Georgia Tech Procurement Assistance Center

The risk of organizational conflicts of interest

By

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:

  1. Unfair Competitive Advantage – when a contractor obtains confidential or proprietary government information not accessible to competitors
  2. Impaired Objectivity – when contract performance could affect a contractor’s other financial interests
  3. Biased Ground Rules – when a contractor helps design the statement of work or other solicitation requirements for a future procurement for which they ultimately submit a proposal

Continue reading at: JD Supra

GAO sustains protest based on awardee’s organizational conflicts of interest

By

If a company has one or more Organizational Conflicts of Interest (“OCIs”), its ability to compete for (and perform) a government contract in a fair and equitable manner is inherently called into question.  In the context of a bid protest, this may be one of the most overlooked but “sharpest” grounds that may be available to a protester.  In short, an OCI is an instance where “because of other activities or relationships with other persons [or entities], a person [or entity] is unable or potentially unable to render impartial assistance or advice to the Government, or the person’s objectivity in performing the contract work is or might be otherwise impaired, or a person has an unfair competitive advantage.”  FAR 2.101.  Understanding the three types of OCIs and the situations in which each typically arises is critical in order for disappointed offerors to execute this riposte in the face of a flawed contract award.

Pursuant to FAR Subpart 9.5, agencies are required to investigate whether actual (or potential) OCIs may impact a procurement and take steps—often with the assistance of the potentially conflicted contractor—to mitigate or effectively neutralize such conflicts as early as possible in the acquisition process.  Indeed, an OCI protest decision typically turns on the reasonableness of the agency contracting officer’s OCI investigation; that is, so long as the contracting officer has investigated the existence of a potential OCI and, in the event a potential OCI exists, reasonably determined whether the conflict has been adequately mitigated (or waived), the General Accountability Office (“GAO”) will likely defer to the contracting officer’s findings.

Although agencies have broad discretion when evaluating potential OCIs, that discretion isn’t unlimited.  The recent decision in Steel Point Solutions, LLC, B-419709 et al., July 7, 2021 (“Steel Point”), underscores this point.  In this case, the GAO sustained the protest on the ground that the agency failed to adequately consider the extent of potential OCIs arising from the awardee’s ongoing performance of two other agency contracts.  This decision not only illustrates what an agency must consider for a proper OCI analysis and mitigation but also serves as another real-world example of when OCIs may arise—in this case, an “impaired objectivity” OCI.

Continue reading at:  McCarter & English

Contractor takes on Herculean task of challenging agency’s conflict-of-interest determination

By

Earlier this month, the Government Accountability Office (“GAO”) sustained a bid protest challenging the agency’s decision to exclude the protester from consideration based on a potential organizational conflict of interest (“OCI”).

The GAO decision serves as a reminder that an offeror that is excluded from a competition on the basis of a perceived OCI can challenge that decision in a protest before GAO.  And although GAO will give the agency a fair amount of deference, it will nonetheless sustain a protest where it concludes that the agency’s decision was unreasonable.

In the Archimedes Global bid protest, the contractor submitted a proposal to perform services in response to a solicitation issued by the Department of Homeland Security.  The solicitation included a clause permitting the agency to disqualify the incumbent contractor from competing for follow-on work because the predecessor contract required the incumbent to have access to non-public, procurement sensitive information.  Archimedes’ proposal listed as key personnel two program managers currently working for the incumbent.  And for that reason, the agency excluded Archimedes from consideration based on the grounds that those employees could have provided Archimedes with unequal access to information.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2018/06/in-archimedes-bid-protest-government-contractor-takes-on-herculean-task-of-challenging-the-agencys-oci-determination-and-wins/

 

Justice Department grantee faulted for sole-source youth mentoring contracts

By

Justice Dept. seal - CopyIn allocating more than $200 million in grant money aimed at mentoring Indian tribal youth, Justice Department grantees over five years relied too much on sole-source contracts and provided lax enforcement of rules against contractor lobbying and conflicts of interest, a watchdog found.

The department’s Office of Justice Programs, as part of its Office of Juvenile Justice and Delinquency Prevention, awarded the Boys and Girls Clubs of America $201.6 million from 2008-2013 to administer national and tribal mentoring programs. The after-school clubs provide a “safe place, caring adult mentors, friendship and high-impact youth development programs,” mostly to American Indians at risk of joining gangs, as noted in a report released on Thursday of last week by the Justice Department’s Office of Inspector General.

