 28, 2011), at 3-4. The CO requested that Cahaba address the “perception that [Cahaba’s] objectivity could be viewed as being impaired” when it investigates an entity that has a contractual relationship with BCBSAL. Id. at 4.

Cahaba stated that BCBSAL has a network of preferred provider relationships with national companies, or affiliates of national companies. Under this arrangement the healthcare provider agrees to participate in the BCBSAL network, and BCBSAL agrees to pay claims in accordance with a fee schedule. AR, Tab 22i, Letter from Cahaba to CMS (July 22, 2011), at 22. Cahaba acknowledged that BCBSAL has contractual relationships with entities, who, in turn, have affiliates that provide services within Zone 3. Id. at 21-22. Cahaba argued, however, that such BCBSAL relationships do not give rise to a disqualifying OCI for Cahaba because the relationship is too remote and attenuated to constitute a disqualifying OCI. Id. at 22.

With regard to scenarios where BCBSAL has a contract with an entity who is affiliated with a healthcare provider, who provides services in zone 3, the CO concluded that the possibility of a conflict was too remote and too far removed to constitute an OCI that requires mitigation. Id. at 10. In this regard, the CO stated that the possibility that the health care provider would complain to its affiliate in order to have the affiliate pressure BCBSAL to in turn pressure Cahaba was “too remote and too far removed to be considered an OCI that requires mitigation.” Id. Additionally, in response to the protest, the CO also noted Cahaba’s explanation that the relationships between BCBSAL and its contractual partners creates a “strong, pre-existing financial incentive not to terminate their relationship with BCBSAL” because of the benefit that the contractual partner enjoys from having access to the BCBSAL customer network. Supp. CO Statement (Dec. 13, 2011) at 6.

Our Office has recognized that an agency may reasonably find that certain relationships between companies or corporate affiliates are too remote or that the possibility of a conflict is too unlikely or speculative to conclude that there is a disqualifying OCI. See Valdez Int’l Corp., B-402256.3, Dec. 29, 2010, 2011 CPD ¶ 13 at 5-6; L-3 Servs., Inc., B-400134.11, B-400134.12, Sept. 3, 2009, 2009 CPD ¶ 171 at 15; American Mgmt. Sys., Inc., B-285645, Sept. 8, 2000, 2000 CPD ¶ 163 at 5. In such cases, we look for some indication that there is a direct financial benefit to the firm alleged to have the OCI. Here, the CO concluded that the relationship between Cahaba and the contractual partners of its parent company were too remote, and that there was no direct financial benefit to Cahaba. We conclude that the CO was within her discretion to draw these conclusions and therefore find no basis to sustain the protest.

Cahaba’s LASER SA²PHE² Service

Finally, AdvanceMed and TrustSolutions argue that Cahaba offers an auditing service, known as LASER SA2PHE2, which could create an OCI. This service is a data analysis tool offered by Cahaba to assist clients in the identification and prevention of healthcare fraud, waste, and abuse. Unlike the potential conflicts arising from Cahaba’s relationship with BCBSAL, the protesters argue that Cahaba’s offered services would create a direct OCI by creating the possibility that the awardee would audit companies for which the awardee had provided data analysis services.

During corrective action, the CO asked Cahaba to identify the clients for whom it has provided services though its LASER SA2PHE2 solution, and to propose a mitigation strategy to address any conflicts that could arise from its provision of these services. AR, Tab 22a, Letter from CMS to Cahaba (June 28, 2011), at 3.

Cahaba responded that it had used LASER SA2PHE2 for its contracts with CMS and the TRICARE Management Activity, and also has a master services agreement which allows [deleted] to place task orders with Cahaba for data analytics services (such as LASER SA2PHE2). AR, Tab 22i, Letter from Cahaba to CMS (July 22, 2011), at 18-19. The awardee stated that it currently “does not have active task orders with [deleted] and has no other commercial clients,” and further stated that the company [deleted]. Id. at 19. Cahaba also stated that it would advise the CO of any requests for work concerning LASER SA2PHE2 from [deleted], and “will not contest any Contracting Officer determination that the task order gives rise to a [conflict of interest] and will refuse any task order as to which the Contracting Officer has made such a determination.” Id.

The CO concluded that Cahaba’s use of the LASER SA2PHE2 solution for contracts performed for the government did not give rise to any OCIs. AR, Tab 22d, OCI Memorandum, at 7. The CO also concluded that because Cahaba did not have existing commercial clients and [deleted] there were no potential OCIs. Id.

The protesters argue that the CO’s conclusion was unreasonable because it relied on Cahaba’s statement that [deleted] for its LASER SA2PHE2 service. In this regard, the protesters contend that Cahaba could, in effect, change its mind and [deleted] and thereby create an OCI. We think that the CO was within her discretion to conclude that there was no OCI, based on her acceptance of Cahaba’s statements regarding its LASER SA2PHE2 solution.

On this record, we find no basis to sustain any of the protesters’ arguments regarding the CO’s OCI analysis.  (AdvanceMed Corporation; TrustSolutions, LLC, B-404910.4,B-404910.5,B-404910.6,B-404910.9, B-404910.10, Jan 17, 2012)  (pdf)

[Satellite Communications program] SATCOM [Special Interest Program Manager] PM's Activities at the Agency

TCS argues that the SATCOM PM's participation in this procurement was very limited and did not warrant the disqualification of TCS from the competition. The record shows that the SATCOM PM continued in his position until he decided to retire from Government service in June 2009. On November 2, 2009, the SATCOM PM signed a memorandum addressed to his supervisor, which stated that the SATCOM PM was seeking employment outside of the Government and that he would disqualify himself from any involvement in matters (including this RFP) that would have a direct and predictable effect on any potential private sector firm with whom he was seeking employment. AR, attach. 4, Tab 19, SATCOM PM Memorandum, Nov. 2, 2009. TCS asserts that, prior to November 2, the SATCOM PM's participation in this procurement was "limited to summary information only" and "early market research activities aimed at exploring industry capabilities and abilities to meet the Satellite Communication program objectives." Protest at 10. TCS further claims that, after November 2, the SATCOM PM did not participate in any non-written communications concerning the RFP. Id. The protest states that the SATCOM PM does not recall being copied on any acquisition sensitive information, but, if he was, he did not solicit such information, and did not provide such information to TCS. Id. at 11. The SATCOM PM began his employment discussions with TCS [deleted], TCS submitted its proposal on April 24, 2010, and the former SATCOM PM began working for TCS on May 17, 2010. Id.

The contracting officer determined that the documentary evidence he compiled indicated that the SATCOM PM's participation in the procurement was more involved than being "limited to summary information only" and "early market research exploring industry capabilities," and that the SATCOM PM did, in fact, have access to, and receive, acquisition sensitive information. Contracting Officer's Investigation Report at 22.

For example, the contracting officer found that numerous industry responses (marked proprietary) to the request for information (RFI), including those from Stratos and TCS, received in March 2009, were provided to an individual supervised by the SATCOM PM. Id. at 3. The contracting officer found that although "[i]t is not clear in the record whether [the SATCOM PM] received and reviewed the individual responses," they were provided to an individual supervised by him and were used for "one on one meetings with contractors during Industry Days held in April 2009." Id. at 14, 22.

The contracting officer further notes that in October 2009 the SATCOM PM took part in at least one meeting concerning "critical decisions" about the procurement—i.e., the source selection strategy and process, the requirements for a statement of work or performance work statement, the desired selection team skill mix, and whether alternate proposals would be allowed. Id. at 4, 15; see AR, attach. 4, Tabs 13 and 17, E-mails and Attachments. At around the same time, the SATCOM PM was a recipient of a 75‑page e-mail attachment containing a cost/benefit analysis, prepared by his office; this document was marked "FOUO [For Official Use Only], close hold, pre‑decisional, not releasable under [Freedom of Information Act]," and included a detailed discussion of technical alternatives, their potential costs, and associated risks. Contracting Officer's Investigation Report at 4, 15; see AR, attach. 4, Tab 16, E‑mail, Oct. 20, 2009; Cost/Benefit Analysis, May 20, 2009.

The contracting officer also considered documentary evidence that, after November 2, the SATCOM PM received a consolidated list of comments to a draft RFP, which identified vendors by name, in preparation for a teleconference meeting in November 2009 to discuss certain elements of the RFP. Contracting Officer's Investigation Report at 4-5, 16-17, 22; AR, attach. 4, Tab 18, E-mail, Oct. 30, 2009; Tab 23, Meeting Minutes, Nov. 19, 2009. The contracting officer noted that issues discussed at the meeting (attended by the SATCOM PM) included market research, industry responses, and a risk assessment of the acquisition. Also discussed were the composition of the technical evaluation team, the requirement of a statement of objectives or a statement of work in the solicitation, and the possible use of operational capability demonstrations during the evaluation. Contracting Officer's Investigation Report at 6; AR, attach. 4, Tab 23, Meeting Minutes, Nov. 19, 2009.

The contracting officer also found that the SATCOM PM participated in another meeting 4 days later, where the topics again included specific issues for this procurement, including acquisition and source selection plans, peer review, dedicated source selection team members, and the use of operational capability demonstrations in the evaluation. Contracting Officer's Investigation Report at 6, 17, 22; AR, attach. 4, Tab 24, Meeting Minutes, Nov. 23, 2009. The contracting officer further determined that in December, the SATCOM PM was included among the addressees on an e-mail that discussed various cost estimates and identified the current independent government cost estimate for this acquisition. Contracting Officer's Investigation Report at 6; AR, attach. 4, Tab 25, E-Mail, Dec. 11, 2009.

Based on his review of the record, the contracting officer found that prior to his employment with TCS, the SATCOM PM had access to non-public procurement sensitive information, and possibly had access to the proprietary information of potential offerors. Contracting Officer's Investigation Report at 22. The contracting officer found that this access continued even after the SATCOM PM promised to disqualify himself from any involvement in this procurement because the SATCOM PM "failed to properly remove himself from the . . . procurement." Id. at 23. We find that that the contracting officer's judgments were reasonable and consistent with the record.

SATCOM PM's Employment With TCS

TCS also claims that the former SATCOM PM was "walled off" after he was employed by TCS and that he had nothing to do with this procurement. TCS first notes here that it submitted its proposal prior to hiring the SATCOM PM. Protest at 11. TCS further states that "[u]pon his employment [with TCS], [the former SATCOM PM] was 'walled off' from all activities related to this procurement;" that he "has not had any discussions with TCS personnel regarding its proposal, the relevant RFP, or the procurement generally;" and that TCS took "extraordinary measures to be certain that [the former SATCOM PM's] employment with TCS was in no way related to this procurement." AR, attach. 4, Tab 79, TCS Responses to Agency Questions, Feb. 4, 2011, at 1. TCS stated in a later response that it "took appropriate steps to "wall [the former SATCOM PM] off completely from the proposal and the proposal effort." AR, attach. 4, Tab 81, TCS Responses to Agency Questions, Feb. 11, 2011, at 3. TCS also stated:

In fact, TCS was so concerned about making sure its competitive position on this procurement was not tainted by the employment of [the former SATCOM PM] that the interviews discussions specifically did not mention this procurement and the capture responsibilities were assigned to another company vice president, . . . , with specific instructions to maintain a firewall with [the former SATCOM PM] for all matters related to this procurement.
AR, attach. 4, Tab 79 at 2.

The contracting officer reviewed numerous communications involving the former SATCOM PM while employed by TCS indicating that he was privy to, and had input regarding, information concerning TCS's revised proposal under the procurement. Contracting Officer's Investigation Report at 19, 24. The contracting officer found that the former SATCOM PM's participation in TCS's response to this procurement included reviewing and providing feedback on TCS's [deleted]Id. at 19-22; see AR, attach. 4, Tabs 44‑67, E-mails dated August 19 through October 8, 2010. Based on his review, the contracting officer determined that rather than being completely walled off from all activities related to this procurement as alleged by TCS, the former SATCOM PM "was repeatedly and regularly informed of the progress of revisions to the final proposal and asked for his opinion regarding some of those revisions." Contracting Officer's Investigation Report at 24. While the protester asserts that the contracting officer has overstated the former SATCOM PM's involvement in the preparation of TCS's revised proposal, we find that the contracting officer could reasonably be concerned about the propriety of these activities.

Conclusion

Based on the record, we conclude that the contracting officer conducted a thorough and well-documented investigation. We further conclude that the contracting officer reasonably determined that "the manner and extent of [the SATCOM PM's] involvement in the procurement may have created an actual unfair competitive advantage, but certainly created an appearance of impropriety that is based on significant documentary evidence and cannot be avoided, neutralized or mitigated." Id. at 24. In this regard, the contracting officer determined that the facts here indicated that the SATCOM PM not only had access to non-public information, but also provided input related to TCS's revised proposal. Contracting Officer's Investigation Report at 22-24. These facts, as identified by the contracting officer, create the presumption that an unfair competitive advantage has arisen, without the need to inquire as to whether the information was actually used by TCS in the preparation of its proposal. See Health Net Fed. Servs., LLC, supra.; Aetna Gov't. Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra. While TCS disagrees with the contracting officer's determination to terminate TCS's contract and to eliminate it from the competition because of an apparent conflict of interest, it has not shown that the contracting officer's conclusion was unreasonable or not based on hard facts. Because the agency has given meaningful consideration to whether a conflict of interest existed and its judgment has not been shown to be unreasonable, we will not substitute our judgment for that of the agency. See CIGNA Gov't Servs., LLC, supra.  (TeleCommunication Systems Inc., B-404496.3,October 26, 2011)  (pdf)

Unequal Access to Information

EIS argues that Paragon had access to RTGX's proprietary information, and that this access created an unequal access to information OCI. Under the PMOS contract, Paragon provides support to USTRANSCOM for acquisition of information technology goods and services. CO Statement at 24. Paragon's duties include management of cost, schedule, performance, and risk for a variety of agency requirements, such as program control, resources management, requirements management, configuration management, test and evaluation, systems engineering, program management support, risk management, information technology administrative support, and acquisition support. Id. at 24-25. EIS contends that under the PMOS contract Paragon had the ability to access RTGX's proprietary technical and cost information, such as RTGX's rates, which created an unequal access to information OCI. Supp. Protest at 38.

In her initial response to the protest, the CO stated that Paragon did not have access to confidential or proprietary RTGX information under the PMOS contract:

Paragon's PMOS contract does not provide it with access to any contractor rates or prices. Even though Paragon may be privy to some of the Programs of Records estimates, neither IRMDR contractor rates nor ITS information are included in this system. In addition, a contractor's proposal or labor rates would not be available for any Paragon employee or any other contractor to access. Contractor rates are not entered into any system accessible to, or maintained by, the PMOS contractor.

CO Statement at 25.

The CO also noted that the PMOS contract required each Paragon employee to sign a non-disclosure agreement (NDA) with the agency. Id. at 26. These agreements stated in relevant part as follows:

This Non-Disclosure Agreement is a standard agreement designed for use by contractor (including subcontractor) employees assigned to work on USTRANSCOM contracts. Its use is designed to protect non-public government information from disclosures and prevent violations of federal statutes/regulations.

* * * * *

3. In the course of performing under contract/order/solicitation # [GS-35-F-0484N] or some other contract or subcontract for the USTRANSCOM, I agree to:

a) Use only for Government purpose any and all confidential business information, contractor bid or proposal information, and/or source selection sensitive information to which I am given access. I agree not to disclose "non-public information" by any means (in whole or in part, alone or in combination with other information, directly or indirectly or derivatively) to any person except to a U.S. Government official with a need to know or to a non-Government person (including, but not limited to, a person in my company, affiliated companies, subcontractors, etc.) who has a need to know related to the immediate contract/order, has executed a valid form of this non-disclosure agreement, and receives prior clearance by the contracting officer. All distribution of the documents will be controlled with the concurrence of the contracting officer.

b) "Non-public information", as used herein, includes trade secrets, confidential or proprietary business information (as defined for government employees in 18 USC 1905); advance procurement information (future requirements, acquisition strategies, statements of work, budget/program/planning data, etc.); source selection information (proposal rankings, source selection plans, contractor bid or proposal information); . . .

c) Not to use such information for any non-governmental purposes, including, but not limited to, the preparation of bids or proposals, or the development or execution of other business or commercial ventures.

AR, Tab 10, Sample NDA, at 1-2.

In its comments and supplemental protest, and supported by a declaration of RTGX's Business Manager, the protester contended that RTGX's proprietary information, such as labor categories, cost data, and other performance-related data, were available in a networked computer system to which Paragon had access through its performance of the PMOS contract. Decl. of RTGX Business Manager at 1. Id. The protester also contended that RTGX provided invoices and other proprietary data to a Paragon employee in connection with Paragon's performance of the PMOS contract. Id. at 2.

In response, the CO acknowledged that her initial view of the potential access to information Paragon had under the PMOS contract was not correct. In her supplemental statement, the CO stated as follows:

[I]n investigating EIS's allegation, I did find an instance where a Paragon employee . . . in the DPS program office may have had access to RTGX rate information from invoice reviews as part of the duties under the PMOS support contract. However, [the Paragon employee] had previously signed a non-disclosure statement which is on file, and is included as an attachment in [the PMOS CO's] declaration (PMOS CO Declaration, Attachment 1). Even if [the Paragon employee] did have access to rates on invoices, he was precluded from disclosing this information to Paragon or using this information by the terms of his nondisclosure agreement.
Supp. CO Statement, July 20, 2011, at 8.

Notwithstanding her revised understanding of the information to which Paragon may have had access under the PMOS contract, the CO confirmed her finding that no disqualifying OCI existed because the NDAs signed by Paragon employees prohibited any disclosure which could have affected the ITS competition. Id. Specifically, the CO stated that she viewed the NDAs as precluding Paragon employees from disclosing the information to any parties not authorized to receive the information, including other Paragon employees not covered by the NDAs. Id. at 12, 14.

As our Office has held, mitigation efforts that screen or wall-off certain individuals within a company from others, in order to prevent an improper disclosure of information, may be an effective means to address an unequal access to information OCI. See Axiom Resource Mgmt., Inc., B-298870.3, B-298870.4, July 12, 2007, 2007 CPD para. 117 at 7 n.3; Aetna Gov't Health Plans, Inc., supra, at 13.

EIS argues, however, that the CO did not reasonably conclude that the NDAs mitigated the potential OCI that arose from Paragon's performance of the PMOS contract. EIS first argues that the CO's reliance on the NDAs signed by Paragon employees was unreasonable because the FAR requires a different form of NDA. In this regard, FAR sect. 9.505-4(a) states that "[w]hen a contractor requires proprietary information from others to perform a Government contract and can use the leverage of the contract to obtain it, the contractor may gain an unfair competitive advantage unless restrictions are imposed." In order to mitigate the potential competitive harm, the FAR mandates the following actions:

A contractor that gains access to proprietary information of other companies in performing advisory and assistance services for the Government must agree with the other companies to protect their information from unauthorized use or disclosure for as long as it remains proprietary and refrain from using the information for any purpose other than that for which it was furnished. The contracting officer shall obtain copies of these agreements and ensure that they are properly executed.

FAR sect. 9.505-4(b).

We agree with the protester that the PMOS CO failed to comply with the express requirements of FAR sect. 9.505-4(b). The record shows that, contrary to the requirements set forth above, Paragon did not enter into an NDA with RTGX for the PMOS contract, nor did the PMOS CO require that Paragon do so. Supp. CO Statement, July 20, 2011, at 14; PMOS CO Statement at 2. Despite this error, we do not think that the protester was prejudiced here. Competitive prejudice must be established before we will sustain a protest; where the record does not demonstrate that the protester would have had a reasonable chance of receiving the award but for the agency's actions, we will not sustain a protest, even if deficiencies in the procurement process are found. McDonald-Bradley, B-270126, Feb. 8, 1996, 96‑1 CPD para. 54 at 3.

Although the NDAs obtained by the PMOS CO did not take the form required by FAR sect. 9.505-4(b), we think that the CO for the ITS contract nonetheless concluded that the NDAs adequately mitigated the possibility that Paragon had an unequal access to information OCI. While the protester contends that the NDAs apply only to "government information," the record shows that the agreements cover a broad range of contractor business information, including "any and all confidential business information, contractor bid or proposal information, and/or source selection sensitive information." AR, Tab 10, Sample NDA, at 1-2. The NDAs prohibit Paragon employees from disclosing this information to "a non-Government person (including, but not limited to, a person in my company, affiliated companies, subcontractors, etc.)" unless that person has a valid "need to know," has executed a NDA, and has received prior clearance from the CO. Id. at 2. Finally, the NDA prohibits use of the information for "any non-governmental purposes, including, but not limited to, the preparation of bids or proposals." Id. Thus, we think the CO could reasonably find that the NDAs apply to any information provided by RTGX to Paragon employees in the course of either party's performance of any contract with USTRANSCOM, and place appropriate restrictions on the disclosure or use of that information. On this record, we conclude that the CO reasonably exercised her judgment by relying on the NDAs as mitigating the possible OCI arising from Paragon's access to RTGX information under the PMOS contract.

EIS argues, however, that the company-to-company agreements required under the FAR and the PMOS contract (which contains a requirement that mirrors FAR sect. 9.505‑4, AR, Tab 19, PMOS Contract, at 51-52) provide protections that are not provided by the NDAs between Paragon and the government. Specifically, the protester contends that "only a company-to-company agreement, as required by the FAR and OCI clause, establishes a binding contracting commitment with legal remedies in the event a company's proprietary data has been improperly used by a contractor acting on behalf of the government." Supp. Comments, July 25, 2011, at 5 n.1. However, the absence of additional protections and benefits that might be afforded to contractors under a company-to-company agreement does not render unreasonable the CO's judgment that the NDAs adequately mitigated the possible OCIs in question here.

In sum, we find that although the PMOS CO did not follow the requirements of the FAR to obtain company-to-company NDAs for the PMOS contract, this error did not prejudice the protester. In this regard, we conclude that the CO for the instant award gave meaningful consideration to the record, and reasonably relied on those NDAs as addressing the potential for an unequal access to information OCI that arose from Paragon's performance of the PMOS contract.  Thus, notwithstanding the agency's error concerning the type of NDA obtained, we find no basis to sustain the protest.  (Enterprise Information Services, Inc., B-405152; B-405152.2; B-405152.3, September 2, 2011)  (pdf)

In its current protest, TAG asserts that the agency failed to adequately consider and investigate whether SAIC has an "impaired objectivity" OCI. In this connection, TAG principally asserts that the agency's OCI review improperly was limited primarily to information provided by SAIC; according to the protester, since SAIC in effect selected the information reviewed by the agency in analyzing the OCI question, the agency's conclusion is inherently unreasonable. TAG further asserts that since the agency's analysis of the OCI question was faulty, its execution of the D&F waiving any remaining OCI also was faulty inasmuch as the waiving authority was unable to appreciate the actual potential risk of an OCI. Finally, in connection with the D&F, TAG also asserts that it improperly included a blanket waiver of potential OCIs that may arise in the future.

The responsibility for determining whether a conflict exists rests with the procuring agency. CIGNA Gov't Servs., LLC, B-401068.4, B-401068.5, Sept. 9, 2010, 2010 CPD para. 230 at 12; Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para.129 at 12. In making this determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, giving consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. Federal Acquisition Regulation (FAR) sections 9.504, 9.505. In reviewing bid protests that challenge an agency's conflicts determinations, the Court of Appeals for the Federal Circuit has mandated application of the "arbitrary and capricious" standard established pursuant to the Administrative Procedures Act (APA). See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). In Axiom, the Court of Appeals noted that "the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion." Id. The standard of review employed by this Office in reviewing a contracting officer's OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable. See, e.g., MASAI Tech. Corp., B-298880.3, B-298880.4, Sept. 10, 2007, 2007 CPD para. 179 at 8; Business Consulting Assocs., LLC, B‑299758.2, Aug. 1, 2007, 2007 CPD para. 134 at 9-10; Overlook Sys. Techs., Inc., B‑298099.4, B‑298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-18; Alion Sci. & Tech. Corp., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 5-8.


We have no basis to object to the adequacy of the agency's inquiry into whether SAIC has an OCI. The protester is correct that the starting point for the agency's effort was to obtain information from SAIC that was to be submitted in response to the discussions conducted during the agency's corrective action; both SAIC and TAG were requested to provide detailed information relating to any potential OCI, and the firm's strategy to mitigate any potential OCI. AR, exhs. 2, 3. In response to this request for information, SAIC provided detailed information, including a matrix[1] listing some [deleted] contracts that SAIC had identified as potentially presenting an OCI, along with an OCI mitigation plan intended to address any OCI concerns. SAIC Revised Cost Proposal, Tab F.

The record shows that SAIC's matrix was not simply accepted by the agency without critical analysis. Rather, the record shows that the agency's OCI analysis team carefully reviewed the contracts listed in SAIC's matrix; while the team agreed with SAIC's characterization of the contracts (and the potential for mitigating possible OCIs) in some instances, it disagreed in other instances. For example, the record shows that, in reviewing SAIC's contracts, the OCI analysis team reached the following conclusion relating to the tier one and two contracts:

The single most significant potential impaired objectivity OCI that SAIC noted revolves around the Joint Capabilities Integration and Development System (JCIDS). SAIC mentions JCIDS in its discussion of all [deleted] of the Tier 1 and Tier 2 contracts.[2] A5XP's analysis of SAIC and JCIDS was as follows:

"The potential for an OCI in A5XP is very low. A5XP is the Strategic Plans and Policy Division, which does not determine requirements, capabilities, or specifications, nor has any influence on future military acquisition of products or services. Our role is to ensure AF policies are in line with that of higher authorities."

"The only risk for an OCI stems from our contractor's access to military requirements documents as they are vetted through the Joint Capabilities Integration and Detection System (JCIDS)."

* * * * *

"When coupled with the staffing process within A5XP, which acts as an additional OCI mitigation layer, the mitigation strategies outlined by SAIC [excluding itself from participation in any JCIDS reviews or inputs related to this program] are effective and acceptable."

* * * * *

The OCI Analysis Team accepted and concurred with A5XP's analysis of JCIDS. SAIC's JCIDS strategies, which include tasking one of their teaming partners with all JCIDS reviews, when coupled with Air Force oversight of those reviews and the limited scope of those reviews (policy and directives compliance), taken together constitute an effective mitigation for this potential impaired objectivity OCI.

AR, exh. 9, at 10-11. On the other hand, the record also shows that the agency criticized SAIC's characterization of certain of its contracts, as well as its proposed mitigation efforts. See e.g., AR, exh. 9, at 11-17. After a lengthy discussion of the agency's reservations in this connection, the agency concluded as follows:

Although these [mitigation] strategies and concepts are useful, none of them can ensure that zero residual potential OCI remains. As the attached Air Force Findings attest, A5XP understands and is willing to accept this unmitigated potential OCI risk.

AR, exh. 9, at 19.

In addition to this critical analysis of the materials presented by SAIC, the record shows that the agency also independently contacted references from the contracts listed by SAIC, both to verify the accuracy of information presented by SAIC in its matrix, and to inquire whether, in light of the requirements being solicited, the points of contact thought that an OCI might potentially exist in light of the SAIC contract for which they were responsible. AR, exhs., 4, 7, 8.

Additionally, the agency performed independent research relating to the products and services offered by SAIC. That review included an examination of SAIC's own website[3] (which provides detailed information relating to the firm's products and services), AR, exh. 5, as well as an examination of other, independent, sources of information about the company, many of which were critical of the firm and its products and services. AR, exh. 6.

Finally, and most significantly, the agency, in the wake of its review, determined that it could not rule out the remote possibility that there was some residual potential for an OCI because of SAIC's other contracts. Consequently, the agency executed a D&F acknowledging and accepting this residual risk and waiving it, consistent with the requirements of the FAR. In this respect, the FAR establishes that, as an alternative to avoidance, neutralization, or mitigation, an agency head or designee may execute a waiver. Specifically, the FAR provides:

The agency head or a designee may waive any general rule or procedure of this subpart by determining that its application in a particular situation would not be in the Government's interest. Any request for waiver must be in writing, shall set forth the extent of the conflict, and requires approval by the agency head or a designee.

FAR sect. 9.503.

Here, the record shows that the contracting officer prepared and submitted a written waiver request that described the agency's investigative efforts to determine if SAIC had an OCI that could not be mitigated and the extent of any residual OCI, and that provided a detailed discussion of the bases for his conclusions that the conflict was not significant and that waiver would be in the best interests of the government. Contracting Officer's Statement, Jan. 21, 2011, exh. 1. The requested waiver was duly executed by the head of the contracting activity, as authorized by FAR sect. 9.503. Id.

TAG challenges the adequacy of the waiver on the basis that the agency relied solely on information provided by SAIC to reach its conclusions regarding the possible existence of an OCI. As discussed, however, the record shows that the agency's efforts went well beyond mere acceptance of the information presented by SAIC--the agency critically examined the information presented by SAIC, contacted the cognizant personnel for the other contracts to inquire about potential OCIs, and conducted its own independent research into the products and services offered by SAIC. In these circumstances, we have no basis to question the adequacy of the agency's investigative efforts. CIGNA Gov't Servs., LLC, supra.

As a final matter, TAG takes issue with the terms of the waiver itself insofar as it purports to waive future, currently unknown, OCIs that may arise. In this respect the waiver provides that it is being executed, in part, to waive "[t]he risk of unknown current or future SAIC contracts that may impact the planned A5XP task order." Contracting Officer's Statement, exh. 1, at 7. According to TAG, the agency cannot waive unknown future OCIs.

As an initial matter, irrespective of whether or not an agency properly can waive future, unknown OCIs, GSA's alleged attempt to do so here does not serve to invalidate the agency's waiver of the known potential OCIs on the part of SAIC, a waiver that, as discussed, we find proper. In any case, while we agree with the protester that an agency may not properly waive unknown or future OCIs, the record shows that this was understood by the agency and that the contracting officer did not intend to waive unknown future OCIs. The contracting officer states:

As the contracting officer, in my ongoing coordination with A5XP, I plan to remain aware of any changes that impact potential OCIs. I will assure that the A5XP personnel are to report any new or unknown existing contract vehicles where additional potential risks have been identified. My intention is to address any new OCI issues and handle them in accordance with my duties under the FAR. It was not my intention that the waiver would cover unanticipated conflicts that were not considered in the waiver request. Any new risks would go through the same scrutiny as identified in the Waiver D&F for adequacy of mitigation. If any risks are found to be real OCI and complete mitigation is not provided then meetings would ensue between the Government and the contractor to establish acceptable mitigation procedures or complete avoidance. The approved waiver represents the risks currently identified and is not intended to be a catch all for potential risks identified in the future.

Contracting Officer's Supplemental Statement, Feb. 15, 2011, at 2-3. We have no basis to question the contracting officer's representations in this regard. Valdez Int'l Corp., B-402256.3, Dec. 29, 2010, 2010 CPD para. 13 at 6 (GAO looks to the entire record, including the contracting officer's statement to our Office, in reviewing a contracting officer's judgment concerning a contractor's possible OCI.) In light of the foregoing, we deny TAG's protest of the OCI review.  (The Analysis Group, LLC, B-401726.3, April 18, 2011)  (pdf)

OCI Allegations

The situations in which OCIs arise, as described in Federal Acquisition Regulation (FAR) subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which a firm has access to nonpublic information as part of its performance of a government contract and that information provides a competitive advantage in a later competition (a “biased ground rules” OCI). FAR § 9.505-4. The second group consists of situations in which a firm, as part of its performance of a government contract, has in some way set the ground rules for another contract competition, thereby skewing the competition in its own favor (an “unequal access to information” OCI). Id. §§ 9.505-1, 9.505-2. The third group consists of situations in which a firm’s ability to render impartial advice to the government would be undermined by the firm’s competing interests (an “impaired objectivity” OCI). Id. § 9.505-3.

QinetiQ contends that certain work performed by CSC under the predecessor contract created the first and second types of OCIs, i.e., “unequal access to information” and “biased ground rules” OCIs. QinetiQ also contends that the agency improperly failed to recognize or address the alleged OCIs. With respect to the alleged biased ground rules OCI, QinetiQ points out that certain key personnel résumés submitted with CSC’s proposal show that the individuals reviewed, analyzed, and defined FAA operational requirements under the predecessor contract. Comments and Supp. Protest at 14-17 (referencing AR, Tab 9, CSC Technical Proposal, at 2-8, 2-9, 2-15, 2-16). QinetiQ argues that CSC was therefore in a position to have skewed the competition in its own favor. Id.

The responsibility for determining whether an OCI exists rests with the procuring agency. Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 12. In making the determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, giving consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. FAR §§ 9.504, 9.505. In reviewing bid protests that challenge an agency’s OCI determination, the Court of Appeals for the Federal Circuit has mandated application of the “arbitrary and capricious” standard established pursuant to the Administrative Procedures Act. See Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). To demonstrate that an agency’s OCI determination is arbitrary or capricious, a protester must identify “hard facts” that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Turner Constr. Co. v. United States, No. 2010-5146, slip. op. at 17-18 (Fed. Cir. July 14, 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010). In Axiom, the court noted that “the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion.” Id. The standard of review employed by this Office in reviewing a contracting officer’s OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable. CIGNA Gov’t Servs., LLC, B-401068.4; B-401068.5, Sept. 9, 2010, 2010 CPD ¶ 230 at 12.

In resolving this protest, our Office conducted a 2-day hearing on the record, during which testimony was provided by the contracting officer, the TET chairman, and a QinetiQ vice president who serves as the program manager for QinetiQ’s V-TRIPS contract. At the hearing, the contracting officer testified that he considered the existence of OCIs on an ongoing basis during the procurement, and that it was his view that CSC’s prior work did not create an OCI. Hearing Tr. at 11, 30, 40-41, 110. The contracting officer stated that his OCI analysis included consideration of the circumstances described in FAR subpart 9.5. Hearing Tr. 11, 40-41. He stated that he also considered that all of the V-TRIPS contracts included a clause requiring the contractors to disclose any OCIs known before award, or discovered after award, and that CSC had made no disclosures. Id. at 260-63 (referencing AR, Tab 35, QinetiQ V-TRIPS Contract, § H.14(a), (e)).

With regard to CSC’s work under the predecessor contract, the contracting officer testified that he knew that CSC had analyzed and defined agency requirements. Id. at 49, 92-93. He also testified that he had reviewed the résumés in CSC’s proposal that described analysis and definition of requirements under the predecessor contract. Id. at 95-97. The contracting officer acknowledged, however, that he did not know, or inquire, whether CSC had participated in the preparation of the SOW for the protested task order, or whether those who prepared that SOW had used materials that CSC created under the predecessor contract.8 Id. at 37-38, 62-65, 68-6

At the hearing, the TET chairman, whose day-to-day responsibilities include management of projects supported by TRIPS and V-TRIPS contractors, testified that CSC’s analysis and definition of requirements under the predecessor contract involved identifying system features that are required by system users. Id. at 113-14, 136-37, 194-95, 200. This work generally occurred, he explained, in connection with routine efforts to create enhancements to those systems Id. at 131, 200-01. The TET chairman further testified that he had responsibility over preparation of the SOW at issue in this protest.  Id. at 118-19, 127-28. No contractors, he testified, assisted with preparation of the SOW, and no contractor-prepared documents--including the system requirement definitions prepared by CSC--or contractor input were considered in connection with preparing the SOW. Id. at 120, 128, 131, 136, 142. Additionally, he testified that even if CSC had not performed the requirements definition work, portions of the SOW relevant to this protest would not have been changed from the way that they appear in the SOW. Id. at 198-99, 205, 219-20, 224.

Notwithstanding the TET chairman’s testimony, QinetiQ argues that CSC shaped the SOW because, according to QinetiQ, the SOW includes requirements that were not included in the TRIPS contract SOW and that CSC allegedly defined. Post-Hearing Comments at 16. The only such requirement identified by QinetiQ, however, is compliance with the SWIM methodology. Id. at 12-14, 16. In this regard, QinetiQ points out that one of CSC’s key personnel résumés reflects support of the FAA SWIM/ITWS program. Id. at 12-14 (referencing AR, Tab 9, CSC Technical Proposal, at 2-9).

As discussed above, FAA’s SWIM program aims to increase the sharing of ATMS information. See FAA SWIM Questions and Answers, http://www.faa.gov/about/ office_org/headquarters_offices/ato/service_units/techops/atc_comms_services/ swim/qanda/ (last visited July 25, 2011); see also CSC Hearing Exhibits, Exh. 1, at 23; Hearing Tr. at 185. As also discussed above, 4 of the more than 125 activities described in the SOW referenced compliance with the SWIM methodology. RFP § C.3, at 8-10. In his testimony, the TET chairman characterized the SOW references to SWIM as “very generic” and indicated that they were included in the SOW for the general purpose of informing offerors that the agency has adopted the SWIM methodology. Hearing Tr. at 167-70. The TET chairman also testified that there was no connection between CSC’s work on the SWIM/ITWS program and the SOW. Id. at 165. For these reasons, and because the record does not reflect hard facts to show that CSC’s work under the predecessor contract put the firm in a position to materially affect the protested procurement--for example by influencing the agency’s decision to structure its projects to comply with the SWIM methodology--QinetiQ’s protest that CSC’s prior work created a potential or actual biased ground rules OCI is denied. See DRS C3 Sys., LLC, B-310825, B-310825.2, Feb. 26, 2008, 2008 CPD ¶ 103 at 7-8; Operational Res. Consultants, Inc., B-299131.1, B-299131.2, Feb. 16, 2007, 2007 CPD ¶ 38 at 6; Mechanical Equip. Co., Inc. et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD ¶ 192 at 26-27.

QinetiQ also argues that the award to CSC violates FAR § 9.505-1 because, as alleged by QinetiQ, the record reflects that under the protested task order, CSC will be developing and integrating system enhancements that are connected with the requirements defined by CSC under the predecessor contract. Post-Hearing Comments at 8-14. FAR § 9.505-1 requires that a contractor that provides systems engineering and technical direction for a system for which it does not have overall responsibility for development, integration, assembly, and checkout, or for its production, shall not be awarded a contract to supply the system. FAR § 9.505-1(a). The regulation states that systems engineering includes a combination of “substantially all” of the following activities: determining specifications, identifying and resolving interface problems, developing test requirements, evaluating test data, and supervising design. Id. § 9.505-1(b). It also states that technical direction includes a combination of “substantially all” of the following activities: developing work statements, determining parameters, directing other contractors’ operations, and resolving technical disputes. Id. According to the regulation, a contractor performing these activities occupies a highly influential position in determining a system’s basic concepts and supervising their execution, and thus should not be in a position to make decisions favoring its own products or capabilities. Id.

At the hearing, the contracting officer denied that CSC performed technical direction under the predecessor contract. Hearing Tr. at 41-42. Further, nothing in the record, and nothing offered by QinetiQ, demonstrates that CSC performed the technical direction activities described in FAR § 9.505-1(b), much less “substantially all” of those activities. Moreover, the basis for QinetiQ’s invocation of FAR § 9.505-1 is unclear given that FAR § 9.505-1 pertains to contracts for the “supply of [a] system or any of its major components,” and the SOW here does not call for the supply of a system or major components of a system. For these reasons, we see no merit in QinetiQ’s claim that the award to CSC violates FAR § 9.505-1.

With respect to the alleged unequal access to information OCI, QinetiQ asserts that certain résumés included with CSC’s proposal demonstrate that CSC had access to nonpublic information under the predecessor contract that gave CSC an unfair competitive advantage. Comments and Supp. Protest at 6, 9. The only specific information to which QinetiQ alleges CSC had access, however, is the agency’s preference for minimizing custom coding. Id. at 11. QinetiQ argues that the agency’s determination to assign a strength to CSC’s proposal for an emphasis on minimizing custom coding demonstrates that QinetiQ suffered prejudice as a result of the role that CSC played in developing the “configure don’t code” approach. Id. at 10 (referencing AR, Tab 11(a), TET Report Excerpt--CSC, at 6).

At base, QinetiQ’s position is that an unequal access to information OCI arose because, in QinetiQ’s words, QinetiQ’s personnel did not “have nearly the same level of inside knowledge and experience that [CSC’s personnel] enjoy[ed] through [their] roles at the Volpe Center.” Supp. Comments at 21. It is well-settled that an offeror may possess unique information, advantages, and capabilities due to its prior experience under a government contract--either as an incumbent contractor or otherwise; further, the government is not necessarily required to equalize competition to compensate for such an advantage, unless there is evidence of preferential treatment or other improper action. See FAR § 9.505-2(a)(3); CACI, Inc.--Fed., B-403064.2, Jan. 28, 2011, 2011 CPD ¶ 31 at 10; MASAI Tech. Corp., B-298880.3, B-298880.4, Sept. 10, 2007, 2007 CPD ¶ 179 at 8. The existence of an advantage, in and of itself, does not constitute preferential treatment by the agency, nor is such a normally occurring advantage necessarily unfair. Council for Adult & Experiential Learning, B-299798.2, Aug. 28, 2007, 2007 CPD ¶ 151 at 6; Government Bus. Servs. Group, B-287052 et al., Mar. 27, 2001, 2001 CPD ¶ 58 at 10.

The portions of the CSC résumés on which QinetiQ’s argument hinges reflect that CSC personnel had experience with supporting various Volpe Center activities, including development of a “configure don’t code” approach in connection with SWIM. See AR, Tab 9, CSC Technical Proposal, at 2-3, 2-5, 2-7, 2-9. The agency’s determination to credit CSC’s proposal for demonstrating that experience--together with the absence of evidence of any preferential treatment or unfair action by the agency--amounts to no more than a reflection of the normally occurring advantage that an incumbent may possess. See CACI, Inc.--Fed., supra; Council for Adult & Experiential Learning, supra.  (QinetiQ North America, Inc. B-405008; B-405008.2, Jul 27, 2011)  (pdf)

OCI Allegations

PCCP and Bechtel protest that CBY has an impermissible OCI that the Corps failed to reasonably investigate or mitigate. Specifically, the protesters argue that CBY's employment of the agency's Chief of Program Execution of the Hurricane Protection Office (HPO)--the office within the Corps responsible for this project and procurement--provided the awardee with an unfair competitive advantage that was based upon an unequal access to information OCI. The protesters complain that the CO's investigation of this potential OCI explored only the Chief's responsibility for this procurement prior to leaving the Corps, and did not consider the Chief's access to source selection sensitive information.

In answer, the Corps contends that the hiring of the Corps's Chief of Program Execution for the HPO by CBY's managing partner did not provide CBY with competitively useful, non-public information; the Corps also defends the CO's review of the situation, and his conclusions. See Supp. Legal Memorandum at 9, citing AR, Tab 15, OCI Determination & Findings (D&F). The agency contends that our review of the CO's determination is limited to determining whether the CO reasonably concluded that no actual OCI existed. Id. at 10.

At the time of his retirement from the Corps on August 31, 2010, the Chief of Program Execution held the most senior civilian position at the HPO. In this role, the Chief had full authority for management decisions related to major elements of the hurricane protection program and projects, including the permanent pumps project. See AR, Tab 16, October 13, 2009 Post-Employment Ethics Guidance Letter. Less than a month later, on September 20, the Chief began working as a project manager for CDM, which was the managing partner of the CBY joint venture, the awardee here. At some point thereafter, his title changed from project manager to strategic accounts manager. At the time the Chief left government service and was hired by CDM, offerors were preparing their phase II initial proposals.

After the Chief had left the Corps and was working for CDM, and after the Corps had evaluated the final proposal revisions submitted under the permanent pumps procurement, the CO began an investigation to determine whether an OCI existed. CO's Statement at 5. The CO prepared a Determination and Findings (D&F) of the potential OCI, which focused on the Chief of Program Execution's responsibilities and activities with respect to this procurement. In the OCI D&F, the CO stated that as a result of his investigation and interviews, he found that the Chief retired prior the submission of phase II proposals and that the "structure and ground rules for phase II continued to evolve and changed substantially" after his retirement. The CO concluded that the Chief "effectively removed himself from any involvement in this procurement beginning approximately June 2010." AR, Tab 15, OCI D&F, at 2, 4.

During the course of this protest, the CO revisited his review and expanded it to include consideration of a possible violation of the procurement integrity provisions of the Office of Federal Procurement Policy Act. In the Procurement Integrity D&F, the CO provided more detail supporting his conclusion that the Chief was effectively removed from participation in this procurement prior to the phase II competition. In this regard, the CO noted that the Chief stated that he reached an agreement with the Colonel heading the HPO, in June, 2009, that the Chief would have no further responsibility for acquisition activities, in order to minimize restrictions on the Chief's search for post-government employment. AR, Tab 15, Procurement Integrity D&F, at 4.

Before we begin our review, we note that the FAR requires that contracting officials avoid, neutralize or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. FAR sections 9.504(a), 9.505. The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs, Inc., B-254397 et al., July 27, 1995, 95-2 CPD 129 at 12. In making this determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, giving consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. FAR sections 9.504, 9.505; CACI, Inc.-Fed., B-403064.2, Jan. 28, 2011, 2011 CPD para. 31 at 9.

The FAR recognizes that conflicts may arise in factual situations not expressly described in the relevant FAR sections, and advises contracting officers to examine each situation individually and to exercise "common sense, good judgment, and sound discretion" in assessing whether a significant potential conflict exists and in developing an appropriate way to resolve it. FAR sect. 9.505. The regulation identifies situations in which an OCI may arise, including, as relevant here, where a firm competing for a government contract has "[p]roprietary information (that was obtained from a Government official without proper authorization)" or "source selection information . . . that is relevant to the contract but was not made available to all competitors, and such information would assist the contractor in obtaining the contract." FAR sect. 9.505(b).

In reviewing bid protests that challenge an agency's conflict of interest determinations, the Court of Appeals for the Federal Circuit has mandated application of the "arbitrary and capricious" standard established pursuant to the Administrative Procedures Act. See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). To demonstrate that an agency's OCI determination is arbitrary or capricious, a protester must identify "hard facts" that indicate the existence or potential existence of a conflict; mere inference or suspicion of an actual or potential conflict is not enough. Turner Constr. Co., Inc. v. United States, No. 2010-5146, slip. op. at 17-18 (Fed. Cir. July 14, 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010). In Axiom, the Court of Appeals noted that "the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion." Axiom Res. Mgmt., Inc., 564 F.3d at 1382. The standard of review employed by this Office in reviewing a contracting officer's OCI determination mirrors the standard required by Axiom. In this regard, we review the reasonableness of the CO's investigation and, where an agency has given meaningful consideration to whether an OCI exists, will not substitute our judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable. See CACI, Inc.-Fed., supra, at 9; CIGNA Gov't Servs., LLC, B-401068.4; B-401068.5, Sept. 9, 2010, 2010 CPD para. 230 at 12.

As set forth more fully below, we find that the CO did not conduct a reasonable investigation to determine whether CBY's employment of the agency's former Chief of Program Execution provided the firm with access to non-public, selection sensitive information that gave CBY an unfair competitive advantage. The record shows that the CO's investigation was narrowly focused upon what role the former government employee had in the conduct of the procurement before his retirement (and even then did not consider pertinent information), and did not explore the Chief's access to proprietary or source selection information and whether this information provided an unfair competitive advantage to CBY.

