Most people intuitively understand conflicts of interest–like a mom who judges her son’s science fair. Mom wants (presumably) her son to win, and she holds the power to make that happen. It’s intrinsically unfair for the other contestants.
Although somewhat different, the federal government contracting sphere has its own variety of conflicts of interests: organization conflicts of interest (OCIs). Because an OCI can be an award disqualifier, contractors should take proactive and systematic steps to identify, avoid, neutralize, and mitigate OCIs or potential OCIs. Without constant vigilance, a contractor might encounter an unexcepted surprise, like the unsuspecting foot below.
In this post, we provide a high-level survey of OCIs, including the three major types that often rear their ugly heads in procurements and bid protests (as one did in a protest that we previously covered).
What is an OCI?
In general, an OCI arises where the activities of a firm or individual render it functionally unable or potentially unable “to render impartial assistance or advice to the Government, or the person’s objectivity in performing the contract is or might be otherwise impaired, or a person has an unfair competitive advantage.” FAR 2.101. Put simply, an OCI exists where a reasonable person could question the fairness of a contractor’s involvement in a specific procurement.
With that in mind, there are three broad categories of OCIs: unequal access to information, biased ground rules, and impaired objectivity.
Unequal access to information
This OCI variety arises where a contractor obtains, or is privy to, information in performing a Government contract that might give it a leg up in competing for a later contract. So, this OCI captures situations where a contractor could exploit information–not generally available–to obtain an unfair competitive advantage.
Biased ground rules
In this situation, a contractor participates in establishing the procurement’s ground rules, such as writing the statement of work or developing specifications. The fear here is that the contractor might, intentionally or subconsciously, skew the competition in its favor. Here’s a representative example from the FAR:
Before an acquisition for information technology is conducted, Company A is awarded a contract to prepare data system specifications and equipment performance criteria to be used as the basis for the equipment competition. Since the specifications are the basis for selection of commercial hardware, a potential conflict of interest exists. Company A should be excluded from the initial follow-on information technology hardware acquisition.
Impaired objectivity
These types of OCIs often arise where a contractor’s work under one contract demands that it evaluate itself or another firm with which it has a relationship. In those cases, the contractor’s financial or other interests might (and likely would) cloud its impartiality. For that reason, the FAR provides that “contracts for the evaluation of offers for products or services shall not be awarded to a contractor that will evaluate its own offers for products or services, or those of a competitor, without proper safeguards to ensure objectivity to protect the Government’s interests.” FAR 9.505-3.
Why take OCIs seriously?
The FAR obligates contracting officers to be watchful for OCIs. And where an apparent successful offeror cannot neutralize or mitigate an OCI, its award may vanish.
Further, disappointed offerors can leverage an OCI as a bid protest theory. In other words, if substantiated, an offeror could offensively use an OCI to unravel a contract award.
What is a contractor to do?
Because OCIs can arise in multitudinous ways, there’s no single strategy to guarantee non-entanglement with actual, potential, or apparent OCIs. That said, there are some good rules of thumb to live by, such as the following:
- Implement a corporate strategy to proactively avoid OCIs.
- Devise a company-wide OCI plan and train employees on OCIs.
- Ensure that the OCI concerns are a priority for the firm’s senior management.
- Require and meaningfully encourage employees to identify and report actual, potential, or apparent OCIs.
- Rigorously and unfailingly analyze actual, potential, or apparent OCIs with every proposal. Consider how a present contract might cause OCI concerns in future contracts.
- If the firm identifies an actual, potential, or apparent OCI, “prick the boil” and address it in the proposal. Present the Government with specific and detailed steps for either neutralizing or mitigating the conflict of interest.
- Foresee possible OCIs and identify possible neutralization and mitigation strategies that the firm can rapidly and seamlessly deploy.
- Cooperate fully with an contracting officer’s request relating to an actual, potential, or apparent OCI.
- Fully comply with any contractual OCI reporting obligations.
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There is a bright side to OCIs: they don’t have to be that vexing nail in the foot. Proactive planning and sustained attentiveness can largely keep the procurement sidewalk free of debris and other hazards.
If you have any questions about organizational conflicts of interest, give us a call at 913-354-2630.