Organizational conflicts of interest (or “OCI”) generally exist when one party has access to nonpublic information as part of its performance on a government contract.
OCI — or even the appearance of OCI — can be a landmine for Federal contractors. Unresolved OCI can lead to exclusion from a contract competition, contract termination, and even suspension / debarment.
OCI can arise in many different shapes and sizes. Sometimes, a mitigation plan is sufficient to wall off the conflict. Other times, the conflict is so pervasive that it undermines the integrity of the Federal procurement process – resulting in a lost contract (or worse).
It is imperative that contractors diligently investigate any actual or apparent OCI and prepare a comprehensive and compelling plan to address the conflict. OCI that can be neutralized or mitigated generally does not require disqualification. But the existence of actual OCI that cannot be adequately mitigated will likely lead the loss of contracting opportunities.
In light of the many forms that OCI can take and the serious consequences associated with a violation, it was surprising to see GAO dismiss a recent protest involving self-evident OCI concerns.
GAO Refuses to Consider “Private” OCI
The protest at issue concerns a U.S. Army task order for intelligence support services. After the award, the unsuccessful incumbent filed a bid protest at the GAO alleging that the Army failed to investigate OCI in the form of unequal access to proposal materials.
Specifically, the protester alleged that a high-level employee for the awardee previously served as a consultant for the protester. In that role, the consultant had access to the protester’s confidential information and trade secrets.
The protester argued that the relationship created an unmitigated conflict of interest.
GAO, however, found no OCI and denied the protest.
According to GAO, OCI and the unfair access to information must arise within the context of a government contract. Here, the underlying relationship did not involve the government. It was a disclosure that took place between two sophisticated parties on a private transaction.
Because of the private nature of the alleged OCI, GAO would not even consider the protest allegation. Stated differently, without the involvement of the government, there is no OCI.
OCI Strategies Moving Forward
So where does this decision Federal contractors?
It certainly should not lull contractors into believing that OCI does not matter. It matters quite a bit. Without appropriate diligence and a plan for identifying and neutralizing OCI, a contractor could find itself in an OCI case where the GAO takes great interest in exploring alleged unfair or unequal access to information.
Instead, the primary takeaway here should be for contractors to think seriously about how they disclose confidential and proprietary information in private settings. If it is necessary to disclose that kind of information to an outside consultant, take care to limit or redact the data to the extent possible.
Contractors should also explore installing language in third-party agreements to limit disclosure and future competition.
Nick Solosky is a Partner in Fox Rothschild’s Government Contracts Practice Group. You can reach Nick directly at NSolosky@FoxRothschild.com or 202-696-1460.