The Chief's Role for the Corps and His Continued Involvement in the Procurement

As indicated above, at the time of his retirement from the Corps, the Chief held the most senior civilian position at the HPO, and in that position he had full authority for management decisions related to major elements of the hurricane protection program and projects, including the permanent pumps project. See AR, Tab 16, Post‑Employment Ethics Guidance Letter, Oct. 13, 2009. The HPO was responsible for the permanent pumps project, and the Permanent Pumps Station branch reported directly to the Chief. See AR, Tab 15, Procurement Integrity D&F, attach. 4, HPO Organizational Chart. The HPO activities the Chief directed included construction management, levees, floodwalls and armoring, existing pump stations, permanent pump stations, and the Inner Harbor Navigation Canal, among others. See AR, Tab 32a, Post‑Employment Ethics Opinion, July 22, 2010, at 1-2. The Corps's ethics counselor found that the Chief had participated personally and substantially in nearly all matters within HPO, specifically naming the permanent pumps project. Id. at 2. The Chief participated in the Corps's preparation of the Acquisition Strategy for the permanent pumps. AR, Tab 15, attach. 8, Acquisition Plan, at 48. The Chief was listed as an advisor to the SSEB for both phases of the procurement (although he denies having acted in that capacity). The Director of Task Force Hope, or overall manager of the $14 billion hurricane protection system program, who was the SSA for this procurement, asked the Chief to intervene with the senior project manager for this procurement to have a different contracting officer assigned to the job. Tr. at 1091. The person whom the Chief approached in this regard, who was working as a deputy in the district at that time, was then moved to the HPO to become the chief of one of the HPO's contracting groups, and CO for this procurement in April 2010. Id.

The record does not support the agency's OCI conclusion that the Chief had removed himself from the procurement in June of 2010. See AR, Tab 15, OCI D&F, at 2. Instead, the record shows that until he retired, the Chief continued to work in close proximity and communication with the agency's project manager for the permanent pumps project, who reported to the Chief throughout his employment with the Corps. Tr. at 1043. The project manager testified, for example, that he had conversations with the Chief in hallways or in his office, Tr. 77, discussing such matters as the costs and the risks of the project, the RFP, how build-to-budget was received by industry, performance requirements, updates, and, in general, discussed the project with the Chief frequently. See Tr. at 76-78. The project manager further testified that there was never a formal declaration, even to him, that the Chief had recused himself from the project. Tr. at 944.

Other evidence supports the Chief's continued involvement in the procurement prior to his retirement. For example, Bechtel provided a sworn declaration of its Operations Manager, who stated that he and another Bechtel employee met with the agency's Chief and the Colonel in charge of the HPO on July 6, 2010, after Phase II had begun, and discussed with them the build-to-budget concept. See Bechtel Supp. Protest, exh. 2, Decl. of Bechtel Operations Manager, June 6, 2011. The Corps has offered no rebuttal to this sworn statement.

In addition, we find the assertion that there was an agreement between the Chief and the Colonel in 2009, under which the Chief allegedly agreed to have no further responsibility for acquisition activities beginning approximately a year prior to his retirement, deserving of little probative weight. This agreement (which was mentioned for the first time in a post-protest D&F) is not contemporaneously documented, and it does not appear that other government personnel were aware of its existence. In this regard, although the Chief asserted that he had made sure that the permanent pumps project manager (who was also the head of the project delivery team, source selection advisory council member, and Permanent Pump Station Branch chief) and the rest of his staff knew of the agreement with the Colonel, Tr. at 1057, the project manager testified that he was unaware of the agreement until after the protests were filed. Tr. at 972. Similarly, the contracting officer was not told of the agreement until after the protests were filed, see AR, Tab 15, Procurement Integrity D&F, at 5, although he would have been expected to learn of such an agreement as a result of his investigation of CBY's potential OCI. Moreover, it was revealed at the hearing that the Colonel did not independently recall the agreement with sufficient clarity to be willing to sign a declaration (prepared in connection with this protest) about his recollection of it, until after a copy of the declaration was provided to the Chief to "make sure [the Chief] didn't see any problems with it before [the Colonel] signed it." Tr. at 1125-30.

Despite the Chief's continued close contact within the office responsible for this procurement, the D&Fs (and the record generally) do not show any investigation into whether any boundaries or restrictions were placed on the Chief's access to non-public, competitively sensitive information. In this connection, the Corps argues in its post-hearing comments that "[e]ven absent a proactive firewall excluding [the Chief] from the acquisition, all members of the selection team told the CO that they had never discussed the acquisition with [the Chief]," citing the OCI D&F as support for this assertion. See Agency's Post-Hearing Comments at 49. We give little weight to this assertion, however, given that the OCI D&F, in contrast to the Corps's post‑protest assertions, states only that the CO inquired whether members of the selection team had discussions about the phase II evaluation with the Chief "following his departure from federal service." See AR, Tab 15, OCI D&F, at 4. This does not account for the Chief's access to non-public, selection sensitive information prior to his retirement.

The Chief's Access to Non-Public, Selection Sensitive Information and Provision of Such Information to CBY

The Corps and CBY contend that the protesters cannot show that the Chief provided non-public, competitively useful information to CBY. However, Bechtel and PCCP point to the Corps's interpretation of the RFP's build-to-budget approach, and CBY's apparently unique knowledge that offerors were permitted to propose less than the $700 million ceiling for this contract. The record shows that the Corps began considering the build-to-budget approach for this procurement as early as February 2009, when, according to the Corps, the Chief still had responsibility for the project. Also, the record shows that the Chief was a required attendee at a February 1, 2010, permanent pumps build-to-budget briefing, in which this approach, and the decision to use it, were explained to the Colonel, and at which briefing the Chief was given slides showing feedback on this issue from one-on-one meetings held with prospective competitors.  See AR, Tab 15, Procurement Integrity D&F, attach. 7, Feb. 1, 2010 E-mail Confirming the Chief's Required Attendance; Tab 30, Decl. of Project Manager, at 1. A briefing slide from that meeting expressly provides, "Require offerors to submit proposals at or below the budgeted amount," a phrase that was not included on slides from briefings to industry and did not appear in the RFP. See PCCP's Supp. Protest, exh. 34, Build-to-Budget Briefing, at 2 (emphasis added).

The record also shows that on July 22, 2010, while the Chief was still working at the Corps—after phase II of the procurement had begun—the Chief received an e-mail from the agency's permanent pumps project manager, marked "high importance," concerning the build-to-budget provision and setting forth a proposed clarification to the RFP. See Hearing exh. 6 at 6. Following the proposed clarification, the e-mail asks whether "this solves the issue." The e-mail, initially sent from the contracting officer to the consultant who introduced the build-to-budget concept and the project manager, was forwarded directly to the Chief by the project manager. There is no explanation in the record of why the Chief was continuing to receive procurement information regarding the build-to-budget issue.

The record further shows that the Chief, after accepting employment with CBY, responded to CBY's request for advice about whether the firm should take an "opportunity to come in below $700 million." Tr. at 1113. The Chief testified that he advised CBY that, "if you could increase your value for the program, increase it . . . [i]f not, you know, it says within the number. It doesn't say you've got to hit $700 million. So don't just add money to add money." Tr. at 1114. In short, he advised CBY that, notwithstanding the RFP's express direction not to offer a lower price, CBY could offer a lower price. As noted above, CBY was the only offeror to propose less than $700 million.

Agency's Failure to Investigate Chief's Role at CBY and CBY's Access to Non‑Public, Selection Sensitive Information

The record does not show that the CO reasonably investigated the Chief's role and activities with CBY and whether CBY had access to non-public, selection sensitive information through the Chief. Rather, the CO merely stated in his D&Fs that the Chief's name did not appear in any of CBY's proposal documents and that nothing in CBY's proposal indicated that the awardee had received superior knowledge from the Chief. See AR, Tab 15, OCI D&F, at 2, 5; see also Procurement Integrity D&F, at 9. No support for these conclusory statements is provided in the D&Fs, or elsewhere in the record. Although the OCI D&F was dated March 24, 2011--approximately 6 months after the Chief started working for CBY's managing joint venture partner--it is written as if the Chief had not yet been hired by CDM. The contracting officer did not contact the Chief for a first‑hand account of his activities after he retired from the Corps or to learn what role he played at CDM. The record shows, in contrast to the CO's conclusions, that, following employment by CBY's managing joint venture partner, the Chief participated in "red team" reviews on CBY's phase II proposal and FPR, see Tr. at 43, and as explained above, the Chief counseled CBY that it could offer less than the build-to-budget amount identified in the RFP.

We note that the OCI D&F concludes that "some mitigation of the potential for an appearance of a conflict occurred when [the Chief] was counseled, when he withdrew from advising the SSO, and when Corps employees were instructed to refrain from discussions with [the Chief] about the project." OCI D&F at 4. We do not believe that the CO could reasonably view the cited events as reliable evidence of mitigation. For example, we understand the "counseling" to refer to a post-employment ethics opinion the Chief received from the Corps after he was offered employment by CBY's managing partner. AR, Tab 32a, Post-Employment Ethics Opinion, July 22, 2010; Tr. at 1095. The Ethics Opinion was issued based on information the Chief provided, including a job description. AR, Tab 32a. After reciting the facts, the opinion concludes that the Chief participated personally and substantially in nearly all matters within HPO, and includes the permanent pump station projects among the three specific areas in which he personally and substantially participated. Id. at 2. With respect to the Chief's prospective employer, the opinion states, "[y]ou advise that CDM does not currently have any contracts on any projects under HPO's area of responsibility," id. at 3, without any apparent consideration of CDM's role in CBY. The opinion directed the Chief to "immediately seek an updated opinion" if his duties with CDM changed or were different from those described in the opinion. The Chief testified that he assumed the ethics counselor would verify the documents he had signed, and that, once he went to work for CDM, he "saw no reason" to ever tell the ethics counselor that he was working on the permanent pumps project. Tr. at 1247-48. With respect to his withdrawal from advising the SSO, and instructions to Corps employees not to discuss the project with the Chief, we find no contemporaneous documentation--or other meaningful evidence in the record--to support that these events took place.

In sum, we find that hard facts exist to suggest the existence of a potential, if not actual, OCI that the Corps failed to reasonably evaluate and avoid, neutralize, or mitigate. In this regard, the Corps did not reasonably investigate the extent to which the Chief had access to non-public, source selection information and whether this information provided a competitive advantage to CBY. Specifically, the agency failed to reasonably consider the Chief's access to build-to-budget information that appears to have provided CBY with a competitive advantage in this procurement. In our view, the agency's failure to reasonably investigate the OCI taints the integrity of the procurement process. We therefore sustain PCCP's and Bechtel's protests of this issue. (PCCP Constructors, JV; Bechtel Infrastructure Corporation, B-405036; B-405036.2; B-405036.3; B-405036.4; B-405036.5; B-405036.6, August 4, 2011)  (pdf)

CACI again protests that BAH's role as [Defense Human Resources Activity] DHRA support contractor created an "unequal access to information" OCI that cannot be mitigated, and as such, BAH should have been excluded from the competition. CACI also again argues that because of BAH's performance as a support contractor to DHRA's Program Management Office, BAH has "a unique knowledge of the government's plans, attitudes and preferences for future [Defense Personnel Records Information Retrieval System] DPRIS development." Protest at 13. In support of this assertion, the protester points, without explanation, to the previously discussed statements provided by the CACI employees to the agency in response to the agency's August 13 request. The protester also points to BAH's technical proposal in support of its assertion that BAH's participation in the competition created an unequal access to information OCI, noting, for example, that BAH's proposal states that BAH has a "unique understanding" of the agency's "needs and strategic vision." Id.; see AR, Tab 62, BAH Technical Proposal, at 1-1. The protester also again argues that BAH, in its performance of the DHRA task order, attended meetings at which CACI and agency personnel had been present, and that these meetings exposed BAH personnel to certain CACI proprietary information regarding CACI's performance as the incumbent DPRIS support contractor.

The responsibility for determining whether a conflict exists rests with the procuring agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra, at 12. In making this determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, giving consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. FAR sections 9.504, 9.505. In reviewing bid protests that challenge an agency's conflict determinations, the Court of Appeals for the Federal Circuit has mandated application of the "arbitrary and capricious" standard established pursuant to the Administrative Procedures Act. See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). In Axiom, the Court of Appeals noted that "the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion." Id. The standard of review employed by this Office in reviewing a contracting officer's OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable. CIGNA Gov't Servs., LLC, B‑401068.4; B‑401068.5, Sept. 9, 2010, 2010 CPD para. 230 at 12.

As indicated by the discussion above, the record reflects that the agency performed a comprehensive OCI analysis. The TEBC/DPRIS PM and contracting officer, as well as individuals associated with DHRA's Office of the General Counsel and Procurement Support Office, all participated in the OCI analysis, and clearly gave "meaningful consideration to whether an OCI exists" with regard to BAH's performance as the DHRA support contractor. The protester's assertion that BAH's DHRA task order gave BAH an unfair competitive advantage because BAH gained a "unique understanding" of the agency's plans and needs was expressly addressed by the agency during its OCI analysis, and found to be without merit. As explained above, the agency states that certain information regarding its plans for DPRIS had been released publicly, and that it failed to understand, based upon its analysis and CACI's generalized assertions, why BAH could be considered to have any such "unique awareness." In this regard, the agency also noted that to the extent BAH had an advantage in this competition because of its performance of the DHRA task order, CACI enjoys a similar or greater advantage because of its 15 years of performance as the DPRIS support contractor under its task order.

Based on our review of the record, we cannot conclude that this aspect of the agency's OCI determination was unreasonable or reflected an abuse of discretion. We agree with the agency that, with the exception of the generalized statements in BAH's technical proposal, CACI has failed to point to any specific agency information BAH may have learned during its performance of the DHRA task order that provided BAH with an unfair advantage in competing for this award. Moreover, and in regard to BAH's alleged "unique awareness" of the agency's needs or plans, it is well settled that an offeror, such as BAH (or CACI), may possess unique information, advantages and capabilities due to its prior experience under a government contract--either as an incumbent contractor or otherwise; further, the government is not necessarily required to equalize competition to compensate for such an advantage, unless there is evidence of preferential treatment or other improper action. MASAI Techs. Corp., B‑298880.3, B-2988880.4, Sept. 10, 2007, 2007 CPD para. 179 at 8. The existence of an advantage, in and of itself, does not constitute preferential treatment by the agency, nor is such a normally occurring advantage necessarily unfair. Id. With regard to the language in BAH's technical proposal, which is the only specific evidence the protester contends supports its assertion here, we cannot find that such statements, which amount to "puffery," are sufficient to establish that BAH had an unfair competitive advantage, particularly given the agency's other findings to the contrary. See Imperial Schrade Corp., B‑223527.2, Mar. 6, 1987, 87-1 CPD para. 254 at 12 (statements made by retired Army officer that only he knew the agency's needs were mere puffery and insufficient to disqualify firm from the competition). Under the circumstances here, the protester's contentions amount to no more than bare speculation that BAH had unequal access to competitively useful information, and as such provides no basis to find that BAH had a conflict of interest. See Mechanical Equip. Co., Inc., et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD para. 192 at 29.

We also do not find unreasonable the agency's determination that BAH, in its performance of its DHRA task order, was not improperly exposed to CACI proprietary or confidential information. We first note that certain of the information CACI asserts or suggestimplies was improperly disclosed was either information that in fact was not disclosed to BAH, such as the information referred to in the statement of the CACI engineer, or was information to which the agency had "unlimited data rights," and thus was "permitted to disclose" to third parties. See AR, Tab 56, TEBC/DPRIS PM OCI Memorandum, at 9, 13. With regard to the other information referenced by CACI, and provided to the agency as attachments, we find reasonable the agency's position that "it was incumbent upon CACI, to control its own information and CACI cannot now claim information as non-public or proprietary that it freely disclosed to BAH during performance of the contract." Id. at 19. In this regard, our Office has stated that, as a general rule, proprietary information is that which is so marked or otherwise submitted in confidence to the government. Snell Enters., Inc., B‑290113, B‑290113.2, June 10, 2002, 2002 CPD para. 115 at 6; Interior Sys., Inc., B-271469, July 23, 1996, 96‑2 CPD para. 34 at 2. In this regard, FAR sect. 9.505‑4(a) specifically provides:

When a contactor requires proprietary information from others to perform a Government contract and can use the leverage of the contract to obtain it, the contractor may gain an unfair competitive advantage unless restrictions are imposed. These restrictions protect the information and encourage companies to provide it when necessary for contract performance. They are not intended to protect information—

(1) Furnished voluntarily without limitations in its use; or

(2) Available to the Government or contractor from other sources without restriction.

Here, the record reflects that the information now claimed by CACI as proprietary was "furnished voluntarily without limitations on its use." That is, the record reflects that the information was not marked as proprietary, nor was it submitted in confidence to the government or BAH. Specifically, CACI has not pointed to any information that was marked or otherwise identified as proprietary or confidential in either its statements furnished to the agency in August 2010, or its submissions to our Office during this protest. Moreover, we have no reason to disagree with the agency's conclusion that none of CACI's proprietary or non-public information was ever disclosed to BAH by agency personnel. Nor does the record reasonably show that CACI was somehow misled by BAH or government personnel into believing that BAH would not compete for future DPRIS work, or that the information being freely shared would be treated as proprietary or confidential.

In sum, we find reasonable the agency's determination that BAH did not have OCIs that precluded award under this RFP.  (CACI, Inc.-Federal, B-403064.2, January 28, 2011) (pdf)

Ellwood asserts that, at a minimum, M&T has a potential unfair access to information OCI by virtue of its relationship with CTS and, more specifically, with Ellwood's former employee. Ellwood reiterates its position that this individual had access to its non-public information relating to the fabrication of HP-9-4-20M steel, and that the information would be competitively useful in the qualification process for the BLU-113 casings. Ellwod concludes that, because the individual assisted M&T both in the qualification process and in preparing its proposal, this establishes a prima facie case that M&T suffers from a potential OCI.

Ellwood's assertions are without merit. While Ellwood's argument is based principally on the fact that Ellwood's proprietary information was available to its former employee in his role as a subcontractor under a SETA contract relating to the MOP program (during which time he observed Ellwood's manufacturing activities and was privy to Ellwood's non-public information), Ellwood has not explained what information was gained during that activity that was in any way new or different from the information the individual already possessed through his employment and consultant relationships with Ellwood. In this regard, where information is obtained by one firm directly from another firm--by, for example, dissemination of information by former employees--this essentially amounts to a dispute between private parties that we will not consider absent evidence of government involvement. LLH & Assocs., LLC, B-297804, Mar. 6, 2006, 2006 CPD para. 52 at 5.

Ellwood's protest supports the proposition that its former employee already possessed the information in question, stating as follows:

Massive Ordnance Penetrator is a technology demonstration program funded by DTRA to develop a large conventional penetrating weapon that will defeat hard and deeply buried targets using high-strength alloy steel casings nearly identical to those ENF [Ellwood] produces for the BLU-113 program. See FedBizOps Website, www.fbo.gov (search "Solicitation No. 678ARSS8JUN09"). The fundamental difference between the casings is their respective sizes. The MOP is a 30,000-pound weapon designed to be carried onboard B-2 and B-52 bombers while the BLU-113 is a 5,000-pound weapon carried on most strike aircraft.

* * * * *

The [MOP] casing is comprised of the same HP-9-4-20M alloy steel used to construct the BLU-113 casings. Proprietary information and know-how regarding manufacture of the MOP, therefore, is directly applicable to manufacture of the BLU-113 and to any other penetrators made of HP-9-4-20M material.

* * * * *

[The individual], in all three of his prior capacities: (1) as a senior manager for ENF's [Ellwood's] predecessor, NFC [National Forge Company]; (2) as a consultant to ENF; and (3) as a SETA contractor to DTRA under the MOP program, [has] had access to and observed ENF's confidential and proprietary techniques used in the production of HP-9-4-20M material and the associated weapons casings.

Ellwood Letter of Protest, July 19, 2010, at 5-6. Ellwood has neither alleged nor demonstrated that information necessary to manufacture HP-9-4-20M steel for the MOP is in any way different from information necessary to manufacture HP-9-4-20M steel for the BLU-113; in fact, it alleges that the information is the same. This being the case, Ellwood's allegation amounts to no more than an assertion that information the individual acquired as an Ellwood employee and consultant was improperly shared with M&T. This is not an OCI scenario; rather, it amounts to an alleged violation of an agreement between private parties that we will not consider. LLH & Assocs., LLC, supra. Stated differently, where an individual obtains non-public, competitively useful information in connection with a private employment or consulting agreement, an allegation that the information subsequently was shared with a competitor is a dispute between private parties, and does not give rise to an OCI, notwithstanding that the individual also subsequently may have had access to the same information through performance of a government contract.

In any case, as outlined above, the contracting officer conducted an extensive investigation into any potential OCI. This effort was sufficient to provide the agency with the information necessary to reach a reasonable judgment as to the potential OCI, and thus there is no basis for us to question the contracting officer's determination that there was no need to exclude M&T from competing for the requirement, because any OCI had been mitigated or neutralized. CIGNA Govt. Servs., LLC, B‑401068.4, B-401068.5, Sept. 9, 2010, 2010 CPD para. __ at 12-13 (where record shows that contracting officer thoroughly considered all facts and circumstances surrounding alleged OCI and sought the advice of counsel and technical experts, we will not substitute our judgment for that of the contracting officer absent clear evidence that the agency's determination was unreasonable).  (Ellwood National Forge Company, B-402089.3, October 22, 2010)  (pdf)

CIGNA first protests that Palmetto's performance under the HIGLAS transition and training support contracts created "[u]nfair, [u]nmitigated, and [u]nallowable" OCIs which the contracting officer failed to reasonably recognize. CIGNA's Fourth Protest, June 1, 2009, at 30. CIGNA maintains that Palmetto's prior performance under those contracts mandate its exclusion from this competition. Id. at 3. We disagree.

The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which a firm has access to nonpublic information as part of its performance of a government contract and that information provides a competitive advantage in a later competition. FAR sect. 9.505‑4. The second group consists of situations in which a firm, as part of its performance of a government contract has, in some way, set the ground rules for another contract competition, thereby skewing the competition in its own favor. FAR sections 9.505-1, 9.505-2. The third group consists of situations where a firm's ability to render impartial advice to the government would be undermined by the firm's competing interests. FAR sections 9.505-3.

In challenging the award to Palmetto, CIGNA maintains that Palmetto's performance of the HIGLAS contracts creates each of the three types of OCIs discussed above, noting that the HIGLAS system "interacts" with the MACs systems, will eventually be used by all MAC contractors, and therefore will "impact" those contractors. CIGNA's Post-Hearing Comments, Aug. 13, 2010, at 8-17. Among other things, CIGNA asserts that Palmetto's activities regarding "workload splits," "workload renames," and "workload merges" create OCIs. Id. at 13-17. In this context, CIGNA also complains that QSSI/Palmetto is involved in updating CMS's "internet only manual" (IOM), which provides instructions to MACs regarding claims processing procedures. Id. at 10. CIGNA further asserts that information Palmetto has received in resolving transition problems encountered by other MACs, as well as information obtained in performing the HIGLAS training contract, create OCIs. Id. at 14-15. Accordingly, CIGNA maintains that the contracting officer could not have reasonably determined that performance of the HIGLAS contracts did not create an OCI.

In responding to CIGNA's numerous protest assertions, the agency has provided information and explanations regarding the HIGLAS system, and the nature of the activities that are required by the agency in transitioning to that system. For example, the agency explains that Palmetto's activities with regard to "splits," "renames," and "merges" reflect the fact that the prior accounting system data was not divided by the geographical boundaries established for the current MAC jurisdictions. Tr. at 40. Accordingly, Palmetto's activities regarding these matters involve reorganization of data from the prior organizational structure to a structure consistent with the MAC jurisdictional boundaries--not a review of other MACs' claim processing operations or procedures. Tr. at 43, 45; Declaration of Deputy Director, Financial Management Systems Group, Aug. 2, 2010, paras. 11, 13, 14. More specifically, the agency states that, in performing the HIGLAS contracts, Palmetto does not "obtain access to the contractor's systems, data, business process documents, or any other documents pertaining to the transitioning contractors." Declaration of Deputy Director, Financial Management Systems Group, June 29, 2010, para. 30.

In responding to Palmetto's assertion's regarding the agency's IOM, CMS states that, although QSSI/Palmetto have been tasked with comparing the content of the IOM with the content of HIGLAS training manuals and identifying areas in the IOM that could benefit from the addition of HIGLAS-related information, QSSI/Palmetto's input is made publicly available to all Medicare claims processing contractors. Tr. at 393. Further, no IOM revisions flowing from QSSI/Palmetto's activities have been implemented. Id. at 395.

Consistent with the above, the agency further states that, in assisting with specific problems encountered by transitioning contractors, QSSI/Palmetto have viewed "screen prints" of specific problem transactions. However, even with regard to such "screen prints," the information accessed does not involve the contractor's claims processing operations or procedures since "[t]he only financial information that

HIGLAS is involved with is the accounting data." Declaration of Deputy Director, Financial Management Systems Group, June 29, 2010, para. 30. Finally, with regard to the performance of the HIGLAS training services contract, the agency states that Palmetto does not have access to actual "production data" or "contractor-specific data," but rather relies on "dummy data"; that is, data used to simulate how the modules operate and the system works. Tr. at 44.

The responsibility for determining whether a conflict exists rests with the procuring agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para.129 at 12. In making this determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, paying consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. FAR sections 9.504, 9.505. In reviewing bid protests that challenge an agency's conflicts determinations, the Court of Appeals for the Federal Circuit has mandated application of the "arbitrary and capricious" standard established pursuant to the Administrative Procedures Act (APA). See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). In Axiom, the Court of Appeals noted that "the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion." Id. The standard of review employed by this Office in reviewing a contracting officer's OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, we will not substitute our judgment for the agency's, absent clear evidence that the agency's conclusion is unreasonable. See, e.g., MASAI Tech. Corp., B-298880.3, B-298880.4, Sept. 10, 2007, 2007 CPD para. 179 at 8; Business Consulting Assocs., B‑299758.2, Aug. 1, 2007, 2007 CPD para. 134 at 9-10; Overlook Sys. Techs., Inc., B‑298099.4, B‑298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-18; Alion Sci. & Tech. Corp., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 5-8.

Here, based on our review of the entire record, we cannot conclude that the contracting officer unreasonably determined that Palmetto's performance of the HIGLAS contracts does not create an OCI. That is, the record shows that the contracting officer followed the FAR direction to consider the particular facts involved, including the nature of the contracts at issue, and to obtain the advice of counsel and the assistance of technical specialists before exercising her sound discretion. While we agree that the matters presented raise legitimate concerns regarding Palmetto's involvement in activities that relate to the performance of the MAC contracts, CIGNA has failed to persuasively explain how any of Palmetto's activities or access to information pursuant to performance of the HIGLAS contracts provided Palmetto a competitive advantage in competing for the jurisdiction 11 MAC contract. Based on our consideration of the record presented, including the testimony and declarations of the various agency personnel associated with, and knowledgeable of, the matters at issue, we cannot conclude that the contracting officer's decision reflected an abuse of her discretion. CIGNA's protests to the contrary are denied.   (CIGNA Government Services, LLC, B-401068.4, B-401068.5, September 9, 2010) (pdf)

In implementing the corrective action, the agency issued requests to both offerors for additional information concerning their performance under current and recent IC [intelligence community] contracts and followed up with clarification requests. After reviewing these responses, the contracting officer conducted interviews with government personnel responsible for administering the prior contracts in order to arrive at an assessment of OCI risk. Based on his review, the contracting officer concluded that MCR had a medium risk OCI under 2 of 7 contracts and that Scitor had a medium risk OCI in 2 of 16. Thereafter, the SSA prepared a seven-page waiver request, which she forwarded to CIA's Chief of Acquisition Services (the official authorized to grant an OCI waiver). The request included a description of the OCI concern and potential effect if not avoided, neutralized, or mitigated, and the government's interest in using the offerors notwithstanding the OCI concerns. Waiver Request at 1-3, 5-6.  The SSA explained that Scitor's and MCR's roles under existing and past contracts presented conflicting interests that theoretically might bias their judgment in performing the RFP work. Id. at 2. The agency's market research indicated that the pool of properly cleared cost estimators with sufficient experience was narrow and that, if MCR and Scitor were precluded from competing, it was "highly doubtful" that cleared personnel could be located who did not also have comparable OCI issues. Id. at 5. Given the limited number of cleared estimators and the lack of competition that would result from eliminating Scitor from the procurement, the SSA reasoned that, even if MCR were deemed not to have an OCI similar to Scitor's, it was in the government's interest to acquire the services competitively in order to obtain the best value, and that waiver of the OCIs therefore was justified. Id. at 5, 7. Accordingly, the designated official approved the waiver.

(sections deleted)

MCR asserts that it was unreasonable for CIA to waive Scitor's OCI for a number of reasons. For example, it maintains that the agency unreasonably considered the offerors' OCIs as equivalent because MCR's OCI allegedly could be easily mitigated, while Scitor's could not be mitigated at all; that the agency's waiver was inconsistent with CIA's earlier guidance on which OCIs precluded an offeror's participation; and that the waiver lacked a sufficient basis. We have considered all of MCR's assertions and find that none has merit.

Under the Federal Acquisition Regulation (FAR) subpart 9.5, when the facts of a procurement raise a concern that a potential awardee might have an OCI, the agency must determine whether an actual or apparent OCI will arise, and whether the firm should be excluded from the competition. The specific responsibility to avoid, neutralize or mitigate a potential significant conflict of interest lies with the cognizant contracting officer. Overlook Sys. Techs., Inc., B-298099.4, B-298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-11; see FAR sect. 9.504. As an alternative, the agency head or a designee may waive any general rule or procedure of [FAR subpart 9.5] by determining that its application in a particular situation would not be in the Government's interest. Any request for waiver must be in writing, shall set forth the extent of the conflict, and requires approval by the agency head or a designee.

FAR sect. 9.504. Where a procurement decision--such as whether an OCI should be waived--is committed by statute or regulation to the discretion of agency officials, our Office will not make an independent determination of the matter. Knights' Piping, Inc.; World Wide Marine & Indus. Servs., B-280398.2, B-280398.3, Oct. 9, 1998, 98-2 CPD para. 91 at 6.

Here, as outlined above, the SSA made a written request for a waiver from CIA's Chief of Acquisition Services, describing the OCI concern with both offerors; the potential effect if not avoided, neutralized, or mitigated; and, the government's interest in allowing the offerors to compete for the award notwithstanding the OCI concerns. After reviewing the request, the designated official approved the waiver. On this record, we find that CIA has met the requirements of FAR sect. 9.504; MCR's assertions to the contrary provide no basis to object to that waiver. See Knights' Piping, Inc.; World Wide Marine & Indus. Servs., supra.  (MCR Federal, LLC, B-401954.2, August 17, 2010) (pdf)

The protester maintains that Boeing had an impermissible "unequal access to information"-type OCI by virtue of the information provided to it by ITT at the October 22 meeting regarding the SRWNM 1.0+ software product. It notes, in this regard, that not all offerors had access to the information, and that Boeing had an opportunity to amend its proposal after the meeting. As a result, ITT concludes that Boeing should be excluded from the competition because of its OCI.

We find no impermissible OCI. Contracting officials must avoid, neutralize or mitigate potential significant OCIs so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. Federal Acquisition Regulation (FAR) sections 9.504(a), 9.505. The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, fall under three broad categories: unequal access to information, biased ground rules, and impaired objectivity. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 11-12.

As relevant here, 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. FAR sections 9.505(b), 9.505-4; Maden Techs., B-298543.2, Oct. 30, 2006, 2006 CPD para. 167 at 8; see also McCarthy/Hunt, JV, B‑402229.2, Feb. 16, 2010, 2010 CPD para. 68 at 5. 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." FAR sect. 9.505(b).

At the heart of ITT's allegation is the notion that, because the SRWNM 1.0+ software is ITT's product, ITT should have enjoyed exclusive use of information relating to the software when preparing its proposal. In other words, ITT is complaining, not that Boeing had unequal access to information, but that ITT lost an informational advantage to which it believes it was entitled. This situation does not establish the elements of an unequal access OCI. First, an unequal access to information OCI can only be established where a protester shows that the awardee had information that it did not possess. Where the protester has the information in question and the awardee also has the same information, the awardee cannot be said to have "unequal access to information," and, correspondingly, the protester cannot be said to have been prejudiced, since both it and the awardee had access to the same information.

More fundamentally, all of the software to be integrated under the RFP--ITT's SRWNM 1.0R and SRWNM 1.0+, as well as Boeing's JWNM software product--was developed and provided to the government with a government purpose rights (GPR) license. Agency Supp. Report, Second Decl. of Agency's Deputy Project Manager, attach.; Intervenor's Supp. Comments, July 2, 2010, attach. D. Accordingly, and as conclusively demonstrated by the fact that ITT was contractually required to provide the information to Boeing at the TIM, the record establishes that the agency had a legal right to use the information by virtue of its GPR license. It follows that the implicit, underlying premise of ITT's argument--that it was entitled to the unequal advantage afforded by possession of the information because it had an exclusive, proprietary right to the information--is unsupported by the record. We therefore conclude that the fact that Boeing was provided with the information did not create an "unequal access" OCI vis-a-vis ITT, and also does not support the finding of any other procurement impropriety.  (ITT Corporation-Electronic Systems, B-402808, August 6, 2010)  (pdf)

More generally, SES's various protest submissions alternatively assert that, even if the solicitation did not create a per se prohibition on Edaptive's reliance on BCSSI as a subcontractor, the agency failed to adequately consider the potential for impaired objectivity conflicts flowing from the specific facts presented here.

The responsibility for determining whether a conflict of interest will arise, and to what extent a firm should be excluded from the competition, rests with the contracting agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para.129 at 12. Because conflicts may arise in various factual situations, including those not directly addressed in the Federal Acquisition Regulation (FAR), that regulation directs contracting officers to examine each situation individually in assessing whether conflicts exist. FAR sect. 9.505. Provided an agency gives meaningful and thorough consideration to potential conflicts, our Office will not overturn a determination based on such consideration absent a showing that it is unreasonable. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra.

In response to SES's assertions that the agency failed to reasonably consider whether Edaptive's particular proposed use of BCSSI as a subcontractor created impaired objectivity conflicts of interest, this Office sought additional information from the agency regarding the basis for its determination. Specifically, following submission of the agency report, this Office conducted a recorded telephone hearing during which testimony was provided by the contracting officer regarding the basis for determining that Edaptive's proposal of BCSSI as a subcontractor did not create a conflict, as well as for the agency's issuance of solicitation amendment Nos. 2 and 3; thereafter, the agency submitted declarations from the agency's technical evaluation panel chair and deputy director of its information systems group further explaining the agency's actions. Based on our review of the entire record, we do not question the reasonableness of the agency's determination regarding conflicts.

Specifically, as discussed above, the agency first determined that conflict of interest concerns precluded any contractor that performed under phase 1 (during which the program requirements are identified) from performing in any capacity under phase 4 (during which a system will be designed/developed to meet the requirements identified in phase 1). Given the required separation between identification of the requirements and design/development of a system, the agency concluded that the objectivity of a contractor in performing the phase 2 tasks, including testing, operating and maintaining the system as developed by the independent phase 4 contractor, was not threatened by the phase 2 contractor's involvement in the phase 1 identification of requirements. That is, the agency considered the phase 4 contract to, in effect, create a "buffer" between performance of the phase 1 and phase 2 contract requirements.

In supporting its conclusions regarding this matter, the agency has provided a comprehensive analysis of the various tasks contemplated under the phase 1 and phase 2 contracts. Agency's Post-Hearing Comments; Declaration of CMS Technical Panel Chair; Declaration of Deputy Director of CMS Information Systems Group. The agency's analysis discusses the various activities contemplated under each contract, and provides the agency's narrative assessment regarding its bases for concluding that no conflict of interest is created. Although protester's various submissions express disagreement with the agency's analysis and conclusions, that disagreement fails to demonstrate that such conclusions are unreasonable or provide this Office with a basis to question the agency's judgments. Accordingly, SES's protest that award to Edaptive was improper due to an alleged conflict of interest is without merit.  (Software Engineering Services, Inc., B-401645, October 23, 2009) (pdf)

ARTEL argues that the award to Intelsat was tainted by an OCI arising from the awardee's knowledge of the other offerors' costs for certain satellite resources. In this regard, ARTEL contends that Intelsat controls certain satellites that are necessary for performance of the CBSP contract requirements. The protester argues that, by virtue of controlling these satellites, Intelsat knew ARTEL's costs for their use, which created an unequal access to information OCI. The protester also argues that Intelsat did not negotiate fairly with ARTEL, and did not allow ARTEL to purchase services in a manner that the protester contends is consistent with industry practice. We conclude that these allegations, even if true, would not constitute an OCI.

Contracting officials must avoid, neutralize or mitigate potential significant OCIs so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. FAR sections 9.504(a), 9.505. The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three categories: unequal access to information, biased ground rules, and impaired objectivity. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 11-12.

As relevant here, 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 for a government contract. FAR sections 9.505(b), 9.505-4; Maden Techs., B-298543.2, Oct. 30, 2006, 2006 CPD para. 167 at 8; see also McCarthy/Hunt, JV, B‑402229.2, Feb. 16, 2010, 2010 CPD para. 68 at 5 (protest sustained where awardee's subcontract had access to nonpublic information through its performance of a government contract). 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." FAR sect. 9.505(b).

Here, ARTEL does not allege that Intelsat obtained any nonpublic information through the performance of a government contract. Instead, the protester complains that the awardee had access to certain cost information arising from ARTEL's negotiations with Intelsat for the use of satellite resources that were under Intelsat's exclusive control. We conclude that these types of negotiations between competitors do not give rise to an OCI, within the meaning of FAR part 9.5.  (CapRock Government Solutions, Inc.; ARTEL, Inc.; Segovia, Inc., B-402490; B-402490.2; B-402490.3; B-402490.4; B-402490.5, May 11, 2010)  (pdf)

Unequal Access to Information

The protester asserts that the agency unreasonably concluded that Turner/Ellerbe did not have an unequal access to information organizational conflict of interest or properly mitigated it.

In order to ensure that the agency has acted in a manner consistent with the FAR, contracting officers are required to give meaningful, deliberate consideration to information that may shed light on potential organizational conflicts of interest. Toward that end, agencies must not limit their consideration only to information that may have been furnished by a firm. The Analysis Group, LLC, B-401726, B-401726.2, Nov. 13, 2009, 2009 CPD para. 237 at 5. Where a prospective contractor faces a potential unequal access to information organizational conflict of interest, the conflict may be mitigated through the implementation of an effective mitigation plan. Axiom Res. Mgmt., Inc., B‑298870.3, B‑298870.4, July 12, 2007, 2007 CPD para. 117 at 8-9. An agency’s reliance on a contractor’s self-assessment of whether an organizational conflict of interest exists or a contractor’s unilateral efforts to implement a mitigation plan, however, is inconsistent with the FAR. L-3 Servs., Inc., supra at 12; Johnson Controls World Servs., Inc., B-286714.2, Feb. 13, 2001, 2001 CPD para. 20 at 8. In other words, an agency may not, in effect, delegate to the contractor itself complete responsibility for identifying potential organizational conflicts of interest, The Analysis Group, LLC, supra, or mitigating them. Johnson Controls World Servs., Inc., supra.

Competitively useful information giving rise to an unequal access to information organizational conflict of interest includes proprietary information beyond offerors’ proposals, such as source selection information and insights into a solicitation’s requirements. As discussed below, the record in this protest shows that AECOM, as the design contractor, was familiar with the details of the procurement. Access to such information gives rise to an unequal access to information organizational conflict of interest. See L-3 Servs., Inc., supra at 11.

AECOM’s assistant general counsel, who advised AECOM in its negotiations to purchase EB, states:

AECOM was required to maintain the confidentiality of all EB proprietary information and limit its disclosure within AECOM (and to agents of AECOM) on a “need to know” basis. Further, the confidentiality agreement expressly prohibited AECOM and EB from disclosing to any third party, without prior written consent, the fact that any confidential information had been exchanged. . . . To maintain the confidentiality of the parties’ discussions, the project would be referred to by its code “Project PACE” designation.

Intervenor’s Comments on the AR, Exh. 2, Decl. of AECOM Assistant General Counsel at para. 5. This is the clearest statement in the record of the precautions taken by AECOM to ensure that information regarding its discussions with EB was not widely disclosed.

AECOM’s efforts are deficient in several respects. There is no indication as to how many employees fit the “need to know” category, who they were, or how their need to know was determined. The assistant general counsel estimated that approximately 25 to 30 personnel participated in the initial due diligence review, id. at para. 10, and approximately the same number of personnel, and approximately the same personnel, conducted a second review. Id. at para. 16. Five AECOM employees, who may not be included in the approximately 25 to 30, attended a briefing hosted by EB management, id. at para. 8, and the AECOM directors--an undetermined number of individuals--were also aware of the negotiations. However many AECOM employees fit the definition of “need to know,” the record contains no evidence of an effective plan, that was disclosed to and approved by the contracting officer and subject to monitoring by her, to ensure that information regarding AECOM’s plans to acquire EB was kept confidential.

With respect to the other key factual element of the analysis here--the AECOM employees’ work on the design contract--the record is similarly lacking with regard to evidence of a plan to prevent disclosure to EB of competitively useful information derived from that work. In this regard, the agency identified 49 employees who worked on the design contract and who thus may have had access to competitively useful information. After the protest was filed, the agency obtained and submitted declarations from 42 of them; each declaration states that the individual did not have any knowledge of the acquisition negotiations and had no reason to, and made no attempt to, improperly influence the procurement. Only one declarant expressly stated that he did not discuss the procurement with anyone at EB. Of the 49 employees identified by the agency, seven did not submit any declarations. In addition, while presumably all of the 49 used e-mail in their work assisting the agency, there is no mention in the declarations (or evidence elsewhere in the record) of specific efforts to limit access by others to such email.

The agency asserts that, to the extent that AECOM had access to competitively useful information through its work on the design contract, that information was fully disclosed to other offerors. Moreover, the agency argues that the open-ended nature of the procurement prevented AECOM from being able to supply EB with competitively useful information. In our view, it was precisely the breadth of the discretion left to the offerors in the Phase II competition that would have made any competitively useful, non-public information known to AECOM valuable to EB. To illustrate: had the competition been for an automobile, with a particular carrying capacity, towing capacity, and performance characteristics, there would likely have been a minimal chance that AECOM would have competitively useful information; the specifications, if not the precise vehicle, would be largely established and communicated to all the offerors on an equal basis through the solicitation. In such a situation, the range of possible responses would be relatively limited. In this procurement, in contrast, the requirement was to design and build a replacement hospital of 700,000 square feet costing several hundred million dollars. AECOM was in a position to obtain information regarding the agency’s priorities, preferences, and dislikes relating to this broadly defined project. AECOM knew what the agency communicated to the offerors about the type of facility that it preferred--as well as what the agency did not communicate. [8] On this record, we think it was unreasonable for the agency to assume that AECOM did not possess competitively useful information based on its role in the procurement.

As noted above, AECOM argues that knowledge of its negotiations to acquire or merge with EB was limited to employees with a “need to know,” and that they kept that information confidential. The contemporaneous record contains no indication that that the contracting officer relied on this information from AECOM or even was aware of AECOM’s arrangements. In any event, in our view it would be unreasonable for the agency to rely on a de facto mitigation plan--namely, the assurance that the negotiations had and would only involve AECOM employees who would keep that information confidential--when, as discussed above, the efforts to maintain confidentiality were largely undisclosed to, unevaluated by, and unmonitored by the Corps--in a word, self-executing. L-3 Servs., Inc., supra at 12. Similarly with respect to the AECOM employees who worked on the design contract, without credible evidence that AECOM had systems in place to prevent the receipt of competitively useful information by EB, there is no reasonable basis to assume that the information was not made available to EB employees.

Biased Ground Rules

The protester argues that Turner/Ellerbe also had an unmitigated biased ground rules organizational conflict of interest stemming from its work on the design contract. The record suggests that AECOM had special knowledge of the agency’s requirements that would have enabled it to give Turner/Ellerbe an unfair advantage in the competition. AECOM’s contract with the agency “consist[ed] of all services necessary in the preparation of design documents, including plans, specifications, supporting design analysis, design narrative, cost estimates, etc. to construct a replacement hospital.” AR, Exh. M, App. A to Design Contract at para. 1.

The agency and the intervenor offer several defenses. The agency’s senior project manager asserts that the Corps closely supervised AECOM’s efforts in drafting the solicitation, AR, Tab 3, Decl. of Senior Project Manager at para. 11, and that the offerors were given the opportunity to review and comment on the draft requirements. The agency did solicit input from the offerors on the draft solicitation, but the record does not establish that the agency closely supervised AECOM in drafting the solicitation. Moreover, even assuming that the agency closely supervised AECOM, it is unclear why it is reasonable to assume that the agency’s mere supervision then prevented AECOM from using its special knowledge of the agency’s requirements to give Turner/Ellerbe an unfair advantage in the competition. AECOM’s contract with the agency called for it to perform “all services necessary” for preparation of the design portion of the procurement, and nothing in the record suggests that it did anything less--supervised or not.

The agency asserts that there is no evidence that AECOM skewed the competition to the benefit of EB. This is not the standard used to resolve allegations of organizational conflicts of interest. Where the record establishes that a conflict of interest exists, to maintain the integrity of the procurement process we will presume that the protester was prejudiced, unless the record establishes the lack of prejudice. See Marinette Marine Corp., B-400697, et al., Jan. 12, 2009, 2009 CPD para. 16 at 28. Nor is the relevant concern simply whether a firm drafted specifications that were adopted into the solicitation; rather, we look to see whether a firm was in a position to affect the competition, intentionally or not, in favor of itself. FAR sections 9.505-1, 9.505-2; L-3 Servs., Inc., supra at 5; Snell Enters., Inc., B‑290113, B-290113.2, June 10, 2002, 2002 CPD para.115 at 3. In short, once an organizational conflict of interest is established, the protester is not required to demonstrate prejudice; rather, harm from the conflict is presumed to occur. See The Jones/Hill Joint Venture, B-286194.4 et al., Dec. 5, 2001, 2001 CPD para. 194 at 14; Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra at 18.

The intervenor argues that at all times during the course of solicitation development, where AECOM might have been able to skew the competition in favor of EB, AECOM and EB were not in fruitful negotiations, and therefore the AECOM employees assisting the agency on this procurement would have had no knowledge of AECOM’s interest in EB. [9] Intervenor’s Comments at 9-15. Although the protester disputes the intervenor’s claim, we need not resolve this issue. Turner/Ellerbe’s assertion that limited numbers of AECOM employees were aware of the negotiations and that they kept the negotiations confidential is based solely on the intervenor’s post-protest representations. As noted above, the record contains no indication of how AECOM determined which AECOM employees had a “need to know” of the negotiations and how their confidentiality was ensured, or that AECOM had systems in place to wall off AECOM employees with a “need to know” from those AECOM employees uninvolved in the negotiations.

The agency also argues that the FAR precludes a finding that there was a biased ground rules organizational conflict of interest, pointing to FAR sections 9.505-2(a) and (b), which set out certain circumstances in which contractors who prepare specifications or statements of work may not, regardless of mitigation, provide the product described in the specifications or the services described in the statement of work. Both of these exclusions are subject to limited exceptions. The exceptions merely prevent the otherwise automatic exclusion of a firm from the competition; they are not an indication that there can be no organizational conflicts of interest under the facts described in the exceptions. In fact, the overarching concern expressed in that section of the FAR is that a firm that prepares the specifications or work statement for a contract should not be allowed to compete, as a prime contractor or a subcontractor, for that contract. See FAR sect. 9.505-2. Even if an exception applied, therefore, the contracting officer would still need to exercise sound judgment, independently investigate the circumstances giving rise to the possible organizational conflict of interest, and institute and monitor appropriate measures to mitigate or avoid the organizational conflicts of interest. See FAR sect. 9.505.