The Boys and Girls Clubs—the largest recipients of those grants—in turn sub-awarded 45 contracts to 14 vendors, totaling about $3.1 million.

Keep reading this article at: http://www.govexec.com/contracting/2016/09/justice-department-grantee-faulted-sole-source-youth-mentoring-contracts/131796

Redstone Arsenal contracting officer to plead guilty to obstructing federal audit

By

A Huntsville, AL woman employed by the U.S. Army Contracting Command at Redstone Arsenal has agreed to plead guilty to a charge of obstructing a federal audit, the U.S. Attorney’s Office in Birmingham said last week.

Redstone ArsenalTeresa Mayberry, 54, agreed to plead to one count of obstructing an audit in 2012 by the Department of Defense Inspector General’s office related to a federal contract for providing parts to Russian-made helicopters to be flown in Afghanistan.

The U.S. Attorney’s Office described the charge in a news release.

“Mayberry created a series of false documents that she provided to (the IG) to obstruct its 2012 audit of an Army contract to purchase parts for Russian-made Mi-17 helicopters.”

Keep reading this article at: http://www.al.com/news/huntsville/index.ssf/2015/06/redstone_arsenal_contract_offi.html

Read charges here: mayberry-charges

Read plea deal here: mayberry-plea

Former Colonel at Redstone Arsenal pleads guilty to federal charges related to inflated contract payments

By

A former colonel at Redstone Arsenal pleaded guilty April 20th to federal charges stemming from inflated contract payments for work on Russian-made helicopters bound for Afghanistan to be used by Afghan forces.

Now-retired Army Col. Norbert Vergez pleaded guilty today to two counts of false statements and one count of conflict of interest, in federal court in Tuscaloosa. No sentencing date has been set, the U.S. Attorney’s Office in Birmingham said today.

U.S. Attorney Joyce White Vance said Vergez “placed his own financial ambitions and personal loyalties above his duties as a member of the armed forces.

“In doing so, he betrayed the U.S. Army values of honesty, integrity and selfless service, which are hallmarks of military service,” Vance said. “This prosecution highlights our commitment to hold responsible those who, by word and deed, corrupt the government contracting process.”

Keep reading this article at: http://www.al.com/news/huntsville/index.ssf/2015/04/former_colonel_at_redstone_ars.html

SDVOSB Verification Contractor eliminated for ‘organizational conflict of interest’

By

An incumbent contractor performing VA CVE SDVOSB verification functions was ineligible to be be re-awarded an order for those services because of an unmitigated organizational conflict of interest.

In a recent decision, the U.S. Court of Federal Claims upheld the VA’s decision to cancel the award to the incumbent contractor and exclude that contractor from the follow-on order.

The Court’s decision in Monterey Consultants, Inc. v. United States, No. 14-1164C (2015) involved a VA RFQ for CVE support functions.  Those functions included supporting the CVE’s SDVOSB and VOSB verification processing.

The verification functions in question had been performed by Monterey Consultants, Inc. under a VA BPA.  Under its BPA, Monterey did work under a variety of call orders, including processing and verification services for CVE.  Monterey also provided support for the VA OSDBU’s acquisition efforts.

The RFQ included a specific section covering OCIs.  In relevant part, that section stated that “Contractors performing on other contracts in support of Verification shall be presumed to have an OCI with respect to this contract and are ineligible to quote on this requirement, due to the integrated nature of work perform[ed] under this solicitation and existing contracts.”

Keep reading this article at: http://smallgovcon.com/u-s-court-of-federal-claims/va-cve-sdvosb-verification-contractor-eliminated-for-oci/

VA manager in NC involved in $4 million deal that benefited relatives

By

A Veterans Affairs manager in North Carolina created a conflict of interest when she participated in a project that netted millions for her family members, according to the department’s watchdog.

The VA bought 35 acres of land for $4.25 million in 2010 from the Gillis family to build a new outpatient medical facility in Fayetteville, N.C. Wendy Gillis, a VA project manager and professional engineer, was part of the team that assessed and ranked five properties owned by her extended family members for the project. Wendy married into the Gillis family in 2001; two of her husband’s cousins submitted plots of land for consideration in response to a 2010 solicitation in FedBizOpps.

