For contractors, defending (and overcoming) bid protests that challenge contract awards based on alleged Organizational Conflicts of Interest (OCI) may hinge on what a contractor does at the very beginning of the procurement process.  Whether the contractor revealed, acknowledged, addressed, and documented potential OCI with the Contracting Officer (CO) could determine the fate of the protest (and, in turn, the contract award).

In a recent decision, GAO sustained a protest asserting that the Department of Health and Human Services (HHS) failed to meaningfully consider the threat of OCI posed by the awardee.

In the opinion, GAO details several material points that all contractors should consider:

1.  The awardee disclosed to the CO that its parent company might pose an OCI, but the awardee did not believe there was a conflict.
2. The CO did not address this potential OCI in the pre-award OCI memorandum.
3. GAO rejected the agency’s argument that the CO did not need to consider the OCI issue presented because the agency had considered and dismissed a similar conflict in a different jurisdiction.

Based on these points, GAO offers a bright line principle that operates in accordance with the FAR:  GAO will not substitute its judgment for the agency’s, provided that the agency gives meaningful consideration to whether a significant conflict of interest exists.  In other words, GAO is saying that if there is no meaningful consideration of potential OCI, as in this case, GAO may sustain a protest on that fact alone.

There are a couple of take-away lessons for contractors:

• Contractors must always actively search for potential OCI during every procurement.
• Contractors should take an active role in informing the CO about potential OCI and ensure that the CO adequately documents any potential issues.
• Contractors cannot rely on OCI waivers in other contracts to determine whether their potential OCI might give rise to a successful protest.

So next time you have a potential OCI issue, do not count on the CO to document the issue properly. Instead, insist that the CO consider the OCI, determine that it is not an issue, and document that process.

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