Based on the record here, we think that the agency lacked a reasonable basis for its conclusion that AECOM’s assistance to the agency did not place it in a position to skew the competition, intentionally or not, in favor of EB, with whom it was in negotiations over the course of the competition, or that the conflict somehow was properly addressed. We therefore sustain the allegation that Turner/Ellerbe had a biased ground rules organizational conflict of interest.  (B.L. Harbert-Brasfield & Gorrie, JV, B-402229, February 16, 2010)  (pdf)

Unfair Competitive Advantage

The crux of DTB’s complaint is that the RFP provides Valdez with an unfair competitive advantage, and that this advantage will arise particularly in the area of pricing. Specifically, DTB contends that the performance of the RFP’s task orders will require the use of KC-135 teardown procedures, called “protocols,” which were developed by Valdez under its existing task orders.  DTB suggests that Valdez, by virtue of its development of the protocols, may have an unfair price advantage since only Valdez has “intimate” knowledge of the cost of using the protocols to perform the KC-135 teardown and analysis work.

The Air Force explains that, when it initiated the KC-135 Teardown and Analysis Program, it knew that various contractors and other entities would be involved and wanted to prevent the compartmentalization of knowledge about these processes in one single person or organization/company. To this end, CAStLE focused on creating three items -- the protocols themselves, Teardown Analysis Program Subject Identification Documents (TAPSID), and a Teardown Data Management System. CO’s Statement at 8-9. The protocols and TAPSID were contract deliverables under Valdez’s existing task orders.

Specifically, Valdez developed eight protocols. These protocols document the procedures and standards to be followed for each primary element of the teardown program, and represent best practices and lessons learned from prior teardown programs. The TAPSID is the data package for the program. CO’s Statement at 9; Agency Report (AR), Tabs 26 and 27 (the Protocols and TAPSID, respectively). After the protocols were drafted, each protocol was reviewed and approved by the program’s oversight committee--comprised of experts from the Air Force and other government agencies--and the protocols were validated and modified by the government as required. AR, Tab 26, Protocol Documents, C/KC-135 Aircraft Teardown Plan and Objectives at 4 and Protocol 2, Teardown Section/Part Identification and Tracking, at iii. To neutralize the appearance of an OCI with respect to Valdez, the protocols and the TAPSID information were made available to potential offerors. CO’s Statement at 10; AR, Tab 14, D&F OCI, at 2-5.

The Air Force contends that Valdez will not be afforded an unfair price advantage because of its knowledge and use of the protocols. Rather, the Air Force argues that the protocols are standardized documents that level the playing field for follow-on contracts, and that Valdez lost any competitive advantage it had when its knowledge of the process was documented in the protocols and provided to industry. We agree.

Moreover, the Air Force explains, and we agree, that the work required by the RFP’s task orders is not, as DTB asserts, identical to that performed by Valdez. Instead, the magnitude of effort required by the RFP’s task orders is significantly greater than prior efforts, and will require considerably more nondestructive inspection and failure analysis tasks. In this regard, the prior effort involved some 250 sections of the airframe compared to up to 800 sections here, and sections with different types of damage. In addition, the contractor will be required to perform teardown and analysis activities on teardown sections not included under the existing contract, involving different airframes with differing structural complexities. CO’s Statement at 36-39.

DTB’s assertion--that “possible” differences in the work is “irrelevant”--does not provide a sufficient basis for our Office to disagree with the agency’s position that Valdez is not afforded an unfair price advantage by virtue of its development and use of the protocols. Any unfair competitive advantage Valdez might have gained through its development of the protocols should be minimal given their general release to prospective offerors. See Foley Co., B-203408, Sept. 14, 1993, 93-2 CPD para. 165 at 3 (bidder does not have an unfair competitive advantage where the bidder does not possess competitively useful information not available to other bidders). In addition, an agency is not required to compensate for every competitive advantage gleaned by a potential offeror’s prior performance of a particular requirement. For example, an incumbent contractor’s acquired technical expertise and functional knowledge of the costs related to a requirement’s complexity are not generally considered to constitute unfair advantages the procuring agency must eliminate. Snell Enters., Inc., B-290113, B‑290113.2, June 10, 2002, 2002 CPD para. 115 at 7.  (Dayton T. Brown, Inc., B-402256, February 24, 2010)  (pdf)

C2C and TrustSolutions argue that CMS's decision to reengage AdvanceMed regarding its proposed OCI mitigation plan, and thereby allow AdvanceMed an opportunity to revise the plan, is improper because it is inconsistent with our recommendation in C2C Solutions, Inc., supra; it is contrary to FAR sect. 9.504(e), which, according to the protesters, allows an agency to provide only an "apparent awardee" with "a" (meaning one) reasonable opportunity to respond to an agency's OCI concerns; and because allowing AdvanceMed a further opportunity to address its mitigation plan constitutes unequal discussions with only AdvanceMed.[2] Both firms also challenge CMS's corrective action on the ground that CMS has failed to "fully implement" our recommendation within 60 days, as contemplated by 31 U.S.C. sect. 3554(b)(3).

As a general matter, the details of implementing our recommendations for corrective action are within the sound discretion and judgment of the contracting agency. See, e.g., Partnership for Response and Recovery, B-298443.4, Dec. 18, 2006, 2007 CPD para. 3 at 3; NavCom Defense Elec., Inc., B-276163.3, Oct. 31, 1997, 97-2 CPD para. 126 at 2. In this regard, where an agency's corrective action extends beyond that which may be specifically called for in our recommendation, the agency's decision to pursue such a course of action does not, by itself, provide a basis for protest absent some showing that the agency's proposed corrective action is contrary to procurement law or regulation, or is otherwise improper. See, e.g., NavCom Defense Elec., Inc., supra, at 3 (agency reasonably decided to open discussions with offerors and obtain revised proposals without amending RFP notwithstanding the fact that we recommended reopening discussions only if RFP needed to be amended).

Given CMS's inherent discretion to craft and implement what it reasonably believes to be appropriate corrective action, the extent to which CMS's proposed corrective action may be characterized as broader than, or inconsistent with, our recommendation is not the relevant inquiry. Rather, the pertinent question is whether the corrective action proposed by CMS is, as the protesters have alleged, contrary to FAR sect. 9.504(e) or constitutes improper discussions. We conclude that the protester's arguments are without merit on both counts.

Under FAR sect. 9.504(e), when an agency concludes that an apparently successful offeror is ineligible for award based on a conflict of interest, the agency is required to notify the firm and allow it "a reasonable opportunity to respond" to the agency's concerns. Here, the protesters argue that it is inconsistent with FAR sect. 9.504(e) for CMS to give AdvanceMed an additional opportunity to address the agency's concerns regarding its OCI mitigation plan. The protesters maintain that FAR sect. 9.504(e) only contemplates affording AdvanceMed a single opportunity to respond to the agency's OCI concerns, and "does not allude to a series of reengagements that last until a contractor finally stumbles across the correct measure." C2C Protest at 6. In support of their position, the protesters point to the use of the indefinite article "a" in FAR sect. 9.504(e) ("a reasonable opportunity"). C2C Protest at 6. In addition, C2C argues that, by its terms, FAR sect. 9.504(e) does not apply because it only speaks to providing the "apparent" awardee with an opportunity to address the agency's OCI concerns, and AdvanceMed is an "actual" awardee at this juncture.

In our view, CMS is not precluded from reengaging AdvanceMed regarding its OCI mitigation plan based on the use of the indefinite article "a" in FAR sect. 9.504(e). FAR sect. 9.504(e) merely establishes an agency's minimum duty to provide an offeror with an opportunity to respond to an agency's OCI concerns where, but for the OCI concerns, the offeror would receive an award. There is no indication in the language of the provision that, by establishing this minimum duty, FAR sect. 9.504(e) otherwise limits an agency's reasonable exercise of its discretion to provide an offeror with additional opportunities to address the agency's OCI concerns.  (C2C Solutions, Inc.; TrustSolutions, B-401106.6; B-401106.7, LLC, June 21, 2010)  (pdf)  (See below for C2C Solutions, Inc., B-401106.5, January 25, 2010)

---------------------

C2C asserts that CMS acted unreasonably in concluding that the amended mitigation strategy presented in the letter from CSC was acceptable. We agree.

Contracting officers are required to identify potential conflicts of interest as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sections 9.505, 9.508. Situations that create potential conflicts of interest include situations in which a firm's work under a government contract entails evaluating itself. The concern in such "impaired objectivity" situations is that a firm's ability to render impartial advice to the government will be undermined by its relationship to the product or service being evaluated. PURVIS Sys., Inc., B‑293807.3, B‑293807.4, Aug. 16, 2004, 2004 CPD para. 177 at 7. The primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR sect. 9.505; RMG Sys., Ltd., B‑281006, Dec. 18, 1998, 98‑2 CPD para. 153 at 4. Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Alion Sci. & Tech. Corp., B‑297022.4, B-297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 8.

Here, it is undisputed that AdvanceMed's proposal presents the potential for an impaired objectivity conflict of interest where AdvanceMed, as a ZPIC contractor, could be placed in the position of evaluating its parent corporation, CSC, in connection with CSC's Medicare Part D work. The contracting officer initially determined that AdvanceMed was ineligible for award, finding that AdvanceMed's proposed mitigation strategies were inadequate. In making this initial determination, the record reflects that the contracting officer exercised deliberate care in analyzing and documenting her review of the conflicts identified by AdvanceMed in its proposal, and the mitigation plan proposed by AdvanceMed to address these conflicts. Specifically, the record reflects the contracting officer's consideration of a detailed analysis of AdvanceMed's conflicts and proposed mitigation strategies, prepared by a CMS compliance policy specialist, as well the contracting officer's own conclusions and documented analysis. CO Supplemental Statement, at 4; AR, Tab A-2, Pre-award OCI Analysis.

In contrast to the contracting officer's initial, deliberate evaluation of the conflicts posed by award to AdvanceMed and mitigation strategies, the record reflects a seemingly last-minute and hasty acceptance of AdvanceMed's "amended" mitigation strategy, which itself comprised a single sentence. The contracting officer's immediate acceptance of this revised mitigation approach is defective in several respects. As an initial matter, it is readily apparent that the amended plan lacks the necessary level of detail to reasonably assess the viability of AdvanceMed's mitigation approach. While the plan identified three potential approaches to mitigate the identified conflicts, there are no details explaining how any of the plans would work or when they would, or could, be implemented. This lack of detail is significant given the inherently complex nature of the proposed strategies, which could involve divestiture of a large corporate entity. Given the plan's inherent lack of detail, it is not surprising that the record does not contain any analysis by CMS addressing the viability of the various plans.

CMS attempts to justify its lack of analysis by arguing that the work which gives rise to the conflict, the Medicare Part C and D work, would not be ordered until some point in the future--suggesting that AdvanceMed did not need to provide a detailed mitigation plan for this work, notwithstanding the identified potential conflicts. CMS's arguments in this regard, however, are contrary to the terms of the solicitation and CMS's contemporaneous consideration of AdvanceMed's conflicts.

Specifically, sections H and M of the RFP established that CMS would not enter into a contract with an entity that has the potential for an unresolved OCI. This requirement expressly applied to the Medicare Part C and D related work where the solicitation provided as follows:

At this time, task orders will not be awarded for Part C and Part D. CMS may award a task order for Part C and Part D no earlier than October 2009. Although a Part C and/or Part D task order is not being awarded at this time, Offerors are required to propose on the [statement of work] requirements for Part C and D as outlined in Section M. Offerors will be required to provide an acceptable Conflict of Interest mitigation strategy to CMS . . . if award of Part C and/or D is an actual or perceived Conflict of Interest.

RFP, at 78, 90.

Moreover, Medicare Part C and D services were an integral part of the agency's technical evaluation; 10 of 12 technical approach sub-criteria involved capability to perform Part C and D work. RFP, at 114-115.

Further, during evaluation of proposals, the contemporaneous documentation reflects the contracting officer's recognition of the need for AdvanceMed to submit, with its proposal, an adequate strategy to mitigate its Medicare Part D conflicts. In fact, regarding these conflicts, the contracting officer specifically stated, "[e]ven though Part D work is not being awarded at this time, AdvanceMed must identify an adequate mitigation strategy it intends to put in place to address this Part C&D OCI." AR, Tab A-2, at 6. Significantly, AdvanceMed's failure to provide an adequate strategy to address the Part D conflicts resulted in the contracting officer's initial determination that AdvanceMed was ineligible for award. Based on this record, it is clear that AdvanceMed was required to submit, and CMS was required to evaluate, a mitigation strategy which CMS could reasonably conclude would resolve AdvanceMed's Medicare Part D conflicts. As set forth above, this did not happen.

In addition to the undefined and general nature of AdvanceMed's amended mitigation plan, various aspects of the plan are fundamentally problematic. Since implementation of one of the three identified mitigation strategies is entirely at CSC's "discretion," each of the three options must be capable of effectively mitigating the identified conflicts.[5] It is apparent, however, that the contracting officer has focused her attention on the viability of only one of the three options--divestiture. In a supplemental statement in response to the protest, she specifically indicates a "preference" for CSC's divestiture of AdvanceMed, notwithstanding the fact that the terms, timing, and process for such an involved process are entirely undefined and there is a concomitant lack of understanding regarding the viability of such an option. Supplemental CO Statement, at 8. Moreover, while the contracting officer readily admits to her "concerns regarding the feasibility of CSC using subcontracting to mitigate conflicts," this option "did not alarm" her because it was only one of the three possibilities and CMS had "reserved the right to terminate the contract." Id.

We think that the contracting officer's underlying concerns regarding the "subcontracting" option are understandable. While CSC indicates a general plan to "subcontract out the functions that pose an OCI with the work of AdvanceMed," it is not apparent how such an option would be feasible or effectively mitigate the conflict. As a ZPIC contractor, AdvanceMed would be responsible for identifying fraud, waste, or abuse by performing audit-type activities. Because such work may necessarily involve a retrospective look at the activities performed by a particular entity, it is not apparent how CSC's post-award subcontracting of the particular Medicare Part D work would insulate AdvanceMed from potentially auditing Medicare Part D work previously performed by CSC. In addition, it is not apparent how use of subcontractors in this situation would address the fundamental concern in connection with AdvanceMed's impaired objectivity--AdvanceMed being placed in the position of reviewing the work of its parent, CSC. Since CSC would ultimately remain contractually responsible for the functions it subcontracts, AdvanceMed's review of work performed by CSC's subcontractors could be considered a review of CSC's contractual obligations and responsibilities. Thus, AdvanceMed could be viewed as in the position of evaluating CSC, notwithstanding CSC's use of an intervening layer of subcontractors.

In addition, regarding the latter point raised by the contracting officer--that CMS's reservation of the right to terminate AdvanceMed's contract somehow negated the need for AdvanceMed to submit an adequate mitigation strategy--this argument flies in the face of the solicitation, which, as discussed above, expressly provided that the agency would not make award to an offeror with an unmitigated conflict. Accordingly, we sustain the protest on the basis that CMS failed to reasonably consider or evaluate the OCI mitigation strategy ultimately proposed by the awardee, AdvanceMed.  (C2C Solutions, Inc., B-401106.5, January 25, 2010)  (pdf)

Also see (Cahaba Safeguard Administrators, LLC, B-401842.2, January 25, 2010.)  (pdf)

FCSO protests that the agency was required to accept its proposed “firewalled subcontractor” approach as an acceptable mitigation plan, and asserts that the agency’s documentation regarding the basis for rejecting FCSO’s proposal was inadequate. We disagree.

Contracting officers are required to identify potential conflicts of interest as early in the acquisition process as possible, and to avoid, neutralize, or mitigate such conflicts to prevent the existence of conflicting roles that might impair a contractor's objectivity. In assessing potential conflicts of interest, the FAR directs the contracting officer to examine each contracting situation individually on the basis of its particular facts and the nature of the proposed contract, and to exercise common sense, good judgment, and sound discretion with regard to whether a conflict exists and, if so, the appropriate means for resolving it; the primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR sect. 9.505; Alion Sci. & Tech., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 6; RMG Sys. Ltd., B-281006, Dec. 18, 1998, 98-2 CPD para. 153 at 4. Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Alion Sci. & Tech., supra.

Here, as discussed above, FCSO’s October 8, 2008 initial proposal contemplated that FCSO would perform both the QIC and the MAC contracts for the same area, and that “separation and segregation of the day-to-day management and operation” of the two contracts should be considered sufficient COI mitigation; alternatively, FCSO’s initial proposal contemplated transferring performance of the QIC contract to its sister corporation. In December, the agency clearly advised FCSO that neither approach was acceptable, and offered FCSO another opportunity to meaningfully address the COI. In January 2009, FCSO responded, continuing to argue for acceptance of the novation approach it had previously proposed. Thereafter, the agency again told FCSO that its proposed approach was unacceptable and, yet again, offered FCSO an opportunity to meaningfully address the COI. In seeking yet another response from FCSO, the agency specifically reminded FCSO that its proposed mitigation plan must be complete, comprehensive, and detailed, and that it must discuss, “at a minimum,” the cost and technical impact created by any proposed revisions. Notwithstanding the agency’s clear directions, FCSO’s response‑‑which reflected material changes to its previously-proposed approach--provided virtually none of the specific information the agency requested.

Based on our review of this record, as discussed above and specifically including FCSO’s various responses to the agency’s multiple requests that FCSO meaningfully address the clear conflict of interest, we find no merit in FCSO’s assertion that the agency was required to accept, or that it inadequately documented the basis for rejecting, FCSO’s “firewalled subcontractor” approach.

The protest is denied.  (First Coast Service Options, Inc., B-401429, July 31, 2009) (pdf)

TAG asserts that SAIC has an "impaired objectivity" OCI. In this regard, the RFQ requires the successful firm to provide expertise to the Air Force in a number of subject areas. 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. RFQ, Statement of Work (SOW), at 2-31 to 2-41. 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. The protester maintains that SAIC will be unable to provide objective advice in this area because any advice given could affect sales of its products.

The agency responds that it considered whether SAIC might have an impaired objectivity OCI and concluded that it did not. In this connection, the record shows that the RFQ included a requirement for all concerns to submit an OCI statement disclosing information concerning actual or apparent OCIs. RFQ at 11-5. The agency asserts that the contracting officer reviewed SAIC’s information and determined that there was no reason to conclude that SAIC had an OCI. The agency also maintains that it intends to monitor SAIC during performance to ensure that there are no OCIs.

Contracting officers are required to identify and evaluate potential OCIs as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sect. 9.504. 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. See FAR sect. 2.101. Situations that create potential OCIs are further discussed in FAR subpart 9.5 and decisions of our Office. 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. Alion Sci. & Tech. Corp., B-297342, Jan. 9, 2006, 2006 CPD para. 1 at 5-6. 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. Id. at 11. In other words, an agency may not, in effect, delegate to the contractor itself complete responsibility for identifying potential OCIs.

Here, the record shows that the contractor will be involved in a full range of activities in support of the Air Force’s C-CBRN program. Task three of the contract specifies the following activities:

The contractor shall support and provide AF [Air Force] unique C-CBRN operational & hazard expertise to inform and develop AF-wide DOTMLPF [doctrine, organization, training, material, leadership and education, personnel and facilities] counter WMD [weapons of mass destruction] solutions and capabilities. Support to this task area requires codifying counter WMD in AF operational plans, policy, doctrine, guidance and procedures; integrating and synchronizing AF efforts across the full counter WMD spectrum; supporting and executing the CSAF [Chief of Staff of the Air Force] C-CBRN Master Plan & Roadmaps; providing MAJCOM [major command] support to execute C-CBRN activities; developing and implementing C-CBRN CONOPS [concept of operations]; institutionalizing C-CBRN into AF education, training and exercises . . .; leveraging science and technology (S&T) and research, development, test and evaluation (RDT&E) to refine hazards, reduce risk and demonstrate capabilities; incorporate counter WMD operational concepts into AF standards into programs and budgets; and manage AF C-CBRN operations globally. The contractor shall support the AF/A5XP mission by assisting them in establishing AF operational policy, strategy, CONOPS, and doctrine on combating WMD, CP [counter-proliferation], and C-CBRN programs.

RFQ at 2-32. In addition to the requirements for task three detailed above, the RFQ includes specific tasks ranging from conducting research and analysis and presenting the results of such efforts in briefing papers and other formats (subtask 3.1), to providing support in developing agency strategy, policy, doctrine and concepts of operations for the C-CBRN program (subtask 3.2). Additionally, and perhaps most significant, the RFQ calls for the contractor to perform detailed technical analyses that will relate directly and predictably to the agency’s selection of C-CBRN products and services. In this regard, subtask 3.3 specifically provides:

The contractor shall provide technical analysis addressing issues from the point of view of ‘what does this mean to the USAF’ on questions that arise in the C-CBRN technical domain. The contractor shall provide technical research and operational evaluations to assess, interpret, shape, and advise the Air Staff and other AF organizations regarding what tests results mean for the operator. This understanding along with good testing and analysis underpin the AF’s policy, doctrine, tactics, techniques and procedures (TTPs), as well as what equipment is best to address the threat. The general categories of analysis and quantitative assessment the contractor shall perform include: Threat and Vulnerability Assessments, Basic Challenge Sources, Attack Characterization, Atmospheric Transport Dispersion Modeling, Chem-Bio Defense (CBD) Equipment Operations, AF Operations, Risk Assessment/Management, Hazard Modeling and Analysis, Detector Capability Analysis, Decontamination Requirements Analysis, Technical Design and Conduct of Laboratory and Field Testing, which support the development and implementation of the C-CBRN CONOPS and other supporting efforts.

RFQ at 2-36-2-37. Also specifically required under subtask 3.3 is contractor support to ensure that development and acquisition programs are consistent with Air Force key performance parameters (discrete standards that new equipment must meet before the Air Force will purchase it), as well as support in connection with the Air Force’s operational testing and experimentation related to its analysis of C-CBRN products, services and procedures. RFQ at 2-37-2-38.

Thus, 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. AR, exh. 30. Notwithstanding that SAIC sells a full line of C-CBRN products and services, SAIC’s quotation states elsewhere, in discussing the solicitation’s requirement to assess C-CBRN test results, that its work “[e]nables objective based decisions on operational effectiveness of equipment; thereby influencing procurement and fielding decisions.” SAIC Oral Presentation at 37. The record therefore appears to show that SAIC will be providing precisely the type of advice and assistance that could influence sales of its, or a competitor’s, C-CBRN product line, but there is nothing to show that GSA actually considered these circumstances. The record as it relates to the agency’s determination of whether SAIC had an OCI, consists, in its entirety, of the following:

SAIC acknowledges there are no known real or perceived conflicts of interest. SAIC agrees and certifies to disclose information concerning the actual or potential conflict with any proposal for any solicitation relating to any work in this effort, and to handle all actual or potential OCI situations in accordance with FAR subpart 9.5.

AR, exh. 19, at 6. While this statement addresses SAIC’s own evaluation of whether there were any actual or apparent OCIs resulting from SAIC’s performance of the work, there is nothing in the record showing that GSA ever made its own independent determination in this regard, as was required by FAR part 9.5. That is, 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. Alion Sci. & Tech. Corp., supra. Accordingly, we also sustain the protest on this ground.  (The Analysis Group, LLC, B-401726; B-401726.2, November 13, 2009)  (pdf)

Contracting officials are to avoid, neutralize or mitigate potential significant conflicts of interest so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. Federal Acquisition Regulation (FAR ) sect. 9.504(a), 9.505.

The responsibility for determining whether an actual or apparent conflict of interest will arise, and to what extent the firm should be excluded from the competition, rests with the contracting agency. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B--254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 12. Because conflicts may arise in factual situations not expressly described in the relevant FAR sections, the regulation advises contracting officers to examine each situation individually and to exercise "common sense, good judgment, and sound discretion" in assessing whether a significant potential conflict exists and in developing an appropriate way to resolve it. FAR sect. 9.505. We will not overturn the agency's determination except where it is shown to be unreasonable. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra.

The situations in which organizational conflicts of interest arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which 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 for a government contract. FAR sect. 9.505-4. In these "unequal access to information" cases, the concern is limited to the risk of the firm gaining a competitive advantage; there is no issue of bias.

The second group consists of situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for another government contract by, for example, writing the statement of work or the specifications. In these "biased ground rules" cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. FAR sections 9.505-1, 9.505-2. These situations may also involve a concern that the firm, by virtue of its special knowledge of the agency's future requirements, would have an unfair advantage in the competition for those requirements. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra at 13.

Finally, the third group comprises cases 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. FAR sect. 9.505-3. In these "impaired objectivity" cases, the concern is that the firm's ability to render impartial advice to the government could appear to be undermined by its relationship with the entity whose work product is being evaluated. Id.; see also FAR sect. 9.501 (definition of organizational conflict of interest).

Allegations Arising from the SI Divisions' Roles in Both the Procurement Planning Work and the Subsequent Procurement

All those involved took the view initially that a company that performed procurement planning services under the task order could not compete for the subsequent procurement. There was a consensus among the Army and Air Force that SI [SI International] could not participate in the Uni-Comm procurement because of its work under the planning effort task order, a preclusion agreed to by SI under the terms of the task order. That view is consistent with FAR subpart 9.5 and reflects concern that SI International (and its affiliate, SI Telecom) would have an unfair competitive advantage in the Uni-Comm procurement. Specifically, without the prohibition on competing for the Uni-Comm contract, SI Engineering's advice to the government in the planning effort under the task order could be tainted by its corporate interest in the subsequent procurement and the firm could obtain nonpublic, competitively useful information. This reflects the fact that the work under the task order entailed being part of the government's procurement planning process and advising the government on the "business case" for the subsequent procurement, as well as other acquisition planning work. In terms of FAR subpart 9.5, the reasons for barring a firm (or its affiliate) that participated in the task order work from competing for the subsequent procurement reflect two types of OCIs: unequal access to information--concern that the firm could obtain (or share with an affiliate) through the task order work nonpublic information that would be competitively useful in the subsequent procurement, and biased ground rules--concern that the firm could shape the Uni-Comm procurement in a way that favors itself or its affiliate.  [Bracketed information added for clarification.]

Here, the Air Force eventually reversed its original decision that SI Telecom was barred from participating in the Uni-Comm procurement due to its affiliate's role in the procurement planning work under the task order. The gravamen of this protest is whether the Air Force had a reasonable basis for that reversal. We examine first the biased ground rules concerns, and then those related to SI's access to nonpublic, competitively useful information.

L-3 alleges that SI has a biased ground rules organizational conflict of interest, given the way in which the effort to produce the Uni-Comm business or mission case and other procurement planning was intertwined with the writing of the statement of work. That interconnectedness can be seen clearly in the language of the Army task order, which described six subtasks that would be performed under phase I; five of those six subtasks were to be performed under phase Ia, and all six would be performed under phase Ib. See AR, Tab 249A, Task Order at 7. Performance of both portions of phase I would include, among others, subtask 1, Program Management, Administrative, and Quality Assurance Services, subtask 2, Communication and IT Requirements Identification and Analysis Services, and subtask 6, Technical Advice and Program Support Services. The one subtask reserved for performance under phase Ib was subtask 5, Evaluation Criteria Services.

The ability of the task order contractor under phase Ia to exert influence on both the "go/no-go" decision and the resulting statement of work was reflected in the consensus opinion of the cognizant Army and Air Force officials‑‑announced during the task order planning, included in Task Order 5017, and reiterated after issuance of the task order--that the contractor performing phase Ia would be excluded from participation in the Uni-Comm procurement. On January 7, 2005, prior to the issuance of the task order, the Air Force Uni-Comm technical manager concurred with the Army contracting officer that a firm that performed only in phase Ia would face organizational conflicts of interest. See AR, Tab 249C, Response to Offeror Questions at 32 ("Q: Will there still be an [organizational conflict of interest] if phase Ib is not turned on or funded? A: Yes."); AR, Tab 249C, E-mail from AF Technical Manager to Army Contracting Officer, Jan. 7, 2005, at 30 ("Concur with [statement of work] and Q&As."). Consistent with this position, the task order itself included a clause precluding SI from participation in the Uni-Comm procurement based on the conclusion that performance of the Uni-Comm contract would create an unmitigable organizational conflict of interest. In sum, as agreed by the Air Force technical manager and the Army contracting officer, and as confirmed in the language of the task order: performance of phase Ia of the task order would necessarily preclude a contractor from participating in the Uni-Comm competition.

Over a year after his original organizational conflict of interest analysis in April 2005, the Air Force contracting officer conducted a second analysis reversing the position that he had shared with the Army contracting officer and the Air Force technical manager, namely, that performance of phase Ia of the Army task order would preclude a firm from participation in the Uni-Comm procurement. The record shows, however, that the Air Force contracting officer's June 2006 biased ground rules organizational conflict of interest analysis failed to appreciate the way in which performance of phase Ia shaped the statement of work, thus making it inappropriate for the phase Ia contractor to participate in the Uni-Comm procurement. The Air Force contracting officer testified that in making his organizational conflict of interest determination he relied on the "clean break" between phases Ia and Ib. The record shows that the "clean break" was illusory. As noted above, the task order contained several critical subtasks that would be performed in both portions of phase I. Moreover, phase Ia was funded for a particular time period, and not for completion of particular tasks, and thus the assumption that none of the tasks assigned to phase Ib could be performed under phase Ia is incorrect. In this regard, the May Monthly Status Report stated that "[b]y direction of the [Air Force technical director], begin [in June] the development of the Uni-Comm [statement of work] and strategy to conduct a series of Industry Days. In accordance with the 5017 Task Order Plan, this activity was not scheduled to begin until Phase 1b." AR, Tab 171, Monthly Task Order Reports at 14. Similarly, the June report states, "[b]y direction of the [Air Force technical director], began the development of the Uni-Comm [statement of work] and strategy to conduct a series of Industry Days. In accordance with the 5017 Task Order Plan, this activity was not scheduled to begin until Phase 1b." Id. at 15. These reports reflect the nearly seamless way in which the effort under phase Ia blended into the drafting of the statement of work under phase Ib, which likewise was reflected in the timing of the deliverables; the draft statement of work was due only 60 days after the last site visit, with the final statement of work due only 30 days later, unless as otherwise directed by the Air Force. Agency Report (AR), Tab 249A, Task Order at 13. The Air Force contracting officer testified that he did not consider these Monthly Reports when conducting his organizational conflict of interest analysis.

Even though his analysis reversed the earlier consensus determination that the contractor under phase Ia would be precluded from participation in the Uni-Comm procurement, the Air Force contracting officer's June 1, 2006 memorandum analyzing SI's potential conflicts of interest recognized the interrelationship between the work performed under phases Ia and Ib on which that preclusion had been based. He stated that "some of the information researched by the Uni-Comm team, which included the SI International employee, was later part of the source information used to develop the requirement." AR, Tab 172 at 17, Organizational Conflict of Interest Analysis of June 1, 2006. He discounted that finding because "SI International's employee was not in a position, during the business/mission case development, to draft specifications for Uni-Comm that would favor the employee's corporation." Id.

As an initial matter, we note that the relevant concern is not simply whether a firm drafted specifications that were adopted into the solicitation, but, rather, whether a firm was in a position to affect the competition, intentionally or not, in favor of itself. FAR sections 9.505-1, 9.505-2; Snell Enters., Inc., B‑290113, B-290113.2, June 10, 2002, 2002 CPD para.115 at 3. While the Air Force contracting officer here relied on our decision in American Artisan Prods., Inc., B‑292559, B‑292559.2, Oct. 7, 2003, 2003 CPD para. 176, as support for the proposition that SI's participation in the business/mission case development did not give rise to a biased ground rules organizational conflict of interest, the facts of the two cases differ in a critical respect. We reached our conclusion in American Artisan Prods., Inc. because the firm alleged to have the biased ground rules organizational conflict of interest did not "perform the type of work solicited," American Artisan Prods., Inc., supra at 9, and thus was incapable of shaping the requirement in a way that would have been beneficial to it, as envisioned in Snell Enters. Inc.. That is not the case here, because SI Telecom, as part of the GDIT [General Dynamics Information Technology, Inc.] team, will perform [deleted] percent of the contract effort.  [Bracketed information added for clarification.]

In sum, the Air Force contracting officer's determination that there was no biased ground rules organizational conflict of interest was based on a misconception of the work performed under the task order and a misreading of American Artisan Prods., Inc. Based on the record here, we think that the agency lacked a reasonable basis for its conclusion that SI's performance under phase Ia of the task order did not place it in a position to skew the competition, intentionally or not, in favor of itself, and we therefore sustain the allegation that SI had a biased ground rules organizational conflict of interest.

L-3 also alleges that SI's performance on Task Order 5017 gave it access to competitively useful, non-public information and thus created an unequal access to information organizational conflict of interest for GDIT. The awardee and the agency assert the following: that the information was not competitively useful; that if it was competitively useful, the information was fully disclosed to the other offerors; that if it was not fully disclosed to the other offerors, the mitigation plans effectively prevented the information's disclosure; and that, based on our decision in Mechanical Equip. Co., Inc. et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD para. 192, this Office should nevertheless dismiss the organizational conflict of interest protests. As explained below, in our view there is no reasonable basis on which to conclude that all competitively useful information obtained by SI was disclosed to the other offerors, as the agency and the intervenor argue. Nor can we conclude that the mitigation plans and non-disclosure agreement effectively prevented an organizational conflict of interest. The agency has yet to adequately investigate and reasonably determine the extent and type of information to which SI had access or the efficacy of the non-disclosure agreement and mitigation plans, and absent the results of those inquiries, the record contains inadequate support for a finding that SI did not have an unequal access to information organizational conflict of interest.

The Air Force contracting officer's own organizational conflict of interest analysis in June 2006 stated that SI handled competitively useful information in the form of unredacted copies of contracts, core communications requirements, the 38 EIG information, and proprietary information of other companies that was subject to non-disclosure agreements. On the basis of this memorandum alone, it would be unreasonable to conclude that SI did not access competitively useful information in the performance of the Army task order. Moreover, while performing the task order, SI's employee was considered a member of the Program Management Office with access to the Department of Defense NIPRNET and wrote site visit reports summarizing the Program Management Office's trips to Air Force bases. Although the Air Force contracting officer testified that he was unaware whether the SI employee was ever unaccompanied on the site visits conducted under the task order, Trans. at 189-90, he never conducted any interviews with the individuals with whom the SI employee met to determine the kinds of information to which he had access. Id. at 186-91. Because the Air Force contracting officer was unaware of the full extent and nature of the SI employee's work under the task order, he could not reasonably conclude, with any certainty, the kinds of information that the SI employee accessed.

Although extensive hearing testimony appeared to show that much (and potentially most) of the known competitively useful information was made available to the other offerors, see Trans. at 51-104, the record shows that SI nevertheless likely had access to other competitively useful information not known to the Air Force. As noted above, the plain language of the task order precluded the firm performing the task order phase Ia work from competing under the Uni-Comm solicitation; the Army and Air Force officials who drafted and issued the Army task order concurred with this exclusion. With that exclusion in effect, neither the Army, nor the Air Force, nor the task order prime contractor or SI themselves, had any reason to track the information being accessed by SI. In this regard, the Air Force contracting officer stated that “[s]ince I wasn't supporting Uni-Comm from Jan 2005 to Apr or May 2005, I didn't know what the SI employee had worked on or had access to during the time (Jan 2005 to about 17 Jun 05) under the subcontract to prime FCI on the [Army] Task Order." AR, Tab 172 at 143, Contracting Officer Memorandum for Record, Dec. 19, 2005. The Air Force contracting officer also testified that he was unaware of any record of the information that SI reviewed. Trans. at 179. The earliest attempts to identify what the SI employee could have learned were made some time after the completion of phase Ia of the task order. In sum, the record contains no contemporaneous account of what information SI had access to, nor is there any accurate description in the record, memorialized after-the-fact, containing that information. Given the various ways in which SI could have accessed information and the lack of a record showing what it did access, we think that it follows that there was no support for the Air Force's belief that all competitively useful information was made public.

The agency and GDIT argue that, even if SI obtained competitively useful, non-public information, the mitigation plans of SI Telecom and SI Engineering, operating alone or in tandem, prevented disclosure of that information.

The record contains two mitigation plans, one each from SI Engineering and SI Telecom, that were submitted to the agency unsigned and undated in July and August 2005, respectively. The SI Engineering mitigation plan included a signed non-disclosure agreement for the SI employee dated January, 28, 2005. Even assuming that the non-disclosure agreement was created in January 2005, that agreement was binding only as to the SI employee and not as to SI Telecom or SI Engineering; neither the SI Telecom nor the SI Engineering plan was submitted to the Air Force until after SI's performance under the task order had ended. Further, because the Air Force contracting officer had a number of significant questions concerning the adequacy of SI Telecom's plan, the final mitigation plan was not approved for over a year, in August 2006, and it was not until then that the agency had before it a signed plan. The issues the Air Force contracting officer raised as requiring clarification went to the heart of the adequacy of the plan's efficacy in addressing the potential organizational conflicts of interest stemming from SI's access to competitively useful information, including: who would decide what qualified as source selection sensitive information, and the other kinds of information that might require protection; how SI's internal computer systems would function to isolate the competitively useful information; how the government would verify that the contractor followed the mitigation plan; how the government would enforce compliance with the mitigation plan; and given that the two divisions of SI were no longer physically separate, how the workspace separation of the employees would be accomplished. AR, Tab 174 at 241-43, Memo from Contracting Officer to SI, July 6, 2006.

Where a prospective contractor faces a potential unequal access to information organizational conflict of interest, the conflict may be mitigated through the implementation of an effective mitigation plan. Axiom Res. Mgmt., Inc., B‑298870.3, B‑298870.4, July 12, 2007, 2007 CPD para. 117. An agency's reliance on a contractor's self-assessment of whether an organizational conflict of interest exists or a contractor's unilateral efforts to implement a mitigation plan, however, is inconsistent with the FAR. Johnson Controls World Servs., Inc., B-286714.2, Feb. 13, 2001, 2001 CPD para. 20 at 8. Here, in our view, it was unreasonable for the agency to rely on a mitigation plan that was undisclosed to, unevaluated by, and unmonitored by the Air Force--in a word, self-executing. Without credible evidence that an effective mitigation plan was in effect at the start of performance, there is no basis to assume that, even if the SI employee himself did not disclose competitively useful information, the information was not otherwise made available to SI Telecom employees working on the subcontract to GDIT.

Finally, citing Mechanical Equip. Co., Inc. et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD para. 192, the intervenor argues that the Air Force contracting officer's reassessment and later finding that there were no organizational conflicts of interest were based on extensive consultations with cognizant Air Force officials, such that he could reasonably rely on their knowledge of whether there were organizational conflicts of interest. The record simply does not support the intervenor's position. The agency in the Mechanical Equip. Co., Inc. protest offered testimony or statements from five agency officials involved in the procurement, including the chair and deputy chair of the source selection evaluation board, who had made an independent, contemporaneous determination, based on extensive first-hand knowledge of the firm’s involvement in the subject procurement, that the firm did not have an organizational conflict of interest. Here, the record contains no contemporaneous finding by knowledgeable Air Force Uni-Comm program officials that SI did not have an organizational conflict of interest. Nor on this record would it be reasonable for the Air Force contracting officer to assume that Air Force officials possessed sufficient familiarity with SI's participation in the procurement to make such a determination. Simply put, the showing that the agency made in Mechanical Equip. Co., Inc. was that agency officials with a breadth and depth of first-hand knowledge reasonably and contemporaneously concluded that the firm had no organizational conflict of interest. The Air Force has made no such showing here.

This record lacks a thorough agency inquiry into the extent of access to information that the SI employee had and what competitively useful information his access yielded. The record similarly lacks any reasonable assessment of whether the non-disclosure agreement and the mitigation plan were effective against the disclosure of information to SI Telecom (or others). We therefore conclude that, given the inadequacies of this record, it was unreasonable for the agency to determine that SI did not have an unequal access to information organizational conflict of interest.

Allegations Arising from the Relationship Between SI and FCI

The protester argues that we should find that GDIT, through its subcontractor SI, had an impaired objectivity organizational conflict of interest, because the prime contractor under Army Task Order 5017, FCI, supplied employees who acted as Mission Capability subfactor evaluation team advisors to the Air Force. As noted above, an impaired objectivity organizational conflict of interest exists 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 a proposal submitted to obtain another contract. Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra at 13.

In support of its allegation, L-3 cited FAR sect. 9.505-3, while also noting the FAR's general admonishment "to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships." FAR sect. 3.101-1. The "hard facts" that L-3 offered in support of such a finding were that SI was FCI's subcontractor on the Uni-Comm procurement, the two firms sought to work together on another task order advising the Uni-Comm procurement, and during the Uni‑Comm evaluation, the GDIT proposal, with SI as a subcontractor, was evaluated by FCI. L-3's Post Hearing Comments, Aug. 5, 2009 at 76. Thus, L-3 argues, FCI and SI sought to influence the solicitation, participate as a subcontractor in GDIT's proposal, and assist with the evaluation of the proposals, and the agency improperly failed to conduct and document an analysis of whether these relationships created an impaired objectivity organizational conflict of interest. GDIT asserts that all of these relationships were timely reported to the Air Force and the relationships and roles do not violate the FAR.

We will sustain an allegation that a firm has an impaired objectivity organizational conflict of interest when the facts of the case meet the standard in FAR sect. 9.505-3. Nortel Gov’t Solutions, Inc., B‑299522.5, B-299522.6, Dec. 30, 2008, 2009 CPD para. 10 (sustaining impaired objectivity organizational conflict of interest allegation where the record showed that contractor would review its own work on another contract); Alion Sci. & Tech. Corp., B-297022.3, Jan. 9, 2006, 2006 CPD para. 2 (sustaining impaired objectivity organizational conflict of interest where awardee would be required to perform analysis and make recommendations regarding products that might be manufactured by it or by its competitors); Ktech Corp., B-285330, B-285330.2, Aug. 17, 2000, 2002 CPD para. 77 (sustaining impaired objectivity organizational conflict of interest where a firm would be responsible for helping to determine the stringency of testing requirements and for monitoring the performance of the tests, while at the same time, as a subcontractor, the firm was responsible for conducting the tests).

The relationships between firms, or the actions of individual firms, described in the cases where we have sustained an allegation of an impaired objectivity organizational conflict of interest are different in kind from the relationship between FCI and SI. There is no evidence in the record of a corporate relationship between the firms, such that one firm is evaluating itself or an affiliate, or evaluating products made by itself or a competitor, or is making judgments that would otherwise directly influence its own well-being, as there was in the cases cited above. The protester urges us to consider that an organizational conflict of interest exists because the two firms contemplated additional work together on the Uni-Comm procurement, but we decline to do so; at least in this circumstance, what the two firms considered doing has no bearing on our analysis of whether their actual relationship met the standard for an organizational conflict of interest. Moreover, we look for some indication that there is a direct financial benefit to the firm alleged to have the organizational conflict of interest, American Mgmt. Sys., Inc., B‑285645, Sept. 8, 2000, 2000 CPD para. 163 at 5, and there is none in this instance. While SI performed as FCI's subcontractor on the Army task order, the suggestion that FCI would benefit financially from favorably evaluating GDIT's proposal is too remote a financial relationship on which to base an impaired objectivity organizational conflict of interest. See id. at 6. The relationship between SI and FCI is simply too attenuated and too dissimilar to the above cases for us to conclude that the agency unreasonably determined that GDIT did not have an impaired objectivity organizational conflict of interest.  (L-3 Services, Inc., B-400134.11; B-400134.12, September 3, 2009) (pdf)

The protester argues that the agency improperly failed to consider that Bollinger has an impermissible organizational conflict of interest (OCI) that "possibly gave [Bollinger] an advantage in this procurement and potentially prejudiced [MMC]." Protester's Comments at 96. As discussed above, the Coast Guard contracted with ABS to analyze certain aspects of the offerors' proposals. The protester points to Bollinger's FPR, which provides in relevant part as follows:

The feedback from ABS on our proposal was positive, and all concerns were addressed. From this meeting Bollinger has developed and revised plans and procedures to incorporate the recommendations of ABS. ABS feedback has validated the FRC‑B design illustrated [below] . . . . ABS and Bollinger have evaluated responsibilities during plan review and agreed to milestone and submittal dates required to meet the construction schedule. ABS has reviewed the Bollinger engineering schedule to verify that ABS resources can sustain an individual drawing review cycle of 30 days to support production.

AR, Tab 48, Bollinger Proposal, vol. III, at 108. The protester adds that the agency was aware of Bollinger's relationship with ABS, in that the PEAG Report provides in relevant part that "ABS was sought and provided [Bollinger] with a review of their proposal." AR, Tab 14, PEAG Report, at 15. The protester concludes that because ABS assisted Bollinger in some manner with the preparation of its proposal, and then assisted the Coast Guard in its evaluation of proposals, an impermissible OCI existed that rendered the award to Bollinger improper.

When the facts of a procurement raise a concern that a potential awardee might have an OCI, the FAR requires the agency to determine whether an actual or apparent OCI will arise, and whether the firm should be excluded from the competition. The specific responsibility to avoid, neutralize or mitigate a potential significant conflict of interest lies with the cognizant contracting officer. Overlook Sys. Techs., Inc., B‑298099.4, B-298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-11; see FAR sect. 9.504. As relevant here, one of the situations that creates a potential OCI is where a firm's work under a government contract entails evaluating itself or its own products. FAR sections 9.505, 9.508; Overlook Sys. Techs., Inc., supra, at 10. The concern in such situations is that a firm's ability to render impartial advice to the government will be undermined or impaired by its relationship to the product or services being evaluated; as a result, such situations are often referred to as "impaired objectivity" conflicts if interest. Overlook Sys. Techs., Inc., supra.

The agency explains that "[t]he assistance" it received from ABS in the evaluation process, which was limited to the consideration of initial proposals, "was specifically in the area of classification of the proposed ships." Agency Supp. Report (Nov. 25, 2008) at 27-28. The agency also states that to its knowledge both Bollinger and MMC "sought advice from ABS, but neither of them obtained that advice under a contract with ABS or any of its affiliates." Id. at 28. The agency asserts that because "ABS did not have a contract with either of the two firms that sought its assistance, there was no conflicting interests to avoid, neutralize or mitigate." Id. The agency adds here that "[s]ince ABS' true role with the offerors and with the Coast Guard was to take an independent position regarding the application of their rules, there could be no internal conflicts of interests." Id. at 29.

