December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 2 D. Michael Bennett, Vice President Contracts, Pricing and Procurement Northrop Grumman Information Technology, Inc. Date: December 9, 2003 MANAGING THE RISKS OF ORGANIZATIONAL CONFLICT OF INTEREST

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 3 Agenda Industry Consolidation What is an OCI? Unfair Competitive Advantage Lack of Impartiality OCI General Rules Providing Statement of Work Exemptions From OCI Mitigation Plan/Actions Questions

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 4 Joke – Just One!

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 5

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 6 What Is an Organizational Conflict of Interest? (OCI)

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 7 What is an OCI? FAR 9.5 Definition: An OCI exists when the nature of the work to be performed under a proposed government contract may: –Result in an unfair competitive advantage to the contractor; or –Impair the contractor’s objectivity in performing the contract work

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 8 Unfair Competitive Advantage Examples: Competitor Technical Approach Competitor Pricing Information Relating to Source Selection or Competitor Information

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 9 Unfair Competitive Advantage (Cont) Example: –Contractor 1 provides input to government for RFP’s statement of work –Contractor 1 also bids on RFP which includes that statement of work. Contractor 2 does not have input on statement of work –Contractor 1 has unfair competitive advantage (Is there a way to mitigate conflict?)

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 10 Lack of Impartiality Examples: Consulting services Writing Specs Writing SOWs I wonder if we can write the spec around our product Relating to Privileged Information

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 11 Lack of Impartiality (Cont.) Example: Contractor develops and delivers a product. Contractor tasked to test product under separate contract. Contractor may be incentivised to perform in biased manner. (How could you mitigate?)

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 12 Lack of Impartiality (Cont.) Example: Contractor parent company builds automobiles Contractor tasked to test another auto company’s experimental product that could compete with parent company’s products (How do you avoid or mitigate OCI?)

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 13 OCI General Rules Contracting Officer Determining Authority Most likely to occur in Management Support Contracts (SETA, Consulting). Waiver granted by Head of Agency or designee.

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 14 Providing Statement of Work The Contractor that writes the SOW is NOT allowed to perform SOW actions If Contractor provides material leading directly, predictably and without delay, to the SOW, that Contractor is conflicted out of the bid process (What does this mean?)

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 15 Exemptions From OCI Contractor is Sole Source Contractor also participated in design and development work More than One (1) Contractor prepared SOW

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 16 Firewalls

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 17 Common Procedures in Mitigation Plans Sensitive program information (SPI) safeguards –Confidential information agreements/OCI briefing statements –Controlled access to Government facilities –Limitation of personnel transfers –Physical control of SPI Establishment of an employee OCI awareness program

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 18 Common Procedures in Mitigation Plans (Cont.) Mandatory OCI Training Flowdown to Subcontractors Passing Work to Subcontractors Provision for Audit and Certifications

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 19 Mitigation Plan Employee Awareness Objective performance –Organization employees shall remain separate and apart from all other organizations and under no circumstances shall be co-mingled with any other employees of the organization Employee performance incentives based exclusively on Contract performance

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 20 Mitigation Actions Confidential information/OCI briefing statement for Contract employees Confidential information statement for Contract employees Exit interview acknowledgement

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 21 Mitigation Actions Annual Re-briefing OCI Mitigation SPI Audit Contract Employee SPI Audit Checklist Certification of Compliance

December 8–9, 2003 Sheraton Premiere, Tysons Corner, VA NCMA 22nd Annual East Coast Educational Conference Understanding Competition, Enhancing Small Businesses, and Getting Best Value 22 Questions?