“Although she was not the final selecting official, she was intimately involved in the process, discussed the sites with team members, and was in a position to influence the team,” the IG concluded. The watchdog also criticized four other high-ranking VA officials involved in the project – Daniel Hoffmann, Elizabeth Goolsby, James Galkowski and Jessica Kaplan – for failing to take sufficient action over the conflict of interest, or appearance of, when they learned about it.

Keep reading this article at: http://www.govexec.com/management/2015/03/va-manager-involved-4m-deal-benefited-relatives/107487/

Tougher contractor ethics rule under consideration

By

Contractor employees providing services to federal agencies might be required to disclose personal financial holdings that could create a conflict of interest and would be required to refuse gifts from certain parties affected by those contracts, under a draft recommendation being considered by a panel of the Administrative Conference of the United States.

The conference is an independent public-private partnership that makes recommendations on federal administration and is subject to federal meetings rules. It recently has regrouped after being disbanded 15 years ago, and its Administration Committee considered a proposed draft rule for federal contractor ethics Dec. 8.

With more than $260 billion spent on service contracts annually, federal rules for contractor ethics vary by agency and in many cases are minimal or nonexistent, the committee said in its report. In cases where contractor employees work side by side with government employees, there is a great disparity in the ethics rules that are applied.

“The conference believes that certain important aspects of the ethics rules applicable to government employees should be extended to contractor employees in order to increase public confidence in the government’s acquisition system,” the draft rule states. “This should be done in a manner that is cost-effective, takes into account the disparate needs of the various agencies that utilize independent contractors, and is sensitive to the burdens that extension of the ethics system to contractor employees would impose on agencies and the companies and small businesses with which they contract.”

The draft recommendation proposes two options: either that a new rule be incorporated into the Federal Acquisition Regulation and applied governmentwide, or that federal agencies assess and prioritize their chief ethics risks and adopt a rule considering those risks.

The draft ethics rule also includes these recommendations:

  • Directly Supervised Employees: Service contractor employees who work side-by-side with government employees, under direct supervision of a government employee, would need to follow the same ethics rules as other federal contractors. Further, Congress should consider passing a law mandating that the service contractor employees must follow the same ethics as the government employees in this situation.
  • Personal Conflicts of Interest: For service contracts over $5 million, the contractor should identify among his or her employees and their family members any personal or business financial interest that may present a conflict, along with a mitigation plan, for review by the contracting officer. Potential conflicts would include ownership in a business that might compete for similar work or employment with an organization affected by the performance of the contract.
  • Gifts: A service contractor or its participating employees may not accept or solicit any gift from any person outside the company who has some interest substantially affected by the performance or nonperformance of the contract.

 

About the Author: Alice Lipowicz is a staff writer for Washington Technology – Dec. 10, 2010.

Federal employee sentenced to a month in jail for steering a contract

By

A federal judge on Tuesday sentenced to a month in
jail a U.S. Fish and Wildlife Service employee who
steered an earth-moving job at the Hanalei National
Wildlife Refuge on Kauai to a company in which he was
a partner.
“When I did this I honestly didn’t see that I did
anything wrong,” said Kevyn Paik.

After he gets out of jail, Paik will be on federal
probation for two years, including seven months of
electronically monitored home detention.

Had Paik pleaded guilty or not lied when he testified in
trial, he probably would have received community
service, as he requested, or probation, said U.S.
District Judge J. Michael Seabright.

A jury found Paik and former Fish and Wildlife
employee James Alan Duarte guilty of two counts each
of wire fraud and mail fraud.

Both men are heavy equipment operators.

Paik was responsible for maintaining the wildlife
refuge.

The jury found Paik guilty of steering a $23,500 job in
2006 to a straw contractor. Duarte then performed the
work using Paik’s equipment.

The jurors acquitted Paik and Duarte in a similar
scheme in 2005 for a $25,000 job.

As a federal employee, Paik was required by law to
disclose his interest in a company doing work for the
government related to his job.

— Honolulu Star-Advertiser – Nov 24, 2010

Contracting News

Read More

Contracting Tips

Read More

GTPAC News

Read More

Georgia Tech News

Read More