Based upon our review, we find that no significant conflict of interest exists here. As set forth above, with regard to Bollinger's pre-award relationship with ABS, although Bollinger received some advice from ABS during the proposal preparation process, ABS clearly was not part of Bollinger's "team" and there was no financial relationship between Bollinger and ABS. Moreover, as indicated above, both MMC and Bollinger obtained advice from ABS during the proposal preparation process. [24] There is no evidence or claim that the post‑award relationship between ABS and Bollinger as the result of Bollinger's status as the awardee is any different than would be the relationship between ABS and MMC had MMC been awarded the contract. That is, as recognized by the protester, the RFP required that during the performance of the contract awarded here, the awardee must contract with ABS for classification of the FRC‑B and structural analysis, and that "all offerors, including [MMC], were required to demonstrate in their proposals that they had arranged with ABS to provide post-award classification services." Protester's Supp. Comments (Dec. 11, 2008) at 5-6; see Protester's Comments at 97 n.14; RFP, pt. III, sect. J, attach. 2, COR, at 000-33. Given the lack of any financial relationship between ABS and Bollinger prior to the award, and the fact that the relationship of ABS with the awardee would be the same or similar whether Bollinger or MMC were the awardee, we find that the potential benefit to ABS here, if any, is speculative and too remote to establish a significant conflict of interest that the contracting agency had to avoid, neutralize, or mitigate pursuant to FAR subpart 9.5. See sect. 9.504(a)(2); American Mgmt. Sys., Inc., B-285645, Sept. 8, 2000, 2000 CPD para. 163 at 6; Professional Gunsmithing, Inc., B-279048.2, Aug. 24, 1998, 98-2 CPD para. 49 at 4 (FAR requires that agencies avoid or mitigate "significant potential conflicts").  (Marinette Marine Corporation, B-400697; B-400697.2; B-400697.3, January 12, 2009) (pdf)

The contracting officer (who was the SSA) determined, and DEA continues to maintain, that "SRA's performance of the FITS contract [does] not create an 'impaired objectivity OCI" with regard to SRA's performance of the EMS O&M contract. Contracting Officer's Statement at 32. In explaining her position that no OCIs will result from SRA's performance of both contracts, the contracting officer asserts that: (1) SRA will not be in a position to evaluate or assess its own work on the FITS contract, nor will SRA benefit from SRA's input as the EMS contractor since neither the EMS nor FITS systems engineering contractor will furnish any system or software that will be necessary to implement systems engineering solutions proposed by the FITS contractor; (2) all systems engineering work and implementation of systems engineering initiatives are subject to oversight and control by DEA personnel, with government personnel chairing any IPTs involved in the initiatives and all systems engineering work under the FITS contract subject to review and approval of DEA's government-led configuration control board (CCB); (3) the input from the EMS contractor regarding systems engineering solutions proposed by the systems engineering FITS contractor will be essentially limited to participating in meetings involving the implementation of systems engineering initiatives, with such meetings occupying only a relatively small portion of the EMS contractor's overall contract effort; and (4) SRA committed that, in the event of a change in these processes or if the government concluded that additional measures were necessary, it would adopt additional mitigation items including organizational/financial and informational separation of the EMS work from the FITS work (a firewall). Supplemental Contracting Officer's Statement at 2-4; SRA Mitigation Plan at 3-5, 7.

Contracting officers are required to identify potential conflicts of interest as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sections 9.505, 9.508. Situations that create potential conflicts of interest include situations in which a firm's work under a government contract entails evaluating itself. The concern in such "impaired objectivity" situations is that a firm's ability to render impartial advice to the government will be undermined by its relationship to the product or service being evaluated. PURVIS Sys., Inc., B‑293807.3, B‑293807.4, Aug. 16, 2004, 2004 CPD para. 177 at 7. The primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR sect. 9.505; RMG Sys., Ltd., B‑281006, Dec. 18, 1998, 98‑2 CPD para. 153 at 4. Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Alion Sci. & Tech. Corp., B‑297022.4, B-297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 8.

The record indicates that the agency did not give meaningful consideration to the potential impaired objectivity OCI involving SRA’s dual roles. Contrary to the agency’s assertion that SRA will not be in a position to evaluate or assess its own work on the FITS contract, the record shows that SRA, as the EMS contractor, is expected to review and offer input from the O&M perspective regarding systems engineering solutions proposed by itself as the FITS contractor. SAR at 5. Moreover, that input will involve SRA’s subjective judgment. In this regard, we note that when asked if DEA sought the O&M (EMS) contractor’s “subjective opinions of the design,” the TEP chair testified that “[t]hey can be subjective . . . depending on the level of detail of the design.” Tr. at 49. In our view, this provides an opportunity for biased advice. See PURVIS Sys., Inc., supra, 2004 CPD para. 177 at 9 (agency improperly failed to consider impaired objectivity OCI where same contractor was expected to provide subjective input on its own products and services). Further, we find persuasive the protester’s position that, while the advice may not result in implementation work for SRA under either contract, input from and review by SRA as the EMS contractor regarding systems engineering solutions proposed by SRA as the FITS contractor could have a potential impact on SRA’s relationship with the government including past performance evaluations and future competitions. In these circumstances, we believe that it is clear from the record that the performance by SRA of both the EMS and FITS contracts presents a potential impaired objectivity OCI.

Our conclusion that a potential impaired objectivity OCI exists is not altered by DEA's assertion that it does not rely on the EMS contractor alone for advice, nor by its reliance on the fact that the government retains the ultimate decisionmaking authority. The record indicates that obtaining input from a contractor with the O&M perspective was considered important. According to the testimony of the TEP chair, it would be "negligent" not to have the EMS contractor's perspective on FITS designs and so the agency would still seek the input of SRA even when it fulfills both roles. Tr. at 166‑68. In this regard, the EMS contractor will replace multiple former O&M contractors with a single O&M contractor (Tr. at 166), arguably giving it a more important role. Thus, the possibility of obtaining O&M perspective from other DEA contractors may necessarily be somewhat limited. Further, the agency broadly asserts that under its process "[a]ny contractor input" in an IPT is "vetted by the DEA personnel" and that the CCB reviews and approves all IT changes making the government the "final decision authority." AR at 20. However, it is not clear from the record that this review will address the impaired objectivity concern arising from SRA's dual roles where, as here, the contractor is expected to have a potentially significant role in providing input with regard to SRA's system design. For example, neither SRA in its OCI mitigation plan, nor the agency, provides any specifics on how the agency will accomplish its vetting of SRA's input before making its final decisions. As we explained in Johnson Controls World Servs., Inc., B-286714.2, Feb. 13, 2001, 2001 CPD para. 20 at 11-12, an approach based upon ad hoc mitigation activity such as discounting the weight given to the firm's recommendations, even if feasible, is not a substitute for the preaward deliberation contemplated under FAR sect. 9.504.

Moreover, although DEA asserts that the review work constitutes only a small portion of the EMS contractor's effort, the agency's position is not supported by the record. In this regard, in response to NGS's protest, the agency now asserts that only 2 percent of the contractor's time is spent in IPT meetings and those meetings are not solely for design reviews. AR at 21 n.8; Supplemental Contracting Officer's Statement at 4. However, not only did a representative of NGS offer persuasive testimony to the effect that 5 of 60 NGS engineers spent at least 25 percent of their time working on reviews and IPT meetings, but in addition, the TEP chair testified that the EMS contractor was spending 10 to 15 percent of its time on reviews. Tr. 158-61. Given this testimony, and the fact the 2 percent figure is not supported by any meaningful contemporary assessment, we find unpersuasive the agency's attempt to portray the review work giving rise to an impaired objectivity OCI as insignificant in terms of the EMS contractors overall level of effort. More significantly, even if the review work took little of the EMS contractor's time, there is no showing in the record that this review process is not important to the agency's mission, and it would not obviate the fact that a potential impaired objectivity OCI existed which needed to be avoided or mitigated.

Finally, SRA's proposal to separate its EMS and FITS personnel through use of a firewall appears to be of little, if any, help in resolving the OCI here. In this regard, the proposed firewall provides for SRA to manage the two contracts using "separate organizations with separate interests" and "distinct business objectives." SRA Mitigation Plan at 5. It also prohibits SRA and subcontractor personnel working on one contract from providing support under the other contract, without written approval from the contracting officer. SRA Mitigation Plan at 7. However, while a firewall arrangement may resolve an "unfair access to information" OCI, it is virtually irrelevant to an OCI involving potentially impaired objectivity. See Aetna Gov't Health Plans, Inc.; Found. Health Fed. Servs., B‑254397.15 et al., July 27, 1995, 95‑2 CPD para. 129 at 16. This is because the conflict at issue pertains to the organization, and not the individual employees. Id. Thus, while the firewall proposed by SRA may create the appearance of separation to mitigate the OCI, the fact remains that personnel under both contracts will be working for the same organization with an incentive to benefit SRA overall. Accordingly, the firewall does not avoid, mitigate or neutralize the impaired objectivity OCI resulting from SRA's performance of dual roles reviewing and providing input on its own designs.

We sustain the protest on the basis that the record does not support DEA's conclusion that there was no potential OCI involving SRA's dual roles, but instead indicates that the agency did not give meaningful consideration to this potential impaired objectivity OCI. Since the agency needs to address the extent of the OCI and what mitigation is appropriate, and because the impact that mitigation may have on SRA's technical and cost proposals is unknown, we believe that the agency will need to reopen discussions in order to address these matters.  (Nortel Government Solutions, Inc., B-299522.5; B-299522.6, December 30, 2008) (pdf)
 

   OCI

Detica asserts that CNA has an impermissible OCI, and that one of the agency's evaluators was biased in favor of CNA. In this connection, the protester asserts that an individual who formerly was the director of the agency's office of preparedness policy, planning, and analysis (PPPA), resigned from his position and subsequently was hired by CNA. The protester maintains that the former PPPA director was involved both in planning the subject acquisition, and in identifying funds for the acquisition. Detica maintains that this gives rise to an OCI that the agency did not identify or attempt to mitigate or neutralize. Detica also asserts that the former director maintained a professional relationship with one of the agency's technical evaluators; according to Detica, this resulted in bias in favor of CNA.

The Federal Acquisition Regulation (FAR) generally requires contracting officers to avoid, neutralize, or mitigate potential significant OCIs in order to prevent unfair competitive advantages or the existence of conflicting roles that might impair a contractor's objectivity. FAR sections 9.504, 9.505. As a general matter, OCIs can be broadly categorized into three groups: biased ground rules, unequal access to non‑public information, and impaired objectivity. Operational Resource Consultants, Inc., B-299131, B-299131.2, Feb. 16, 2007, 2007 CPD para. 38 at 5-6. Substantial facts and hard evidence are necessary to establish the existence of an OCI; mere inference or suspicion of an actual or apparent OCI is insufficient for our Office to sustain a protest. Id.

Although Detica has not specifically identified the type of OCI it is alleging, its contention that the former director participated in planning the subject acquisition and identifying funds within the agency suggests an alleged "biased ground rules" OCI; such an OCI arises where an individual or concern has, for example, prepared the SOW for a solicitation. FAR sect. 9.505-2. We find no basis to conclude that CNA has an impermissible OCI.

The record shows that the individual in question was the director of PPPA from September until December 2007, at which time he tendered his resignation; shortly thereafter, he became an employee of CNA. Intervenor's Comments, Oct. 6, 2008, Affidavit of Former PPPA Director, at 1. The former director states that, during this interval, PPPA's fiscal year 2008 budget remained in draft form and, although this draft budget included funding for research and analysis, there was no SOW or other acquisition documentation for the requirement that eventually evolved into the SPAR acquisition, and the budget was not finalized or approved until after his departure. Id. at 2. These representations are corroborated by affidavits from agency personnel. The new PPPA director states that the former director never saw the research branch quotation that eventually became the basis for the SPAR procurement. AR, exh. B, at 1. He further represents that the individual responsible for preparing the scope of work (SOW) for the SPAR procurement did not begin working on that document until February or March 2008, after the departure of the former director, and that the SOW document was not forwarded to him for review (as the new PPPA director) until March. Id.

The record also contains the affidavit of the individual who prepared the acquisition package for the SPAR procurement, including the SOO. She states that, at no time did she have any interaction with the former director, and that she neither received information from him, nor provided information to him relating to her development of the acquisition package for the SPAR requirement. AR, exh. C, at 1. She also states that she did not begin preparing the solicitation's SOO until early March 2008, and that she forwarded it to her director in mid-March. Id.

Against the backdrop of this evidence, the only evidence presented by Detica in support of its generalized allegation of an OCI is an affidavit in which one if its employees represents that he has observed that the former director was responsible for overseeing preparation of the agency's budget, that there were several contacts between representatives of Detica and CNA (that did not include the affiant) in February 2008 concerning possible teaming arrangements between the two firms, and that the former director had been involved in these contacts. Letter of Protest, Aug. 29, 2008, attach. A, at 1-3. This affidavit does not establish that the former director participated in planning the subject acquisition and in identifying available agency funding for the requirement, as Detica alleges.

We conclude from the evidence presented that the former director was involved in the preliminary stages of preparing the agency's annual budget; that he was aware that the budget in its draft form included funding for some unspecified research and analysis work; that he was no longer a federal employee at the time the SPAR requirement was identified with specificity and did not participate in preparing the solicitation or SOO; and that identifying the agency's actual requirements and preparing the acquisition package (including the SOO) was accomplished by other individuals who were not in contact with the former director. Simply stated, the evidence does not support a finding of an impermissible OCI on the part of CNA.  (Detica, B-400523; B-400523.2, December 2, 2008) (pdf)

Contracting officers are required to identify potential conflicts of interest as early in the acquisition process as possible, and to avoid, neutralize, or mitigate such conflicts to prevent the existence of conflicting roles that might impair a contractor’s objectivity, such as where contract performance entails evaluating itself or its own products, since the firm’s ability to render impartial advice may be undermined. See FAR sections 9.505, 9.508; PURVIS Sys., Inc., B-293807.3, B-290807.4, Aug. 16, 2004, 2004 CPD para. 177 at 7. In assessing potential OCIs, the FAR directs the contracting officer to examine each contracting situation individually on the basis of its particular facts and the nature of the proposed contract; using sound judgment, the contracting officer is to determine not only whether a conflict exists, but, if so, the appropriate means for resolving it, consistent with the terms of the solicitation and applicable procurement rules. See Alion Sci. & Tech. Corp., B-297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 8; Lucent Techs. World Servs. Inc., B-295462, Mar. 2, 2005, 2005 CPD para. 55 at 10. Our review of the record here supports the protester’s contention that the agency’s OCI assessment of AT&T, as well as the agency’s disqualification of the firm without considering its ability to avoid, neutralize, or mitigate the alleged conflict, or otherwise allowing the firm to respond to the reasons cited for its adverse OCI assessment, were unreasonable.

First, although the RFP required the contracting officer to evaluate all proposals to determine whether an apparent OCI exists, the agency here concedes that AT&T’s proposal, which included a proposed OCI mitigation plan, was not evaluated prior to the firm’s disqualification; the OCI assessment, therefore, clearly was not conducted in accordance with the terms of the RFP, which called for such an evaluation. Second, as the protester points out, and as stated above, the solicitation here included provisions (referencing the general rules of FAR sect. 9.505) for limitations on contracting as a means of avoiding, neutralizing, or mitigating perceived OCIs, but there is no indication in the record that the agency considered their application to AT&T prior to deciding to disqualify the firm. While the agency suggests that, since the RFP did not specifically request a mitigation plan from the offerors and advised that firms with an actual or apparent OCI would be disqualified, offerors should have known that plans to avoid, neutralize, or mitigate an OCI would not be considered by the agency, our review of the solicitation does not support the agency’s position. Rather, our review shows that the RFP contemplated that the agency would attempt to avoid, neutralize, or mitigate perceived OCIs, at least to the extent of applying the “contracting restrictions” provisions of the RFP. These provisions, as stated above, allow participation in the procurement with some performance limitations or where other safeguards are in place to ensure objectivity; we therefore agree with the protester that a reasonable interpretation of the RFP is that disqualification was a determination to be made after consideration of whether or not a perceived OCI could be resolved short of eliminating the firm from the competition. See RFP at 39-41. The agency, however, failed to conduct the required review of whether or not the perceived OCI attributed to AT&T could be resolved, i.e., avoided, neutralized or mitigated, without the need to disqualify the firm.

Third, the agency provides no support for its conclusion that AT&T would be evaluating its own IO security products in performance of the tasks identified in the RFP, such as the required analysis of the agency’s current IO systems. According to AT&T, its IO security products are not part of the Navy’s IO systems to be supported here; rather, AT&T’s IO products are only available to its network subscribers and the Navy does not subscribe to that network. The OCI determination, therefore, appears to be based more on unsupported inference than fact.[2] See NES Gov’t Servs., Inc.; Urgent Care, Inc., B-242358.4; B-242358.6, Oct. 4, 1991, 91-2 CPD para. 291 at 6. We think it was unreasonable for the agency to have assessed an OCI in this regard without first resolving the implications of the subscription-only limitation associated with the use of the firm’s products and services before concluding that those products and services would be evaluated by the firm during its performance of the RFP’s tasks.[3] Under these circumstances, we think that the agency’s failure to communicate its OCI concerns to AT&T and provide an opportunity for a response from the protester for consideration in the OCI assessment of the firm, was unreasonable. See FAR sect. 9.504(e) (providing that before determining to withhold an award based on conflict of interest considerations, the contracting officer is to notify the contractor of the reasons supporting proposed exclusion of the firm and allow the contractor a reasonable opportunity to respond); sect. 9.506(d)(2) (requiring the contracting officer to consider additional information provided by prospective contractors in response to the solicitation or during negotiations in review of perceived OCIs); Lucent Techs. World Servs. Inc, supra, at 11.

In light of the lack of support for the agency’s OCI assessment of AT&T, and the failure to give AT&T an opportunity to respond to the agency’s perceived OCI, we recommend that the agency give the firm notice of the reasons for its OCI concerns and an opportunity to respond. The agency’s new OCI assessment for the firm should also include, consistent with the solicitation, consideration of the firm’s proposal (including its proposed OCI mitigation plan). To the extent a perceived OCI is found, the agency should then consider the applicability of the “contracting restrictions” provided in the solicitation to resolve any OCI concerns, if appropriate (i.e., prior to a disqualification determination, if any). We also recommend that AT&T be reimbursed the costs of filing and pursuing the protest, including reasonable attorneys’ fees. 4 C.F.R. sect. 21.8(d)(1) (2008). AT&T should submit its certified claim for costs, detailing the time expended and costs incurred, directly to the contracting agency within 60 days after receipt of this decision. 4 C.F.R. sect. 21.8(f)(1).  (AT&T Government Solutions, Inc., B-400216, August 28, 2008)  (pdf)

The record shows that while both CEDS and the HAP program involve processing information from multiple security levels simultaneously, the two programs apply different separation technologies and approaches; the requirements in the two programs here are also qualitatively different. CEDS requires, at a minimum, the ability to simultaneously and separately process information from six different security classifications under the same operating system, while the HAP program involves separating information in two adjacent levels of security classification. CEDS involves a real-time operating system (i.e., the results of one process are available in time for the next computing process which requires the previous result) and the HAP program does not. Further, while CEDS utilizes separation kernel technology that is to be certified by NSA against the most rigorous security assurance requirements, the HAP program does not involve the use or adaptation of a separation kernel, or mandate compliance with the same security assurance requirements. RFP amend. 1, SRD sect. 3.6.2.3; GD Comments, Dec. 31, 2007, exh. 3, HAP Statement of Work, attach. A, Declaration of Bill Ross, at 4-8. In sum, from the record before us, it appears that to the extent that GD was familiar with separation kernel technology, it was not as a result of its work on the NSA HAP program.

Contracting officers are required to identify and evaluate potential OCIs as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sect. 9.504(a)(1). The FAR provides that an OCI exists when, because of other 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, or the person’s objectivity in performing the contract work is or might be otherwise impaired, or the person has an unfair competitive advantage. See FAR sect. 2.101. Situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, are generally associated with a firm’s performance of a government contract and can be broadly categorized into three groups: (1) unequal access to information cases, where the primary concern is that a government contractor has access to nonpublic information that would give it an unfair competitive advantage in a competition for another contract; (2) biased ground rules cases, where the primary concern is that a government contractor could have an opportunity to skew a competition for a government contract in favor of itself; and (3) impaired objectivity cases, where the primary concern is that a government contractor would be in the position of evaluating itself or a related entity (either through an assessment of performance under a contract or an evaluation of proposals in a competition), which would cast doubt on the contractor’s ability to render impartial advice to the government. Mechanical Equip. Co., Inc. et al., B-292789.2 et al., Dec. 15, 2003, 2004 CPD para. 192 at 18; Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 12-13. DRS’s allegation concerning GD here is primarily that it had an unfair competitive advantage as a result of its work under the HAP contract.

We find DRS's central assertion--that as the HAP contractor GD improperly gained inside knowledge and helped to shape the separation kernel standards applicable to the CEDS procurement--to be unfounded. As a preliminary matter, there is no evidence (and DRS does not assert otherwise) that GD had a role in the development of the actual CEDS separation kernel requirements. Further, GD's work on the HAP program did not result in the offeror having a role in the development of NSA's SKPP standard. As set forth above, the record clearly reflects that the HAP program did not involve the use of separation kernel technology, none of GD's work on the HAP program involved the development or the delivery of NSA's SKPP standard, and none of GD's work product from the HAP program was used by NSA for the development of the SKPP standard.[8] Further, GD's work on the HAP program was not directly applicable to the much more difficult technology and security assurance requirements set forth in the CEDS SRD: at most, GD's work on the HAP contract taught the offeror what would not work for the CEDS procurement. There is simply no merit to DRS's allegation that GD helped to shape the NSA separation kernel standards that applied to the CEDS procurement, and any exposure that GD had to separation kernel technologies and the corresponding NSA standard was a competitive advantage that the Navy had no duty to neutralize. Gonzales Consulting Servs., Inc., B-291642.2, July 16, 2003, 2003 CPD para. 128 at 7; Government Bus. Servs. Group, B-287052 et al., Mar. 27, 2001, 2001 CPD para. 58 at 10.  (DRSC3 Systems, LLC, B-310825; B-310825.2, February 26, 2008) (pdf)

SRA contends that the key personnel evaluation is tainted by personal and organizational conflicts of interest (OCI) involving an evaluation reference, SRNS’s proposed SRNL director, and several of SRNS’s other key personnel. SRA first argues that the evaluation was tainted in that one of the individuals who provided references to the SEB in connection with two proposed key personnel provided biased information because she had a personal conflict of interest: at the time of the evaluation, she was married to an employee of one of SRNS’s team members. The RFP required each proposed key personnel to provide a reference, and stated that these “reference checks” would be part of the key personnel evaluation. RFP sect. M‑2(a)(1). One of SRA’s key personnel and one of SRNS’s key personnel identified a DOE employee as a reference. As was known by SRA at the time of its proposal submission and during the evaluation, but was not known to the SEB or SSA, this DOE employee was married to an employee of one of SRNS’s team members. Supp. Contracting Officer’s Statement at 2-3. The evaluators had no reason to suspect bias on the part of this reference, given that it was SRA that identified this DOE individual as a key personnel reference, and presumably SRA would not have identified a reference that could be biased against it. Id. at 5. The DOE employee reference gave the SRA individual a somewhat negative reference, and gave the SRNS individual a positive reference. During the evaluation, the SEB noted that, with regard to the one SRA key personnel, the negative reference was inconsistent with the other positive references, and thus the agency requested additional references, all of which were positive. As a result, the SEB “discounted” the negative reference, concluded that the reference checks for this SRA individual were “[f]avorable,” and rated this SRA individual a strength in the key personnel evaluation. Supp. Contracting Officer’s Statement at 6; AR, Tab B.2, SEB Report, app. A, at 5, 11. With regard to the one SRNS key personnel, the DOE reference was found to be consistent with other “[f]avorable” references, and the SRNS individual was also given a strength in the evaluation. Supp. Contracting Officer’s Statement at 6; Tab B.2, SEB Report, app. A, at 5, 11.

We have recognized that an actual or apparent conflict of interest may arise when an agency employee has both an “official role in the procurement” and a “personal stake in the outcome.” TPL, Inc., B-297136.10, B-297136.11, June 29, 2006, 2006 CPD para. 104 at 8 (citing examples). Here, however, the DOE reference in question did not have an official role in the procurement--she was not involved in drafting, reviewing or approving the RFP; evaluating proposals; or reviewing or approving the award. She merely provided a personnel reference for two individuals because she was identified by the offerors as a person to contact as a reference check. We have found that a conflict of interest does not necessarily exist, even where the same agency employee provides a reference and performs the evaluation, absent a showing (which has not been made here) of improper influence on the evaluation. Id. at 9. Based on this record, we find that the evaluators acted reasonably in dealing with this reference’s comments. In any event, even if the DOE reference were biased or had a conflict of interest, the record shows that this had no impact on the evaluation and thus SRA was not prejudiced as a result. See Laerdal Med. Corp., B‑297321, B-297321.2, Dec. 23, 2005, 2005 CPD para. 12 at 7 (prejudice is not established where, even if a conflict of interest or bias exists, it has no impact on the evaluation).

SRA also complains that several of SRNS’s proposed key personnel create the potential for OCIs. Specifically, it contends that the SRNL director’s role as the president and owner of a consulting firm “conflicts” with his role as SRNL director for SRNS, and that the director could use information obtained during performance for the competitive advantage of his company and clients in the future. SRA’s Comments at 87. SRA also contends that [REDACTED] of SRNS’s proposed key personnel have “divided loyalty” because they are employed by SRNS’s member companies and not SRNS itself. SRA’s Comments at 83. As discussed below, we do not agree with SRA that the situations it describes with regard to SRNS’s key personnel present the potential for OCIs.

It is true that contracting officers have a duty to avoid, neutralize, or mitigate potential significant OCIs so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. Federal Acquisition Regulation (FAR) sections 9.504(a), 9.505; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 12-13. As FAR Subpart 9.5 explains, OCIs that must be avoided include situations where a company has divided loyalties that impair its ability to render impartial advise to the government (“impaired objectivity”), or where the company has access to information that its competitors do not that could lead to a competitive advantage for the firm (“unequal access to information”). FAR sect. 9.5; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 12-13. It must be noted, however, that there is a distinction between an OCI and a personal conflict of interest: with an OCI, the conflicted party is the organization; with a personal conflict of interest, the conflict is with the individual. See Daniel I. Gordon, Organizational Conflicts of Interest: A Growing Integrity Challenge, 35 Pub. Cont. L.J. 25, 29 (Fall 2005) (distinguishing personal from organizational conflicts of interests); see also FAR sections 3.101-1, 9.505, 9.508. The facts here, at most, give rise to personal conflicts of the individual SRNS employees and are not OCIs.  SRA has not alleged, nor does the record evidence, any facts showing that SRNS or its team member organizations have impaired objectivity or that these entities serve multiple, or conflicting, roles that could lead to an impaired objectivity OCI; nor has SRA alleged that SRNS or its team member organizations had unequal access to information that would render this competition unfair. Rather, SRA argues merely that the individual employees are not adequately committed to SRNS and may use their positions to benefit their employing team member companies, or, in the case of the SRNL director, that he will use information in the future that will benefit his own company. With regard to the SRNL director, the individual’s ownership of a consulting business does not appear to “conflict” with his role as SRNS’s proposed SRNL director, as SRA asserts. The individual has divested himself of all of his consulting work, except for one unrelated contract which he is performing as a means of income until this protest is resolved. Declaration of SRNS’s SRNL director para. 5. He and the other [REDACTED] key personnel have signed commitment letters to work solely on the Savannah River Site project without any “contingencies or constraints” on their positions. SRNS’s Second Supp. Comments, exh. 4, SRNS Key Personnel Commitment Letters. To the extent that SRA asserts that the SRNL director or others may use information learned during performance to benefit themselves or their employers in future endeavors, this is speculative and insufficient to impute any conflict of interest on these individuals or their employers. See American Mgmt. Sys., Inc., B‑285645, Sept. 8, 2000, 2000 CPD para. 163 at 6 (possible benefit from current procurement to a contractor is too speculative and remote to establish a significant OCI). In addition, we see no significant potential for OCIs arising out of the fact that [REDACTED] of SRNS’s key personnel will remain employees of the team member companies rather than become direct employees of SRNS. Given that the employers are team members of SRNS working together to perform the site work, we agree with the agency that there is unlikely to be any divergence of interest. Under the incumbent contract, currently performed by SRA’s team members, the key personnel are employed by the team members and not the prime contractor, WSRC. OCIs have not arisen under that situation, and as the agency reasonably explains, OCIs are unlikely to happen here. Contracting Officer’s Statement at 56. The contracting officer here reviewed SRNS’s disclosures regarding potential OCIs, and reasonably determined that there was no basis to question these disclosures. Id. SRA’s arguments do not call into question the reasonableness of the contracting officer’s judgment.  (Savannah River Alliance, LLC, B-311126, B-311126.2, B-311126.3, B-311126.4, April 25, 2008) (pdf)

Karrar asserts that the agency improperly failed to consider that BANC3 has an impermissible OCI due to the fact that it is a subcontractor to, and has a mentor‑protégé agreement with, Lockheed Martin Corporation, one of the eight prime contractors for the R2 program. Karrar’s assertion is based on its claim that BANC3’s Internet website references the mentor-protégé relationship.  The situations in which OCIs arise are addressed in Federal Acquisition Regulation (FAR) subpart 9.5 and in decisions of our Office. As relevant here, one type of OCI, which reflects concerns about a firm’s “impaired objectivity,” consists of situations where a firm’s work under one federal contract could entail its evaluating its own or a related entity’s performance under another federal contract, thus undermining the firm’s ability to render impartial advice to the government. FAR sect. 9.505-3; Aetna Gov’t. Health Plans, Inc.: Found. Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 13.


The responsibility for determining whether an OCI exists, and the extent to which a firm should be excluded from the competition, rests with the contracting agency, SRS Techs., B-258170.3, Feb. 21, 1995, 95-1 CPD para. 95 at 8-9. Where an agency has given thorough, documented consideration to an offeror’s activities and their potential to create OCIs, we will not substitute our judgment for the agency’s conclusions drawn from such a comprehensive review, provided the conclusions are otherwise rational and reasonable. See, e.g., Business Consulting Assocs., B‑299758.2, Aug. 1, 2007, 2007 CPD para. 134 at 9-10; Overlook Sys. Techs., Inc., B‑298099.4, B-298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-18; Alion Sci. & Tech. Corp., B-297022.4, B-297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 5-8. The Army reports that it was aware of the potential OCI here--the possibility that BANC3’s relationship with Lockheed would undermine its ability to render impartial advice to the agency under the contract--because BANC3 was performing in the R2 project office as a subcontractor under a task order issued to Lockheed, which was to expire in August 2007, but was extended to October 31. AR at 10. The Army determined that, if BANC3 were awarded the contract, it would have an impermissible OCI if it continued to work with Lockheed or any other R2 prime contractor. Accordingly, on Oct. 15, after BANC3 received the award, the Army met with the firm to discuss its transition plans. At this meeting, BANC3 indicated that it was withdrawing from all teaming arrangements with R2 prime contractors and would not compete as a prime contractor or subcontractor for any future R2 contract. BANC3 further indicated that it would not have any contractual relationship with Lockheed after the current work order expired on October 31. The Army concluded that, since any services that could result in an OCI issue would not be ordered until after the relationship between Lockheed and BANC3 ended, no impermissible OCI existed. As for the alleged mentor‑protégé agreement between BANC3 and Lockheed, the Army and BANC3 state that there is not and never has been such an agreement. BANC3 explains that the statement on its website was included in a draft version of its company brochure because it explored the possibility of such an agreement, but the agreement was never completed. The protester has provided no evidence to the contrary. We find that, after thoroughly and reasonably considering the possibility of an OCI, the agency reasonably concluded that there existed no OCI that precluded BANC3 from participating in the procurement or from receiving the award. This argument thus provides no basis for questioning the award.  (Karrar Systems Corporation, B-310661; B-310661.2, January 3, 2008)  (pdf)

The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups: “unequal access to information” cases; “biased ground rules” cases; and “impaired objectivity” cases. See Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 12-13. This protest concerns the first type, unequal access to information. The record shows that an employee of TCI had access to source selection information, including the independent government estimate, the source selection plan, and other offerors’ proposals. The owner of TCI, as noted, owns [DELETED] percent of the stock of MPSC, Protest at 2 n.1, a subcontractor of VRC under the current contract and a proposed subcontractor under the current solicitation. In our view, these relationships, considered together, indicate that VRC was in a position to benefit competitively as a result of the TCI employee’s position in NGB’s contracting office, which gave her access to source selection information regarding this procurement. Contracting agencies are admonished to avoid any conflict of interest, even the appearance of a conflict of interest, in government procurements, FAR sect. 3.101-1; see Lancaster & Co., B-254418, Dec. 14, 1993, 93-2 CPD para. 319; on the record here, we find reasonable the agency’s conclusion that VRC had a conflict of interest. The protester asserts that, regardless of the business relationships among the three companies, the Chief of the Operational Contracting Division (the contracting officer’s supervisor) had the authority to decide whether the relationships in question constituted an OCI, and the agency was bound by the Chief’s opinion that they posed no conflict of interest. We disagree. With regard to conflicts of interest, the FAR assigns certain duties and responsibilities specifically to the contracting officer, some of which are noted above. The FAR, without exception, places responsibility for determining the existence of an OCI on the contracting officer and makes no provision for the contracting officer to delegate her authority. Here, the contracting officer simply exercised her authority under the FAR, notwithstanding the Chief’s apparent view of the matter. The protester also asserts that there was no conflict of interest because the agency has not shown “hard facts,” that is, that VRC was in possession of source selection information as a result of the TCI’s employee’s work for the agency. We disagree. It is true that a determination to exclude an offeror must be based on facts, rather than mere suspicion. Clement Int’l Corp., B-255304.2, Apr. 5, 1994, 94-1 CPD para. 228 at 4; see also CACI, Inc.-Fed. v. United States, 719 F.2d 1567 (Fed.Cir. 1983). The facts that are required, however, are those which establish the existence of the OCI, not the specific impact of the conflict. Aetna Gov’t Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra, at 18. Once the facts establishing the existence of an OCI are present, reasonable steps to avoid, mitigate, or neutralize the conflict are required without further need for “hard facts” to prove the conflict’s impact on the competition. Where, as here, the facts demonstrate that an OCI exists, the harm from that conflict, unless it is avoided or adequately mitigated, is presumed to occur. Id.  The protester asserts that it had measures in place, in the form of “firewall arrangements” between the TCI employee and TCI and between TCI and MPSC/VRC, that the contracting officer should have found sufficient to mitigate any OCI. Protest at 6-7. The contracting officer states that, had TCI made her aware of the ownership relationships earlier in the procurement process, mitigation of the potential conflict of interest might have been possible. AR, Contracting Officer’s Statement of Facts at 4. Because the relationships were not brought to her attention until 2 days after proposals had been received, the contracting officer saw no way to successfully mitigate the actual OCI and instead chose to avoid the OCI altogether by rejecting VRC’s proposal. Again, we see no basis in the record to question the reasonableness of the contracting officer’s decision. In sum, even the appearance of an unfair competitive advantage may compromise the integrity of the procurement process, thus justifying a contracting officer’s decision to err, if at all, on the side of avoiding the appearance of a tainted competition. Lucent Techs. World Servs. Inc., B‑295462, Mar. 2, 2005, 2005 CPD para. 55 at 10. Here, the fact that an individual employed by TCI, a company with ownership ties to the protester, was assigned to work in the agency’s contracting office, together with the fact that the agency was not notified of those ownership relationships until after receipt of proposals, created a conflict of interest that the contracting officer reasonably determined could only be avoided by rejecting the protester’s proposal.  (VRC, Inc., B-310100, November 2, 2007) (pdf)

MTC maintains that any time an offeror, through performance of another government contract, gains knowledge or information that is not generally available to other offerors, that offeror has an OCI and must be excluded from the competition. In our view, MTC overstates the requirements of the FAR in this area. It is well-settled that an offeror may possess unique information, advantages and capabilities due to its prior experience under a government contract--either as in incumbent contractor or otherwise; further, the government is not necessarily required to equalize competition to compensate for such an advantage, unless there is evidence of preferential treatment or other improper action. See FAR sect. 9.505-2(a)(3); Crux Computer Corp., B-234143, May 3, 1989, 89-1 CPD para. 422 at 5. The existence of an advantage, in and of itself, does not constitute preferential treatment by the agency, nor is such a normally-occurring advantage necessarily unfair. Crofton Diving Corp., B‑289271, Jan. 30, 2002, 2002 CPD para. 32 at 6-7; Government Bus. Servs. Group, B-287052 et al., Mar. 27, 2001, 2001 CPD para. 58 at 10.  The responsibility for determining whether an OCI exists, and to what extent the firm should be excluded from the competition, rests with the contracting agency, SRS Techs., B-258170.3, Feb. 21, 1995, 95-1 CPD para. 95 at 8-9, and the FAR directs contracting officers to examine each situation individually and exercise “common sense, good judgment, and sound discretion” in determining whether significant conflicts exist. FAR sect. 9.505. The FAR and this Office’s decisions mandate that, in meeting its obligation to identify OCIs, an agency must give thorough consideration to the interests and activities of an offeror that might create OCIs. See, e.g., Alion Sci., & Tech. Corp., B-297342, Jan. 9, 2006, 2006 CPD para. 1 at 8-13; Science Applications Int’l Corp., B‑293601 et al., May 3, 2004, 2004 CPD para. 96 at 4-8. Where an agency has, in fact, given thorough, documented consideration to an offeror’s activities and their potential to create OCIs, we will not substitute our judgment for the agency’s conclusions drawn from such a comprehensive review, provided the conclusions are otherwise rational and reasonable. See, e.g., Business Consulting Assocs., B‑299758.2, Aug. 1, 2007, 2007 CPD para. 134 at 9-10; Overlook Sys. Techs., Inc., B‑298099.4, B‑298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 10-18; Alion Sci. & Tech. Corp., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 5-8. 

Here, as documented extensively in the agency record, the agency gave thorough and comprehensive consideration to the prior activities of Denysys and its subcontractors, as well as MTC and its subcontractors, in order to assess whether those activities created OCIs. Specifically, the contracting officer performed an analysis of the work that would be required under the solicitation at issue--that is, operational sustainment of the TEWLS system. AR, Tab 6, 26. The contracting officer then turned to documenting an extensive review regarding the activities previously performed by Denysys and its subcontractors, and MTC and its subcontractors, under prior contracts. Id. In this regard, the contracting officer noted that the TEWLS system is comprised of software owned by SAP AG and that, in performing its prior contracts, neither Denysys nor its proposed subcontractors have been materially involved in development or customizing the TEWLS system, since that function is performed by SAP itself; that Denysys and its subcontractors have not had a role in developing the requirements for the solicitation at issue; that neither Denysys nor its subcontractors have had access to any underlying software code configuration for TEWLS; that neither Denysys nor its subcontractors provided technical direction for TEWLS; and that neither Denysys or its subcontractors have been involved in any discussions where contract sensitive information has been discussed. AR, Tabs 6, 26.  Additionally, the contracting officer found that MTC has had more access to TEWLS‑related information, pursuant to MTC’s prior contract for sustainment of the URL project, than Denysys and its subcontractors. AR, Tab 26. Based on the agency’s review of the offerors’ prior activities, the contracting officer concluded that Denysys did not have an unfair competitive advantage in this procurement. We have reviewed the entire record, including documentation of the contracting officer’s review and analysis of the offerors’ prior activities, and conclude that the agency’s review was thorough and comprehensive; in this regard, MTC has not identified any material flaw in the agency’s review. Further, we find no basis to question the agency’s conclusions drawn from its review. Finally, we view MTC’s protest to be based on an interpretation of the law which would, in effect, exclude virtually any government contractor (including MTC in this procurement) from competing for procurements that in any way relate to the contractor’s prior contract performance. FAR subpart 9.5 does not establish such a sweeping exclusionary rule. (MASAI Technologies Corporation, B-298880.3, B-298880.4, September 10, 2007) (pdf)

The issue here is whether the agency reasonably considered the awardee’s proposed mitigation plan. BCA contends that MBI’s plan to move the affected work from one team member to the other, and imposing a firewall, does not adequately mitigate the potential OCI. It contends that MBI’s mitigation plan should have required MBI to subcontract the work to a firm that was not a team member of the offeror, like BCA’s mitigation plan did. In cases such as this, once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Overlook Sys. Techs., Inc., B-298099.4, B-298099.5, Nov. 28, 2006, 2006 CPD para. 185 at 16. In this regard, contracting officer’s are allowed to exercise “common sense, good judgment, and sound discretion” in assessing whether a potential conflict exists and in developing appropriate ways to address it. FAR sect. 9.505; Epoch Eng’g, Inc., B‑276634, July 7, 1997, 97-2 CPD para. 72 at 5. Here, the agency conducted extensive discussions with each offeror about the potential OCIs and the details of each offeror’s proposed mitigation plan. As a result of these discussions, the agency reasonably determined the plans to be “similar.” In this regard, under BCA’s proposal, RER will subcontract the affected work to a separate entity and establish safeguards to ensure that RER employees will not work on the affected transactions. Similarly, under MBI’s proposal, Reznick will transfer the affected work to a separate entity (MBI) and establish safeguards to ensure that Reznick’s employees will not work on these transactions. In evaluating the adequacy of the plans, the agency considered that both offerors put into place procedures to identify the affected properties and to ensure that the conflicted company would not be performing the work on these properties. AR, Tab 12(B), Final TEP Report, at 19, 68. The agency also considered whether the affected work could be performed independently from the conflicted entity in order to determine whether the safeguards were sufficient. Contracting Officer’s Statement at 20-21. The agency concluded that MBI possessed “significant experience and skill” so as to complete the work independently of Reznick, and that the BCA team subcontractor was able to perform the work independently of RER. Id. The agency identified that only a small percentage of loans (approximately [REDACTED]) could potentially be affected, such that the proposed mitigation plans could adequately neutralize the conflict. Id. We have found, in other “impaired objectivity” OCI situations, that subcontracting or transferring work to a separate entity, and establishing a firewall around the impaired entity, can reasonably mitigate these types of OCIs. Deutsche Bank, B‑289111, Dec. 12, 2001, 2001 CPD para. 210 at 4; see also Alion Sci. & Tech. Corp., B‑297022.4, B‑297022.5, Sept. 26, 2006, 2006 CPD para. 146 at 10; Epoch Eng’g, Inc., supra, at 6. Given that the agency thoroughly considered the parties’ potential OCIs and proposed mitigation plans, we find unobjectionable the agency’s determination that MBI’s mitigation plan adequately mitigated the potential OCI. (Business Consulting Associates, LLC, B-299758.2, August 1, 2007) (pdf)

The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups: biased ground rules, unequal access to non-public information, and impaired objectivity. Contracting officers must exercise “common sense, good judgment, and sound discretion” in assessing whether a potential conflict exists and in developing appropriate ways to resolve it; the primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency. FAR sect. 9.505; Science Applications Int’l Corp., B-293601.5, Sept. 21, 2004, 2004 CPD para. 201 at 4. Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. Science Applications Int’l Corp., supra. As relevant to the protester’s allegations, a biased ground rules OCI arises where a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract by, for example, writing the SOW or the specifications. In these cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. FAR sections 9.505-1, 9.505-2. An unequal access to nonpublic information OCI arises where, as part of its performance of a government contract, a firm has access to information that may provide the firm an unfair competitive advantage in a later competition for a government contract. FAR sect. 9.505-4.  With regard to the protester’s claim of a biased ground rules OCI, the protester alleges that, as the contractor for the GSA and NIH contracts discussed above, Enspier may have had a role in drafting the SOW. The agency states that Mitretek Systems, the incumbent contractor for the FPKIA services that are the subject of this procurement, was the entity that assisted the government in developing the SOW, and that Enspier played no role in drafting or developing the SOW. AR, at 6; Contracting Officer’s Statement at 1. The protester fails to identify any information in the record that demonstrates that Enspier played a role in developing or drafting the SOW, and thus does not rebut the agency’s specific statement that Enspier had no such involvement with the SOW. In this regard, substantial facts and hard evidence are necessary to establish a conflict; mere inference or suspicion of an actual or apparent conflict is not enough. Snell Enters., Inc., supra, at 4.  With regard to the protester’s claim of an unequal access to information OCI, the protester alleges that Enspier may have had access to non-public information that provided the awardee an unfair competitive advantage in the competition. Specifically, the protester contends that the positions held by Enspier under the GSA and NIH contracts suggest that that firm may have had access to non-public information. Although the agency report contained the SOWs for Enspier’s contracts, and the record further describes the activities of Enspier under those contracts, the protester is unable to identify any specific examples of non-public information that would have provided an unfair competitive advantage to the awardee in the competition. Furthermore, as discussed above, the activities performed by Enspier under the NIH contract in support of the FPKIA were generally secretarial in nature, and the work for GSA under the E-Authentication contract pertained to the performance of validation work that relied on publicly-available FPKIA documentation for the two lower-tier levels of authentication, not the two higher-level levels that are the subject of this RFQ. The protester argues that certain publicly-available documents which were either prepared by Enspier or refer to Enspier suggest that that firm may have had access to non-public information. For example, the protester argues that a publicly-available document titled “Technical Approach for the Authentication Service Component,” AR, Exh. 32, supports ORC’s protest to the extent that an Enspier employee is listed as the “author” of the electronic file. The agency explains, however, that this document is merely a recitation of public information regarding PMO polices. Further, even assuming that an Enspier employee was the drafter of this document, the protester does not identify any non-public information that might have been used in its creation, nor does the protester suggest how any such information could have given Enspier an unfair competitive advantage in the competition. In sum, the protester has not provided support for its assertion that the award to Enspier was tainted by an OCI. (Operational Resource Consultants, Inc., B-299131.1; B-299131.2, February 16, 2007) (pdf)

Our role, within the confines of a bid protest, is to determine whether any action of the former government employee may have resulted in prejudice for, or on behalf of, the awardee during the award selection process. See Creative Mgmt. Tech., Inc., B‑266299, Feb. 9, 1996, 96-1 CPD para. 61 at 7. Specifically, we review whether an offeror may have prepared its proposal with knowledge of inside information sufficient to establish a strong likelihood that the offeror gained an unfair competitive advantage in the procurement. PRC, Inc., B‑274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD para. 115 at 19-20. Our review includes consideration of whether the former government employee had access to competitively useful information, as well as whether the individual’s activities with the firm likely resulted in disclosure of such information. Id. An individual’s familiarity with the type of work required under a solicitation from prior government employment is not, by itself, evidence of an unfair competitive advantage. Id. Consistent with our finding in the Philadelphia case, we conclude here that, even if this individual’s prior employment with DeCA had given him access to inside information regarding the agency’s initial produce procurements, it appears much, if not all, of the alleged inside information has in fact been shared with the produce industry through the agency’s informational roundtables, and thus cannot be characterized as inside information. The agency reports that the current solicitation was issued without this individual’s assistance and that material differences exist in each of its Area produce procurements; here, for instance, the contractor faces additional challenges in terms of warm climate conditions and, in some locations, harsh terrain, as well as ensuring produce delivery to the commissaries in Hawaii. As we noted in the Philadelphia decision, the consultant signed a non-disclosure agreement certifying that he would not disclose contractor or source-selection information that he may have learned as an evaluator. Moreover, as in that case, there is no indication in this record that the awardee’s proposal was prepared based on any inside information. Both the consultant and the awardee deny that any communication involving inside information took place. The awardee is an experienced federal government contractor that prepared its own proposal for additional work at numerous commissaries that it already successfully serves. The awardee reports that the consultant did not write the proposal, but was asked to review it prior to its submission. The awardee and the consultant affirm that the consultant’s suggestions were editorial in nature, including general suggestions to provide additional detail, to identify the proposal as containing proprietary information, to describe workforce and activities, and to make assorted style/format changes for consistency. This advice does not suggest the use of inside information, or, for that matter, any information that could reasonably be found to have provided an unfair competitive advantage to this experienced firm. Rather, the record here shows that the awardee’s favorable evaluation was based on the strength of the firm’s established business operations and experience, described in its comprehensive technical proposal. Accordingly, we have no reason to question the propriety of the awards. (OK Produce; Coast Citrus Distributors, B-299058; B-299058.2, February 2, 2007) (pdf)

