Agency Waives OCI on 97th Day of GAO Protest Calendar, Thwarts Protester Victory

by Holland & Knight LLP
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On January 30, 2013, the Government Accountability Office (“GAO”) published a bid protest decision which should serve to remind government contractors and enthusiasts of the sometimes surprising discretion left to agencies in deciding to waive an Organization Conflict of Interest (“OCI”) under the current version of Federal Acquisition Regulation (“FAR”) 9.503. 

In AT&T Government Solutions, Inc., B-407720, award of an IDIQ task order for IT support services was protested, alleging unmitigated “unequal access to information” and “impaired objectivity” OCIs.  The protester argued that the awardee’s performance on a related IT support contract gave it access to non-public budget and requirements information, in addition to impairing the awardee’s objectivity. 

The protest record was fully developed and, during the course of the proceedings, GAO conducted an “outcome prediction” wherein the GAO hearing officer informed the agency that GAO saw no evidence that a meaningful OCI determination had been made, and thus intended to sustain the protest.  While usually a cue to take corrective action, the head of the contracting activity instead elected simply to waive the OCI on the 97th day after the protest was initially filed- a mere three days before GAO’s written opinion was due- pursuant to FAR 9.503. 

This kind of eleventh-hour waiver may not be an option for agencies in the future.  As pointed out by Professor Dan Gordon of George Washington University, the proposed rule revising the OCI provisions of the FAR - languishing since April 2011- would remove unequal access to information OCIs from FAR Part 9.5 and treat them as another matter altogether.  According to Gordon, this would have the effect of halting an agency’s unbridled discretion to waive them. 

The new FAR regulation, if it becomes final, would recognize the fundamentally different nature of an unequal access to information OCI that taint the integrity of the procurement process from impaired objectivity OCIs that potentially affect contract performance.  The FAR Councils have determined it makes sense to allow an agency to evaluate and waive impaired objectivity OCIs as a matter of business judgment (provided they do a thorough analysis, of course).   Unequal access OCIs, however, are arguably different because once a contractor has had access to truly competitively useful and non-public information, it cannot un-see what has been seen.  Moreover, this type of OCI arguably harms competitors to a greater degree than impaired objectivity OCIs.  Thus, the FAR Councils have proposed requiring agencies to either mitigate an unequal access type of OCI- usually, by releasing the accessed information to all competitors- or exclude the conflicted offeror from the competition.  

However, with the proposed rule still merely proposed, GAO is bound by the FAR as it stands.  GAO dismissed the protest- perhaps somewhat reluctantly- but reminded protester that the “reasonableness” of the agency’s decision to waive is still game for a subsequent protest.

- See more at: http://www.hklaw.com/GovConBlog/Agency-Waives-OCI-on-97th-Day-of-GAO-Protest-Calendar-Thwarts-Protester-Victory-02-26-2013/#sthash.9OFsVzWy.dpuf

On January 30, 2013, the Government Accountability Office (“GAO”) published a bid protest decision which should serve to remind government contractors and enthusiasts of the sometimes surprising discretion left to agencies in deciding to waive an Organization Conflict of Interest (“OCI”) under the current version of Federal Acquisition Regulation (“FAR”) 9.503.

In AT&T Government Solutions, Inc., B-407720, award of an IDIQ task order for IT support services was protested, alleging unmitigated “unequal access to information” and “impaired objectivity” OCIs. The protester argued that the awardee’s performance on a related IT support contract gave it access to non-public budget and requirements information, in addition to impairing the awardee’s objectivity.

The protest record was fully developed and, during the course of the proceedings, GAO conducted an “outcome prediction” wherein the GAO hearing officer informed the agency that GAO saw no evidence that a meaningful OCI determination had been made, and thus intended to sustain the protest. While usually a cue to take corrective action, the head of the contracting activity instead elected simply to waive the OCI on the 97th day after the protest was initially filed- a mere three days before GAO’s written opinion was due- pursuant to FAR 9.503.

This kind of eleventh-hour waiver may not be an option for agencies in the future. As pointed out by Professor Dan Gordon of George Washington University, the proposed rule revising the OCI provisions of the FAR - languishing since April 2011- would remove unequal access to information OCIs from FAR Part 9.5 and treat them as another matter altogether. According to Gordon, this would have the effect of halting an agency’s unbridled discretion to waive them.

The new FAR regulation, if it becomes final, would recognize the fundamentally different nature of an unequal access to information OCI that taint the integrity of the procurement process from impaired objectivity OCIs that potentially affect contract performance. The FAR Councils have determined it makes sense to allow an agency to evaluate and waive impaired objectivity OCIs as a matter of business judgment (provided they do a thorough analysis, of course). Unequal access OCIs, however, are arguably different because once a contractor has had access to truly competitively useful and non-public information, it cannot un-see what has been seen. Moreover, this type of OCI arguably harms competitors to a greater degree than impaired objectivity OCIs. Thus, the FAR Councils have proposed requiring agencies to either mitigate an unequal access type of OCI- usually, by releasing the accessed information to all competitors- or exclude the conflicted offeror from the competition.

However, with the proposed rule still merely proposed, GAO is bound by the FAR as it stands. GAO dismissed the protest- perhaps somewhat reluctantly- but reminded protester that the “reasonableness” of the agency’s decision to waive is still game for a subsequent protest.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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