1. Organizational Conflicts of Interest (OCI)
National Defense Industrial Association
Annual Educational Seminar
Michael R. Golden
Assistant General Counsel
United States Government Accountability Office

2. What are OCIs? Federal Acquisition Regulation (FAR)
subpart 9.5 sets forth the regulatory guidance governing OCIs.

3. What are OCIs?
Such a conflict of interest arises where, 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 §
Contracting officials are 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),
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. 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 §

4. The FAR and GAO decisions address three types of OCIs.
Unequal Access to Information--A firm has access to nonpublic information as part of its performance of a government contract and that information may provide the firm a competitive advantage in a later competition for a government contract. FAR § 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.
Biased Ground Rules--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 §§ , 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.
Impaired Objectivity--A firm's work under one government contract could entail its evaluating itself, either through an assessment of performance under another contract or through an evaluation of proposals. FAR § 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.

5. Why are OCIs increasing in frequency?
Industry consolidation--firms combining supplies and services
Government buying more services that involve the exercise of judgment
Use of contract vehicles that encourage marketing by the contractor

6. What types of OCIs is GAO seeing in cases?
Recent protests most often involve impaired objectivity OCIs.

7. What does case law say?
Alion Sci. & Tech. Corp., B , Jan. 9, 2006, 2006 CPD ¶ __ (protest is sustained where record does not support the agency’s conclusion that awardee’s conflicts of interest will be minimal, with limited impact on quality of contract performance, where awardee, a manufacturer of spectrum-dependent products, will perform analysis and evaluation and exercise subjective judgment regarding formulation of policies and regulations that may affect the sale or use of spectrum-dependent products manufactured by the awardee or the awardee’s competitors, and those deployed by the awardee’s customers).
Alion Sci. & Tech. Corp., B , Jan. 9, 2006, 2006 CPD ¶ __ (protest is sustained where record does not support the agency’s assessment regarding the “maximum potential” for organizational conflicts of interest to occur during awardee’s contract performance where awardee, a manufacturer of spectrum-dependent products, will perform various activities requiring subjective judgments that may affect the sales or use of spectrum-dependent products of the awardee, the awardee’s competitors, and the awardee’s customers).

8. What does case law say?
Greenleaf Constr. Co., Inc., B , B , Jan. 17, 2006, 2006 CPD ¶ __ (protest is sustained where Department of Housing and Urban Development failed to reasonably consider or evaluate potential organizational conflict of interest arising due to the fact that the owner of the management and marketing (M&M) services contractor in Ohio will be receiving payments from the owner of the closing agent contractor for Ohio, the activities of which the M&M contractor will oversee).
PURVIS Sys., Inc., B , B , Aug. 16, 2004, 2004 CPD ¶ 177 (protest is sustained where agency failed to reasonably consider or evaluate potential conflicts of interest that would be created by awardee’s involvement in evaluating the performance of undersea warfare systems that had been manufactured by the awardee or by the awardee’s competitors, even if such evaluations were not “part of the procurement process”).

9. What does case law say?
Science Applications Int’l Corp., B et al., May 3, 2004, 2004 CPD ¶ 96 (where agency acknowledges that awardee’s substantial involvement in activities subject to environmental regulations could create conflicts of interest in performing certain tasks contemplated by the solicitation’s scope of work, and where agency gave no consideration to the impact of such potential conflicts in making award, agency failed to comply with Federal Acquisition Regulation requirement that it “identify and evaluate potential organizational conflicts of interest”).
Science Applications Int’l Corp., B , Sept. 21, 2004, 2004 CPD ¶ 201 (where agency previously failed to give any consideration to potential conflicts of interest between awardee's performance of contract requirements and awardee's involvement in environmentally-regulated activities, agency's corrective actions adequately remedy prior procurement flaws where agency has reviewed additional information regarding the ongoing, environmentally-regulated activities of the awardee, has considered that information in the context of the scope of work reasonably contemplated under the contract, and has procedures in place for the agency's independent assessment of potential conflicts between each task order's requirements and the awardee's ongoing activities).

10. What does case law say?
Deutsche Bank, B , Dec. 12, 2001, 2001 CPD ¶ 210 (protest is denied where, in a procurement for loan support services, record showed that the agency reasonably determined that the awardee’s proposal adequately mitigated any conflict of interest through the use of a subcontractor to perform loan servicing on those properties where awardee had previously been involved in handling administrative matters for the agency related to the same properties).
Lucent Tech. World Servs. Inc., B , Mar. 2, 2005, 2005 CPD ¶ 55 (protest challenging protester’s exclusion from participation in a procurement denied where the contracting officer reasonably determined that the protester had an organizational conflict of interest arising from its preparation of technical specification used by the agency in the solicitation).
Ktech Corp., B , B , Aug. 17, 2002, 2002 CPD ¶ 77 (conflict was found where the record showed that the awardee’s subcontractor may have obtained and used information obtained from the protester as a result of the subcontractor’s oversight role on the protester’s predecessor contract; protest sustained where the agency did not consider or mitigate this conflict).

11. What does case law say?
LEADS Corp., B , Sept. 26, 2003, 2003 CPD ¶ 197 (agency reasonably determined not to reject the quotation from the vendor selected to receive an order for augmentation of the agency’s procurement staff on the basis of organizational conflicts of interest where any potential conflict can be avoided by the careful assignment of work under the contract to ensure that the vendor’s contracting specialists do not handle matters (procurements or contracts) in which the vendor has an interest).
Decisions are available on GAO’s Website:

12. Recent OCI Article
Daniel I. Gordon, Organizational Conflicts of Interest: A Growing Integrity Challenge,
35 Pub. Cont. L.J. 25 (Fall 2005) (discusses legal framework and case law related to OCIs in the federal procurement system).

13. Lessons Learned?
Review acquisition for OCIs as early in the process as feasible, optimally at the planning stages, to permit agency and offerors to effectively address OCIs before award process. Don’t hope that the OCI issue will not surface through the protest process!
Avoid, neutralize or mitigate significant potential conflicts before contract award.
Be aware that there is a relationship between the OCI mitigation plan, technical approach, and contract performance. The potential for OCIs is an evaluation issue--whether or not it is specifically identified as a technical evaluation factor.
There is no litmus test for ascertaining the impact of the OCI on the contract. Need to identify the significant potential OCIs and address them.
Firewall within the company generally does not work to resolve “impaired objectivity” OCI. May have to hand work over to a subcontractor. Is this workable? What is the impact on the offeror’s technical approach?

14. Lessons Learned?
Companies should fully disclose and alert the agency to what they believe to be the potential OCIs and offer a solution that will work. Understating or hiding the effect of potential OCIs is a risky strategy for the offeror and agency.
In a number of impaired objectivity cases, it is clear that the reason the agency wants the company to perform the work is precisely the reason that there may be an impermissible, and potentially unmitigatable, OCI.
In analyzing the acquisition for potential impaired objectivity OCIs, the agency and contractor cannot limit their analysis to acquisition conflicts. Conflicts may exist in situations where a firm will be influencing policy, or testing and evaluating products or systems, although no procurement is imminent or anticipated.
GAO reviews the reasonableness of an agency’s actions; GAO will not “second guess” or perform its own de novo review.