Our role, within the confines of a bid protest, is to determine whether any action of the former government employee may have resulted in prejudice for, or on behalf of, the awardee during the award selection process. See Creative Mgmt. Tech., Inc., B-266299, Feb. 9, 1996, 96-1 CPD para. 61 at 7. Specifically, we review whether an offeror may have prepared its proposal with knowledge of inside information sufficient to establish a strong likelihood that the offeror gained an unfair competitive advantage in the procurement. PRC, Inc., B‑274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD para. 115 at 17. Our review includes consideration of whether the former government employee had access to competitively useful information, as well as whether the individual’s activities with the firm likely resulted in disclosure of such information. Id.  Here, the record shows that, while he worked for DeCA, the consultant participated in preliminary market research and strategy planning with his supervisors who were coordinating the conversion of operations from DSC-P, and that he was an agency spokesperson for the agency’s two industry roundtables. However, it is clear that those roundtables were held for the purpose of releasing to the public for industry comment, at least in summary form, research and planning information gathered by the agency. Specifically, the agency not only discussed its market research and its plan to change its produce business model, but also released to the substantial number of vendors in attendance the terms of its recent test program and follow-on procurement for the provision of produce to Area 1 commissaries. The record thus shows that at least much of the preliminary research known to the consultant was in fact shared with other vendors and thus cannot be characterized as inside information.  As for the current solicitation, the agency reports that the individual did not assist in the preparation or development of the source selection plan or the solicitation, which was issued almost 4 months after his retirement from the government. Additionally, the agency points out that there are differences in the terms of the solicitation compared to the prior procurement the former government employee participated in as an evaluator (where he reviewed two initial technical proposals, but had no access to price proposals). For instance, the previous solicitation included a requirement for port delivery of produce for commissaries in Keflavik, Iceland and Guantanamo Bay, Cuba (including meeting airlift times and sailing dates); there are no such requirements in the RFP for the Area 3, Group 2 award at issue here. While we recognize that the prior and current solicitations share similar general provisions regarding the basic performance requirement here--delivering quality produce to commissaries at competitive prices--the differences between the two solicitations suggest that the information to which the consultant had access during the prior procurement might be of limited value in the current procurement. In any event, even assuming that the consultant’s participation in the prior procurement gave him access to inside information, the consultant signed a non-disclosure agreement certifying that he would not disclose contractor or source-selection information that he may have learned as an evaluator, and we see no basis in the record here to conclude that the Four Seasons proposal was prepared based on such information. Rather, the record shows that upon his retirement, the consultant was advised by the agency ethics officer that offering his services as a commissary produce consultant would be unobjectionable as long as inside information was not used; that he relayed that information to his client, Four Seasons; that Four Seasons confirmed the accuracy of the restriction with the DeCA ethics officer; and that both the consultant and the awardee deny that any communication involving inside information took place. Our conclusion is further supported by the responses received to our inquiries as to the type of assistance rendered by the consultant. The record shows that Four Seasons, a commercial produce vendor with limited experience in contracting with the federal government, specifically hired another consultant (a professional federal government contract proposal writer)--not the consultant at issue in the protest--to work closely with the firm to prepare its proposal. The role of the consultant at issue here was limited to the review of that proposal; the record shows, for instance, that he made suggestions of editorial and style changes to the proposal related to achieving clarity and compliance with the RFP instructions calling for offerors to provide details regarding their capabilities, approaches, and accomplishments; this advice suggests no use of inside information. (Philadelphia Produce Market Wholesalers, LLC, B-298751, December 8, 2006) (pdf)

With regard to the conflict of interest issues, Maden first contends that BAI had an “unfair competitive advantage” due to the fact that Robert Copeland, the director of SID, is a former BAI employee and supervised two of the evaluators who participated in the procurement. Maden further alleges, based on “information and belief,” that Mr. Copeland or other DARPA employees granted BAI “special access” to the project site prior to the award of the contract. Maden also argues that DARPA failed to properly consider the fact that BAI had an unfair advantage due to its teaming with Marianne Carter; according to Maden, Ms. Carter had worked as an evaluator for DARPA on a previous procurement wherein Maden had submitted a proposal and thus had access to Maden’s “proprietary information.”  Maden’s argument that BAI’s teaming arrangement with Marianne Carter presented an organizational conflict of interest (OCI) which should have resulted in BAI’s exclusion from the competition, is similarly unsubstantiated and without merit. Contracting officers are required to identify and evaluate potential OCIs as early in the acquisition process as possible, and to avoid, neutralize, or mitigate potential significant conflicts of interest so as to prevent an unfair competitive advantage or the existence of conflicting roles that might impair a contractor's objectivity. Federal Acquisition Regulation (FAR) sections 9.504(a); 9.505. OCIs, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract by, for example, writing the statement of work or the specifications. FAR sect. 9.505-2; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., B-254397.15 et al., July 27, 1995, 95-2 CPD para.129 at 13. The second group, which Maden alleges is relevant in this case, consists of “unequal access to information” situations in which a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm an unfair competitive advantage in a later competition for a government contract. FAR sect. 9.505-4; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 12. The third group reflects concerns about a firm’s “impaired objectivity” and comprises cases where a firm’s work under one government contract could entail its evaluating itself or a related entity, thus undermining the firm’s ability to render impartial advice to the government. FAR sect. 9.505-3; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 13. As an initial matter, in addressing this issue, we note that Maden fails to describe the nature of the prior procurement in which DARPA utilized the services of Ms. Carter as an evaluator, nor does Maden explain how the “proprietary information” it provided in connection with that procurement could have provided BAI with an advantage under the current solicitation. In any event, the record reflects that the contracting officer recognized the potential for a conflict resulting from BAI’s use of Ms. Carter as a subcontractor, given her work as an evaluator on a prior DARPA procurement, and that he conducted an inquiry into her involvement in the preparation of BAI’s proposal. Specifically, he solicited independent statements from both BAI and Ms. Carter to determine “exactly what information was shared between BAI and [Carter] and to confirm that no source selection information or proprietary information was released.” AR, Tab 22, Source Selection Significant Event, SSP Deviations, and amend. 4 Justification, at 3. Based on the statements received, the contracting officer was satisfied that Ms. Carter did not provide any information to BAI on how it should structure its proposal and found that her participation was limited to the submission of a subcontract proposal. Moreover, the contracting officer confirmed that Ms. Carter had signed a non-disclosure agreement in connection with her services as an evaluator for DARPA, which prohibited her from disclosing any source selection or proprietary information she may have obtained while serving as an evaluator. Upon reviewing the matter with the SSEB chairperson and agency counsel, the contracting officer concluded that the “potential OCI was effectively mitigated.” AR, Tab 22, Source Selection Significant Event, SSP Deviations, and amend. 4 Justification, at 3-4). Based on this record there is nothing to support Maden’s contention that BAI should have been excluded from the competition based on proposing Ms. Carter as a subcontractor, and Maden has not shown otherwise.  (Maden Technologies, B-298543.2, October 30, 2006) (pdf)

Once an agency has given meaningful consideration to potential conflicts of interest, our Office will not sustain a protest challenging a determination in this area unless the determination is unreasonable or unsupported by the record. SRS Techs., B‑258170.3, Feb. 21, 1995, 95-1 CPD para. 95 at 9. Here, Alion’s protest has not identified any material aspect of the agency’s review and analysis that renders the agency’s conclusions unreasonable. Specifically, Alion has not identified any material aspect of ITT’s involvement in producing or providing spectrum-related products and services that the agency has overlooked or otherwise ignored. Based on the discussion above, we believe the agency has reasonably identified the scope and extent of ITT’s involvement with spectrum-related products and services, as well as reasonably identified ITT’s competitors and customers, including foreign governments, that possess spectrum-related interests. Further, the agency’s consideration of each particular contract activity listed in the solicitation, along with consideration of every contract project performed during the preceding fiscal year, appears to be thorough and complete. To the extent Alion has expressed disagreement with various agency judgments regarding the various solicitation activities and/or performance of particular past projects that could create OCIs for ITT, Alion’s arguments fail to identify any material flaws that would render the agency’s overall conclusions unreasonable. A protester’s mere disagreement with an agency’s judgment does not establish that the judgment was unreasonable. See, e.g., Hanford Envtl. Health Found., B-292858, B-292858.2, Apr. 7, 2004, 2004 CPD para. 164 at 4. On this record, we find no basis to question the reasonableness of the agency’s conclusion regarding the portion of contract requirements that could create OCIs for ITT. (Alion Science & Technology Corporation, B-297022.4; B-297022.5, September 26, 2006) (pdf)

The Federal Acquisition Regulation (FAR) instructs agencies to identify potential OCIs as early as possible in the procurement process, and to avoid, neutralize, or mitigate significant conflicts before contract award so as to prevent unfair competitive advantage or the existence of conflicting roles that might impair a contractor’s objectivity. FAR sections 9.501, 9.504, 9.505; PURVIS Sys., Inc., B-293807.3, B293807.4, Aug. 16, 2004, 2004 CPD para. 177 at 7. The responsibility for determining whether a contractor has a conflict of interest and should be excluded from competition rests with the contracting officer, who must exercise “common sense, good judgment and sound discretion” in assessing whether a significant potential conflict exists and in developing appropriate ways to resolve it. FAR sections 9.504, 9.505; Aetna Gov. Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B-254397 et al., July 27, 1995, 95-2 CPD para. 129 at 12. Situations that create potential conflicts of interest are identified and discussed in FAR subpart 9.5, and they include situations in which a contractor’s performance of contract requirements may affect the contractor’s other activities and interests. See FAR sections 9.505, 9.508. That is, a contractor’s judgment and objectivity in performing the contract requirements may be impaired if the substance of its performance has the potential to affect other activities and interests of the contractor. Id.; Science Applications Int’l Corp., B‑293601 et al., May 3, 2004, 2004 CPD para. 96 at 4. We find that HUD failed to reasonably consider or evaluate the potential OCI arising due to the fact that the owner of CLF (the M&M contractor in Ohio) will be receiving payments from the owner of the closing agent contractor for Ohio, the activities of which CLF will oversee. Specifically, it appears that CLF’s judgment and objectivity in performing the contract requirements could be impaired if its performance could potentially affect the ability of the owner of the closing agent contractor to make the payments owed to CLF’s owner. Further, while the contracting officer was aware of the potential OCI from having CLF’s owner receive a share of Lakeside Title’s profits, and proceeded properly to have CLF eliminate that OCI, it is clear that the contracting officer failed to consider the OCI implications of the amended version of the purchase agreement--whether the magnitude of the payments was such as to call into question whether CLF’s judgment and objectivity were likely to be impaired, or whether there were suitable mitigation measures required to address the scope of the potential conflict of interest. In these circumstances, we sustain the protest on the basis that HUD failed to reasonably consider or evaluate a potential OCI that may result from an award to CLF. (Greenleaf Construction Company, Inc., B-293105.18; B-293105.19, January 17, 2006) (pdf)

Contracting officers are required to identify and evaluate potential conflicts of interest as early in the acquisition process as possible. Federal Acquisition Regulation (FAR) sect. 9.504. The FAR provides that an OCI exists when, 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. See FAR sect. 2.101. Situations that create potential OCIs are further discussed in FAR subpart 9.5 and the decisions of our Office; specifically, what is frequently referred to as an "impaired objectivity" OCI is created when a contractor’s judgment and objectivity in performing the 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. Id.; PURVIS Sys., Inc., B‑293807.3, B‑293807.4, Aug. 16, 2004, 2004 CPD para. 177; Science Applications Int’l Corp., B‑293601 et al., May 3, 2004, 2004 CPD para. 96; Aetna Govt. Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 13. In reviewing this protest, we considered the contract requirements, as reflected in the solicitation and ITT’s proposed PWS tasks, and the basis for the agency’s assessment that ITT was likely to experience impaired-objectivity OCIs only "7.3 percent of the time over the entire contract effort." As discussed below, the agency’s assessment regarding the extent and impact of OCIs with regard to ITT’s contract performance is not reasonably supported by the record. Overall, as discussed above, the agency maintains that "an impaired objectivity OCI [is] likely to occur [for ITT] approximately 7.3 percent of the time over the entire contract effort." Contracting Officer’s Statement at 16. Based on our review of the record, discussed above, the agency’s assessment is not reasonably supported by the record. Specifically, the aggregate level of effort proposed with regard to only the PWS tasks discussed above make up more than [deleted] percent of the total level of effort proposed. Agency Report, Tab 10. As discussed above, a significant portion of the activities described under each of the PWS tasks addressed above involve analysis, evaluation, and subjective judgment with regard to matters in which DOD, ITT, ITT’s competitors, and ITT’s customers are likely to have direct, and likely divergent, interests. Further, in light of the interrelated nature of the activities both within tasks and between tasks, it does not appear from the record here that the agency, or ITT, can expect to meaningfully identify potential conflicts prior to the time the specific activities are performed, rationally segregate such conflicted portions of the contract, and successfully perform those requirements with "firewalled" subcontractors. In short, the record shows that the agency failed to reasonably identify and evaluate the extent of OCIs associated with ITT’s performance of this contract, as well as the effect of potential OCIs on contract performance.  (Alion Science & Technology Corporation, B-297342, January 9, 2006) (pdf)

Contracting officers are required to identify and evaluate potential conflicts of interest as early in the acquisition process as possible. FAR sect. 9.504. The FAR provides that an OCI exists when, 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. See FAR sect. 2.101. Situations that create potential conflicts are further discussed in FAR subpart 9.5 and the decisions of this Office; specifically, an “impaired objectivity” OCI is created when a contractor’s judgment and objectivity in performing a contract’s 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. FAR sections 9.505, 9.508; PURVIS Sys., B-293807.3, B-293807.4, Aug. 16, 2004, 2004 CPD para. 177; Science Applications Int’l Corp., B-293601 et al., May 3, 2004, 2004 CPD para. 96; Aetna Govt. Health Plans, Inc.; Foundation Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD para. 129 at 13. In reviewing this protest, we considered the description of contract requirements reflected in the solicitation, as well as the basis for the agency’s conclusion that “the maximum potential for impaired objectivity OCI occurrences is 15%” of the total contract requirements. We also considered the information provided by ITT with its OCI plan, which included its 2004 annual report, along with other publicly available information, including information contained on ITT’s Internet website. The publicly available information we reviewed leaves no doubt that ITT has multiple financial interests with regard to manufacturing and marketing of spectrum-dependent products to the U.S. government, to foreign governments, and to commercial customers worldwide.[10] Further, ITT’s public statements make clear that its financial interests and the success of its company are affected by a variety of factors, including both domestic and foreign government regulations, ITT’s ability to continue to win contracts, and ITT’s development and marketing of new products. Overall, our review of the record leads us to conclude that the agency’s assessment of potential impaired-objectivity OCI’s created by ITT’s performance of the anticipated contract activities is not adequately supported by the record.[14] Specifically, in light of the significant spectrum-related interests of ITT, ITT’s competitors, and ITT’s customers, that may well be affected by ITT’s contract performance, the agency’s failure to meaningfully consider the scope and extent of such spectrum-related interests requires the conclusion that the agency’s assessment of the “maximum potential” for impaired-objectivity OCIs is not, on the record here, reasonably supported. In short, the record shows that the agency failed to reasonably identify and evaluate potential OCIs associated with ITT’s performance of this contract and, accordingly, failed to reasonably evaluate the effect that such OCIs will have on ITT’s contract performance. (Alion Science & Technology Corporation, B-297022.3, January 9, 2006) (pdf)

As a general rule, OCIs may be broadly categorized into three situations: impaired objectivity, unequal access to information and biased ground rules. American Mgmt. Sys., Inc. , B-285645, Sept. 8, 2000, 2000 CPD 163 at 4. GSS has not articulated which of the three situations it believes is present here. However, we find that none applies. The unequal access to information and biased ground rules situations clearly are not applicable to this aspect of the protest. In an unequal access to information situation, there must be some showing that the allegedly conflicted entity has had access to information not available to the other competitors, while in a biased ground rules situation there must be some showing that the entity had an opportunity (such as in preparing the solicitation) to influence the ground rules for the competition. Id. Under the third situation, impaired objectivity, the concern is that, because of the nature of a firm's actual or potential work under another government contract, it may be unable to provide objective advice or judgments to the government. Id. Here, because the CV contractor is not called upon by the terms of its contract to provide objective judgments regarding the disposition of property as useable versus scrap (such judgments are contractually the responsibility of DRMS), it follows that there can be no issue of an impairment of LSI's objectivity. In the final analysis, GSS does not allege that LSI's objectivity will be impaired; rather, it alleges that, because of the additional potential profit available under the SV contract, LSI will have an incentive to act deliberately, in concert with SAV, to maneuver property offered to SAV under the CV contract to the SV contract. This amounts to an allegation that LSI may potentially engage in bad faith in its performance of the two contracts. However, there simply is no basis to deny a firm an award due to bad faith that has not occurred but, rather, is a mere theoretical possibility. (Government Scrap Sales, B-295585, March 11, 2005) (pdf)

Lucent argues that the contracting officer's OCI determination was flawed because Lucent did not provide "complete specifications" for the TETRA devices, as that term is used in FAR 9.505-2(a). Specifically, Lucent contends that it developed the specifications in Schedule D in conjunction with the agency, and that the agency further altered or revised the specifications in Schedule D when it issued the revised RFP. As a preliminary matter, the FAR does not define the term "complete specifications." A reasonable interpretation of the term suggests that a firm that provides specifications that are necessary and sufficient to inform the solicitation has provided "complete specifications." Based on our review of the record, we agree with the agency that Lucent's Schedule D was the source for the technical specifications in the revised RFP and that the specifications provided by Lucent are nearly identical to those listed in the amended RFP. Compare RFP, Amend. 2, at 3-10 with AR, Tab 18, Lucent Schedule D. Lucent characterizes its work on Schedule D as a collaboration with the agency, and thus argues it did not provide complete specifications. FAR 9.505-2(a)(1)(ii) provides that the OCI exclusion rule does not apply where contractors prepare specifications under the supervision and control of government representatives. Lucent's references to the record do not, however, conclusively establish that the agency played a joint role in developing the TETRA device specifications, or one that would rise to the level of supervision and control by the agency. At best, correspondence cited by Lucent suggests that the agency was kept apprised of Lucent's progress on the Schedule D specifications, participated in some discussions regarding Lucent's development of the specifications, and provided some comments or feedback prior to the final version of the specifications. See Protester's Comments, Exh. 9, E-mail Correspondence Between Agency Technical Representatives for IRCS Contract and Lucent; id. , Exh. 1, Decl. of Lucent Technical Manager, at 1; id. , Exh. 2, Decl. of Lucent Technical Consultant, at 1. The record clearly shows that Lucent provided technical specifications for the TETRA devices under IRCS Task Order 2, and that the agency incorporated those specifications into the revised RFP. (Lucent Technologies World Services Inc., B-295462, March 2, 2005) (pdf)

In response to our decision, the agency requested, received and considered additional information regarding Lockheed Martin's past and ongoing environmentally-regulated activities. Thereafter, the agency performed and documented an analysis regarding whether such activities would reasonably affect the objectivity with which Lockheed Martin will perform the work contemplated by this contract. In a memorandum dated June 9, 2004, the agency summarized the additional information it had considered and concluded: "[I]t has been determined that no actual or potential conflicts of interest exist due to Lockheed Martin's environmentally-regulated activities in the context of the entire scope of work to be performed under [this contract]." Agency Report, Tab 9, Conflict of Interest Analysis Memorandum, at 2. Despite the agency's assertion that "no . . . potential conflicts of interest exist," the agency's analysis, nonetheless, provides that, prior to issuing any task order under this contract, the agency's project officer will "ascertain that no [conflicts of interest] exist within the assigned tasks, or that adequate mitigation strategies are in place and have been discussed with the contracting officer." Id. at 8. By letter to our Office dated June 10, with a copy to SAIC's counsel, the agency stated that, as a result of its analysis and conclusions, it was proceeding with contract performance by Lockheed Martin. This protest followed. Here, notwithstanding the agency's broad assertion that "no . . . potential conflicts of interest exist," the record clearly demonstrates that the agency recognizes the potential that conflicts may arise during contract performance, and has in place procedures to safeguard against such occurrences. As noted above, the agency states that, prior to issuing each task order under this contract, the agency project officer will independently consider whether that task order's requirements create a conflict of interest for Lockheed Martin. Specifically, the project officer will "[either] ascertain that no [conflicts of interest] exist within the assigned tasks, or that adequate mitigation strategies are in place and have been discussed with the contracting officer." Agency's Conflict of Interest Analysis, June 9, 2004, at 8. In summary, the record establishes that the agency has requested and received information regarding Lockheed Martin's environmentally-regulated activities, has reasonably considered that information in the context of the solicitation's anticipated requirements, and has accepted responsibility for performing an independent and ongoing assessment of potential conflicts of interest each time a task order is issued. On this record, we deny SAIC's protest that the agency's corrective actions regarding potential conflicts of interest were inadequate. (Science Applications International Corporation, B-293601.5, September 21, 2004) (pdf) (NOTE:  See B-293601 below)

As noted above, the solicitation's SOW lists numerous activities that either expressly or inherently involve analysis, evaluation, and judgment on the part of the contractor. For example, under the task area exercise planning and preparation, the SOW establishes that the contractor is responsible for drafting scenarios to test specific tactics and recommending settings for mine simulators. Agency Report, Tab 3, RFP at 80-81 (italics added). With regard to the task area conducting and observing an exercise, the contractor is required to present first-impression reports. Id. at 81 (italics added). Under the task area exercise reconstruction and analysis, the contractor is required to conduct in-depth analysis of exercise data to include detection capability evaluation , sensor effectiveness assessment, and tactical effectiveness assessment. Id. at 81 (italics added). Under the task area program analysis, the contractors responsibilities include evaluating and comparing data and selecting and analyzing MOEs [measures of effectiveness]. Id. at 81 (italics added). Finally, under the task area program intermediary and longrange planning, the contractor is responsible for assisting the SHAREM and MIREM officers in devising, presenting and implementing their 6-year plans. Id. at82 (italics added). We view all of the above activities as requiring varying amounts of subjective analysis and judgment on the part of the contractor that go beyond objectively measuring data. The agency record regarding the evaluation of Northrop Grumman's proposal further supports the conclusion that contract performance will require--and that the agency values--subjective contractor input and judgment. For example, in evaluating Northrop Grumman's technical performance plan with regard to the task area, [deleted], the agency rated Northrop Grumman's proposal [deleted], specifically noting that, in their proposal, [deleted]. Agency Report, Tab 36, at6. Similarly, in evaluating Northrop Grumman's technical performance plan with regard to the task area [deleted], the agency concluded that Northrop Grumman specifically proposed [deleted], and further noted that Northrop Grumman's proposed performance approach includes [deleted]. Id. at 9. We view the agency's evaluation assessments identified above as reflecting the agency's expectation--and desire--that the contractor will provide subjective input and judgment in performing the contract.

Despite recognizing that Northrop Grumman is the manufacturer of a significant portion of the systems to be tested and that the vast majority of the remaining systems are manufactured by companies with whom Northrop Grumman competes, Northrop Grummans OCI plan concludes: we have determined that an actual OCI .. . does not currently exist for the envisioned work to be performed under the Contract, adding that [m]ature, fielded USW systems in use in the fleet do not pose an OCI issue. Agency Report, Tab 24, Northrop Grumman OCI Plan, at8. Northrop Grumman's conclusion that no OCI issues are created by Northrop Grumman's evaluation of its own mature, fielded systems--or similar systems manufactured by potential competitors--appears to be based on the premise that the work performed under this contract is not part of the procurement process. Even if Northrop Grumman's assertion, that the work performed and reports produced under this contract are not part of the procurement process, was factually accurate--which it is not --we reject Northrop Grumman's apparent assumption that impaired objectivity OCIs can arise only within the procurement process. To the contrary, we view a situation where, as here, a company is responsible for assessing the performance of systems it has manufactured as a classic example of an impaired objectivity OCI--without regard to whether the evaluation occurs as part of the procurement process. See, e.g. , Engineered Air Sys., Inc., supra , at 3 (contract to test and evaluate products that awardee manufactured was improper). In such situations, the firm risks having its objectivity impaired by a bias in favor of its own system's performance. Similarly, a company manufacturing systems that are, as a practical matter, competing with similar systems produced by other manufacturers, risks having a negative bias regarding the performance of the competing systems. This is particularly true where, as here, the contract requirements clearly anticipate comparisons between the performance of similar systems manufactured by competing firms. (PURVIS Systems, Inc., B-293807.3; B-293807.4, August 16, 2004) (pdf)

As discussed above, the record unambiguously establishes that the agency gave no consideration to Lockheed’s past and ongoing performance of environmentally-regulated activities and, similarly, gave no consideration to the impact those activities could have on Lockheed Martin’s judgment and objectivity in performing certain tasks that are reasonably within the scope of the contract. Our concern with the agency’s failure to consider the potential conflicts of interest is heightened by the fact that both the agency and Lockheed Martin are intent on experiencing substantial “growth” in the contract--increasing both the volume of tasks to be performed and the customer base that relies on this contract, specifically expressing the intent to expand the base to EPA’s “clients” and “partners,” including “other Federal and state agencies” and “local governments, contractors, and researchers.” RFP at C-2, C-4; Agency Report, Tab 4, Lockheed Martin Proposal, at III.2-1. (Science Applications International Corporation, B-293601; B-293601.2; B-293601.3, May 3, 2004) (pdf)

We find that TSMO reasonably viewed with concern RAM’s failure to describe an approach to avoiding OCI issues in the event that it entered into new, contractual relationships for outside technical assistance. As asserted by the agency, it was unreasonable for RAM to assume that it would not need to look outside the company (and RAM’s pool of surge personnel) for technical expertise sometime during the potential 15-year period of the contract. Given the reasonable possibility that RAM would require recourse to outside technical expertise sometime during the potential 15-year period of the contract, and given the possibility that such assistance might carry with it OCI concerns, it was not unreasonable for the agency to expect that RAM’s mitigation plan would address the OCI implications of such an eventuality. However, we also find that the agency failed to apply the same strict standard in evaluating NGTS’s mitigation plan as acceptable and its risk as low. In this regard, NGTS’s OCI plan contemplated a number of possible responses when faced with a potential OCI, including (depending on the nature of the potential OCI) [DELETED]. NGTS OCI Plan, attach. 2, at 3-4. TSMO concluded that OCIs would be rare and that NGTS’s mitigation plan would effectively eliminate OCIs that did arise. In this regard, TSMO states that, in the event it is faced with an actual OCI, it will either, as it has in the past, ask other military services or the intelligence community to provide operators, or award a short-term contract to another firm [DELETED]. Given the availability of operators from other military services or the intelligence community, TSMO expects to have to award a short‑term, limited contract for support services no more than 3-5 times over the potential 15-year period of the contract. TSMO Comments, Oct. 23, 2003, at 4-5; Declaration of TSMO Operations Team Leader, Oct. 23, 2003, at 4-6. Even if TSMO reasonably concluded that the OCIs resulting from award to NGTS could be avoided or mitigated such that award to NGTS was not precluded, it does not follow that there were no OCI concerns that had to be reflected in the evaluation, at least in light of the strict standard applied in evaluating RAM’s mitigation plan. It is clear from the record that the agency was fully aware during the evaluation that, in some limited number of instances, an award to NGTS likely would require TSMO to proceed outside the terms of NGTS’s contract and have contract work performed by some other contractor or government entity. This likely outcome does not appear to have been factored into the agency’s evaluation of NGTS’s proposal, despite the agency’s view during its evaluation of RAM’s proposal that RAM’s failure to plan for a merely potential OCI warranted downgrading RAM for performance risk. We conclude that the agency did not evaluate the proposals on an equal basis, and that the evaluation in this regard therefore was unreasonable. Symplicity Corp., B‑291902, Apr. 29, 2003, 2003 CPD ¶ 89 at 5. (Research Analysis & Maintenance, Inc.; Westar Aerospace & Defense Group, Inc., B-292587.4; B-292587.5; B-292587.6; B-292587.7; B‑292587.8, November 17, 2003) (pdf)

We have no basis on the record before us to find that [deleted] has an impaired objectivity OCI. Contrary to TDS's position, there is nothing inherently improper in a firm's monitoring the activities of a team member such as Northrop here (or its own activities); monitoring, standing alone, does not necessarily create the potential for impaired objectivity. Rather, as noted above, an impaired objectivity conflict typically arises where a firm is evaluating its own activities because the objectivity necessary to impartially evaluate performance may be impaired by the firm's interest in the entity being evaluated. See Johnson Controls World Servs., B-286714.2, Feb. 13, 2001, 2001 CPD ¶ 20 at 11-12. While we do not exclude the possibility in a different context of monitoring activities resulting in an impaired objectivity OCI, here there is no evidence that [deleted] will be evaluating the performance of the help desk contractor, and there is nothing otherwise objectionable in the interrelationship of activities performed by [deleted] on the two contracts. Instead, the record shows that the help desk contractor's performance must at least meet the minimum standards outlined in the RFQ and that the contracting officer's technical representative will be responsible for evaluating the adequacy of the firm's performance for purposes of assessing the firm's overall performance, deciding whether or not to award option year requirements, and determining the firm's compensation under the SLA. SOO at 8-9. We find no indication in the record--and TDS has not directed our attention to any information--showing that [deleted] will have any input whatsoever into the evaluation of the help desk contractor's performance. Under these circumstances, we have no basis to find that the awardee, or its subcontractor, has an impaired objectivity OCI. (TDS, Inc., B-292674, November 12, 2003) (pdf)

The situations in which OCIs arise, as addressed in FAR subpart 9.5 and the decisions of our Office, can be broadly categorized into three groups. The first group consists of situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for the competition for another government contract by, for example, writing the statement of work or the specifications. In these biased ground rules cases, the primary concern is that the firm could skew the competition, whether intentionally or not, in favor of itself. FAR §§ 9.505-1, 9.505-2. These situations may also involve a concern that the firm, by virtue of its special knowledge of the agency’s future requirements, would have an unfair advantage in the competition for those requirements. Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., B‑254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 13. The second group consists of “unequal access to information” situations in which a firm has access to nonpublic information as part of its performance of a government contract and where that information may provide the firm an unfair competitive advantage in a later competition for a government contract. FAR § 9.505-4; Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 12. The third group comprises cases where a firm's work under one government contract could entail its evaluating itself or a related entity, either through an assessment of performance under another contract or an evaluation of proposals. FAR § 9.505-3. In these “impaired objectivity” cases, the concern is that the firm’s ability to render impartial advice to the government could appear to be undermined by the relationship with the entity whose work product is being evaluated. Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 13.  As noted by the protester, while a firewall arrangement may resolve an “unfair access to information” OCI, it is virtually irrelevant to an OCI involving potentially impaired objectivity. See Aetna Gov’t Health Plans, Inc.; Found. Health Fed. Servs., Inc., supra, at 16. Likewise, due to the ultimate relationship of one entity to another, a firewall would not resolve an organizational conflict of interest involving biased ground rules. However, the record indicates that the OCI mitigation approach relied upon by DCC‑W in determining to issue an order to CACI extended beyond CACI’s proposed firewall. According to testimony at the hearing our Office conducted in this matter, the most important feature of the plan was CACI’s proposal to notify the agency of procurements under which CACI was interested in competition, which would allow DCC-W to act to avoid an OCI. Hearing Transcript (Tr.) at 29, 131. Specifically, contracting officials testified, and the then Acting Director of Contracting confirmed, that potential OCIs on the part of CACI would be handled in the same manner where a government employee has an interest in a matter; CACI contracting specialists would not be assigned to a procurement for which CACI was expected to submit an offer or to a CACI contract, and if CACI submitted an offer for a procurement that already was assigned to a CACI contracting specialist, the procurement would be reassigned to a government contracting specialist. Tr. at 32, 37, 39-40, 61-62, 121‑124, 138-40, 148, 183-84, 193, 196-97, 212-13; Agency Comments, September 4, 2003; Agency Comments, September 5, 2003, Statements of Contracting Officer and Former Acting Director of Contracting.[1] As a result, the mitigation approach addresses the unfair access to information and impaired objectivity OCIs by ensuring that CACI contracting specialists would not be in potential conflict positions. (The LEADS Corporation, B-292465, September 26, 2003) (pdf)

An impaired objectivity OCI exists 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 a proposal submitted to obtain another contract. Id. at 13. The concern in such situations is that the firm’s ability to render impartial advice to the government could appear to be undermined by its relationship with the entity whose work product is being evaluated. Id. CUI’s allegation that Critel will be unable to render impartial judgments because of conflicting obligations under different government contracts involves impaired objectivity. We find no prohibited OCI here. Under its equipment contract, Critel is required to provide preventative and corrective maintenance and an inspection system covering the required services, and also must maintain and make available to the government records of all inspection work performed. While the IMS contractor is required to develop a quality assurance program to provide surveillance of--that is, to monitor--the required scheduled maintenance, it is not responsible for making judgments as to what maintenance is required or how well the maintenance is being performed. We note in this regard that monitoring, standing alone, does not necessarily create the potential for impaired objectivity. Rather, as noted above, an impaired objectivity OCI typically arises where a firm is evaluating its own (or a related firm’s) activities, because the objectivity necessary to impartially evaluate performance may be impaired by the firm’s interest in the entity being evaluated. See Johnson Controls World Servs., Inc., B‑286714.2, Feb. 13, 2001, 2001 CPD ¶ 20 at 11-12. Since the IMS contractor’s responsibilities are not based on subjective judgments or evaluations, there is no basis for finding that the objectivity of the IMS contractor will be impaired under the circumstances here. Cf. Ktech Corp., B-285330, B‑285330.2, Aug. 17, 2002, 2002 CPD ¶ 77 (prohibited OCI found where subcontractor was to establish requirements for tests it or its prime contractor would perform). (Computers Universal, Inc., B-292794, November 18, 2003)  (pdf)

Protest that awardee had unfair competitive advantage due to organizational conflict of interest is sustained where awardee's proposed subcontractor possessed information through its work as a government contractor, the information was not available to other offerors, the agency took no steps to identify or mitigate the conflict in advance, and there were no meaningful procedures in place to prevent interaction between the employees possessing the information and the employees preparing the proposal.  (Johnson Controls World Services, Inc., B-286714.2, February 13, 2001)

Agency reasonably excluded protester from participating in procurement where protester has an organizational conflict of interest arising from its preparation of the statement of work and cost estimates used by the agency in the procurement.  (SSR Engineers, Inc., B-282244, June 18, 1999)

An offeror may not have an unfair competitive advantage over other competitors and, in order to protect the integrity of the procurement system, an agency may go so far as to exclude an offeror from the competition because of the likelihood that it has obtained an unfair competitive advantage. See Compliance Corp., B-239252, Aug. 15, 1990, 90-2 CPD ¶ 126 at 5; Holmes and Narver Servs., Inc./Morrison-Knudson Servs., Inc., a joint venture; Pan Am World Servs., Inc., B-235906, B-235906.2, Oct. 26, 1989, 89-2 CPD ¶ 379 at 8. In seeking competition, however, an agency is not required to construct its procurements in a manner that neutralizes the competitive advantage that some potential offerors may have over others by virtue of their own particular circumstances, such as prior or current government contracts, where the advantages did not result from unfair motives or action on the part of the government. See MCA Research Corp., B-276865, July 29, 1997, 97-2 CPD ¶ 33 at 2-3; Optimum Tech. Inc., B-266399.2, Apr. 16, 1996, 96-1 CPD ¶ 188 at 7; Validity Corp., B-233832, Apr. 19, 1989, 89-1 CPD ¶ 389 at 6; Ross Bicycles, Inc., B-217179, B-217547, June 26, 1985, 85-1 CPD ¶ 722 at 3. EDI has failed to establish that an unfair competitive advantage existed here.  (Electronic Design, Inc., B-279662.5, May 25, 1999)

The issue before the court is whether CO Helton’s decision to disqualify A2JV based on her finding of significant potential OCI was in accordance with law and not arbitrary, capricious or an abuse of discretion. The court has examined each of A2JV’s arguments challenging the CO’s disqualification decision and for the reasons set forth below each is rejected.

a. NASA’s COs Did Not Violate FAR § 9.504(a)(1) or (2) by Failing to Act Sooner to Identify or Mitigate OCI

A2JV argues that NASA’s COs violated FAR § 9.504(a)(1) and (2) by failing to notify Al-Razaq of its potential OCI sooner in the ABSS2 procurement process and by not taking action to mitigate any potential significant OCI. A2JV relies on the various conversations Al-Razaq employees had with NASA’s COs to show that NASA had sufficient notice to have acted earlier. In addition, A2JV relies on (1) the November 2015 email conversation between Mr. Hunter and CO James where Mr. Hunter informed CO James that he would be attending the ABSS Industry Briefing, (2) the fact that NASA knew that Al-Razaq and Adventus were forming a joint venture so as to bid on the ABSS2 contract, and (3) the conversation Mary Dobbins had with CO Helton.

The government does not deny that NASA’s COs were aware of Al-Razaq’s intentions of joining with Adventus to seek the ABSS2 contract. However, contrary to A2JV’s contentions, the government maintains that NASA’s COs understood from their dealings with Al-Razaq personnel that Al-Razaq was not planning on using its employees to prepare the A2JV proposal for the ABSS2 contract. The government relies on Mr. Hunter’s conversation with CO Fenn, in which it was agreed that Al-Razaq team leaders would not participate in preparing the A2JV proposal. The government also relies on CO Helton’s conversation with Ms. Dobbins in which CO Helton made clear to an Al Razaq team leader that Al-Razaq would need to create a firewall and seek permission from NASA before using its employees to help with A2JV’s proposal. Finally, the government relies on Al-Razaq’s OCI plan which required Al-Razaq to identify significant potential OCI to NASA. It is not disputed that Al Razaq never informed NASA that it was using its past or present program managers to help prepare A2JV’s proposal for the ABSS2 contract.

Based on the foregoing, the government argues it did not have any reason to believe that Al-Razaq program managers would be working on the A2JV proposal and thus the government argues NASA did not violate FAR §9.504(a)(1) by failing to notify A2JV that Al-Razaq needed to mitigate significant potential OCI. From the government’s perspective, potential OCI concerns were discussed with the program manager and a team leader and it was understood that Al-Razaq was not using its managers to prepare the A2JV ABSS2 contract bid proposal. The government asserts that NASA’s COs would have reasonably understood that any potential OCI had been addressed. If that were not the case, the government contends that under Al-Razaq’s OCI plan for the ABSS1contract, Al-Razaq should have informed NASA of its plans to use Al-Razaq managers on the ABSS1contract to prepare the A2JV ABSS2 bid.

The court agrees with the government that the NASA COs did not err by failing to act sooner to identify or mitigate the significant potential OCI. Contracting officers “have considerable discretion in determining whether a conflict is significant.” PAI Corp. v United States, 61 F.3d 1347, 1352 (Fed. Cir. 2010). Here, based on the record of conversations between the NASA COs and Al-Razaq personnel, it was reasonable for NASA’s COs not to find significant potential OCI until they learned that Mr. Hunter and possibly Mr. Lentz had participated in preparing A2JV’s bid. Prior to Mr. Hunter and Mr. Lentz hand delivering the A2JV proposal to NASA, NASA’s COs reasonably assumed that Al-Razaq’s program managers (past and present) would not be participating in developing A2JV’s proposal. For these same reasons, NASA’s COs did not have an earlier obligation to mitigate significant potential OCI under FAR § 9.504(a)(2). NASA’s COs could only mitigate significant potential OCI after they learned of significant potential OCI. NASA only learned of Mr. Hunter’s involvement when he told a NASA CO that he had participated in preparing A2JV’s bid.

b. CO Helton’s determination that there was significant potential OCI connected with the preparation of A2JV’s proposal was based on “hard facts” and her conclusion that the significant potential OCI could not be mitigated was supported

Next, the plaintiff argues that even if FAR § 9.504(a) was not triggered earlier and before A2JV’s proposal was submitted, CO Helton’s decision to disqualify A2JV was arbitrary and capricious because she did not identify any “hard facts” to support her determination that A2JV’s bid was tainted by significant potential OCI or that the bid could taint the fairness of the ABSS2 procurement. Specifically, A2JV argues that CO Helton failed to provide any evidence that Mr. Hunter or Mr. Lentz actually accessed confidential business information about an A2JV competitor in order to give A2JV a competitive edge. A2JV asserts that CO Helton’s significant potential OCI determination was based only on the suspicion that Mr. Hunter had actual access to information that would have given A2JV a competitive advantage. In this connection, A2JV argues that the CO’s reliance on Al-Razaq’s access to Deltha-Critiques financial information (a competitor to A2JV) to support her finding of potential significant OCI was misplaced. According to A2JV the Deltha-Critiques information in Al- Razaq’s files is almost ten years old and thus would not have given A2JV an advantage.

The government argues in response, that CO Helton’s determination that A2JV’s bid was tainted by significant potential OCI is supported by “hard facts” and not mere suspicion or innuendo. Specifically, the government maintains that it was not necessary for CO Helton to find with certainty that Mr. Hunter or Mr. Lentz had examined or relied on sensitive business information to give A2JV an improper competitive edge. Rather, the government maintains that it is sufficient to show that Mr. Hunter’s involvement as the current program manager on the ABSS1contract and Mr. Lentz’s prior involvement as the past program manager which gave each access to sensitive documents in the ABSS1 contract file was sufficient to create the appearance of a significant potential OCI.

The court agrees with the government the fact that Al-Razaq’s files had confidential business information regarding an A2JV competitor and the fact that Al Razaq failed to take action to prevent its managers from having access that information are “hard facts” showing a significant potential OCI. It was the ability of Al Razaq’s program managers to access sensitive information coupled with the fact that information relevant to an A2JV competitor was present in files that created significant potential OCI. These facts amount to more than mere “suspicion or innuendo” of significant potential OCI. See Turner 645 F.3d at 1387.

The court further finds that A2JV’s arguments challenging CO Helton’s decision to disqualify A2JV rather than take less drastic action upon learning that A2JV had significant potential OCI are also without merit. The Federal Circuit has held that deference is owed to a CO’s decision to disqualify a contractor based on the appearance of OCI. In NKF Engineering, Inc. v. United States, the Federal Circuit determined that the CO’s decision to disqualify the protestor based on an appearance of OCI due to its retention of a government employee who had proprietary information about other potential bidders was reasonable and rational. 805 F.2d 372, 377 (Fed. Cir. 1986).

In this regard, the court finds that A2JV’s disqualification is in many respects a problem of its own making. As the government has argued, Al-Razaq had an OCI plan which required Al-Razaq to inform NASA of any potential OCI as early as possible if AlRazaq perceived it may have potential OCI. The provision was designed to allow for NASA and Al-Razaq to work together to find a way to mitigate potential OCI. By failing to bring Mr. Hunter’s participation in preparing A2JV’s bid proposal to NASA’s attention sooner, i.e. as soon as he started working on the proposal and before proposals were due and submitted, CO Helton had very little flexibility in addressing the significant potential OCI caused by unequal access to information. Before the GAO, A2JV argued that Mr. Hunter and Mr. Lentz had not accessed confidential business information, but did not explain how A2JV had itself mitigated potential OCI concerns by walling off AlRazaq’s employees to avoid unequal access to information claims. The GAO found that in such circumstances A2JV had failed to show that contracting officer’s decision was unreasonable. AR 1638 n.13. This court concurs with the GAO’s reasoning.

c. A2JV’s Reliance on FAR § 9.504(e) is misplaced

Finally, A2JV argues that the CO Helton’s decision should be set aside because she failed to comply with FAR § 9.504(e). As noted, FAR § 9.504(e) states that “[t]he contracting officer shall award the contract to the apparent successful offeror unless a conflict of interest is determined to exist that cannot be avoided or mitigated. Before determining to withhold award based on conflict of interest considerations, the contracting officer shall notify the contractor, provide the reasons therefor, and allow the contractor a reasonable opportunity to respond.” A2JV argues that CO Helton failed to consider whether the OCI she identified could be avoided or mitigated before award and further she failed to give A2JV a reasonable opportunity to respond to her disqualification determination as required by FAR § 9.504(e) .

The government argues that FAR § 9.504(e) is not applicable because it applies only when the apparent successful offeror is disqualified and A2JV was never identified as the “apparent successful offeror.” FAR § 9.504(e).

Again, the court agrees with the government. FAR §9.504(e) applies only when an apparent successful offeror has been identified. A2JV was not identified as the apparent successful offeror and thus the provision was not triggered. In NetStar Consulting, Inc., the court concluded that “FAR §9.504(e) prohibits a CO from awarding a contract if an OCI cannot be avoided or mitigated.” 101 Fed. Cl. at 524; see also Cahaba Safeguard Administrators, LLC, B–401842.2, 2010 (Comp .Gen. Jan. 25, 2010). Here, A2JV was disqualified before proposals were evaluated. As such, A2JV’s reliance on FAR § 9.504(e) is misplaced and its arguments based on NASA’s failure to comply with its requirements are rejected.  (A Squared Joint Venture v. U. S., No. 17-835C, February 23, 2018)

Concourse Waived its OCI Claims by Not Raising Them

Before the Award Under the seminal Blue & Gold Fleet case, “A party who has opportunity to object to the terms of a government solicitation containing a patent error and fails to do so prior to the close of the bidding process waives its ability to raise the same objection subsequently in a bid protest action in the Court of Federal Claims.” Blue & Gold Fleet L.P. v. United States, 492 F. 3d 1308, 1313 (Fed. Cir. 2007). The Federal Circuit adopted this rule to prevent contractors from “taking advantage of the government and other bidders” by sitting on their rights during the bidding process, which leads to expensive post-award litigation. Id. at 1313–14 (quoting Cmty. Heating & Plumbing Co. v. Kelso, 987 F.2d 1575, 1580 (Fed. Cir. 1993)). The waiver rule applies broadly in bid protests to all situations where the protesting party had the opportunity to raise its claim before the award of the contract. COMINT Sys. Corp. v. United States, 700 F.3d 1377, 1382 (Fed. Cir. 2012).

Logically, the waiver rule also applies where a protester fails to raise OCI claims before the close of the bidding process. See Commc’n Constr. Servs., Inc. v. United States, 116 Fed. Cl. 233, 264 (2014); CRAssociates, Inc. v. United States, 102 Fed. Cl. 698, 712 (2011), aff’d, 475 F. App’x 341 (Fed. Cir. 2012). For example, in CRAssociates, a bidder on an Army contract asked the Army to amend its Request for Proposals to mitigate potential OCIs caused by the Army’s close relationship with the incumbent contractor. 102 Fed. Cl. at 712. When the Army failed to address the bidder’s concerns, the bidder chose not to pursue its OCI claims further before the contract was awarded. When it raised its OCI claims in a post-award bid protest in this Court, the Court (Allegra, J.) found that, “[g]iven its lack of diligence, [the protester] should not be heard to argue now—after the award—that the agency erred in failing to amend the RFP to deal with the concerns [it had] with [the incumbent’s] prior performance.” Id

The situation here is quite similar to that in CRAssociates. As in that case, Concourse alleges that the Army and the incumbent’s “unusually close” relationship gave rise to multiple OCI claims. Compl. ¶ 43. Despite JLL’s incumbent status, Concourse also claims it was unaware of the unusually close relationship until after the contract award. The Court finds that Concourse knew or should have known of JLL’s role in the MHPI program well before the contract award. First, the Court finds it unconvincing that Concourse was ignorant of or unable to access the two public documents it references in its complaint before the contract award (both of which were highly relevant to the MHPI program). Second, JLL filed three separate pre-award protests at the GAO before the contract award, thereby publically displaying its interest in the procurement and putting Concourse on notice of its possible involvement. Id. ¶¶ 20, 23. Finally, and most tellingly, Concourse admits in its Complaint that it was aware of JLL’s direct participation with RER prior to the contract award and still did not raise an OCI claim in its pre-award protest at the GAO. See id. ¶ 37 (“Concourse contended [at the GAO] that this vague Solicitation language and the Army’s desire for Army experience was tipping the competition in favor of the small business backed by the incumbent JLL.”).

