Organizational Conflicts of Interest (OCI)

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In the first two parts of this series, we have summarized what constitutes an Organizational Conflict of Interest (“OCI”) in government procurements, and discussed OCIs’ importance in the bid protest arena. But lest you think that, having passed the protest hurdle, you are now free from all harm caused by having an OCI, we now address potential post-award liability stemming from undisclosed and unmitigated OCIs. Contractors found to have undisclosed and unmitigated OCIs, that either existed before award or arose thereafter, can face a variety of bad outcomes—contract termination, suspension or debarment, and liability for fraud under the False Claims Act (“FCA”). Recall that OCIs come in three forms:Continue Reading Organizational Conflicts of Interest – Part 3: The Next Target for FCA Enforcement

Last month, we began our three-part series on organizational conflicts of interests (“OCIs”) with an article discussing the different types of OCIs and how they can be mitigated. Now, in Part 2 of our series, we analyze how OCIs arise in bid protests. First, we explain how the Government Accountability Office (“GAO”) and the Court of Federal Claims (“COFC”) review OCI protests. Then, we examine scenarios where OCI protests have been sustained, followed by a synopsis of OCI protest grounds that (almost) always will be denied. Finally, we conclude with a summary of key points to consider when faced with an OCI issue that arises during a bid protest.Continue Reading Organizational Conflicts of Interests – Part 2: OCIs in Bid Protests

You might be wondering, “What’s so important about Organizational Conflicts of Interest (“OCIs”)?” The answer is fairly simple: understanding both what causes OCIs and how to mitigate them are critical because unmitigated OCIs can preclude a contractor from (1) competing for future contract work, (2) performing certain tasks under existing contracts, (3) transferring personnel between company organizations, (4) hiring personnel, (5) teaming with certain vendors, and/or (6) entering into certain corporate transactions. Moreover, undisclosed or unmitigated OCIs can create risk of liability under the False Claims Act. In this Part 1 of a three part series, we offer a summary of what creates OCIs and general mitigation strategies. In Part 2, we will detail how OCIs arise in protests, and in Part 3, we will address the risks of False Claims Act liability arising from undisclosed OCIs.Continue Reading Organizational Conflicts of Interest – Part 1: A Refresher on OCIs

Volume VI —Organizational Conflicts of Interest:  When the Whole Is Less Than the Sum of Its Parts

An organizational conflict of interest (“OCI”) arises when the performance of one contract undermines a contractor’s objectivity or creates an unfair competitive advantage with respect to another contract.  An agency cannot issue an award to a contractor that possesses an OCI unless that OCI has been avoided, mitigated, or waived.  Many government contracts include clauses that require contractors to avoid potential OCIs, to notify the Government of any OCIs that arise after award, and to work with the Government to mitigate any such OCIs.  Some contracts also avoid OCIs proactively by precluding the contractor from performing specific types of work.Continue Reading What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers

By John Chierichella

As many of you know, we frequently write on the topic of organizational conflicts of interests ("OCIs"). Several years ago, one of our partners, Keith Szeliga, published what remains the most comprehensive and insightful article available on this topic. The article, entitled Conflict and Intrigue in Government Contracts: A Contractor’s Guide to Identifying and Mitigating Organizational Conflicts of Interest, has now been cited in three Court of Federal Claims opinions. Most recently, in Netstar-1 Government Consulting, Inc. v. United States, Judge Allegra cited Mr. Szeliga’s article with approval no less than six times.
 Continue Reading Organizational Conflicts of Interest – How We Can Help

By Keith Szeliga and Anne Perry

On April 26, 2011, the Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space administration (“NASA”) published a proposed rule to amend the Federal Acquisition Regulation (“FAR”) coverage of organizational conflicts of interest (“OCIs”). See 76 Fed. Reg. 23236 (Apr. 26, 2011). In addition to transferring the regulatory coverage of OCIs from FAR Part 9, “Contractor Qualifications,” to FAR Part 3, “Improper Business Practices and Personal Conflicts of Interest,” the proposed rule departs from existing FAR coverage of OCIs, as well as longstanding Government Accountability Office (“GAO”) precedent, in several important respects. Comments on the proposed rule are due by June 27, 2011.
 Continue Reading Proposed FAR Rule: A New Regulatory Framework For Organizational Conflicts Of Interest And Unequal Access To Nonpublic Information

By Anne B. Perry and Jessica M. Madon
 

On July 16, 2010, the Court of Federal Claims (“COFC”) determined that a Government Accountability Office (“GAO”) bid protest recommendation that an awardee, Turner Construction Co. (“Turner”), be disqualified on the basis of organizational conflicts of interest (“OCI”) under an Army Corps of Engineers (the “Army”) hospital renovation contract was irrational. See Turner Construction Co., Inc. v. United States, Fed. Cl., No. 10-195C, July 16, 2010. We previously discussed the implications of the GAO decision here.
 Continue Reading A Retreat From Hard Line OCI Decisions? The COFC Overturns A Controversial GAO Ruling

By Keith R. Szeliga

As the economy begins to recover, the number of corporate transactions between Government contractors no doubt will increase. If your company is positioned as a potential acquirer or a potential target, you should be aware of a recent Government Accountability Office (“GAO”) decision holding that entering into negotiations for a corporate transaction can give rise to an organizational conflict of interest (“OCI”) well before, and potentially whether or not, the transaction actually occurs. See McCarthy/Hunt, JV, B-402229, Feb. 16, 2010, 2010 CPD ¶ 69.
 Continue Reading The Dangers Of Courtship: Organizational Conflicts Of Interest Arising From Contemplated Corporate Transactions

By John S. Tobey

On April 22, 2010 the Defense Acquisition Regulation Council proposed to amend the Defense Acquisition Regulation Supplement (“DFARS”) to provide uniform guidance and tighten existing requirements for organizational conflicts of interest (“OCIs”) by contractors in major defense acquisition programs.  See 75 Fed. Reg. 20,954 (April 22, 2010). The proposed rule implements section 207 of the Weapons System Acquisition Reform Act of 2009 (the “Act”) (Pub. L. 111-23), which directs the Secretary of Defense to revise the DFARS to provide both uniform guidance and tighten existing requirements related to OCIs to ensure that advice from contractors comes from sources that are objective and unbiased. The Act also authorizes limited exceptions to ensure that the DoD has continued access to highly qualified contractors.
 Continue Reading DoD Issues Proposed Rule Providing Guidance On Organizational Conflicts Of Interest

The Government Accountability Office (“GAO”) denies more than three quarters of all bid protests decided on the merits. Certain categories of protests, however, tend to be more successful than others. 

Three…

Continue Reading Identifying Viable Post-Award Bid Protest Allegations At The GAO

In AT&T Government Solutions, Inc., B-400216, Aug. 28, 2008, the GAO sustained a protest on the grounds that the Navy improperly excluded the protestor from the competitive range based upon an appearance of an organizational conflict of interest (OCI).  This case is significant because, among other things, it appears to be the first time the GAO has sustained a protest based on an agency’s failure to consider a protestor’s OCI mitigation plan prior to excluding that protestor from a procurement.  The case also stands for the proposition that the appearance of an OCI, standing alone, does not constitute a valid basis for excluding an offeror from a procurement.Continue Reading Appearance of an OCI Standing Alone Is Insufficient to Disqualify Offeror