Federal contractors need to be proactive about detecting and neutralizing or mitigating Organizational Conflicts of Interest (OCI).

The FAR’s OCI provisions (currently found at FAR Subpart 9.5) promote the fairness and integrity of the procurement process.  The provisions are intended to ensure a level playing field by preventing unfair competitive advantages, biased decision-making, or impaired objectivity.

Failing to identify and neutralize or mitigate OCI can lead to disqualification from contract awards or even contract termination.  Understanding these rules helps contractors maintain compliance, protect their reputation, and compete in the federal marketplace.

A recent GAO decision provides key insights into how OCIs are identified, evaluated, and effectively managed.  Contractors can look to the decision for a good example of mitigating an unavoidable OCI – and how to document mitigation efforts in the face of a procurement challenge.

Understanding Organizational Conflicts of Interest

Before digging into the decision, let’s cover some OCI basics.

Under the FAR, the government must avoid, neutralize, or mitigate actual or apparent conflicts of interest to prevent an unfair competitive advantage or the existence of conflicting roles that might impair the contractor’s objectivity. 

FAR 9.5 outlines three primary types of OCIs:

  1. Biased Ground Rules: Occurs when a contractor sets the rules for a future procurement.  The classic example is a contractor that drafts procurement specifications and then competes for the resulting contract.
  2. Unequal Access to Information: Arises when a contractor has access to non-public, proprietary, or source selection information that could provide an unfair competitive advantage when competing for a contract.
  3. Impaired Objectivity: Arises when a contractor’s work on one contract could affect its objectivity in performing another – particularly if that work involves evaluating its own products or services (or those of a competitor).

The GAO Decision – Key Facts and Findings

In GAO B-423294, a disappointed bidder protested the award of a contract for the Air Force’s Tactical Operations Center – Light program.

The protest hinged on the existence of alleged unmitigated OCI based on the awardee’s concurrent role as the software integrator for the Air Force’s Cloud-Based Command and Control (CBC2) program.  That is, the protest argued that the awardee’s involvement in both programs resulted in impaired objectivity and unequal access to information.

GAO denied the protest, concluding that the Air Force reasonably assessed and approved the actions taken by the contractor and the agency to identify and mitigate the OCI.  The specific mitigation measures included:

  • Government Oversight and Final Authority: The government retained final decision-making authority under the CBC2 contract, thus reducing the risk of biased recommendations from the contractor in its role as the software integrator.  This measure was key to mitigating the alleged Impaired Objectivity OCI.
  • Bidder’s Library and Firewalls:  Regarding the allegation of an Unequal Access OCI, GAO highlighted the creation of a procurement “Library” intended to ensure that all bidders had access to the same information.  Further, the decision noted the awardee’s implementation of a firewall between its software team on the CBC2 contract and the proposal team for this solicitation.

GAO’s decision emphasizes that mere allegations or suspicions are insufficient to establish an OCI – “hard facts” of an actual or apparent conflict are required. 

Key Takeaways for Federal Contractors

GAO’s decision offers several important lessons for contractors:

  • Proactive Identification and Mitigation. Contractors should proactively identify actual or apparent OCI and develop robust neutralization or mitigation plans. Efforts can include establishing internal firewalls and promoting transparency with the government.
  • Documentation Rules. OCI challenges turn on concrete evidence rather than speculative assertions. Document the efforts employed to neutralize or mitigate OCI – and be prepared to hammer the other side’s lack of documentation as part of any OCI challenge.
  • Agency Discretion and Oversight. Agencies have broad discretion in evaluating and mitigating OCI.  Rely on agency touchpoints during the process.
  • Understanding FAR Provisions. Familiarity with FAR Subpart 9.5 is essential. Contractors should understand the established definitions, responsibilities, and procedures to navigate OCI concerns effectively.

Underscoring that last point, contractors must also stay current with the rapidly changing times.  A proposed Final Rule published in January 2025 aims to further hone OCI definitions, provide contractors with concrete OCI examples, and offer specific guidance on avoidance and mitigation practices. 

Contractors should look to the proposed Final Rule to enhance OCI best practices – and stay up to date with how OCI regulations are employed during the FAR 2.0 rollout.

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.