In sum, both the public documents and JLL’s interest in the procurement were “easily recognizable or obvious” facts that make them subject to the Blue & Gold patent ambiguity test. Infrastructure Def. Techs., LLC v. United States, 81 Fed. Cl. 375, 389 (2008). Therefore, Concourse failed to timely raise its OCI claims prior to the award of the contract despite the opportunity to do so and its easy access to the knowledge upon which it now relies. As a result, Concourse’s OCI claims are waived.  (Concourse Group LLC v. U. S. and RER Solutions, Inc., No. 17-129C, March 13, 2017)

1. Biased Ground Rules OCI under FAR § 9.505-1

“The biased ground rules category of OCIs focuses on the concerns that a company may, by participating in the process of setting procurement ground rules, have special knowledge of the agency’s future requirements that may skew the competition in its favor.” Turner Const. Co. v. United States, 645 F.3d 1377, 1382 (Fed. Cir. 2011). Under FAR § 9.505-1(a), “[a] contractor that provides systems engineering and technical direction for a system but does not have overall contractual responsibility for its development, its integration, assembly, and checkout, or its production shall not . . . be a subcontractor or consultant to a supplier of the system or any of its major components.”15 FAR § 9.505-1(b) states that “[i]n performing these activities, a contractor occupies a highly influential and responsible position in determining a system’s basic concepts and supervising their execution by other contractors.” To show a violation under FAR § 9.505-1, the FAR requires that a bidder or subcontractor be “in a position to make decisions favoring its own products or capabilities” by providing “systems engineering” and “technical direction” for the relevant program. FAR § 9.505-1. FAR § 9.505-1(b) defines “systems engineering” as “a combination of substantially all of the following activities: determining specifications, identifying and resolving interface problems, developing test requirements, evaluating test data, and supervising design.” FAR § 9.505-1(b) then defines “technical direction” as “a combination of substantially all of the following activities: developing work statements, determining parameters, directing other contractors’ operations, and resolving technical controversies.”

(sections deleted)

The court finds that AEgis has failed to provide hard facts to show that Booz Allen’s potential participation as a Cole subcontractor would violate FAR § 9.505-1. There is no indication in the record that Booz Allen was in the type of “highly influential and responsible position in determining a system’s basic concepts,” that could create biased ground rules OCI under FAR § 9.505-1. For example, the portion of the record quoted by AEgis to show that Booz Allen provided systems engineering and technical direction on AFMSTT expressly states that Booz Allen “served in an observation and requirements capturing role” in supporting AFAMS. AR 1538. The fact that Booz Allen collected and tracked the change requests and deficiency reports used in the AFMSTT program is not proof that Booz Allen developed work statements or determined parameters for the AFMSTT program, directed the operations of other contractors such as AEgis, or resolved technical controversies. To the contrary, the record shows that Booz Allen, under its AFAMS contract, did not determine specifications, develop test requirements, or supervise design for the AFMSTT program. See, e.g., AR 3176 (“This [AFAMS task order] does not support the development of the simulations [used by the Air Force for testing the AFMSTT program], but provides support to both the developers and the users.”). As such, there is no proof that Booz Allen could have played a role in designing specifications or developing test requirements that could result in biased ground rules. Accordingly, there is no proof that Booz Allen’s potential role as one of Cole’s proposed subcontractors violates the OCI rules set in FAR § 9.505-1.   (AEgis Technologies Group, Inc. v. U. S. and Cole Engineering Services, Inc., No. 16-863C, September 28, 2016)

A. The Decision to Take Corrective Action is Based on OCI Concerns that are not Supported by the Record.

The contracting officer’s memorandum for the record states that after reviewing the GAO protesters’ arguments and re-reviewing the proposals submitted in response to the solicitation, the agency realized that it had not sufficiently evaluated OCI issues with regard to task order one and “[i]t is likely that Raytheon [Blackbird] is not the only of our offerors with an impact in this area.” AR 19003. The contracting officer goes on to state that because “any offeror with an [unmitigatable] OCI related to [task order one] would4. ViON Has Not Demonstrated The Existence Of An Organizational Conflict Of Interest most likely be eliminated from the overall [SWMS Group A] competition, even if that contractor would have no OCI problems for SWMS A Task Orders to be competed after award,” the agency has decided to remove task order one from SWMS Group A and terminate the awards. Id.

The plaintiffs argue that the agency’s decision to remove task order one from the SWMS Group A procurement and re-solicit offers is not supported by the record and must be set aside. Relying on Turner Construction Co. v. United States, 645 F.3d at 1387, the plaintiffs argue in the first instance that there are no “hard facts” to support the conclusion that they have an OCI issue. Nothing in the contracting officer’s memorandum for the record or in other documents in the record identifies any facts to suggest an actual or potential OCI issue with the task order awardees or the other IDIQ awardees. Without “hard facts” to suggest there is an OCI issue with regard to these awardees, they contend that corrective action is not necessary. See MacAulay-Brown’s MJAR 19-20; Booz Allen’s MJAR 23; Booz Allen’s Reply 13; CACI’s Reply 11-13.

In addition, the plaintiffs argue that to the extent concerns about OCI issues with Raytheon Blackbird support taking some corrective action, the FAR requires the agency to first investigate the allegations of OCI and only if the agency determines that the OCI cannot be avoided or mitigated would corrective action be appropriate. The plaintiffs also note that under section 9.503 of the FAR, an agency may waive any general rule or procedure for OCI concerns where the rule or procedure “would not be in the Government’s best interest.” In addition, section 9.504(e) of the FAR requires a contracting officer to award a contract to an apparently successful offeror unless, after notifying the contractor, providing the reasons therefor, and allowing the contractor a; reasonable opportunity to respond, the contracting officer determines that a conflict of interest exists that cannot be avoided or mitigated. The plaintiffs argue that FAR section 9.504(e) directs the agency to “re-engage the affected awardees and, where necessary, provide those awardees a reasonable opportunity to respond to concerns and/or address its mitigation plan.” MacAulay-Brown’s MJAR 35 (citing C2c Sols., Inc., B 401106.6 et al., 2010 CPD ¶ 145 (Comp. Gen. June 21, 2010)); see also Booz Allen’s MJAR 17-18 (“Following [FAR section 9.504(e)], the agency can analyze the potential OCI issues and raise those issues with the affected awardee without disrupting the procurement process and without terminating any of the awarded contracts . . . [and without] trigger[ing] the requirement to hold discussions with other offerors.” (citing C2c Sols., Inc., B-401106.6 et al.; Cahaba Safeguard Administrators, LLC, B-401842.2, 2010 CPD ¶ 39 (Comp. Gen. Jan. 25, 2010))). Therefore, the plaintiffs contend the agency is not compelled to take the planned corrective action even if the contracting officer’s OCI “finding” is supported by the record. The plaintiffs further note that the solicitation has a waiver provision for an awardee to avoid submitting a proposal for a task order if the task order would present an OCI problem. See AR 874. They suggest that this provision could also be invoked to address any OCI issues. See MacAulay-Brown’s MJAR 8; MacAulay-Brown’s Reply 7-8.

Finally, the plaintiffs argue that the administrative record does not support the contracting officer’s contention that the OCI plans submitted did not address task order one or that the OCI plans were not evaluated. The plaintiffs argue that each of the IDIQ awardees discussed their OCI concerns, including concerns about the three initially awardable task orders, and the agency found their plans acceptable. MacAulay-Brown’s MJAR 26; Booz Allen’s MJAR 4-5; CACI’s MJAR 15. They note that both Raytheon Blackbird and Booz Allen specifically identified how any actual or potential OCI issues with task order one would be addressed. See also AR 16196-200 (Raytheon Blackbird’s OCI plan), 13178-84 (Booz Allen’s OCI plan).

In response, the government argues that the agency’s decision to take corrective action before evaluating whether any of the awardees or other offerors have unmitigatable actual or potential OCI for task order one is supported by the record. Def.’s MJAR 22. The government contends that the entire procurement process was “tainted” by the risk of unmitigatable actual or potential OCI under task order one. Def.’s MJAR 32. Specifically, the government argues that because of the potential OCI issues raised before the GAO with regard to Raytheon Blackbird, the agency acted within its discretion when it decided that task order one should be removed from Group A and that it needed to re-solicit offers. Def.’s MJAR 22-23. According to the government, evaluating the extent of any OCI problem under FAR section 9.504(e), assuming it applies to actual awardees, is not sufficient because the agency has already concluded that task order one contains OCI concerns that cannot be mitigated without severely restricting competition. See Def.’s MJAR 51 n.6. As such, the government concludes, the procurement must be redone. See Def.’s MJAR 28 n.2; Def.’s Reply 20 n.15.

The court finds on this record that the agency’s proposed corrective action goes too far and thus must be set aside. First, the court agrees with the plaintiffs that the record does not show that the agency failed to consider OCI in connection with awarding task order one. The record reflects that each of the awardees, including Raytheon Blackbird, addressed OCI with regard to the procurement, including task order one, and noted concerns in their proposals. AR 13178-84 (Booz Allen), 13635-37 (CACI), 15912- 16 (MacAulay-Brown), 16196-16200 (Raytheon Blackbird). Each of the awardees received an acceptable rating on their OCI plans. See individual technical evaluations for MacAulay-Brown, AR 17221, 17226, 17232, 17238; Booz Allen, AR 17063, 17068, 17074, 17079; CACI, AR 17087, 17092, 17098, 17103; Raytheon Blackbird, AR 17244, 17249, 17255, 17260. There is nothing in the record to suggest that the OCI plans were not reviewed for task order one. The RFP may have been focused on OCI plans for future task orders, but a review of the proposals themselves reveals that the offerors addressed OCI concerns for task order one and that the agency reviewed the awardees’ OCI plans.

Second, there is no support in the record for the contracting officer’s finding that OCI cannot be mitigated without severely restricting competition. The finding does not identify any supporting evidence in the record. Indeed, the government concedes that “[t]he agency has not yet done the analysis . . . to determine whether hard facts support findings of OCI,” Def’s Reply 20 n.15, and that “we haven’t found anybody has OCI.” Oral Arg. Tr. 70:25, 72:20; see also Def’s MJAR 28 n.2 (“The agency did not delineate ‘hard facts’ in its corrective action memorandum specifying why it identified significant OCI concerns for Raytheon in particular.”). More importantly, the contracting officer’s finding is contradicted by the record, which demonstrates that the agency early in the procurement process considered whether including task order one in Group A was appropriate and concluded that it was. As discussed above, the agency went through a process prior to issuing the RFP to address OCI concerns. See AR 27. Eventually, the agency decided to establish three separate procurements in large part to address the risk of OCI. These became Groups A, B, and C. See AR 30. The record also shows that the potential issue of OCI with regard to certain tasks in Group A was brought to the agency’s attention and the agency rejected the concern. Specifically, the agency received comments suggesting that the agency move certain Group A tasks to Group C, the group created for task orders with significant potential for OCI. The record reflects that the agency rejected the suggestions. For example, one commenter noted that the statement of work for Group A “contains tasks that qualify as Advisory and Assistance Services (Strategic and Operational Planning, Acquisition Support and Test & Evaluation to name a few)” and, “[a]s a result, [IDIQ awardees] may need to recuse themselves from participating on Tasks due to potential OCI concerns.” AR 331. The commenter asked “[a]s this limits competition, would the Government consider moving all (A&AS) tasking to another Group C?” Id. The government responded with a simple “No.” AR 331. In response to other comments raising OCI concerns regarding the draft task orders, the government responded that “[i]f there is a high risk of a potential or actual OCI, the task order will be awarded under Group C. Otherwise the mitigation will occur at the task order level for Groups A & B.” E.g., AR 331. Having gone through this process to create three groups and consider appropriate tasks for each, the government, without more facts and analysis, is not free to change course and terminate the awards.

In view of the foregoing, the court agrees with the plaintiffs that this case presents facts closer to WHR Group, Inc. v. United States, 115 Fed. Cl. 386, 398 (2014), in which the court set aside a corrective action decision for going too far “under the circumstances,” than to Sierra Nevada Corp. v. United States, 107 Fed. Cl. 735 (2012), which the government relies on to suggest that an agency is free to resolicit a procurement anytime there is a problem with the solicitation or its evaluation of offers. In WHR Group, an agency asserted that it was reasonable to cancel four blanket purchase agreements (“BPAs”) and re-solicit proposals in order to: (1) resolve a GAO protest in connection with one of the four BPAs, (2) remove an “outdated” financial capability requirement from the solicitation, (3) address evaluation errors regarding that requirement, (4) address a potential conflict with the FAR, and (5) align the solicitation with revised projected requirements. Id. at 398. The WHR Group court found that the proposed corrective action was not reasonable under the circumstances for four primary reasons. First, the court found that “[b]ecause the [GAO] protest plainly did not implicate the first three awards, . . . it cannot provide a rational basis for the [agency’s] decision to terminate those awards.” Id. at 398. Second, the court found no evidence in the record to support the agency’s “bald assertions in notes to the file” that removing the financial capability requirement was necessary; the record did not include any analysis or findings regarding the impact of that decision or an explanation of the agency’s reasons for removing the requirement. Id. at 398-99. Third, the court determined that the agency’s failure to review offerors’ supporting documents meant that corrective action should be limited to further review and not wholesale re-solicitation. See id. at 399-400. Finally, the WHR Group court rejected the government’s contention that a changed estimate of the agency’s needs provided a rational basis for re-solicitation because the estimate was provided only to assist offerors with pricing. See id. at 401-02. This case presents similar concerns regarding a lack of support for the government’s findings and the need for corrective action. Here, as in WHR Group, the agency has not identified evidence in the record or conducted an analysis to support its conclusion that resolicitation is required to ensure that procurement issues are addressed and thus reasonable under the circumstances.

The court finds that the government’s reliance on Sierra Nevada to support its contention that changing the terms and re-soliciting the procurement is misplaced. In Sierra Nevada, an agency proposed to cancel an award and resolicit a procurement as corrective action after it conducted an investigation which revealed a tainted procurement process. Id. at 754. Because the agency “reasonably considered that the entire process was tainted by bias,” based on evidence gathered in initial investigative efforts, the court concluded that “corrective action to amend the solicitation and to request new proposals was a reasonable solution in the circumstances.” Id. at 754-55. In this case, as discussed above, the agency has not conducted the fact-finding and analysis necessary to support its position that, despite looking at the issue previously, including task order one in Group A raises OCI concerns that are not mitigatable. Indeed, to the contrary, the agency conducted a pre-solicitation review in which it concluded there would not be an OCI issue with including task order one in Group A.

In sum, while the court agrees that the agency has the discretion to consider whether OCI issues that were raised before the GAO require corrective action, the agency’s proposed corrective action is not supported by the record and is thus not reasonable under the circumstances.  (MacAulay-Brown, Inc. and CACI-WGI, Inc. and Booz Allen Hamilton, Inc. v. U. S. and Jacobs Technology, Inc., No. 15-1041C, February 18, 2016)  (pdf)

ViON’s argument that DISA failed to properly evaluate a potential organizational conflict of interest regarding WWT’s proposal is equally flawed. Pl. Mem. at 19. In its motion, ViON contends that an organizational conflict of interest arose because the Evaluator Group has a strong financial relationship with HP–WWT’s primary subcontractor for the ESS II contract. Pl. Mem. at 19 (citing AR at 18,664; 18,764-84). Specifically, ViON alleges that Randy Kerns– an employee and cofounder of the Evaluator Group–conducted a training at DISA that “may very well have” resulted in bias. Pl. Mem. at 35. Furthermore, ViON states that Mr. Kerns recommended HP products on the Evaluator Group’s website. Pl. Mem. at 19-20 (citing AR at 18,786-89). And so, ViON contends that the Evaluator Group’s work with HP may have affected the contract award process, by influencing DISA’s expectations. Pl. Mem. at 35; see AR at 18,759.

With respect to organizational conflicts of interest, the United States Court of Appeals for the Federal Circuit has held that the FAR only obligates an agency to conduct an organizational conflict of interest analysis for significant conflicts, and that contracting officers are given broad discretion in determining whether the potential conflict of interest is significant. PAI Corp. v. United States, 614 F.3d 1347, 1352 (Fed. Cir. 2010) (holding that agencies are only required to document “significant potential conflicts”); FAR 9.504(a)(2). In this regard, “[a] significant potential conflict is one which provides the bidding party a substantial and unfair competitive advantage during the procurement process on information or data not necessarily available to other bidders.” Turner Constr. Co. v. United States, 645 F.3d 1377, 1386 (Fed. Cir. 2011) (quoting PAI Corp., 614 F.3d at 1352). Moreover, under the FAR, an organizational conflict of interest is present when, “because of other activities or relationships with other persons, a person is unable or potentially unable to render impartial assistance or advice to the Government, or the person’s objectivity in performing the contract work is or might be otherwise impaired, or a person has an unfair competitive advantage.” FAR 2.101 (2015). And so, the FAR obligates the contracting officer to “analyze planned acquisitions in order to . . . [a]void, neutralize, or mitigate significant potential conflicts before contract award.” FAR 9.504(a)(2) (2015) (emphasis added).

ViON’s allegation of a potential organizational conflict of interest is not substantiated by the administrative record. In fact, the administrative record shows that the alleged connection between the Evaluator Group and the ESS II contract is tenuous at best. ViON provides no evidence to show that Mr. Kerns or the Evaluator Group had any impact on the procurement process for the ESS II contract. To the contrary, in an affidavit proffered by Scott Whitten, DISA’s technical evaluation lead for the procurement, Mr. Whitten states that “DISA did not use Randy Kerns or Evaluator Group as a consultant for any consultation or training of DISA personnel in support of the ESS II procurement process.” AR at 18,174.

Furthermore, ViON provides no “hard facts” to indicate that the Evaluator Group influenced the ESS II contract procurement. PAI Corp., 614 F.3d at 1352 (“[A] protester must identify ‘hard facts’; a mere inference or suspicion of an actual or apparent conflict is not enough.”); FAR 9.504(a)(2). Rather, ViON simply concludes that “[g]iven the Evaluator Group’s IT storage expertise and consulting contract with DISA, it was certainly in a position to affect the procurement’s ground rules and/or evaluations.” Pl. Reply at 26. Such a claim is mere speculation and does not rise to the level of “creat[ing] an advantage to one bidder over the others.” PAI Corp., 614 F.3d at 1351. And so, ViON has not shown that any “significant potential conflicts” existed in connection with the evaluation of WWT’s proposal. PAI Corp., 614 F.3d at 1352; FAR 9.504(a)(2).  (ViON Corporation v. U. S. and World Wide Technology, Inc., No. 15-354C, August 10, 2015)  (pdf)

I. Monterey’s Potential Organizational Conflict of Interest

In the November 17, 2014 letter to Monterey, the CO stated that Monterey had a potential conflict of interest due to access to government requirements and solicitation documents prior to the release of the RFQ. Although somewhat awkwardly worded, his conclusion is clear: “As a result, it cannot be said that Monterey was not provided an unfair competitive advantage for award over other offerors who did not have access to the Government’s requirements and other acquisition documents prior to submission of their offers.” AR 1598. As a basis for this conclusion, the CO detailed that his investigation revealed that Monterey and its subcontractor CACI had access to solicitation and acquisition documents and “provided administrative duties and recommended edits to the requirements documents,” including the performance work statement, internal government estimates, Performance Requirements Summary, Determination and Findings, “QASP” and other attachments to the solicitation. Id. Although the letter is not specific as to which of these documents were accessed, edited, or otherwise only available for access by plaintiff’s personnel, the problem is clear: prior to public availability, Monterey had access to information that could give it a competitive edge in crafting its proposal for the follow-on procurement.

The CO then identified a compounding problem–that Monterey did not have an OCI risk mitigation plan to alleviate the problem of access to documents. The CO stated that neither “the Deputy director [of] OSDBU for Acquisition and Contract Support Team, Administrative CO for the IPT BPA nor the CO for the new award . . . were aware of an OCI Risk Mitigation Plan for Monterey as alleged in Monterey’s response letter dated November 4, 2014.” AR 1598-99. As further support for this finding, the CO quoted Monterey’s proposal for the IPT BPA in which Monterey represented that it was not aware of any OCI related to the work under that solicitation. The CO recognized that Monterey, and presumably CACI, employees had signed nondisclosure agreements during their work on the BPA and in support of the acquisition, but found this fact to be unavailing for Monterey because of the absence of a risk mitigation plan. He found these measures to be inadequate because Monterey had not shown how the NDAs themselves would “avoid or mitigate any actual or potential [OCIs].” AR 1599.

Plaintiff attacks those findings as unfounded for two reasons. First, as to the unequal access to information, plaintiff argues that Monterey’s work on the BPA “did not involve the development of requirements/performance work statements.” Pl.’s Mot. for J. on the AR 18. This is critical in its view because it shows a lack of prejudice to the agency and other offerors from Monterey’s access to information prior to the solicitation’s release. In essence, “no harm, no foul” is plaintiff’s view of the situation. Plaintiff further directs our attention to the CO’s questions to government personnel and their answers, in which Jeffery Gault, Acting Director of CVE, states that CVE “fire walled Monterey from every activity in the requirements preparation” and that Monterey had no role in formulating the performance work statement, costing, or any other contract documents. AR 1561. Monterey cites this court’s decision in the IBM Corporation v. United States protest, decided in late 2014, for support. There, we found the army’s decision not to exclude an offeror was rational even when that challenged offeror employed a former Project Manager at the army who had a role in developing the statement of work and cost estimates for the solicitation at issue. 119 Fed. Cl. 145, 160 (2014). Plaintiff’s point is that, if that level of a conflict of interest was not enough to disqualify the offeror there, neither should a CO’s less-specific finding of mere access to pre-solicitation documents be enough to disqualify it here.

Second, plaintiff argues that any document it might have had access to eventually became public anyway, further supporting its notion of lack of prejudice to other offerors. Several of plaintiff’s personnel provided declarations to the CO to that effect. Third, plaintiff points to the NDAs signed by its employees as evidence of the fire wall maintained by Monterey pursuant to its mitigation plan. It avers that none of its employees with access to the server on which solicitation and other acquisition documents were stored were allowed to work on its proposal for this RFQ. Instead, according to plaintiff, only government employees had a hand in preparing acquisition documents such as the statement of work and other requirements documents. Thus, despite access, Monterey gained no competitive advantage from its incumbency, urges plaintiff.

Defendant responds by relying on the undisputed facts that 1) Monterey and/or CACI did acquisition support work under several BPA call orders, 2) the RFQ was a follow-on from two BPA call orders performed by Monterey, 3) Monterey personnel had access to all solicitation documents, including confidential documents never shared with other offerors, and 4) Monterey was required by the RFQ to identify any potential OCIs but failed to do so. This, in combination with the RFQ’s stated assumption that anyone who had previously performed CVE verification work was presumed to be ineligible, see AR 953, provided the necessary backdrop to support the CO’s investigation and conclusion, according to defendant. Defendant also argues that the CO’s finding that Monterey employees had a hand in document creation (at the very least, editing) was well founded. It bases that argument on the statements of Mr. Skinner, referenced by the CO in his questions and answers to government personnel, despite plaintiff’s reliance on Mr. Gault’s statements to the contrary. See AR 1561 (CO Questions to OSDBU CVE Personnel). Although defendant recognizes that plaintiff disputed and still disputes that it did not have an OCI plan in place, defendant relies on that fact as the proverbial “nail in the coffin” for Monterey’s proposal. In light of unfettered access to documents and the lack of a mitigation plan, the CO reasonably concluded that there was a potential OCI, according to defendant. The government cites the Federal Circuit’s decision in NKF Engineering, Inc. v. United States, in which the court held that the mere appearance of impropriety was sufficient to disqualify an offeror because of the agency’s interest in preserving the integrity of the acquisition process. 805 F.2d 372, 377 (Fed. Cir. 1986). In contrast, the IBM decision of this court, defendant argues, is inapposite because the agency and the court found the work done by the person in question was over 3 years prior and thus “stale” for purposes of creating an OCI.

We agree with defendant. In light of the government’s interest in safeguarding the integrity of the procurement process, the facts on this record establish the rationality of the CO’s conclusion. We begin with the undisputed facts. Plaintiff had access to all of the acquisition documents, and at least one or two Monterey/CACI employees did access them when providing editing and other quality control services in support of the acquisition efforts of OSDBU/CVE. See AR 1560-66. Plaintiff admitted at oral argument that it did have access to some documents never released to the public, such as the internal government cost estimates. With regard to other documents, regardless of whether they later became public, it is not disputed that Monterey had access to them first. This creates, on its face, the potential for an OCI. Monterey therefore had a duty to mitigate that conflict or face ineligibility to bid on the follow-on solicitation. The FAR requires contracting officers to identify and evaluate potential OCIs and to “avoid, neutralize, or mitigate significant potential conflicts before contract award.” 48 C.F.R. § 9.504(a) (2014). The solicitation thus stated a presumption that offerors who had performed support of CVE verification in the past would be ineligible for award and also required any offeror who identified a potential OCI to provide and implement a mitigation plan to alleviate the possibility of unfair competitive advantage. See AR 953-54.

The CO found Monterey not to have had a mitigation plan in place during its performance of the BPA. Several agency officials told the CO that they were unaware of any mitigation plan during Monterey’s performance under the BPA. The CO took into account the representation by Monterey in its BPA proposal that it had no actual or potential OCIs as evidence that it did not have a mitigation plan in place, along with the fact that it did not present a plan with its bid for the follow-on RFQ. See AR 1621 (Excerpt from Monterey’s BPA proposal). He took both of those facts at face value as indications of plaintiff’s then-belief that it had nothing to mitigate. He thus gave no credit to the after-the-fact plan provided by Monterey.7 Although Monterey supplied signed NDAs and declarations from various employees, averring that they had no access to solicitation information and, in any event, had no role in solicitation preparation, the CO reasonably concluded that these measures were insufficient without a working mitigation plan. He was unprepared to supply, by force of imagination or otherwise, the details of how non-disclosure agreements would actually operate to prevent, at a minimum, the appearance of impropriety.  

The CO reasonably viewed the facts as establishing a potential OCI. Plaintiff thus had a duty to mitigate that conflict prior to bidding on the followon work. The CO found its efforts in that regard to be inadequate in view of the absence of a mitigation plan. Given the discretion we afford on review of agency action in this regard, we cannot say that the CO acted arbitrarily and capriciously with regard to his conclusion of a potential, unmitigated OCI.

Likewise, we see no conflict between our holding here and our holding in the IBM case. There, the CO relied on a letter from the DOD general counsel’s office regarding the potential for a conflict of interest involving a former army employee, which found little chance for a problem with regard to the specifics of that employee and that solicitation. IBM, 119 Fed. Cl. at 160. In addition, the court found that any information gained by that specific employee was stale by the time of the actual solicitation at issue, three years later. Id. at 161. Here, the CO found very recent potential access to presolicitation documents and no plan for mitigation. The information that might have been gleaned was neither stale nor irrelevant. The CO’s finding of an unmitigated potential conflict of interest was thus neither arbitrary, capricious, nor contrary to law.  (Monterey Consultants, Inc. v. U. S. and Loch Harbour Group, Inc., No. 14-1164C, March 26, 2015)  (pdf)

1. Organizational Conflicts of Interest – Unequal Access

At issue in this case is whether there was an “unequal access to information” OCI here. Such an OCI arises when the contractor has access to “[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.” FAR § 9.505-4; see also Turner Constr. Co. v. United States, 94 Fed. Cl. 561, 569 (2010), aff’d, 645 F.3d 1377 (Fed. Cir. 2011); Keith R. Szeliga, “Conflict and Intrigue in Government Contracts: A Guide To Identifying and Mitigating Organizational Conflicts of Interest,” 35 Pub. Cont. L. J. 639, 643 (2006) (hereinafter “Szeliga”). As the FAR makes clear, this category of OCI raises concerns 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.” FAR § 9.505(b). The FAR cautions that such conflicts are more likely to occur as the result of contracts involving management support services, the type of contract that ALON had with ICE. See FAR 9.502(b)(1).

There are hard facts here that strongly suggest the existence of an OCI associated with ALON’s having had unequal access to information that could have provided it with a significant  competitive advantage in obtaining the BPA. See ARINC Eng’g Servs., 77 Fed. Cl. at 202. The record reveals that at least four ALON employees had access to the complete BEP and regularly used information from that plan in providing support services to the OCIO. As described by one ICE manager, that information included “vendor name, contract number, . . . period of performance, . . . contract employee name, labor category, job description, fully loaded rates, estimated number of employee hours, and anticipated funding source and amount.” The complete BEP captures the budget requirements for all program offices within the OCIO and included information regarding NetStar’s prior performance of the contract in question. Moreover, it appears that another dozen ALON employees had access to the BEP of OCIO’s Engineering Division, which tracked NetStar’s performance of the Atlas contract and also included its labor rates. Contrary to defendant’s claims, NetStar did not have comparable access to ALON’s proprietary information. NetStar’s employees did not have access to the complete BEP, but only had access to the BEP of OCIO’s Engineering Division, which plan did not contain ALON’s labor rates.

There is little doubt that the potential conflict posed by ALON’s unequal access to information was significant. “A significant potential conflict is one which provides the bidding party a substantial and unfair competitive advantage during the procurement process on information or data not necessarily available to other bidders.” PAI, 614 F.3d at 1352; see also ARINC, 77 Fed. Cl. at 202. Here, ALON stood to gain a competitive advantage if it used proprietary information regarding, inter alia, its competitor’s labor rates in crafting its own bid, as the cost evaluation model used to award the BPA in question was based solely on the offerors’ fully loaded labor rates. Indeed, the administrative record reveals that ALON was awarded the contract in question under a best-value, technical-cost trade-off decision, based on its having a lower price than that offered by NetStar. See FAR § 15.101-1. Defendant has conceded that, in a situation like this – where one competitor has another contractor’s labor rates and price is a determining factor in a subsequent award – any resulting OCI is significant. It contends, however, that the CO here identified this potential OCI on a timely basis and crafted a mitigation plan that ensured that ALON did not derive any competitive advantage by virtue of its access to NetStar’s trade secrets. It remains to be seen, however, whether this is actually the case.

2. Timely Identification

The FAR emphasizes that the CO should determine the existence of a significant OCI “as early in the acquisition process as possible.” FAR § 9.504(a). The operation of a whole host of FAR provisions depends upon this happening. FAR § 9.506(b), for example, provides that if “the contracting officer decides that a particular acquisition involves a significant potential organizational conflict . . . , the contracting officer shall, before issuing the solicitation, submit for approval to the chief of the contracting office . . . [a] written analysis, including a recommended course of action for avoiding, neutralizing or mitigating the conflict,” as well as “a draft solicitation provision and . . . a proposed contract clause.” An approving official is then entrusted to “[r]eview the contracting officer’s analysis and recommended course of action, including the draft provision and any proposed clause . . . and . . . [a]pprove, modify, or reject the recommendations in writing.”FAR § 9.506(d)(3) requires that “[b]efore awarding the contract, [the contracting officer shall] resolve the conflict or the potential conflict in a manner consistent with the approval or other direction by the head of the contracting activity.” Providing an overarching summary of this process, FAR § 9.504(a) indicates that the contracting officer shall analyze planned acquisitions in order to “[a]void, neutralize, or mitigate significant potential conflicts before contract award.” See also Turner, 645 F.3d at 1386; Jacobs Tech., 2011 WL 3555595, *11 (Fed. Cl. July 29, 2011).

All of these provisions anticipate, in one way or another, that, as part of acquisition planning, the CO will “identify and evaluate potential conflicts in the early stages of the acquisition process.” Turner, 645 F.3d at 1386; see also; PAI, 614 F.3d at 1352; Jacobs Tech., Inc., 2011 WL 3555595 at *11; The Geo Group, Inc. v. United States, 2011 WL 3455823, at *4 (Fed. Cl. July 29, 2011). As noted by two prominent commentators, “FAR 9.504, 9.506 and 9.507 seem to direct COs to figure out potential organizational conflicts of interest before a solicitation is issued and either mitigate potential conflicts before award, include restrictions in the solicitation to avoid the conflict of interest, or disqualify an offeror from a competition.” Ralph C. Nash & John Cibinic, “Conflicts of Interest: The Guidance in the FAR,” 15 No. 1 Nash & Cibinic Rep. ¶ 5 (2001). In this case, however, the contracting officer did not ascertain the existence of a potential OCI prior to the issuance of the RFQ, or even after receiving proposals, but instead made no such determination until NetStar protested the first award to ALON. This delay, in and of itself, is not indicative of arbitrary action because the existence of a potential significant conflict of interest is not always apparent before the issuance of a solicitation, and sometimes cannot be identified until after an award and a bid protest. See Turner, 645 F.3d at 1386. But, by the same token, a CO may not “ignore and not evaluate known potential OCIs prior to award.” Id.; see also Alion Sci. & Tech. Corp., 2006 C.P.D. ¶ 2 (2006). And that would appear to be the case here.

In the case sub judice, the CO knew or should have known, well before the issuance of the RFQ, that ALON was performing advisory and assistance services for the OCIO that raised serious questions regarding its participation in other procurements by that same office. No less than three of ALON’s prior contracts/task orders with OCIO, issued from September 2008 through June 2009, explicitly warned that its performance thereunder could cause future OCIs by providing the company with a competitive advantage derived from “access to proprietary, business confidential, or financial data of other companies.” In each of these instances, the contracting officer responsible for those procurements inserted into the contract clause I.9 HSAR 3052.209-73, entitled “Limitation on Future Contracting,” which stated, in relevant part:

(a) The Contracting Officer has determined that this acquisition may give rise to
a potential organizational conflict of interest. Accordingly, the attention of
prospective offerors is invited to FAR Subpart 9.5 – Organizational Conflicts of
Interest.

* * * * *

(c) The restrictions upon future contracting are as follows:

* * * * *

(2) To the extent that the work under this contract requires access to the
proprietary, business, confidential, or financial data of other companies, and as
long as these data remain proprietary and confidential, the Contractor shall protect
these data from unauthorized use and disclosure and agrees not to use them to
compete with those other companies.

Who was the contracting officer who inserted this clause? The one who “determined that this acquisition may give rise to a potential organizational conflict of interest”?

In two of the three instances, it was none other than the CO who issued the RFQ in question. Yet, rather than checking her own files and addressing these OCI issues head on prior to issuing the RFQ, the CO relied upon the offerors to identify in their proposals any OCIs they thought existed. This was unacceptable. The relevant FAR provisions and the case law construing them expect more – they do not permit agency officials to sit passively by, waiting to be alerted to the potential existence of an OCI by contractors bidding on a solicitation, when the agency’s own records (not to mention its daily operations) readily disclose the existence of potential problems.

Contrary to defendant’s claims, this is not asking too much. To the contrary, the FAR proceeds from the reasonable assumption that agencies which consistently follow its procedures for protecting third-party information will know when an envisioned solicitation poses potential conflicts. That is why FAR provisions, like § 9.506, require contracting officers to insert cautionary clauses in certain contracts. And it is why FAR § 9.505-4(b) requires agencies to obtain nondisclosure agreements from contractors who, through their government contracts, have access to the proprietary information of potential competitors. The latter subsection states that “[a] contractor that gains access to proprietary information of other companies in performing advisory and assistance services for the Government must agree with the other companies to protect their information from unauthorized use or disclosure for as long as it remains proprietary and refrain from using the information for any purpose other than that for which it was furnished.” Id. It adds that “[t]he contracting officer shall obtain copies of these agreements and ensure that they are properly executed.”

The CO here never enforced these provisions. Defendant admits as much even while acknowledging that OCIO’s contracts with ALON plainly involved the performance of advisory and assistance services. 13 OCIO was not required to obtain such agreements, defendant asserts, because FAR § 9.505-4(b) applies only where a government contractor obtains proprietary information directly from a third party and not where, as here, the contractor obtains that information indirectly from an agency. The plain wording of the regulation, however, contradicts this notion – it makes no such distinction based on how a contractor “gains access to propriety information of other companies in performing advisory and assistance services.” Nor, contrary to the intervenor’s claims, is there anything about the regulatory context of this language that leads to a contrary conclusion. Indeed, the authorities on this point have all uniformly construed this FAR provision as applying to situations like this, where the employee of a contractor is given access by an agency to a third party’s proprietary information.

Defendant and intervenor cite no authorities to the contrary – and for good reason, as research reveals none. This result is not surprising as it is hard to read the language of this provision in the cramped way defendant and the intervenor contend, let alone to understand why the drafters of the FAR would provide this protection to the proprietary information of some contractors, but not to that of others.

Had the agency complied with this provision and required ALON to enter into nondisclosure agreements with outside contractors, the CO would have had further warning that the issuance of the RFQ here posed a potential significant OCI that needed to be promptly addressed in the fashion specified by the FAR. The very existence of such agreements would have screamed this out. Of course, even without such nondisclosure agreements, the CO should have been aware of the contracts that she herself previously awarded and was administering, under which ALON was providing advisory and assistance services. And she should have known this before issuing the RFQ and, ironically enough, specifically inviting ALON to submit a response thereto.

But these findings do not end our inquiry. While the FAR plainly adopts a strong preference in favor of resolving OCIs earlier rather than later, the failure by an agency to identify the existence of a potential significant OCI before the issuance of a solicitation is not fatal, so long as the agency can implement an effective mitigation plan. Whether ICE did so here is a topic to which the court now turns.

3. Mitigation

FAR § 9.504(e) prohibits a CO from awarding a contract if an OCI cannot be avoided or mitigated. See Axiom, 564 F.3d at 1382; Robert S. Metzger, “Final DFARS OCI Rules – A Retreat From What Some Feared, A Sign of What is to Come,” 53 No. 5 Gov’t Contractor ¶ 35 (2011). Defendant and intervenor argue, however, that the contracting officer effectively mitigated any potential conflicts of interest here. In fact, though, a probing review of her conduct in this regard reveals that it was arbitrary and capricious.

In granting plaintiff a preliminary injunction in this case, this court observed that “[t]he
mitigation plan adopted by the contracting officer has some interesting features.” NetStar-1 Gov’t Consulting, 98 Fed. Cl. at 733. Quite candidly, the court did not intend the term “interesting” to be complimentary. Further review of the record has confirmed the gross inadequacy of the plan adopted by the CO. As will be discussed below, some of the provisions of that plan were defective in their design; others were flawed in their execution; and still others required the CO to rely upon ALON’s representations and promises, without any verification whatsoever and despite indications that procedures for protecting proprietary information had not been strictly followed in the past.

Some of the provisions embraced by the CO plainly were ineffective and should have been seen as such. As part of its plan, for example, ALON provided the CO with declarations from certain ALON employees working at OCIO, who indicated that they had not obtained NetStar proprietary information or shared that information with other ALON officials. The problem was that these declarations did not come from the ALON employees who had access to NetStar’s proprietary information. As since admitted by defendant, declarations from the dozen or so ALON employees who did have that access were never obtained. This is problematic not just because the CO relied upon declarations from the wrong people, but because neither she nor ALON apparently did enough of an investigation to know who these people were, at least initially. Indeed, ALON has admitted that, under its internal operating procedures, the only ALON employees who knew who had access to the various OCIO databases were the employees themselves. No outside supervisors were given this information. While ALON touts this lack of knowledge as a double-blind “firewall,” it is only half right – its willful blindness left it unable to verify and ensure that its nondisclosure policies were being complied with, and to report to the agency if they were not. And, as it turns out, they were not.

In embracing other provisions, the CO blithely assumed that the OCIO and ALON would comply with procedures that they had failed to observe in the past. A prime example of this was the CO’s reliance on ALON’s assertion that the relevant ALON employees had all signed DHS nondisclosure agreements. But, all but one these agreements were not dated, leaving open questions as to when they were signed. Moreover, none of them were approved by the companies whose proprietary information was being shared with ALON, as required by the FAR § 9.505-4(b). Defendant, however, contends that these facts are irrelevant because OCIO required that the agreements be witnessed by OCIO personnel and because the agency maintained copies of the signed agreements in its contract files. Unfortunately, these factual representations appear false.

Contradicting this claim is a series of startling electronic communications between OCIO and ALON personnel in late October of 2010, after NetStar had filed its protest of the first award. These messages reveal that, as of October 21, 2010, the agency did not have copies of many of the relevant DHS nondisclosure agreements in its contract files and, instead, was scrambling to locate these agreements. Some of these agreements could not be found within the agency and were provided by ALON – one message from the Contracting Officer Technical Representative (COTR) on the ALON contracts to an ALON supervisor listed particular nondisclosure agreements that were missing and indicated that they were needed “within 1 hour;” a later message from the same person requested the same forms “ASAP.” Responding messages from ALON indicate that they were having problems locating some of the agreements and needed to confirm with the affected employees whether they had signed such an agreement. ALON began providing copies of these agreements to OCIO on October 22, 2010 – months, of course, after the CO had invited ALON officials to prepare a response to the RFQ. Still more troubling, these electronic messages reveal irregularities in the execution of these agreements. Several indicate that at least one of the nondisclosure agreements found was not witnessed by an OCIO employee, evidenced by messages from ALON requesting an OCIO employee to sign off on the agreements then. These messages suggest that neither OICO nor ALON was bothered by the prospect of having OCIO employees countersign these agreements after-the-fact, without having actually witnessed the original signature. Other documents suggest that at least some of the nondisclosure agreements were countersigned not by OCIO employees, but rather by ALON employees.

The court cannot help but presume that the CO was aware of these problems (it was her COTR, after all, that sent most of the messages described above) when, on January 10, 2011, the CO approved ALON’s mitigation plan. That plan relied heavily upon ALON and OCIO promising to comply with procedures that the CO knew they had violated in the past. This disconnect between past performance and future promises is not only irrational in ipsum, but also raises serious questions as to the CO’s judgment in relying, without any verification whatsoever, upon other critical representations made by ALON in its plan. For example, in concluding that the OCI here had been mitigated, the CO relied upon ALON’s policy of having its employees sign internal nondisclosure forms and receive security training. Yet, there is no indication that she verified that such steps had occurred by the time of the procurement in question. The CO also did not probe what ALON meant when it averred in its plan that it had established “firewalls.” Those “firewalls” were not described in any detail in the plan and instead appear to be little more than pledges by ALON that its employees with access, through the OCIO contracts, to other companies’ proprietary information would not participate in preparing responses to ICE requests for proposals. Such bare bone promises are a far cry from the detailed procedures, as well as physical and electronic barriers, that the decisional law have found adequate to mitigate “unequal access to information” OCIs.19 These cases reveal that even when such promises are reduced to paper, they lack the inhibitory and refractory characteristics generally associated with effective firewalls.

Defendant and defendant-intervenor are left to argue that the potential OCI here was mitigated because ALON provided the CO with declarations from the four individuals who were involved in preparing ALON’s pricing proposal on the contract in question. Each of these declarations stated, under penalty of perjury, that the declarant did not have access to and did not use any of NetStar’s proprietary information. In the circumstances of this case, however, the CO’s reliance on these declarations was arbitrary and capricious. For one thing, there is no indication that an agency’s failure to adhere to the FAR’s requirements regarding OCIs may be remedied by the expediency of obtaining post hoc declarations from the winning contractor denying any wrongdoing. Can it be that the drafters of the FAR dedicated a whole subpart’s worth of guidance to how and when to identify such conflicts, as well as how and when to mitigate the conflicts so identified, yet subscribed to the notion that the failure to follow these procedures could be cured by having the awardee swear up and down it did nothing improper? Of course not. As this court stated in granting plaintiff’s motion for preliminary injunction, “if the latter were enough, one must wonder why the drafters of the FAR bothered to develop an extensive set of rules to deal with such conflicts . . .” NetStar-1 Gov’t Consulting, 97 Fed. Cl. at 734. Under well-established principles of administrative law, this court is loathe to construe any regulation in a way that would render it ineffectual.20 And it is no more inclined to defenestrate the FAR provisions in question – which is exactly what would happen were the court to countenance the post-award palliative offered up by defendant here. The court cannot do this even in the name of deferring to agency discretion, as the agency has the discretion neither to ignore the FAR nor to render any of its provisions moribund. To hold otherwise would, if nothing else, run counter to the long-standing reasons for having the OCI regulations in the first place.

While defendant and intervenor apparently believe that these declarations, standing alone, are adequate to mitigate any conflicts here, the CO did not share that view. Instead, she found it necessary to rely upon the rest of ALON’s multi-faceted mitigation plan – including the portions that were found lacking above. Given the shortcomings of that plan, the court will not treat these declarations as dispositive, when the CO herself did not do so. Doing so would violate basic principles of arbitrary and capricious review under the Administrative Procedure Act. See SEC v. Chenery Corp., 332 U.S. 194, 200 (1947); PDK Labs, Inc. v. DEA, 362 F.3d 786, 798 (D.C. Cir. 2004); Natural Resources Defense Council, Inc. v. Herrington, 768 F.2d 1355, 1397 n.40 (D.C. Cir. 1985) (“we may sustain the agency’s decision only on the rationale it offered”). “Arbitrary and capricious review ‘demands evidence of reasoned decisionmaking at the agency level,’” the D.C. Circuit has said, and “agency rationales developed for the first time during litigation do not serve as adequate substitutes.” Williams Gas Processing-Gulf Coast Co., L.P. v. F.E.R.C., 475 F.3d 319, 326 (D.C. Cir. 2006). Indeed, even if the court were inclined to rely upon the declarations, they are incomplete. While they contain assurances from ALON’s pricing team, there are no comparable assurances from other ALON employees who were involved with the preparation of other aspects of ALON’s offer (e.g., the technical proposal), any of whom might have benefited from second- or even third-hand knowledge of NetStar’s proprietary information.23 Accordingly, the court concludes that the four declarations in question do not bear the considerable weight that defendant and intervenor would heap upon them.

It remains to be seen whether any mitigation plan can neutralize the potential that ALON had access to NetStar’s pricing information. The ALON plan accepted by the CO certainly did not. It was much too little, much too late – akin to closing the stable door after the horse had bolted. The FAR requires early identification of a potential significant OCI because it recognizes that once proprietary information has crept into the competitive process, the imbalances so created are difficult to isolate and counteract. Unlike in Homer’s Greece of old, there are no Elysian Fields here, where contractors may go to wipe from their memories information regarding their competitor’s pricing information. It thus stands to reason that the later a significant OCI is discovered, the harder an agency must work to address the harm caused thereby.24 This is not to say that post hoc remedies will always be ineffective – the decisional law holds otherwise. But, remedies adopted after-the-fact cannot be effective if they look only forward and fail adequately to address unequal access problems that have occurred in the past. Nor can such plans be viewed as effective if they allocate to the putative contract awardee the task of policing and mitigating its own potential conflicts of interest. Against these standards, the ALON mitigation plan adopted by the CO fails abysmally, leading the court to conclude that the CO’s reliance upon that plan was contrary to the FAR, and arbitrary and capricious.  (NetStar-1 Government Consulting, Inc. v. U. S. and ALON, Inc., No. 11-294C, October 17, 2001) (pdf)

B. The Army’s Decision to Follow GAO’s Recommendation Was Arbitrary and Capricious.

Turner argues that the Army’s decision to implement the recommendation of the GAO was arbitrary and capricious for three primary reasons: first, the GAO decision itself was “raw judgment substitution” and irrational because it failed to defer to the discretion of the CO; second, the Army failed to “fully and independently evaluate” that decision before implementing it; third, the Army failed to reasonably evaluate the waiver request before it.

1. The Rationality of the GAO’s Decision

The GAO, according to Turner, failed to adhere to the relevant standard of review. As discussed above, the applicable standard of review is reasonableness: the GAO should not overturn an agency’s decision, unless it was unreasonable. McCarthy/Hunt, JV, B-402229.2, at 5. According to Turner, the GAO conducted a de novo review of the record that supplanted the CO’s decision, which was based on “hard facts,” with a decision based on “mere inference and suspicion.” In doing so, Turner contends that the GAO committed three major errors in reviewing the record and that these errors render the recommendation irrational. As noted above, the task before this Court is to determine whether the GAO had a rational basis to overturn the agency’s findings. If it did, the Army was not arbitrary and capricious in implementing the GAO recommendation, and the Army’s decision must stand.

a. Preliminary Matters

Before addressing the GAO’s holdings themselves, the Court must resolve two preliminary disagreements between the parties: a potential disagreement concerning the “hard facts” requirement, and an actual disagreement concerning the timing of the CO’s OCI investigation.

i. Has Plaintiff Misstated the “Hard Facts” Requirement?

Defendant and intervenors have repeatedly asserted that plaintiff has misstated the “hard facts” requirement. According to defendant, plaintiff argues that hard facts showing “actual harm” from an OCI must be present to establish an OCI. Defendant, in contrast, argues that only the appearance of a conflict must exist.

Plaintiff has, however, simply contrasted a decision based on “hard facts” with a decision based on “speculation and innuendo.” This contrast is the classic dichotomy from C.A.C.I., 719 F.2d at 1582. In that case, the Federal Circuit found that “the possibility and appearance of impropriety is not supported by the record and therefore is not a proper basis for enjoining award of the contract” and that the Claims Court erred in basing “its inferences of actual or potential wrongdoing . . . on suspicion and innuendo, [rather than] on hard facts.” Id. at 1581–82 (emphasis added). Defendant has itself cited cases that support plaintiff’s juxtaposition of hard facts and suspicion. For instance, defendant quotes the Federal Circuit’s statement that a bidder should not be rejected “where the facts of the case do not support a finding of an appearance of impropriety.” NKF Eng’g, 805 F.2d at 376. In its sur-reply, plaintiff argues that “the assessment of OCIs is a fact-specific inquiry the CO must undertake, and under the facts here, the CO reasonably concluded there was no OCI, and GAO erred in substituting its judgment for that of the CO.”32 The Court therefore agrees with plaintiff—and precedent—that a proper GAO decision is based on “hard facts” that show an “appearance of impropriety.” NKF Eng’g, 805 F.2d at 376.

ii. Were the Timing and Substance of the CO’s Investigation Improper?

Much more serious disagreements concern the timing and substance of the contracting officer’s investigation. There are three general areas of disagreement regarding this investigation: first, whether the investigation should have occurred before contract award; second, whether the GAO should have considered the postprotest declarations submitted to it as part of that investigation; third, whether the focus of the investigation should have been on rebutting a presumption of prejudice.

As noted above, the CO submitted to the GAO a detailed examination of whether any OCIs existed, but this investigation was only conducted post-award and post-protest. In their filings, defendant and intervenors have attacked the timing of this investigation for a number of reasons. For instance, according to the government, “the FAR directs that the CO shall identify and evaluate potential conflicts as early in the acquisition as possible and before contract award,” and the CO erred by not acting prior to award.33 The GAO, the government argues, correctly found that the CO acted unreasonably in finding no potential OCIs during this post-award investigation.

The government claims that one of this Court’s prior cases controls. In that case, Filtration Development, the award of a contract for engine barrier filters to Aerospace Filtration Systems (“ASF”) was at issue. Filtration Dev. Co., LLC v. United States, 60 Fed. Cl. 371, 373 (2004). ASF was a division of Westar Corporation, who, under a prior contract, received task orders and participated in meetings related to these filters. Id. at 374. The government officials in charge of that earlier contract grew concerned about the potential for OCIs and tried to “implement precautionary measures” through “two unsigned and unapproved mitigation plans.” Id. at 374. The CO for the contract at issue “was informed that the Army had recognized the conflict and that the appropriate measures were in place.” Id. at 374–75. Based on these assurances, the CO found no significant potential OCI. Id. at 375. A bidder for the contract alleged that the CO had failed to address or mitigate the potential OCI; the bidder argued that “the CO cannot abdicate her responsibilities . . . simply because government personnel represented that the conflict had been addressed through the submission of mitigation plans.” Id. at 377. This Court agreed and found that the CO had failed to address OCIs “as early in the acquisition as possible” because clear signs of a conflict were present prior to the award. Id. at 378. The Court further concluded that the CO “exceeded her authority by concluding that the appropriate safeguards were in place to eliminate the conflict,” when “all those involved recognized the significant conflict.” Id. at 378.

The government argues that Filtration Development is directly on point for this case, but that argument hinges on a misreading of the FAR and of Filtration. According to the government, the FAR requires the CO to “identify and evaluate” potential conflicts “before contract award.”34 This assertion merges two separate requirements of FAR Section 9.504. The first, under section (a)(1), requires a CO to “[i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible,” and the second, under section (a)(2), requires a CO to “[a]void, neutralize, or mitigate significant potential conflicts before contract award.” 48 C.F.R. § 9.504(a)(1)-(2) (2009) (emphasis added). The government improperly combines these two requirements. The FAR does not require a CO, in every single procurement, to review and document whether OCIs exist prior to award. Instead, a CO must evaluate OCIs as early in the process as possible, and, for significant potential OCIs, a CO must mitigate them prior to award. In some cases, the earliest time to evaluate an alleged OCI might be post-award, such as when a bid protest is brought that alleges theretofore unknown OCIs. In other cases, such as in Filtration, evidence of a “significant” OCI will exist before contract award and require a CO to evaluate and mitigate it then. Filtration Dev., 60 Fed. Cl. at 378.

A second, related timing issue infected the GAO’s decision. Turner and the Army had argued before the GAO that those AECOM employees who assisted the agency did not know of the potential merger, but GAO dismissed this argument as based on “post-protest representations” and stated that they “need not resolve this issue.” McCarthy/Hunt, JV, B-402229.2, at 10–11.

This dismissive attitude departs from prior GAO decisions which have considered post-protest representations. For instance, in Pemco Aeroplex, a protester alleged that an OCI existed because an employee of the winning bidder for a contract may have acted as a consultant and reviewed the proposals for that contract. Pemco Aeroplex, Inc., B-310372 (Comp. Gen., Dec. 27, 2007), at 14. The agency responded with factual assertions showing that no such employee had in fact reviewed the proposals. Id. The GAO acknowledged that the assertions were made “in responding to [the] protest” and considered them in finding that no OCI existed. Id. Similarly, in Integrated Concepts, the GAO relied on an “agency report” that “explained that the alleged facts underpinning the protester’s OCI allegations were not as argued.” Integrated Concepts & Res. Corp., B- 309803 (Comp. Gen., Oct. 15, 2007), at 6. The GAO also noted that “[s]ubstantial facts and hard evidence are necessary to establish a conflict.” Id. Finally, in Chenega Federal Systems, a protester alleged that the government had awarded a contract to a firm with an OCI. Chenega Fed. Sys., LLC, B-299310.2 (Comp. Gen., Sept. 28, 2007), at 5. According to the protester, the awardee hired an employee who may have had access to confidential information. Id. In response to the protest, the agency told the GAO that it would investigate the OCI allegations and then make a new source selection decision. Id. at 2. After the agency investigated and awarded the contract to the same firm, the protester filed another bid protest. Id. The GAO relied on this investigation, which was not contemporaneous with the events in question and which was conducted after the initial award and protest, and upheld the award. Id. at 5.

Dismissing the “post-protest representations” of a party or the agency defies reason. If a protester were to allege an OCI so baseless that it had never been considered before, an agency might not be able to respond except with “post-protest representations.” It was irrational in this case to depart from precedent and not consider the factually-based arguments of Turner and the Army, especially when the GAO was tasked with looking for “hard facts” of an OCI.

Finally, the parties dispute the exact application of a presumption of prejudice that can attach in OCI cases. The Court of Federal Claims and the GAO have frequently stated that, when an OCI is found, prejudice stemming from that OCI is presumed. See, e.g., Filtration Dev., 60 Fed. Cl. at 379; L-3 Servs., B-400134.11, at 17 n.19. This frees a party alleging an OCI from having to prove actual prejudice and places the onus on the other party to rebut the presumption of prejudice. Presuming prejudice coincides with the emphasis on avoiding even the appearance of impropriety in federal procurements. See NKF Eng’g, 805 F.2d at 377. The court in ARINC Engineering Services, LLC v. United States illustrates this presumption: a “protestor need not show that the information possessed by its competitor specifically benefitted the latter’s proposal—that prejudice is presumed primarily because the contracting officer must avoid and address not only actual, but apparent, conflicts of interest.” 77 Fed. Cl. at 203 (emphasis added). The GAO also adheres to this view and has provided this example: “an unfair competitive advantage is presumed to arise where an offeror possesses competitively useful nonpublic information that would assist that offeror in obtaining the contract, without the need for an inquiry as to whether that information was, actually, of assistance to the offeror.” L-3 Servs., B-400134.11, at 17 n.19.

Defendant and intervenors have made, at times, expansive arguments about this presumption of prejudice. McCarthy/Hunt, for instance, has asserted that “[w]hen an OCI investigation is post-hoc, i.e., it occurs after the act potentially tainted by an OCI has occurred, then the only thing left to investigate is the issue of prejudice.”Defendant has also argued that “the CO’s focus was not rebutting the presumption of prejudice that attached to the AECOM-EB merger discussions” and that reliance upon that investigation is therefore “misplaced.”Due to a lack of clarity in these arguments, the Court ordered the parties to conduct supplemental briefing on the issue. In its supplemental brief, defendant correctly states the law: “in a post-award, post-protest OCI investigation, an agency is required to consider both whether a potential OCI exists, and if so, whether the presumption of prejudice that attaches to an identified OCI can be rebutted.”

The critical, antecedent question of whether or not an OCI exists must be answered before presuming prejudice, and the more expansive arguments from defendant and intervenors sometimes miss this mark. In this case, as discussed below, the CO found that no OCI existed. The GAO’s first task was thus to address the issue of whether or not the CO acted reasonably in finding no OCI. Only after that initial inquiry is made can a presumption of prejudice attach. McCarthy/Hunt is thus incorrect that “the only thing left to investigate” is prejudice. Defendant has now stated the law correctly: the first question the agency was required to look at is whether a potential OCI exists, and, if it does, the agency must address prejudice.

b. Were HSMM and EB’s Interests “effectively . . . aligned”?

Turner first claims that the GAO erred in finding that AECOM and EB’s interests “effectively were aligned” as early as August 2008. Before the GAO, Turner had argued that the CO was correct in finding the relationship between the two firms too attenuated to support an OCI, and the GAO disagreed with this conclusion.

This issue is difficult for two reasons. First, the GAO has not articulated what precisely it looks for when OCI allegations are raised about potentially affiliated firms or persons, and defendant and intervenors have attempted to apply a reductionist reading of the FAR to this inquiry. Second, no prior decision appears to have found that sporadic merger discussions between firms create an effective alignment of interests, yet neither the GAO nor defendant has discussed or justified the expansive nature of that holding.

The starting point of an OCI analysis is the definition of an OCI found in the FAR. Those regulations define an OCI as a conflict that may occur due to “relationships with other persons.” 48 C.F.R. § 2.101. Since the seminal OCI decision in Aetna, GAO decisions have covered both close “relationships” that do raise OCI concerns and more tenuous “relationships” that do not. In Aetna, the GAO found that a potential OCI did exist where the government had hired a consulting company to assist with the procurement, and the winning bidder had proposed using a wholly owned subsidiary of that consultant to perform a significant subcontract worth over $180 million. Aetna Gov’t Health Plans, Inc., B-254397 (Comp. Gen., July 27, 1995), available at 1995 WL 499806, at *14. In contrast, the GAO found the relationship between firms too attenuated in its decision in American Management Systems, Inc., B-285645 (Comp. Gen., Sept. 8, 2000). In that case, the government had initiated two separate procurements: one for financial software and one for the integration of that software into the government’s systems. Id. at 2. Under the integration contract, the vendor was also supposed to assist the government with selection of the software itself. Id. An unsuccessful bidder for the software contract filed a protest because of an agreement between the winning bidders for the integration and software contracts.

Under that agreement, the two firms had adopted “a structure for submitting proposals under a prime contractor/subcontractor relationship . . . [and] a formula for splitting revenues under contracts resulting from such proposals.” Id. at 5. The agency and GAO reviewed this agreement and found that, despite their alliance for contractor/subcontractor proposals, the potential for a significant OCI was too remote and speculative for contracts, like the one under review, which did not involve a contractor/subcontractor proposal. Id. at 6.

A recent GAO decision contains one of the more extensive discussions of relationships in the OCI context. In that case, L-3 Services, a protester had alleged, among other things, that an impaired objectivity OCI existed due to the relationship between two firms. L-3 Servs., Inc., B-400134.11 (Comp. Gen., Sept. 3, 2009), at 14. The two firms had worked together on a prior contract and were trying to work together in the future; the protester alleged that a conflict existed, when one firm was called on to review the other firm. Id. The GAO found that this relationship was not sufficiently close to raise OCI concerns:

There is no evidence in the record of a corporate relationship between the firms, such that one firm is evaluating itself or an affiliate, or evaluating products made by itself or a competitor, or is making judgments that would otherwise directly influence its own well-being . . . . The protester urges us to consider that an organizational conflict of interest exists because the two firms contemplated additional work together on the [ ] procurement, but we decline to do so; at least in this circumstance, what the two firms considered doing has no bearing on our analysis of whether their actual relationship met the standard for an organizational conflict of interest. Moreover, we look for some indication that there is a direct financial benefit to the firm alleged to have the organizational conflict of interest [ ] and there is none in this instance.

Id. at 15 (citations removed) (emphasis added). The GAO compared the facts that the protester alleged to those prior decisions of the GAO concerning relationships between firms and OCIs. Those decisions show actual relationships: a contractor reviewing its own work on another contract; an awardee making recommendations regarding its own product or its competitors’ products; a firm determining the stringency of testing requirements for tests that it itself would conduct. Id. at 14 (citing Nortel Gov’t Solutions, Inc., B-299522.5 (Comp. Gen., Dec. 30, 2008); Alion Sci. & Tech. Corp., B-297022.3 (Comp. Gen., Jan. 9, 2006); Ktech Corp., B-285330 (Comp. Gen., Aug. 17, 2000)). In contrast, the GAO found that the firm in L-3 did not have a sufficiently close relationship to raise OCI concerns. L-3 Servs., B-400134.11, at 15.

Distilling these cases, GAO decisions on this issue have looked for a direct financial benefit between firms, rather than an attenuated or potential benefit. A relationship involving a firm and its subsidiary is certainly close enough to raise potential OCI concerns, while the relationship between two firms that have merely considered future work together does not raise similar concerns. Defendant and intervenors have, however, ignored almost entirely the GAO case law described above. They repeatedly cite to the “relationship” language of FAR § 2.101 without discussing the GAO case law that has construed that term.39 It is certainly true that AECOM and EB had some type of “relationship,” but the presence of a relationship does not end the inquiry. As the GAO has stated in numerous prior cases, that relationship must be sufficiently direct to raise OCI concerns.

In this case, the Army concluded that AECOM and EB were only “potential merger partners, with no community of interests.”40 Despite that conclusion, the GAO overturned the CO’s analysis. Unlike that analysis, which had extensively discussed the facts of the case, the GAO simply stated: “[I]n our view, the record shows that, as early as August 2008, AECOM’s and EB’s interests effectively were aligned as a result of the merger/acquisition discussions sufficient to present at least a potential organizational conflict of interest.” McCarthy/Hunt, JV, B-402229.2, at 6. The GAO also dismissed the CO’s findings that the negotiations were extended and non-continuous. Id.

This Court’s task is not to conduct a de novo review of the record and make a finding as to whether or not AECOM and EB’s relationship was sufficiently close. Instead, the Court must strictly adhere to the standard of review and inquire whether the GAO had a rational basis for finding the CO’s determination unreasonable. In this case, it is, of course, true that both acquisition talks and procurement actions occurred during the past several years, but the GAO ignored the CO’s findings and merely stated that “in [their] view” the record indicated a sufficient alignment of interests. This cursory inquiry differs from the GAO decisions discussed above. Those cases discussed the facts of the case to inquire into the closeness of the connection between firms, the directness of a financial relationship, and the specific facts that could indicate whether a relationship was close enough or too attenuated to support an OCI. The GAO did not do that in this case. This failure to engage the CO and the record is especially noteworthy when a recent decision, cited by the GAO in this very case, found no OCI between two firms planning future work together because “what [] two firms considered doing has no bearing on our analysis of whether their actual relationship met the standard for an organizational conflict of interest.” L-3 Servs., B-400134.11, at 15. In OCI matters, the Federal Circuit has noted that a CO must exercise “considerable discretion” and that a CO’s determinations must not be overturned unless they are unreasonable. Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009). This Court thus finds that the GAO lacked a rational basis because it overturned the CO’s determination without highlighting any hard facts that indicate a sufficient alignment of interests. Because the GAO lacked a rational basis, the Army was not justified in following its recommendation.

c. Did the GAO Have a Rational Basis for Finding Unreasonable the CO’s Biased Ground Rules OCI Determination?

Turner also argues that the GAO erred in overturning the CO’s decision and finding a biased ground rules OCI.  This type of OCI exists where a firm could “skew the competition” in favor of itself or where a firm could have an unfair competitive advantage due to its “special knowledge” of an agency’s future needs. Aetna Gov’t Health Plans, 1995 WL 449806, at *8.

In her factual analysis, the CO separated the negotiations between EB and AECOM into two distinct periods during which negotiations overlapped with action in the procurement process. The first period ran from May 2008, when interested firms began to contact EB, until November 30, 2008, when AECOM and EB terminated discussions. During this period, the CO found that no AECOM employees assisting the government were aware of the negotiations. Even if they had been aware, the CO found that such large changes occurred to the procurement after November 2008 that any action taken by those employees from May 2008 until November 2008 would have been unable to skew the procurement in favor of EB. The second period ran from June 2009, when negotiations between AECOM and EB restarted, through August 2009, when Turner was awarded the contract. During this period, the only changes relevant to EB that occurred were initiated by the agency. Based on these findings, the CO concluded that it was “inconceivable” to think that AECOM employees, who were unaware of a potential acquisition, could skew the competition in favor of EB.

The GAO, however, overturned the CO’s findings. According to the GAO, the record “suggests” that AECOM had “special knowledge of the agency’s requirements” and that this “special knowledge” would have given Turner an unfair advantage. McCarthy/Hunt, JV, B-402229.2, at 9. The only piece of the record that the GAO cites is AECOM’s contract with the agency to provide “‘all services necessary in the preparation of design documents, including plans, specifications, supporting design analysis, design narrative, cost estimates, etc. to construct a replacement hospital.’” Id. at 9–10. Relying solely on this piece of evidence, the GAO rebutted the agency’s arguments and found a biased ground rules OCI. Having found that, the GAO then presumed that prejudice existed. Id.

Turner argues that it was irrational for GAO to reach this conclusion. The Court agrees for two primary reasons. First, the GAO failed to adhere to the proper standard of review. The GAO’s task was to review the agency’s decision for reasonableness. That agency decision, as described above, tracked the precise state of negotiations between AECOM and EB, the exact dates upon which critical changes to the RFP occurred, the exact employees that could have known of the merger, and numerous other facts. Using this data, the CO concluded that no OCI existed. The GAO failed to address this OCI decision; in fact, the GAO decision on a biased ground rules OCI does not even cite the agency decision that it was tasked with reviewing. Instead, the GAO cites exactly one piece of information—the text of AECOM’s contract with the agency—to support its finding that the record “suggests” that AECOM had “special knowledge” that would have given Turner an unfair advantage.

This failure to meaningfully engage with the agency decision dramatically differs from prior GAO decisions. For instance, in its recent decision in L-3 Services, the GAO also overturned an agency decision, but, in doing so, followed a remarkably different pattern of logic. Instead of ignoring the agency’s decision, as the GAO did here, the GAO in that case engaged the CO’s decision both in facts and in reasoning. See L-3 Servs., B-400134.11, at 7 (“The Air Force contracting officer testified that in making his organizational conflict of interest determination he relied on the ‘clean break’ between Phases Ia and Ib. The record shows that the ‘clean break’ was illusory.”) and at 8 (“[T]he Air Force contracting officer’s determination that there was no biased ground rules organizational conflict of interest was based on . . . a misreading of American Artisan Prods., Inc.”). Similarly, in Johnson Controls World Services, Inc., the GAO overturned an agency’s OCI decision but specifically explained its bases for disagreeing with the agency. The protester in that case had alleged that the winning bidder of a contract had access to information that gave it an unfair competitive advantage.  Johnson Controls World Servs., Inc., B-286714.2 (Comp. Gen., Feb. 13, 2001), at 3. After outlining the agency’s rationale, the GAO disagreed with the decision and spent several pages citing to the record and discussing why the agency’s determination was unreasonable. Id. at 4–7. The GAO decision in this case contains no similar discussion of the agency’s findings.

Second, the one piece of information that GAO cited is not a “hard fact.” The decision of this Court in Filtration Development is instructive in this regard. Filtration Dev. Co. v. United States, 60 Fed. Cl. 371 (2004). As discussed above, the plaintiff in that case had alleged that the winning bidder for a contract had “‘potential access to source selection information’” that created an OCI. Id. at 380. The Court found that this allegation, without more, could not satisfy the C.A.C.I. “hard facts” requirement. Id. The GAO’s sole fact in this case is similarly vague, especially in light of the CO’s findings. The GAO cited to an appendix to the design contract that contained the “General Requirements” for that contract; these requirements specify that the contractor would be responsible for “all services necessary in the preparation of design documents, including plans, specifications, supporting design analysis, design narrative, cost estimates, etc. to construct a replacement hospital . . . .” This sole fact is insufficiently weighty to buttress the GAO’s finding of an OCI, because it fails to accord the CO’s contrary determination any deference and because it lacks any specificity whatsoever.

Rational basis is not a particularly demanding standard of review. In this case, however, the GAO decision fails to withstand even that level of scrutiny. The GAO was tasked with reviewing the agency decision for reasonableness, but it failed to discuss the agency’s decision in any meaningful way. Furthermore, the one piece of record evidence that the GAO cited was not a “hard fact” showing an appearance of impropriety, as the law requires, but instead was mere “suspicion or innuendo.” As discussed above, the first question an agency must address in an OCI investigation is whether or not an OCI exists.45 The Army addressed that here, and the GAO lacked a rational basis for finding the Army’s determination unreasonable.

d. Did the GAO Have a Rational Basis for Finding Unreasonable the CO’s Unequal Access OCI Determination?

Turner contends that GAO erred in finding an unequal access OCI. As noted above, this type of OCI can occur when a company has access to non-public information that is competitively useful. See Aetna Gov’t Health Plans, B- 254397 (Comp. Gen., July 27, 1995), available at 1995 WL 449806, at *8.

In this case, the CO found that no unequal access OCI existed. To support this conclusion, the CO looked at the two general types of information that AECOM could have had access to: (1) customer preferences and/or technical requirements and (2) Phase II technical proposals. For the first category of information, the CO concluded that only forty-nine AECOM employees had access to it, and no evidence indicated that the information was ever communicated to EB.46 She also found that the information could not have provided a competitive advantage to EB. This information was only related to a design concept, not an actual design, and the Army wanted each offeror to provide its own design. Furthermore, this information was memorialized in the Phase II Technical Provisions, which all Phase II offerors were given, and disclosed to the other offerors on multiple occasions from December 2008 until July 2009. Regarding the second category of information, the CO found that this could have given EB a competitive advantage if EB had access to it before final proposals were submitted. The Army, however, “strictly controlled access” to these proposals and prevented AECOM employees from accessing them until after final proposals were submitted.

The GAO overturned the CO’s determination and found that AECOM had an “unequal access to information” OCI. To support this conclusion, GAO cited three general sources of information: (1) as the design contractor, AECOM was “familiar with the details of the procurement,” (2) some of AECOM’s employees “may have had access to competitively useful information,” and (3) AECOM was “in a position to obtain information regarding the agency’s priorities, preferences, and dislikes.” McCarthy/Hunt, JV, B-402229.2, at 7–9.

As with the biased ground rules claim, the GAO failed to cite any hard facts to support its unequal access claim. As discussed above, hard facts showing actual harm are not required; for instance, the GAO did not need to show that EB had access to data that was “actually [] of assistance.” L-3 Servs., B-400134.11, at 17 n.19. The GAO did, however, need to show the “possession” of undisclosed, competitively useful information. Id. Instead, the GAO pointed only to vague allegations that someone “may have had access” to unidentified information or that someone “was familiar with the details.” These nebulous allegations are similar to the claim of “potential access to source selection information” that this Court found insufficient in Filtration. Filtration Dev., 60 Fed. Cl. at 380. According to the Federal Circuit, mere “suspicion” that a company may have had access to information is insufficient. C.A.C.I., Inc. v. United States, 719 F.2d 1567, 1582 (Fed. Cir. 1983).

The lack of concreteness in GAO’s decision can be seen quite clearly in comparison to prior GAO decisions. For instance, in L-3 Services, the GAO found an unequal access OCI when an employee of the winning bidder had, among other things, “handled competitively useful information in the form of unredacted copies of contracts, core communications requirements . . . and proprietary information of other companies that was subject to non-disclosure agreements.” L-3 Servs., B-400134.11, at 9–10. In another GAO decision, Johnson Controls, the GAO sustained an OCI protest when the winning bidder had access to a non-public database that contained data with a “significant level of detail” not available to other bidders, and the GAO listed and discussed this information in detail. Johnson Controls World Servs., Inc., B-286714.2 (Comp. Gen., Feb. 13, 2001), at 4.

Furthermore, apart from simply using the phrase “competitively useful,” the GAO cites to no facts to support their conclusion that EB had access to anything of competitive worth. As noted above, there are two elements of an “unequal access” OCI: a firm must have (1) access to non-public information that is (2) competitively useful. Aetna Gov’t Health Plans, 1995 WL 449806, at *8. In a recent Court of Federal Claims decision, the court noted that “there is no indication that whatever informational differences that may have existed . . . gave rise to a competitive disadvantage that was unfair.” ARINC Eng’g Servs. v. United States, 77 Fed. Cl. 196, 205 (2007). Lacking such an indication, the court found that it would be unreasonable to find an OCI. Id. In this case, the CO specifically discussed how each type of information to which AECOM may have had access not only lacked competitive utility but was also disclosed to all of the offerors. The GAO decision does not reference this discussion except to say that EB may have gained an unfair advantage from knowing “what the agency did not communicate” to other offerors. McCarthy/Hunt, JV, B-402229.2, at 9. In support of this assertion, GAO cites no facts.

These prior GAO decisions are based on hard facts that show the possession of information that is both nonpublic and competitively useful. They cite specific examples of information that could have given one bidder an unfair competitive advantage. They do not require a court to draw inferences from innuendo and suspicion in order to presume the existence of such information. The GAO decision here, in contrast, only points to “familiar[ity] with the details” and potential “access to competitively useful information” and being “in a position to obtain information.”48 This is not specific enough to have overturned the agency’s OCI determination, and it was irrational for the GAO to do so. Because the GAO decision was irrational, the Army was not justified in relying on it.

2. Plaintiff Argues that the Agency Failed to Fully and Independently Evaluate the GAO’s Recommendation Before Adopting It.

Turner also argues that the Army had an obligation to “fully and independently evaluate” GAO’s recommendation. This language is drawn from a 1995 Court of Federal Claims case in which the court wrote:

Although noncompliance with a GAO recommendation may not be the preferred action of the agency, it may be the correct action. Therefore, it is the agency’s responsibility to fully and independently evaluate all recommendations given by the GAO. While this court recognizes that a procurement agency normally will accept the advice of the GAO, it is imperative that the agency perform its own evaluation of the procurement process before making final decisions. If, in its own expertise, the procurement agency determines that the GAO’s recommendation is misguided, it has a responsibility to make up its own mind and to act on its own advice.

IMS Servs., Inc. v. United States, 33 Fed. Cl. 167, 184 (1995). Based on this language, Turner argues that the Army failed to evaluate whether the recommendation of the GAO was “misguided.” Instead, Turner believes that the Army focused almost exclusively on pressure from legislators.

The government rejects Turner’s argument that such a requirement exists. To support this, the government points to two decisions: that of the Federal Circuit in Centech and that of the Court of Federal Claims in SP Systems. In Centech the Federal Circuit reaffirmed Honeywell and found that an agency’s decision is rational if it follows a rational GAO decision. Centech Group v. United States, 554 F.3d 1029, 1039 (Fed. Cir. 2009). In SP Systems, the protester had latched onto the same language from IMS Services that Turner here quotes and had used that language to argue that an agency “‘must perform [its] own analysis of whether the GAO is correct.’” SP Sys., Inc. v. United States, 86 Fed. Cl. 1, 13 (2009). The Court of Federal Claims rejected this argument and stated that it would continue to follow the “viable and applicable precedent” of Honeywell: “If the GAO makes a rational recommendation and the agency simply implements that recommendation, then the agency action itself has a rational basis. . . . [I]nquiring after the rationality vel non of the GAO decision is, where the agency action is solely based upon that decision, examining whether there exists a rational basis for the agency’s acts.” SP Sys., 86 Fed. Cl. at 14 (emphasis added).

The government is correct. Precedent does not support plaintiff’s argument that an agency must go through a separate evaluation process when considering whether to implement the GAO’s recommendation. In the normal course of events, agencies fully implement GAO recommendations, and the “fail[ure]” of an agency “to implement fully the recommendations” of the GAO is so serious that a report of this “failure” must be submitted to Congress. 31 U.S.C. § 3554(b)(3), (e)(1) (2009). Neither Honeywell nor Centech nor any other binding case mentions a separate evaluation requirement. In fact, the only two cases to mention this requirement are the two cited above—IMS, Services, where the requirement allegedly appeared in dicta, and the recent SP Systems that rejected the existence of any such requirement. Finding that such a requirement exists would be at odds with our path of review in cases such as this one; as discussed above, this Court reviews the rationality of an implemented GAO recommendation because that decision “constitutes the very reason(s) for the agency action.” Grunley Walsh Int’l, LLC. v. United States, 78 Fed. Cl. 35, 44 (2007). Furthermore, the administrative record in this case contains numerous documents and emails discussing the GAO decision and whether to implement it or waive the conflicts. This Court will not rely on challenged dicta in a nonprecedential, fifteen-year-old case to forge a new requirement.

C. The Agency was not Arbitrary and Capricious in Implementing the GAO Recommendation, Rather than Waiving the Conflicts.

Apart from the Army’s decision to follow the GAO recommendation, Turner also argues that the Army failed to adequately evaluate the OCI waiver request. According to Turner, the Army must “examine the relevant data and articulate a satisfactory explanation for its action” when deciding whether or not to seek a waiver. F.C.C. v. Fox Television Stations, Inc., 129 S. Ct. 1800, 1810 (2009) (quotations omitted). In this case, the record is replete with examples of the costs of reprocurement but contains scant evidence of the benefits of reprocuring the contract. Instead of making a decision based upon those costs— which could stretch to $100 million and involve great inconvenience for soldiers—plaintiff argues that the Army attempted to pick the action that would be “most defensible in litigation” and that would appease members of Congress who had contacted the Army about a waiver.

The government responds that the decision to waive is entirely discretionary and need not be documented. Under the FAR, “[t]he agency head or designee may waive” an OCI and any such request must be made in writing. 48 C.F.R. § 9.503 (2009) (emphasis added). The record in this case indicates that the official, LTG Antwerp, with the ability to grant a waiver was advised that “[t]here is no requirement to create a record of why you did not grant a waiver . . . .”51 The government also argues that the decision not to grant a waiver was entirely rational; the official in charge noted that he had to “balance [his] responsibilities to the competitive process . . . and [his] heart for service men and women, their families, and retirees who deserve the best medical care possible.”52 Towards this end, that official solicited substantive advice regarding the law on OCIs and waivers. The government also notes that plaintiff has failed to cite anything in the record that indicates the Army actually considered the input of legislators in making their decision to follow the GAO recommendation.

The government is also correct on this point. The FAR places the decision to waive an OCI squarely in the hands of the head of contracting activity, who “may” waive an OCI, if appropriate. 48 C.F.R. § 9.503. That language comports with the emphasis placed upon the agency’s judgment in situations involving OCIs, and that discretionary language contains no hint of a requirement that an agency must waive or must document the reasons for a waiver decision. Furthermore, precedent from this court and the GAO has never discussed any such requirement but has always referred to waiver as merely one of several options that an agency may pursue. See, e.g., Filtration Dev. Co., LLC v. United States, 63 Fed. Cl. 418, 422 (2005) (“In appropriate circumstances, the head of the contracting agency is empowered to waive an OCI . . . .”); Nortel Gov’t Solutions, Inc., B-299522.5 (Comp. Gen., Dec. 30, 2008), at 7 n.5 (noting that there are “situations” in which the FAR allows the head of contracting activity to waive an OCI); Government Bus. Servs. Group, B-287052 (Comp. Gen., Mar. 27, 2001), at 12 (noting that waiver is merely one of several courses that an agency could take, if an OCI were found). The only requirement contained in the text of the FAR is that, if a waiver is requested in writing, the “request and decision shall be included in the contract file.” 48 C.F.R. § 9.504(e). Both of these are contained in the file.53 Requiring the government to waive or to document their reasons for not waiving an OCI would also contravene the spirit of the regulations, which seek to reduce “unnecessary delays, burdensome information requirements, and excessive documentation” when dealing with OCIs. Id. § 9.504(e). Accordingly, the Court does not find the Army’s waiver decision to be arbitrary and capricious.   (Turner Construction Co., Inc. V. U. S. and McCarthy/Hunt, JV and B.L. Harbert- Brasfield & Gorrie, JV, No.  10-195C, July 16, 2010) (pdf) 

See GAO decisions B.L. Harbert-Brasfield & Gorrie, JV, B-402229, February 16, 2010  (pdf) and McCarthy/Hunt, JV, B-402229.2, February 16, 2010  (pdf)

Plaintiff’s primary argument is that the competitive integrity of the procurement was compromised through ITP’s access to nonpublic information which gave ITP an unfair advantage in the procurement. In particular, plaintiff contends that ITP’s and Wackenhut’s roles as incumbent contractors gave ITP inside information regarding how Wackenhut and other contractors planned and performed particular OST activities. In plaintiff’s view, such cost and staffing data provided ITP with a clear advantage in responding to the sample task orders set forthin the solicitation. Plaintiff thus argues that the procurement was tainted by an organizational conflict of interest—specifically, unequal access to information favoring a particular offerer—that now requires the court to declare the award to ITP unlawful.

The contracting officer addressed this very issue in a memorandum titled “Organization Conflict of Interest Analysis” issued on June 8, 2009, in response to ATL’s January 2009 protest before the Government Accountability Office. In her memorandum, the contracting officer noted that she had reviewed each offeror’s submissions regarding any potential organizational conflicts of interest (a certification was required as part of each proposal) and had determined that no significant potential conflict existed with respect to any offeror. Specifically, the contracting officer determined that although ITP and Wackenhut had access to nonpublic information through their existing contracts, such information had no competitive value in the instant procurement. With respect to ITP, the contracting officer found that the information to which it had access involved constantly changing requirements and thus was of little use as it was quickly outdated.5/ With respect to Wackenhut, the contracting officer similarly determined that the information to which it had access was not germane to the requirements addressed in the solicitation’s first two sample task orders and in the case of the third sample task order (relating to the contractor’s proposed transportation utilization program) had been effectively offset by other information disclosed in the solicitation.6/ The contracting officer further observed that both she and the technical representative regarded the information released by DOE to be sufficient to guide offerors in preparing an effective technical proposal. Based on the foregoing, the contracting officer concluded that no organizational conflicts of interest existed that would preclude an award to ITP for the support services contract.

Plaintiff now urges the court to reject the contracting officer’s conclusion on the grounds that: (1) the analysis should have been conducted prior to the issuance of the solicitation and was therefore untimely; (2) the remedial steps taken by the contracting officer to address any potential conflicts of interest were not approved by the chief of the contracting office and were thus unauthorized; and (3) the existence of a conflict is clear on the face of ITP’s proposal. In support of the first point, plaintiff asserts that the contracting officer is required under the Federal Acquisition Regulations (“FAR”) to analyze planned acquisitions in order to: “(1) [i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and (2) [a]void, neutralize, or mitigate significant potential conflicts before contract award.” 48 C.F.R. (FAR) § 9.504(a). Compliance with the FAR, plaintiff maintains, would have required the contracting officer to have undertaken her analysis more than a year earlier than she did, i.e., by April 2008—the date when DOE first became aware that ITP intended to partner with Wackenhut in competing for the successor OST support services contract. Plaintiff presumes that such an earlier intervention would have prompted heightened attention to the likelihood of an organizational conflict of interest.

Plaintiff’s argument, however, ignores the fact that the contracting officer did indeed act in a timely and comprehensive manner to address any potential problems associated with ITP’s and Wackenhut’s participation in the instant procurement. As the contracting officer noted in her analysis, Global Engineering & Technology, Inc., a potential bidder, had filed an agency-level protest in July 2008 (a date that preceded the issuance of the solicitation), alleging unequal access to information and thus an unfair competitive advantage to any offeror that partnered with Wackenhut. In particular, Global Engineering maintained that the solicitation, as then proposed, did not provide sufficient information regarding the staffing levels necessary to support the sixteen task areas the offerors’ were directed to address in their technical proposals.

In response to this concern, the contracting officer took a number of corrective steps, the most significant of which was to modify the required scope of the offerors’ technical proposals. The contracting officer explained this point in her analysis as follows:

[I]n light of the [Global Engineering] protest, I fundamentally altered the solicitation requirements. Instead of requiring all offerors to propose on 15 of the 16 [Performance Work Statement] Task Areas over a five year period of performance, as initially envisioned . . . offerors now only had to address three Sample Task Orders covering a 12 month period of performance or less. For example, Task Order 1 entitled “Conduct Agent Candidate Training (ACT),” set forth the performance objectives of ACT and specifically identified the applicable Task Areas. In this case, offerors were instructed to address seven Task Areas (Task Areas 1 through 7) as part of their technical approach for Task Order 1. For Task Order 2, entitled “Conduct Operational Readiness Training (ORT),” offerors were provided the performance objectives for ORT and instructed to address eight Task Areas (Task Areas 1 through 7 and 9). For Task Order 3, not only did I provide offerors with very specific information for three fictitious transportation scenarios, I provided offerors information regarding the number of drivers and transportation assets needed to complete each scenario as well as trip duration and locations.

In addition to narrowing the scope of the offerors’ technical proposals, the contracting officer also provided offerors with a historical twelve-month snapshot of the direct productive labor hours, by location, for each of the solicitation’s task areas. Further, the contracting officer provided offerors with an estimated training calendar for OST for the twelve-month period from December 2008 to December 2009, and with the Lesson Plan Master Listing which contained a detailed list of the types of training that offerors would be expected to provide. Finally, the contracting officer revised the solicitation to require all offerors to certify as part of their proposals that their participation in the procurement did not give rise to any organizational conflicts of interest. In light of these actions, plaintiff’s argument that the contracting officer did not act in a timely manner to address concerns regarding unequal access to competitively useful information is simply not correct.

Nor can we accept plaintiff’s contention that the award to ITP is unlawful because the contracting officer failed to obtain the requisite authorization for the adjustments she made to the solicitation in light of Global Engineering’s protest. In plaintiff’s view, the FAR requires that any such adjustments be approved by a senior-level procurement official. The regulation to which plaintiff refers reads as follows:

(b) If the contracting officer decides that a particular acquisition involves a significant potential organizational conflict of interest, the contracting officer shall, before issuing the solicitation, submit for approval to the chief of the contracting office (unless a higher level official is designated by the agency)— (1) A written analysis, including a recommended course of action for avoiding, neutralizing, or mitigating the conflict . . . . FAR § 9.506.

Plaintiff’s argument, which would apply the approval authority requirement of FAR § 9.506(b) to the adjustments the contracting officer made to the draft solicitation in June 2008, overreads the regulation. The focus of this regulation, as we read it, is on a solicitation that, as issued, would present significant potential organizational conflicts of interest unless remedial steps are undertaken to avoid, neutralize, or mitigate those conflicts. As the subsequent FAR provision makes clear, “potential organizational conflicts of interest are normally resolved by imposing some restraint, appropriate to the nature of the conflict, upon the contractor’s eligibility for future contracts or subcontracts.” FAR § 9.507-1. In other words, it is the “corrective” restraints introduced into a solicitation to address potential organizational conflicts of interest that are the concern of FAR § 9.506(b), not substantive adjustments to the content of the solicitation before its final release.

This is not the situation we face here. As the contracting officer explained in her analysis, she “took a number of steps to address potential [organizational conflicts of interest] during the pre-solicitation phase” and added that it is “worthwhile to note that the draft OST solicitation in June 2008 was significantly different than the final solicitation.” As to the final solicitation, the contracting officer “determined that no [organizational conflict of interest] exists . . . which would preclude an award to ITP.” FAR § 9.506(b) simply does not apply to the contracting officer’s actions.

Turning then to the third and final argument in support its claim of unequal access to information, plaintiff challenges the contracting officer’s determination that no organizational conflicts of interest existed that would preclude an award to ITP. According to plaintiff, it is clear from the opening paragraph of ITP’s response to the first and second sample task orders that ITP had a significant advantage through its own and Wackenhut’s status as incumbent OST contractors. This paragraph, however, does nothing more than declare that ITP intends to
assign responsibility for the performance of the task orders to its subcontractor, Wackenhut, and that Wackenhut, in turn, will engage the services of individuals whose prior experience includes “all of the functions associated with this [task order’s] requirements.” The paragraph, in other words, contains nothing to support a claim of unequal access to information.

The fact that Wackenhut has performed activities identified in the solicitation’s sample task orders and therefore can be expected to have a more informed understanding of those activities than a first-time contractor undoubtedly offers ITP some competitive advantage. But such an advantage is the product of experience rather than the result of having access to nonpublic information garnered from the government through a special relationship. Under prevailing case law, only information of the latter sort is regarded as yielding an unfair competitive advantage that might taint a procurement; information that draws upon a contractor’s own experience is not so regarded. This point is well explained in ARINC Engineering Services, LLC v. United States, 77 Fed. Cl. 196, 203–204 (2007), as follows:

[F]or an organizational conflict of interest to exist based upon unequal information, there must be something more than mere incumbency, that is, indication that: (i) the awardee was so embedded in the agency as to provide it with insight into the agency’s operations beyond that which would be expected of a typical government contractor; (ii) the awardee had obtained materials related to the specifications or statement of work for the instant procurement; or (iii) some other “preferred treatment or . . . agency action” has occurred.

(Footnotes omitted.) Plainly, the instant case does not involve nonpublic information within the meaning of the organizational conflict of interest rules.  (PAI Corporation v. U. S. and Innovative Technology Partnerships, LLC., No. 09-411C, September 17, 2009) (pdf)

C. The Government's Motions To Stay Judgment.

1. The Government’s Arguments.

The Government argues that "compelling reasons exist" for staying the court's February 26, 2008 Order.  See Gov't Stay Mot. at 3. First, a stay is necessary to preserve the Government's ability to maintain an appeal, because setting-aside the contract award would render the pending appeal moot. Id. (citing Powell v. McCormack, 395 U.S. 486, 496 (1969) ("Simply stated, a case is moot when the issues presented are no longer "live" or the parties lack a legally cognizable interest in the outcome.")).

Second, the Government contends that it will prevail on the merits of the appeal for the reasons discussed in "earlier pleadings" and "given the absence of dispositive appellate court guidance upon [OCI and mitigation issues in bid protests], it is certainly plausible, if not likely, that the court of appeals will agree with [the Government's] interpretation of [these issues] in this case.”Id. at 4.

Third, a stay will serve the public interest, because it would afford the United States Court of Appeals for the Federal Circuit an opportunity to provide guidance on OCI and mitigation issues, regarding the pending and future solicitations. Id. at 4-5. Without such guidance, even if the Government issued a new solicitation, future protests likely will follow by disappointed bidders and undermine judicial economy. Id. at 5.

Finally, issuance of a stay would present no harm to other interested parties, because a new solicitation would not necessarily be awarded to Plaintiff, and even it were, such an award may be "tied up in further litigation." Id.

2. The Plaintiff's Response.

Plaintiff responds that the Government does not face irreparable injury if the February 26, 2008 Final Order is not stayed, because the Government will have standing to challenge the court's determination that the Government acted "arbitrarily and capriciously." See Pl. Opp. at 6. More importantly, the Government has failed to demonstrate a likelihood of prevailing on the merits on appeal, because the Government's argument that the court improperly supplemented the Administrative Record and accepted outside expert testimony is contrary to "a substantial body of case law." Id. at 5 (citing Vantage Assocs., Inc. v. United States, 59 Fed. Cl. 1, 13 (2003) (information outside the Administrative Record may be considered by stipulation or court order)).

Finally, Plaintiff would be substantially harmed if the stay were imposed, because the Government may try to bar Plaintiff from competing for future TEAMS contract work, except for the pending June 18, 2008 RFP covering work under the pending contract, but only if the court's February 26, 2008 Order "remain[s] in effect." Id. at 6. Therefore, "[s]taying the [c]ourt's order would have the effect of completely barring [Plaintiff] from competing for the work that was subject to this protest." Id. at 6.

3. The Court's Resolution.

On February 26, 2008, the court ruled against the Government on the dispositive issues of this bid protest. See Axiom II, 80 Fed. Cl. at 535-36 ("The court has determined that the CO did not identify and analyze a potential 'unequal access to information' conflict, as required by FAR §9.504(a), and abused his discretion in violation of FAR §9.504(e) by awarding the Task Order to Lockheed Martin, without developing a mitigation plan that does not afford Lockheed Martin any significant competitive advantages, is enforceable, and otherwise does not impose any anticompetitive effects on future competition."). The Government did not seek reconsideration of that Memorandum Opinion and Final Order, and the pending motions have not advanced any new grounds that would support success on the merits on appeal. See Gov't Stay Mot. at 4 ("Our earlier pleadings in this [c]ourt outline arguments that we will present in our appeal, and reflect why we believe that we will prevail upon the merits of the appeal.") (emphasis added); see also Minor Metals, 38 Fed. Cl. at 381 (the moving parties on a motion for injunction pending appeal "provided the court with no substantive information or argument that would compel issuance of the instant emergency motion."). As discussed in Axiom II, the potential and unmitigated "unequal access to information" and "mpaired objectivity" OCIs present in the contract may undermine ongoing and future TRICARE management activity and the integrity of the federal procurement process, if the option period of the contract is not set-aside. See Axiom II, 80 Fed. Cl. at 537-38 ("[T]he potential 'unequal access to information' and 'impaired objectivity' conflicts may undermine ongoing and future TRICARE management activity, if not adequately mitigated."); see also Labat-Anderson, Inc. v. United States, 65 Fed. Cl. 570, 581 (2005) ("It is well established that there is an overriding public interest in preserving the integrity of the federal procurement process by requiring government officials to follow procurement statutes and regulations.") (citations omitted). That remains the considered opinion of the court.

The Government filed the April 28, 2008 Notice Of Appeal on the latest date permitted under the Federal Rules of Appellate Procedure, but then waited almost two additional months before filing the June 16, 2008 Motion To Stay. See Fed. R. App. P. 3(b) ("When the United States or its officer or agency is a party, the notice of appeal may be filed by any party within 60 days after the judgment or order appealed from is entered."). More importantly, two days later, on June 18, 2008, the Government issued a notice to solicit a new TRICARE contract, without informing the court. Since the Government has decided to resolicit the TRICARE contract, the issuance of a stay is unnecessary. In fact, substantial harm likely will result, if a stay is granted. See Minor Metals, 38 Fed. Cl. at 381. As discussed in Axiom II, Plaintiff established that it would suffer irreparable harm, if the court did not set-aside the contract. See Axiom II, 80 Fed. Cl. at 536; see also Parcel 49C Limited Partnership v. United States, 31 F.3d 1147, 1151 (Fed. Cir. 1994) (recognizing that the Government has a "duty to conduct a fair procurement."); Cardinal Maint. Serv., Inc. v. United States, 63 Fed. Cl. 98, 110 (2004) ("It is well-settled that a party suffers irreparable injury when it loses the opportunity to compete on a level playing field with other bidders[.]"). Moreover, the contract at issue represents approximately 10% of Plaintiff's overall business. See 8/7/07 TR at 6; see also Cardinal Maint. Serv., 63 Fed. Cl. at 110 ("Irreparable injury includes, but is not limited to, lost profits which would flow from the contract.") (citing SAI Indus. Corp. v. United States, 60 Fed. Cl. 731, 747 (2004)); see also AR 472-77 (Contract W81XWH-06-F-0440) (contract expires on July 21, 2008, at which time the Government may exercise two one-year options). In addition, in light of Plaintiff’s recent allegations that the Government intends to bar Plaintiff from competing for future TEAMS RFPs, except for the pending June 18, 2008 RFP concerning work covered by the pending contract and only while the court’s February 26, 2008 Order "remain[s] in effect," granting a stay may prohibit Plaintiff from competing for the work subject to this protest. See Pl. Opp. at 6. Consequently, there is no basis for the Government's argument that "a stay would benefit" Plaintiff. See Gov't Mot. Dis. at 5.

Finally, the Government argues that a stay would afford the United States Court of Appeals for the Federal Circuit with an opportunity to provide "dispositive . . . guidance upon OCI and mitigation issues in bid protests." See Gov't Stay Mot. at 4. On June 18, 2008 the Department of Defense, General Services Administration, and National Aeronautics and Space Administration, however, issued an advance notice of proposed rule-making, inviting comment on whether the FAR's conflict of interest provisions serve the current needs of the acquisition community. See Organizational Conflicts of Interest, 73 Fed. Reg. 34,686 (June 18, 2008) (advanced notice of proposed rule-making; reopening of comment period). Again, the Government also failed to inform the court of this relevant development. Nevertheless, the court is pleased to see that the procurement agencies recognize the importance of conflict of interest considerations and the recognized need to clarify existing ambiguities. See Ralph C. Nash, Organizational Conflicts of Interest: An Increasing Problem, 20 No. 5 NASH & CIBINIC REPORT ¶ 24 (May 2006). If a new rulemaking accomplishes this objective, hopefully there will be no need for judicial review in future cases.

III. CONCLUSION. For the aforementioned reasons, the Government's June 16, 2008 Motion To Stay The Court's Order Of February 26, 2008 is denied. The Government's June 20, 2008 Motion For Expedited Consideration is denied as moot.  (Axiom Resource Management, Inc., v. U. S. and Lockheed Martin Federal Healthcare, Inc., No. 07-532C, July 7, 2008) (pdf)  (NOTE: See decision below)

On September 28, 2007, the United States Court of Federal Claims held that the Contracting Officer ("CO"), in this case, violated Federal Acquisition Regulation ("FAR") § 9.504(a), by not identifying a potential "impaired objectivity" conflict, but awarding a TRICARE Management Activity ("TMA") contract for the United States Department of Defense's healthcare program to Lockheed Martin Federal Health Insurance, Inc. ("Lockheed Martin"). See Axiom I, 2007 U.S. Claims LEXIS 314, at *79 (Fed. Cl. Sept. 28, 2007). In addition, the court determined that the CO did not exercise sound discretion as required by FAR § 9.504(e) in developing an Organizational Conflict of Interest (“OCI”) mitigation plan to correct the belatedly identified “unequal access to information” conflict, i.e., a plan that: did not afford Lockheed Martin any significant competitive advantages; was enforceable, i.e., subject to court order; and otherwise did not impose any anticompetitive effects on future competition. Id. at *80.

In considering what relief was appropriate, the court requested additional briefing on three questions: “(1) whether Lockheed Martin should be required to divest existing Category 3 contracts [Product Support], if the current Category 2 [Program Management Support] award stands; (2) whether current TMA Policy and Lockheed Martin’s voluntary mitigation efforts are sufficient to ameliorate the conflicts of interest at issue; and (3) whether the non-disclosure agreements that Lockheed Martin has required Plaintiff’s former employees to sign or other mitigation proposals may foreclose future competition for these services when the current Task Order expires in three years.”  Id. at *84.8

(sections deleted)

Therefore, the Government and Lockheed Martin's offer to incorporate the proposed mitigation plan as a modification to the contract, without affording the court the ability to insure compliance by an independent auditor, likely will prove illusory. See 12/19/07 TR at 7-8. Given the fact that the CO repeatedly failed properly to identify or mitigate the OCIs at issue in this case, the court has little confidence that the CO will identify and properly mitigate potential or actual OCIs in the future. See Axiom I, 2007 U.S. Claims LEXIS 314, at *78-80. Surprisingly, the Government argues that a compliance auditor would usurp the CO's function to administer the contract. See Gov't Resp. To Show Cause at 3. The court does not view an independent auditor as interfering with the CO's responsibilities to administer the contract, because the auditor’s function is to ensure compliance with the court's order. See 28 U.S.C. § 1491(b)(1) (“To afford relief in [a bid protest] action[, the court] may award any relief that the court considers proper[.]”); see also Abbott Labs. v. Novopharm Ltd., 104 F.3d 1305, 1309 (Fed. Cir. 1997) (affirming that a trial court “has inherent power to order the parties to the litigation to act in a manner that will enforce its judgment.”) (citing Shillitami v. United States, 384 U.S. 364, 370 (1966)). The Government, however, has stated that it would prefer that the court set aside the award, rather than have an independent auditor oversee compliance with Lockheed Martin's proposed mitigation plan. See 12/19/07 TR at 13 (GOVERNMENT COUNSEL: “And, Your Honor, I guess that's what we're saying. It's either the contract stands or the contract falls.”). Accordingly, the court has determined that the public interest weighs in favor of injunctive relief.  

In light of the fact that the initial term of the contract expires on July 21, 2008, at which time the Government may exercise two one-year options (see AR 472-77 (September 19, 2006 Contract W81XWH-06-F-0440)), the court has decided to issue an injunction, effective on that date, setting aside the continuation of the contract through the exercise of options. This limited injunctive relief allows the Government ample time to re-solicit the contract, if it wishes, while minimizing disruption to ongoing performance. See Parcel, 31 F.3d at 1153 (quoting United States v. John C. Gimberg Co., 702 F.2d 1362, 1372 (Fed. Cir. 1983)) (advising that the court’s equitable powers “should be exercised in a way which best limits judicial interference in contract procurement.”); see also Gov't Resp. Disclosure (Dec. 19, 2007 Decl. of Ms. Suzanne Curtis) (representing that employees who sign Government non-disclosure agreement will not be prohibited from obtaining work with any follow-on contractor); 12/19/07 TR at 3 (same).  (Axiom Resource Management, inc., v. U. S. and Lockheed Martin Federal Health Insurance, Inc., No. 07-532C, February 26, 2008) (pdf)  (NOTE:  See decision below)

The federal government's increased use of and dependence on outside contractors to perform essential government functions, often entails providing these contractors with governmental, business proprietary, and otherwise private information to perform their duties. This has increased potential and actual conflicts of interest regarding how, and the extent to which, such information is utilized in performing contract services and otherwise. See Ralph C. Nash, Organizational Conflicts of Interest: An Increasing Problem, 20 No. 5 NASH & CIBINIC REPORT ¶ 24 (May 2006). Establishing the parameters of access to and use of this information will be among the most important decisions that the United States Court of Federal Claims and the United States Court of Appeals for the Federal Circuit will make in the next few years – not only for government contract jurisprudence, but to maintain competition in this growing segment of the economy.

(Next sections deleted)

The Administrative Record, in this case, evidences that Lockheed Martin employees working on the Task Order will have access to “non-purchased” care requirement information that will give Lockheed Martin an unfair competitive advantage in future procurements. See, e.g., Adams Decl. ¶¶ 8-17 at 3-7 (AR 920-24); Richards Decl. ¶¶ 12-15 at 6-8 (AR 931-33). The competitive effect of this advantage is exacerbated by the fact that Lockheed Martin currently is one of the largest government contractors in the country. See Lockheed Martin Corporation, 2006 ANNUAL REPORT, at 2, 11 (estimating that “[in] 2006, 84% of . . . net sales [total sales were $39.6 billion] were made to the U.S. Goverment, either as a prime contractor or as a subcontractor.”); see also Compl. ¶ 77 (alleging that Lockheed Martin “currently performs 18 [TRICARE] contracts classified as Category 3 with a total contract value of $114.595 [million].”); Cole, WALL ST. J. at A10 (reporting that Lockheed's growth plans call for securing more federal government contracts in "an array of behind-the-scenes services"). Under these circumstances, the fact that neither TMA nor the CO initially identified the “unequal access to information conflict” nor to date has identified an apparent “impaired objectivity conflict” significantly undermines the court’s confidence, both in the CO’s conflict identification and wholesale endorsement of a voluntary mitigation plan. See 48 C.F.R. §§ 9.505-1-4 (defining the types of OCIs the CO must identify and mitigate). And, as Lockheed Martin has admitted: “By continuing to win competitions in our traditional business, we are positioned exceptionally well for sustained success in the defense, homeland security, and government information technology arenas.” Lockheed Martin Corporation, 2006 ANNUAL REPORT, at 4 (emphasis added).

Although the CO ultimately cured a prior failure to identify and analyze a potential “unequal access to information” conflict the CO did not identify the potential “impaired objectivity” conflict, as required by FAR § 9.504(a). In addition, the Administrative Record does not evidence that the CO exercised sound discretion in developing an appropriate mitigation plan, as required by FAR § 9.504(e). See 48 C.F.R. § 9.504(e). To be sure, the Government arguably could rescind the contract if it was not satisfied with Lockheed Martin’s mitigation efforts. Nevertheless, under the proposed mitigation plan, Lockheed Martin is not barred from performing “non-purchase” Category 3 contracts;23 TMA’s “Policy” and Lockheed Martin’s “OCI Mitigation Plan and Competitive Analysis” have no binding effect at law;24 and certain mitigation efforts, such as non-disclosure agreements, may be anticompetitive.

The Complaint in this case was not filed until July 17, 2007, after the GAO rejected three prior bid protests, concluding that “any potential future OCIs can be mitigated[.]” See Axiom Resource Mgmt., Comp. Gen. B-298870.3, at 1. On July 18, 2007, Lockheed Martin was to commence performance of the Task Order, utilizing Plaintiff's former employees. See 7/17/07 TR at 6. In light of this situation and the fact that the Administrative Record had not been filed, the court declined to issue a Temporary Restraining Order on July 17, 2007. See 7/17/07 TR at 6-11, 17-18, 22.25 After reviewing the Administrative Record, the briefs, and convening an oral argument, the court has determined that the CO abused his discretion in violation of FAR § 9.5 by awarding the Task Order to Lockheed Martin, without developing a mitigation plan that does not afford Lockheed Martin any significant competitive advantages, is enforceable, i.e., subject to court order, and otherwise does not impose any anticompetitive effects on future competition. See 5 U.S.C. § 706(2)(A).

(Next section of decision deleted)

The Bureau of Competition of the Federal Trade Commission ("FTC") is the federal agency authorized to protect the public interest by monitoring and insuring that there is competition in the healthcare service industry. See Federal Trade Commission, FTC Antitrust Actions in Health Care Services and Products (Oct. 2003), available at http://www.ftc.gov/bc/hcupdate03/024.pdf; see also Federal Trade Commission, Hearings on Health Care and Competition Law and Policy, June 26, 2003, available at http://www.ftc.gov/ogc.healthcarehearings/030626ftctrans.pdf. Therefore, the court has decided, prior to determining whether the public interest requires the issuance of an injunction and the elements thereof, to request the views of the FTC Bureau of Competition as amicus curiae on or before December 15, 2007 to advise the court: (1) whether Lockheed Martin should be required to divest existing Category 3 contracts, if the current Category 2 award stands; (2) whether current “TMA Policy” and Lockheed Martin’s voluntary mitigation efforts are sufficient to ameliorate the conflicts of interest at issue;26 and (3) whether the non-disclosure agreements that Lockheed Martin has required Plaintiff’s former employees to sign or other mitigation proposals may foreclose future competition for these services when the current Task Order expires in three years. Compare 8/7/07 TR 90-97, 102-04 with AR 606 (“Lockheed [Martin] considers any authorized release of procurement sensitive information by a Lockheed [Martin] employee to be a felony underfederal law. All Lockheed [Martin] employees providing support services to TMA at all locations either have executed or will be required to execute a non-disclosure agreement.”);27 see also Remarks of Chairman Deborah Platt Majoras, The Role of Competitive Analysis in Regulatory Decisions, AEI/Brookings Joint Center, May 15, 2007, at 15 (“Agencies can . . . make . . . decisions in ways that enhance rather than squelch competition and [the FTC] can refuse to allow firms to undermine or manipulate regulatory processes to gain government endorsed advantages.”).  (Axiom Resource Management, inc., v. U. S., No. 07-532C, Filed September 28, 2007) (pdf)

Even if the averments of the Mr. Ouyachi are discounted as a post hoc rationalization and any possible informational advantage that Systems Plus may have gained through its prior work with DOL are similarly discounted, the court determines that Systems Plus has failed to point to evidence that would show that NetStar was “embedded” within the agency such that NetStar had the kind of specific non-public information that would create an OCI. See Johnson Controls, 2001 WL 122352, at *5. NetStar, as an incumbent supplier of planning and architecture services, may have had an advantage over some other bidders in these areas. However, it appears not to have had the kind of specific, sensitive information that would create an OCI. In this regard, the court notes that Sytel, an outside contractor that had done little or no prior work with DOL, submitted a technical proposal that was the highest-rated in DOL’s initial review of all of the proposals. See supra, at 5. Additionally, while NetStar’s initial technical proposal appears to have provided well-rated initial responses in the area of network architecture, NetStar’s original proposal was rated as “weak” in project management because it was “more theoretical than practical.” AR Tab 13 (Technical Review Team evaluation of (initial) proposal submitted by NetStar). If NetStar had enjoyed unfair access to non-public information, one would have expected NetStar to have achieved better results in the initial technical appraisal, and better overall technical ratings than a non-incumbent vendor. The court thus finds that NetStar did not benefit from an “unequal access to information” OCI. (Systems Plus, Inc., v. U. S., and NetStar-1, Inc., No. 05-1219C, Reissued: February 28, 2006) (pdf)

The CO’s determination that a significant OCI did not exist is contradicted by the record. The CO did properly contact other government personnel to apprise her of the situation. 48 C.F.R. § 9.506(a). Those personnel informed her that they recognized the potential for a conflict of interest.22 Their conclusion was buttressed by Westar’s submission of at least two proposed mitigation plans. It is, therefore, safe to conclude that all those involved recognized the significant conflict. The CO, however, exceeded her authority by concluding that the appropriate safeguards were in place to eliminate the conflict. According to the FAR, that is not a decision the CO is empowered to make. 48 C.F.R. § 9.506(b). The authority to “[a]pprove, modify, or reject the [recommended course of action for avoiding, neutralizing, or mitigating the conflict]” rests with the chief of the contracting office. Id. § 9.506(b)-(d). Accordingly, the CO failed to abide by the procedures set forth in § 9.506.  (Filtration Development Co, LLC, v. U. S.,  No. 03-2835C, Originally sealed April 13, 2004, Reissued April 27, 2004) (pdf)

Moreover, even if there were no flow down of OCI clauses, the contracting officer still could act to avoid organizational conflicts of interest. See the Federal Circuit's opinion in NKF Engineering, Inc. v. United States, 805 F.2d 372 (Fed. Cir. 1986). In NKF, no violation of the Ethics in Government Act, and particularly of 18 U.S.C. § 208(a), was found, such that all that was left was the appearance of a conflict of interest. Id. at 375. The Federal Circuit, nevertheless, held, based on the circumstances of that case, "we cannot say that the agency's conclusion, that there was an appearance of impropriety, was unreasonable or irrational," id. at 376, so that "the Claims Court order overturning that [contracting officer's] decision was erroneous and is vacated," id. at 378. Despite the seeming absence of any authority expressly authorizing the actions that were taken in this case the court is of the view that the contracting officer's responsibility of "safeguarding the interests of the United States in its contractual relationships," 48 C.F.R. § 1.602-2 (1985), is sufficient to support the exercise of authority that was asserted. What persuades us to this view is the latitude the courts have historically shown with respect to the contracting officer's basic authority to enter into, administer, or terminate contracts, and the overriding importance of the Government's need to insure full and fair competition in the conduct of its procurements. A procurement system powerless to rid itself of an unfair competitive advantage gained through inside information would soon lose every vestige of competitiveness. There can be no question, therefore, that the contracting officer had authority to act upon his concerns and, in an appropriate case, to cause the disqualification of a bidder.  (DSD Laboratories, Inc. v. U.S., No. 00-177C, April 14, 2000)

The record, as supplemented, contains scant evidence that the contracting officer considered plaintiff's OCI mitigation plan; rather, the evidence raises serious doubts about the extent and quality of the deliberation afforded plaintiff's plan. If FAR § 9.504(e) means anything, it is that the contracting officer must determine that an OCI cannot be avoided or mitigated in order to deny contract award to an otherwise qualified offeror. Consequently, the contracting officer actually must determine whether a proposed mitigation plan could mitigate or avoid a perceived or potential OCI. (Informatics Corporation, v. U.S., No. 98-16C, March 18, 2001)

Harbert-Gorrie first accuses the Court of Federal Claims of improperly engaging in de novo review of the GAO decision. This argument is misplaced because the text of the Court of Federal Claims’ opinion makes plain that the court applied the proper standard of review.

The Court of Federal Claims correctly articulated the Honeywell standard that applies here and emphasized that it cannot conduct its “own independent de novo assessment.” Turner I, 94 Fed. Cl. at 571, 574, 579. The court acknowledged that “‘the controlling inquiry [is] whether the GAO’s decision was a rational one.’” Id. (quoting Honeywell, 870 F.2d at 647). Recognizing that its review was a deferential one, the Court of Federal Claims nonetheless concluded that the GAO’s decision did not meet this standard. Id. at 581. It concluded that the GAO’s decision was not rational because its five-page analysis failed to give any deference to the CO’s extensive fact-finding and analysis. As discussed above, this court’s enjoys great latitude in handling OCIs. Because the GAO improperly substituted its own judgment for that of the CO, it was the GAO—not the Court of Federal Claims—that failed to apply the proper deference in conducting its review.

The court then applied the correct standard of review, focusing its extensive analysis on whether the GAO’s decision to overturn the CO’s determination lacked a rational basis. For example, the GAO concluded that HSMM’s and EB’s interests were “effectively aligned” in August 2008, when AECOM participated in the multi-party confidential auction for EB that ended before HSMM provided the Army with any draft technical provi-sions. The Court of Federal Claims determined that this conclusion “lacked a rational basis” because it was incon-sistent with case law, which looks “for a direct financial benefit between firms, rather than an attenuated or potential benefit,” and “fail[ed] to engage the CO and the record.” Turner I, 94 Fed. Cl. at 579. The court noted that the GAO’s cursory inquiry was a departure from prior GAO decisions. Id. The court pointed out that the GAO, in lieu of citing to hard facts of “a sufficient align-ment of interests” between HSMM and EB, merely stated that “‘in [its] view’ the record indicated a sufficient align-ment of interests.” Id.

The court further concluded that the GAO lacked a rational basis for rejecting the CO’s biased ground rules determination. Id. at 581. The CO’s analysis of this issue “tracked the precise state of negotiations between AECOM and EB, the exact dates upon which critical changes to the RFP occurred, the exact employees that could have known of the merger, and numerous other facts. Using this data, the CO concluded that no OCI existed.” Id. at 580. Reiterating that the GAO’s task was to review the agency’s decision for reasonableness, the Court of Federal Claims noted that the GAO “failed to address this OCI decision; in fact, the GAO decision on a biased ground rules OCI does not even cite the agency decision that it was tasked with reviewing.” Id. Instead, “the GAO cites exactly one piece of information [AECOM’s contract with the Army] . . . to support its finding that the record ‘suggests’ that AECOM had ‘special knowledge’ that would have given Turner an unfair advantage.” Id. Concluding that the GAO’s “failure to meaningfully engage with the agency decision dramatically differs from prior GAO decisions,” the Court of Federal Claims indi-cated that the GAO’s determination was not based on hard facts but rather was based on “mere suspicion and innuendo.” Id. at 580-81.

The Court of Federal Claims likewise concluded that the GAO lacked a rational basis for rejecting the CO’s unequal access determination. Id. at 581-83. Again, the court noted that the GAO “failed to cite any hard facts,” pointing only to “vague allegations that someone ‘may have had access’ to unidentified information or that someone ‘was familiar with the details.’” Id. at 582. The court noted that this “lack of concreteness” in the GAO’s analysis was a departure from precedent. Id. In addition, the court pointed out that “apart from simply using the phrase ‘competitively useful,’ the GAO cites to no facts to support [its] conclusion that EB had access to anything of competitive worth.” Id. In contrast, the court concluded that the CO carefully assessed the information that AECOM may have had access to and determined that this information “not only lacked competitive utility but was also disclosed to all of the offerors.” Id. Accordingly, the Court of Federal Claims applied the proper standard of review and did not conduct a de novo review as alleged by Harbert-Gorrie.

B

Next, Harbert-Gorrie argues that the Court of Federal Claims erred in considering the CO’s post-award investi-gation and report in determining that the GAO decision was irrational. Harbert-Gorrie believes that because this investigation was not conducted until after the hospital contract was awarded, it should be given no weight be-cause the conclusions and statements therein were de-pendent on facts not known by the CO during the procurement process. Pointing to the fact that the Army had not conducted a documented investigation prior to the award of the contract, Harbert-Gorrie contends that the Court of Federal Claims erroneously believed that the CO had no obligation to investigate the potential OCI when she first became aware of it prior to the award. As a result, the Court of Federal Claims resorted to relying on the CO’s post-award report. These arguments, however, misapprehend the FAR and the Court of Federal Claims’ decision.

Contrary to Harbert-Gorrie’s contentions, the Court of Federal Claims did not hold that the CO had no duty to evaluate a potential OCI when she first became aware of it. Under FAR § 9.504(a), a CO must “[i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible” and “[a]void, neutralize, or mitigate significant potential conflicts before contract award.” 48 C.F.R. § 9.504(a) (emphasis added). These duties are separate. PAI, 614 F.3d at 1352. Although the FAR requires a contracting officer to identify and evaluate potential conflicts in the early stages of the acquisition process, § 9.504(a) does not require that this preliminary analysis be documented in writing. If the potential conflict is determined to be a significant one, the CO must avoid, neutralize, or mitigate it before the contract award. 48 C.F.R. § 9.504(a). The CO has considerable discretion in determining whether a conflict is significant. PAI, 614 F.3d at 1352. “A signifi-cant potential conflict is one which provides the bidding party a substantial and unfair competitive advantage during the procurement process on information or data not necessarily available to other bidders.” Id. The FAR therefore requires mitigation of “significant potential conflicts,” but does not require mitigation of other types of conflicts, such as apparent or potential non-significant conflicts. Id.

The Court of Federal Claims did not hold that a CO’s duty to evaluate potential OCIs is limited to “significant” OCIs or that a CO may ignore and not evaluate known potential OCIs prior to award. Rather, the court held, consistent with PAI, that a CO has two distinct duties under FAR § 9.504(a): the duty to evaluate potential OCIs as early as possible and the duty to mitigate significant potential OCIs before contract award. Turner I, 94 Fed. Cl. at 574-75. The Court of Federal Claims concluded that the CO discharged those duties.

With respect to the timing of the CO’s investigations, the court explained that the FAR “does not require a CO, in every single procurement, to review and document whether OCIs exist prior to award.” Id. at 575. Courts reviewing bid protests routinely consider post-award OCI analyses and consider evidence developed in response to a bid protest. See, e.g., Masai Techs. Corp. v. United States, 79 Fed. Cl. 433, 449-50 (2007). In addition, as previously conceded by Harbert-Gorrie, “[s]ometimes . . . an OCI cannot be identified until after award” of the contract. Turner Constr. Co. v. United States, 94 Fed. Cl. 586, 591 (2010) (“Turner II”). If the first time an allegation or evidence of a potential OCI appears is after award, then the earliest time to evaluate that potential OCI as coun-tenanced by § 9.504(a)(1) might be at that time. A CO’s post-award evaluation can clear the air of any OCI taint by showing that no significant OCI existed. If, however, the CO’s post-award evaluation shows that a significant potential OCI did exist and went unmitigated in violation of § 9.504(a)(2), then serious remedial actions are appro-priate.

Harbert-Gorrie contends that the Court of Federal Claims erred by not limiting its analysis to assessing the CO’s actions in July 2009 when she first became aware of a potential OCI, but that is not the proper inquiry. In this case, the GAO should have assessed the reasonable-ness of the CO’s determinations both in July 2009 and in her post-award investigation in January 2010. The Court of Federal Claims did not err by considering the CO’s post-protest investigation and analysis.

C

Harbert-Gorrie’s last attack on the merits of the Court of Federal Claims’ decision is based on the court’s application of the “hard facts” requirement. Harbert-Gorrie acknowledges that an OCI must be based on “hard facts; a mere inference or suspicion of an actual or appar-ent conflict is not enough.” PAI, 614 F.3d at 1352. It claims that the Court of Federal Claims misapplied this requirement. Specifically, Harbert-Gorrie argues that the Court of Federal Claims’ analysis indicates that it re-quired that the “hard facts” show an actual OCI rather than merely the “appearance” of an OCI. These claims are unavailing.

The Court of Federal Claims explicitly acknowledged that “hard facts” do not need to show an actual conflict—a potential conflict can be sufficient. Turner I, 94 Fed. Cl. at 573. Rather, the Court of Federal Claims drew a distinction between circumstances where “hard facts” indicate the existence or potential existence of impropri-ety and circumstances such as these where the finding of an OCI relies on inferences based upon “suspicion and innuendo.” Id. (citing C.A.C.I., Inc. v. United States, 719 F.2d 1567, 1582 (Fed. Cir. 1983)). Here, the GAO relied on its inference that some unnamed HSMM employees “may have had access” to unidentified information. The Court of Federal Claims found this inference to be flawed because the GAO only found possible rather than actual access. Further, this possible access was to “unidentified information” rather than specific, sensitive information. The GAO cited to no facts supporting its conclusion that EB had access to any information of competitive worth. The CO specifically identified all information “to which AECOM may have had access” and found that the infor-mation lacked competitive utility and was actually dis-closed to all of the Phase II offerors. Because an unequal access OCI requires that a firm have access to non-public information that is competitively useful, Axiom, 564 F.3d at 1377 n.1, the Court of Federal Claims did not err in its application of the hard facts requirement.  (Turner Construction Company, Inc. v. U. S. and McCarthy/Hunt JV, and B.L. Harbert-Brasfield & Gorrie, JV, No. 2010-5146)  (pdf)

Also see:  Turner Construction Co., Inc. V. U. S. and McCarthy/Hunt, JV and B.L. Harbert- Brasfield & Gorrie, JV, No. 10-195C, July 16, 2010 (pdf)  (Court of Federal Claims)

See GAO decisions B.L. Harbert-Brasfield & Gorrie, JV, B-402229, February 16, 2010  (pdf) and McCarthy/Hunt, JV, B-402229.2, February 16, 2010  (pdf)  (Comptroller General)

The issue before us is whether an organizational conflict of interest is so pervasive as to have created an advantage to one bidder over the others, and whether the contracting officer failed to exercise proper discretion and to follow proper procedures in making the determination that no organizational conflict of interest existed. The Federal Acquisitions Regulations (“FAR”) recognize that “the identification of [organizational conflicts of interest] and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion.” Axiom Res. Mgmt. v. United States, 564 F.3d 1374, 1382 (Fed. Cir. 2009) (citing 48 C.F.R. § 9.505). FAR requires that “[e]ach individual contracting situation should be examined on the basis of its particular facts and the nature of the proposed contract. The exercise of common sense, good judgment, and sound discretion is required in both the decision on whether a significant potential conflict exists and, if it does, the development of an appropriate means for resolving it.” 48 C.F.R. § 9.505 (2004); see also Axiom, 564 F.3d at 1382 (citing ARINC Eng’g Servs. v. United States, 77 Fed. Cl. 196, 202 (2007) (“The responsibility for determining whether such un-equal access exists and what steps should be taken in response thereto rests squarely with the contracting officer.”)).

This court will not overturn a contracting officer’s de-termination unless it is arbitrary, capricious, or otherwise contrary to law. John C. Grimberg Co. v. United States, 185 F.3d 1297, 1300 (Fed. Cir. 1999). To demonstrate that such a determination is arbitrary or capricious, a protester must identify “hard facts”; a mere inference or suspicion of an actual or apparent conflict is not enough. C.A.C.I., Inc. Fed. v. United States, 719 F.2d 1567, 1581 (Fed. Cir. 1983); Filtration Dev. Co., LLC v. United States, 60 Fed. Cl. 371, 380 (2004) (holding that the disappointed bidder failed to provide “any factual basis” to establish the existence of an organizational conflict of interest).

PAI’s sole argument of legal error on appeal is that the contract award to ITP is unlawful because the contracting officer failed to comply with the applicable FAR in issuing the solicitation. Specifically, PAI alleges that the contracting officer’s organizational conflict of interest analysis violates 48 C.F.R. §§ 9.504(a) and 9.506(b). PAI asserts that, in order to comply with these regulations, the contracting officer is required to (1) analyze any type of conflict that may arise during the procurement, including apparent or potential conflicts, and (2) document in writing a plan to neutralize any type of conflict before a solicitation is issued. However, PAI’s argument conflates the requirements of the two regulations.

Section 9.504(a) requires that a contracting officer “(1) [i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and (2) [a]void, neutralize, or mitigate significant potential conflicts before contract award.” 48 C.F.R. § 9.504(a) (emphasis added). This regulation requires a contracting early officer to identify and evaluate potential conflicts in the stages of the acquisition process. Section § 9.504(a) does not require that this preliminary analysis be documented in writing, but if a potential conflict is identified, the regulation specifies that the contracting officer must avoid, neutralize, or mitigate any “significant potential conflicts” before the contract award. Id. § 9.504(a). A significant potential conflict is one which provides the bidding party a substantial and unfair competitive advantage during the procurement process on information or data not necessarily available to other bidders. See ARINC, 77 Fed. CI. at 202. Section 9.504(a) therefore requires mitigation of “significant potential conflicts,” but does not require mitigation of other types of conflicts, such as apparent or potential non-significant conflicts. The contracting officer does have considerable discretion in determining whether a conflict is significant. Moreover, the FAR provides a contracting officer with considerable discretion to conduct fact-specific inquiries of acquisition proposals to identify potential conflicts and to develop a mitigation plan in the event that a significant potential conflict exists. 48 C.F.R. § 9.505; see also Axiom, 564 F.3d at 1382.

In contrast to § 9.506(a), § 9.506(b) specifies a unique documentation requirement once a “significant potential organizational conflict” is deemed to exist. 48 C.F.R. § 9.506(b). This regulation requires that, in the event “the contracting officer decides that a particular acquisition involves a significant potential organizational conflict . . . , the contracting officer shall, before issuing the solicitation, submit . . . [a] written analysis, including a recommended course of action for avoiding, neutralizing, or mitigating the conflict . . . .” Id. (emphasis added). Moreover, § 9.506(b) requires that, if the contracting officer makes such a determination, the written analysis be approved by the chief of the contracting office. Id. This regulation requires a written analysis, but only for “significant potential conflict[s].” Id. (alteration added). Thus, the contracting officer is not required to document in writing or submit for approval a plan to neutralize apparent or potential conflicts, which in her discretion and judgment are deemed not to be significant.

In this case, the contracting officer fully complied with the FAR requirements. First, the contracting officer timely identified and evaluated any potential conflicts in compliance with § 9.504(a). After GET filed the agency-level protest in July 2008, the contracting officer pursued a number of steps to resolve any potential conflicts, including narrowing the technical scope of the solicitation, providing to the potential offerors additional information regarding the OST support services contract, and requiring that each potential offeror certify that its participation in the procurement did not create any organizational conflicts of interest. The contracting officer also completed an additional and comprehensive conflicts investigation in June 2009. In a written memorandum, the contracting officer noted that she had thoroughly re-viewed the offerors’ submissions regarding any potential organizational conflicts of interest. The contracting officer determined that no significant potential conflict existed that would preclude an award of the OST support services contract to ITP. Furthermore, because the contracting officer determined that no significant potential conflict existed, she was not required to submit a written analysis pursuant to § 9.506(b), nor was she required to obtain approval from the chief contracting officer for adjustments to the solicitation. In light of the considerable discretion given to contracting officers in identifying and mitigating significant potential conflicts, we agree with the trial court that the contracting officer in this case complied with the FAR requirements.

Moreover, PAI failed to establish that there was any significant potential conflict that provided ITP with an unfair competitive advantage during the procurement. See ARINC, 77 Fed. Cl. at 202. PAI failed to introduce any evidence before the trial court showing that ITP gained a substantial and unfair competitive advantage through unequal access to information. See C.A.C.I., 719 F.2d at 1581 (stating that a disappointed bidder must identify “hard facts” to overturn an agency’s award of a contract). Moreover, PAI’s bare allegation that ITP and Wackenhut had a prior contractual relationship with OST is insufficient to show a significant potential conflict. Id. “The mere existence of a prior or current contractual relationship between a contracting agency and a firm does not create an unfair competitive advantage, and an agency is not required to compensate for every competi-tive advantage gleaned by a potential offeror’s prior performance of a particular requirement . . . .” ARINC, 77 Fed. Cl. at 203; see also Ala. Aircraft Indus. Inc. Birmingham v. United States, 83 Fed. CI. 666, 686 (2008) (holding that incumbent status by itself is insufficient to create an organizational conflict of interest). Accordingly, we find that PAI failed to establish the existence of a significant potential conflict and thus failed to show that the integrity of the procurement was compromised.  (PAl Corporation (Doing Business As Professional Analysis) v. U. S. and Innovative Technology Partnerships, LLC, No. 2010-5003, August 5, 2010)  (pdf) 

See above PAI Corporation v. U. S. and Innovative Technology Partnerships, LLC., No. 09-411C, September 17, 2009 (pdf)

II. DISCUSSION

Appellants allege that the Court of Federal Claims committed two principal errors.  First, they argue that the court violated established principles of administrative law by permitting Axiom to supplement the record with affidavits created for litigation and then extensively relying on those affidavits to support its decision. Second, they assert that the court failed to properly review the record under the "arbitrary and capricious" standard set forth in the Administrative Procedure Act ("APA"). We agree on both grounds.

A. Supplementation of the Record

"Evidentiary determinations by the Court of Federal Claims, including motions to supplement the administrative record, are reviewed for abuse of discretion." Murakami v. United States, 398 F.3d 1342, 1346 (Fed. Cir. 2005). A trial court's determination of an evidentiary matter constitutes an abuse of discretion if, for example, it is "clearly unreasonable, arbitrary, or fanciful" or is "based on an erroneous construction of the law." Air Land Forwarders, Inc. v. United States, 172 F.3d 1338, 1341 (Fed. Cir. 1999).

Appellants argue that the Court of Federal Claims erred by permitting Axiom to supplement the record with materials that were not before the agency, including legal pleadings filed before the GAO, declarations of Axiom's employees, and declarations from consultants retained for litigation. During a telephone conference with the trial court, the government objected to Axiom’s request to add these documents to the record. The government acknowledged during the conference that the law of the Court of Federal Claims allows supplementation in at least some circumstances identified in Esch v. Yeutter, 876 F.2d 976, 991 (D.C. Cir. 1989). The government asserted, however, that Axiom had not provided any explanation as to why it would be proper to add documents to the record in this case. The court responded:

Well, let me cut to the chase here. My practice . . . since I've been on the Court is to allow everybody to put . . . whatever they want to put into the record in trial and even in an administrative record to supplement.

My own view is that I don't know what's important or not until I finally get around to looking at the record, which would be some time from now.

You know, I think that I have enough experience. Just because it's in the record doesn't mean I'm going to rely on it for any reason.  I may never even bother to do anything with it, but I do think it's better to get it in there.

If it goes up on appeal, that way the Appellate Court has a full record to work with, and the parties and the parties have put in everything that they feel they need to have put forward their best argument. I do it on both sides.

I'm not going to change that practice in this case. I don't see any prejudice to the government because you don't know what I'm going to do one way or the other with any of the stuff.  The same thing for the Plaintiff.  If they want to put it in, I'll put it in.

J.A. 2034. When the government then requested to add its own supplementary evidence to the record, the court urged government counsel not to "hold back," saying:  "I let everybody put in what they want to . . . put in. The world will not come to an end.  Western civilization will not crumble based upon this value judgment." J.A. 2035.

While we recognize the need for an adequate record during judicial review, the parties' ability to supplement the administrative record is limited. In Camp v. Pitts, the Supreme Court stated that "the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court." 411 U.S. 138, 142 (1973). "The task of the reviewing court is to apply the appropriate APA standard of review, 5 U.S.C. § 706, to the agency decision based on the record the agency presents to the reviewing court.” Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985) (emphasis added). The purpose of limiting review to the record actually before the agency is to guard against courts using new evidence to “convert the 'arbitrary and capricious' standard into effectively de novo review.” Murakami v. United States, 46 Fed. Cl. 731, 735 (2000), aff’d, 398 F.3d 1342 (Fed. Cir. 2005). Thus, supplementation of the record should be limited to cases in which "the omission of extra-record evidence precludes effective judicial review." Id.

We conclude that the trial court abused its discretion in this case by adding Axiom’s documents to the record without evaluating whether the record before the agency was sufficient to permit meaningful judicial review. The court made clear that it would freely allow the parties to supplement the record "with whatever they want," and, by so doing, failed to make the required threshold determination of whether additional evidence was necessary.

(sections deleted)

B. The Court of Federal Claims' Review of the Record

Appellants argue that the Court of Federal Claims' decision to enjoin Lockheed's performance of the contract resulted from the use of an incorrect standard of review on an improperly supplemented record. Specifically, they allege that the court erred by declining to use the APA's "arbitrary and capricious" standard and instead undertaking what was essentially a de novo review of the CO's evaluation of the mitigation efforts. They contend that the record before the CO sufficiently supports the CO's decision under a proper application of "arbitrary and capricious" review.

(section deleted)

We agree with Appellants that the court erred by failing to review the CO's decision under the "arbitrary and capricious" standard set forth in 5 U.S.C. § 706(2)(A). In Impresa Construzioni Geom. Domenico Garufi v. United States, this court explained that bid protest cases are reviewed under the standard set forth in the APA. 238 F.3d 1324, 1332 (Fed. Cir. 2001). Adopting the articulation of the test set forth in a line of D.C. Circuit cases, we stated that "a bid award may be set aside if either: (1) the procurement official's decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure." Id. A court evaluating a challenge on the first ground must determine "whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion." Id. at 1333 (quotation marks omitted). "When a challenge is brought on the second ground, the disappointed bidder must show a clear and prejudicial violation of applicable statutes or regulations." Id. (quotation marks omitted).

FAR § 9.504(a) provides that "contracting officers shall analyze planned acquisitions in order to (1) [i]dentify and evaluate potential organizational conflicts of interest as early in the acquisition process as possible; and (2) [a]void, neutralize, or mitigate significant potential conflicts before contract award." 48 C.F.R. § 9.504(a). Section 9.504(e) further provides that "[t]he contracting officer shall award the contract to the apparent successful offeror unless a conflict of interest is determined to exist that cannot be avoided or mitigated." Id. § 9.504(e). However, the FAR recognizes that the identification of OCIs and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion. See 48 C.F.R. § 9.505 ("Each individual contracting situation should be examined on the basis of its particular facts and the nature of the proposed contract. The exercise of common sense, good judgment, and sound discretion is required in both the decision on whether a significant potential conflict exists and, if it does, the development of an appropriate means for resolving it."); see also ARINC, 77 Fed. Cl. at 202 ("The responsibility for determining whether such unequal access exists and what steps should be taken in response thereto rests squarely with the contracting officer.").

In light of the discretion given to COs, we cannot agree with the Court of Federal Claims that the CO in this case "violated" FAR § 9.504 in such a way as to warrant de novo review of "whether or not there may be [a] potential violation of law" and, if so, whether "the mitigation proposal [is] an actual remedy." Axiom I, 78 Fed. Cl. at 599. Under the trial court's rationale, courts might never review a CO's OCI determination under the "arbitrary and capricious" standard because every instance in which the court disagreed with the CO's decision could be fashioned as a violation of FAR § 9.504 that triggers de novo review. This result would be inconsistent with the discretion given to the CO by FAR § 9.505 and the principles underlying the APA. Accordingly, we conclude that the Court of Federal Claims erred in this case by failing to evaluate the CO's decision under the APA's "arbitrary and capricious" standard.

2. The Court of Federal Claims' Decision on the Merits

Appellants next argue that the Court of Federal Claims' determination that Lockheed's mitigation plan did not adequately resolve the alleged OCI is contrary to the record before the CO. The court decided

that the CO abused his discretion in violation of FAR § 9.5 by awarding the Task Order to Lockheed Martin, without developing a mitigation plan that does not afford Lockheed Martin any significant competitive advantages,4 is enforceable, i.e., subject to court order, and otherwise does not impose any anticompetitive effects on future competition.

Id. at 600. Because the antitrust concerns were originally raised by the trial court and are not relied upon by Axiom in this appeal, we will limit our review to the adequacy and enforceability of the mitigation plan.

In its discussion of the adequacy of Lockheed's mitigation plan, the Court of Federal Claims relied heavily on two expert witness declarations that the court permitted Axiom to add to the record. See Axiom I, 78 Fed. Cl. at 596-98. The first declaration, that of Nancy Adams, a former Senior Advisor to the Director of TMA, expressed the opinion that it would be impossible for Lockheed to prevent information relevant to its Category 2 contracts from reaching its employees who were working on its Category 3 contracts. Id. at 596-97. Accordingly, Ms. Adams believed that Lockheed's mitigation plan could not adequately resolve all OCIs. Id. In the second declaration, Ronald Richards, who was formerly TMA's Chief of the Central Operations Office, stated his belief that the Category 2 work would provide Lockheed with information that could give Lockheed an unfair competitive advantage when bidding for future purchased care and Category 3 non-purchased care contracts. Id. at 597-98.

As discussed previously, supplementation of the administrative record is only appropriate in limited circumstances. Because we have not been presented with any persuasive explanation of why the record before the CO precluded effective judicial review in this case, we do not find the court's reliance on the Richards and Adams declarations well placed. However, even if we were to give some weight to these declarations, they do not end the inquiry. After all, a decision is not necessarily unreasonable simply because the disappointed bidder is able to find two witnesses who disagree with it.

Notwithstanding the contrary opinions of Axiom's declarants, we conclude that the CO's decision to award the contract to Lockheed was not arbitrary or capricious. Mindful of the confidential nature of Lockheed's mitigation efforts, we note that the CO and TMA reviewed the OCI Mitigation Plan and comparative analysis submitted by Lockheed and determined that the processes and procedures described therein would be sufficient to mitigate the alleged conflicts. We see nothing unreasonable about that determination. Additionally, TMA barred Lockheed from bidding on future purchased care requirements. Finally, we agree with the government that it is reasonable for the CO to defer evaluating certain potential unequal access to information conflicts until Lockheed actually bids on future contracts for which it has obtained non-public information by virtue of its performance of the contract at issue in this case. See ARINC, 77 Fed. Cl. at 202 (setting out a four-part test to be applied when a protester alleges that the successful bidder on a current contract unfairly benefited from non-public information obtained through a prior contract); see also Axiom, No. B-298870.3, 2007 WL 2141694, at *5 ("In our view, conflicts that might arise from subsequent awards can properly be analyzed as part of those subsequent award decisions, and need not be addressed at this juncture.").

Turning to the enforceability of Lockheed's mitigation plan, the parties agree that the government would have had legal recourse if Lockheed failed to adhere to the plan. Oral Arg. at 30:00-30:44, available at http://oralarguments.cafc.uscourts.gov/mp3/2008-5072.mp3. However, the trial court doubted that the CO could be trusted with future enforcement of the plan. See, e.g., Axiom II, 80 Fed. Cl. at 533 ("I don't know if I can put it any better than to say that I've kind of lost confidence in this CO's ability to be the proper person to monitor this."); id. at 539 ("[T]he court has little confidence that the CO will identify and properly mitigate potential or actual OCIs in the future."). The court expressed interest in finding a monitor to serve as "a pair of independent eyes for the Court," id. at 533, and ordered the parties to show cause "why the court should not enter an order that designated the United States Army Audit Agency ('USAAA') to submit an annual compliance report to the court regarding implementation of the proposed mitigation plan," id. at 534. Ultimately, the government took the position that it would prefer to have the contract set aside instead of submitting to continuing oversight by an auditor and the court. Id.

While we doubt that it would ever be appropriate for the court to interfere with the performance of a contract based solely on its belief or suspicion that the CO cannot be trusted, court interference is certainly inappropriate in this case because the CO did not act arbitrarily or capriciously in evaluating the mitigation efforts. The Supreme Court has warned against undue judicial interference with the lawful discretion given to agencies. See Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 67 (2004) ("The prospect of pervasive oversight by federal courts over the manner and pace of agency compliance with such congressional directives is not contemplated by the APA."). Moreover, "[g]overnment officials are presumed to do their duty, and one who contends they have not done so must establish that defect by clear evidence." Carolina Tobacco Co. v. Bureau of Customs & Border Prot., 402 F.3d 1345, 1350 (Fed. Cir. 2005) (quotation marks omitted). Accordingly, we conclude that the Court of Federal Claims erred by finding that the "unenforceability" of Lockheed's mitigation plan was grounds for setting aside the contract. 

III. CONCLUSION

For the foregoing reasons, we reverse the Court of Federal Claims' decision setting aside the United States Army's contract award to Lockheed.

(Axiom Resource Management, Inc., v. U. S. and Lockheed Martin Federal Healthcare, Inc., No. 2008-5072, -5073, May 4, 2009)  (NOTE:  See Axiom cases above which are under the Court of Federal Claims.)